Victorian Civil and Administrative Tribunal|2012-02-15

Tate-Louery & Dwyer Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 160 (15 February 2012)

Taxation List; Assessments of Land Tax whether subject land exempt from Land Tax as being land 'occupied or ... available for occupation, as ... a supported residential service'; exemption not available where operator of service has vacated premises and registration under Health Services Act 1988 has terminated; Land Tax and Special Land Tax assessments properly made; Land Tax Act 1958 Section 9(1)(k), Section 10 Land Tax Act 1958, Section 76(1)

Tate-Louery & Dwyer Pty Ltd, as trustee for the Cash Wheeler Unit Trust

Tate-Louery & Dwyer Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 160

This proceeding concerned a number of Land Tax assessments made against the applicant taxpayer by the respondent Commissioner of State Revenue with respect to a property at 42-44 Parker Road, Silvan. The taxpayer sought review with respect to its Land Tax liability for another parcel of land but this element of its applications was not pursued.
According to Mr Mondous who is the director and shareholder of the taxpayer company and also the sole unit holder in the Cash Wheeler Unit Trust of which the taxpayer company is trustee in the early 1990s a nursing home complex license to operate 24 beds was erected on this four and a half acre site. (The narrative in a Planning and Environment List determination referred to below suggests the complex may have been erected a decade or two earlier.) The land is situated within a 'green wedge' area and so its development potential is drastically constrained. It is of split level construction and so could be regarded either as a two storey or one and a half storey building. In addition there is a weatherboard house which was used by a caretaker and a number of sheds. The nursing home was initially operated by the owner of the land and buildings under the name Silvan Country Cottage. The business was sold to a Mrs Rangasami with the original owner remaining as lessor and Mrs Rangasami taking up a lease as the operator of the establishment. It was not accredited under the Commonwealth aged care regime but was registered as a supported residential service accommodating a maximum number of 24 residents. Most recently a certificate of registration under the Health Services Act 1958 was issued on 1 January 2003 expressed to expire on 31 December 2005.
In 2002 Tate-Louery & Dwyer bought the freehold reversion of the property subject to the lease in favour of Mrs Rangasami. In 2002 according to Mr Mondous the lease to Mrs Rangasami had some three years of a five year term to run with two options to renew, the first exercisable to renew in 2005. This option to renew was exercised.
According to Mr Mondous the nursing home was of only marginal economic viability. In 2002 De Novo Group Pty Ltd apparently another company associated with Mr Mondous sought a permit to erect a 60 resident aged care facility on the site. Yarra Ranges Shire Council as responsible authority under the Planning Scheme declined to issue a permit. An application for review to this Tribunal the following year was rejected by Member Quirk.
According to Mr Mondous, in 'early 2006' the tenant ceased paying the rent. Apparently she had de-camped. Tate-Louery & Dwyer took legal advice but ultimately elected not to take legal proceedings against the tenant. Rather it sought a new tenancy. In light of this Tribunal's refusal of a planning permit for a larger more economic facility, Tate-Louery & Dwyer initially put the complex in the hands of brokers to seek tenants for the property as a supported residential service without success. In 2007 Mr McCaffery, a consultant town planner sought a permit from the local shire to use the premises as a boarding house providing accommodation for agricultural workers. This proposal seems to have come to nothing. In late 2008 by a letter dated 16 December of that year Tate-Louery & Dwyer authorised a company known as Markham Care Pty Ltd to seek to obtain a minimum of 60 bed licences under the Commonwealth Aged Care Scheme in the expectation that if the allocation of licences were made to Markham Care, Tate-Louery & Dwyer would act as developer, construct the facility and lease it to Markham Care Pty Ltd. Again, this proposal seems to have come to nothing. In 2010 Tate-Louery & Dwyer sold the property.
As a result of the process of rate and tax adjustments relative to the conveyance, the Land Tax status of 42-44 Parker Road, Silvan came to the Commissioner's attention. Until the sale in 2010 the property had been treated as exempt from Land Tax in this taxpayer's hands.
As a result there were three assessments or re-assessments issued. The property was assessed for ordinary Land Tax in the years 2008 and 2009 and for Special Land Tax in 2005 under the provisions of Section 10 of the Land Tax Act 1958.
By virtue of Section 9(1)(k)

land which is occupied, or currently available for occupation, as -

was exempt from Land Tax. An exemption in similar terms is available under Section 76(1) of the Land Tax Act 2005.

It is common ground that when the buildings were occupied and operated by Ms Rangasami, the land qualified for exemption as being land 'occupied ... as ... a supported residential service'. The Commissioner took the view that this exemption ceased to apply on 14 October 2005. He reached this conclusion based on a letter dated 30 September 2011 addressed to one of the Commissioner's officers at the Compliance Branch of the State Revenue Office from the Victorian Department of Health which stated inter alia:

Silvan Country Cottage ceased to be registered as a supported residential service (SRS) on 14 October 2005.

It will be recalled that the registration certificate issued in 2003 was expressed to expire on 31 December 2005.

Special Land Tax is levied where exempt land ceases to exempt. The relevant provision of the 1958 Act is as follows:

(1) Where any land which is exempt from land tax by the operation of section 9(1)(b), (g), (h), (ha), (i), (k) or (l) or section 9A ceases to be exempt from land tax (otherwise than by reason of the coming into operation of section 9 or 9A (as the case requires)) a special land tax at the rate of five cents for each dollar of the unimproved value of the land or that portion of the land which has so ceased to be exempt, as the case may be, shall be payable to Her Majesty -

(a) in the case of land which ceases to be exempt immediately or within 60 days after a change of ownership, by the person who was the owner thereof immediately before such change of ownership; and

(b) in any other case, by the person who is the owner immediately after it ceases to be so exempt.

Mr Grace of Counsel appeared on behalf of the taxpayer. He submitted first that I should not accept as correct the assertion in the letter from the Department of Health officer relied on by the Commissioner. That letter was put into evidence only over Mr Grace's objection. He said even if it were allowed into evidence contrary to his contentions, I should treat the certificate which was also in evidence as part of the materials filed by the Commissioner under Clause 89(1)(b) of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998 as showing that the registration of the premises as a supported residential service persisted until the last instant of 2005, that is the last instant of 31 December 2005, the expiry date of the relevant certificate. He then took me to the transitional provisions to the Land Tax Act 2005 which repealed the 1958 Act. The effect was that the 2005 Act applied to the assessment of Land Tax from and after the 2006 year, that is from the first instant of 2006. Accordingly said Mr Grace, even if contrary to his primary submission which he developed later that the expiry or termination of the registration under the Health Services Act did not terminate the exemption, any termination caused by the end of the registration applied after the 1958 Act ceased to have affect. Accordingly, any assessment made under Section 10 of the 1958 Act was necessarily made without proper authority and should be set aside.
In any event submitted Mr Grace, during the relevant period nothing was done to render the nursing home complex unavailable for use as a supported residential service. Therefore, in the later tax years the exemption continued to apply. The evidence showed that the former caretaker of the establishment continued to live in the caretaker's residence albeit without performing any duties relative to a supported residential service. The complex was 'available for occupation' as a supported residential service whether it had current registration or not.

Mr Young of counsel appeared on behalf of the Commissioner. He submitted that since October 2005 the land had never been occupied as a supported residential service. Without any current registration it could not, he submitted, be regarded as 'available' for occupancy as a supported residential service at any material time. He submitted the fact that the property might have been available in the future or there might have been plans to render it available in the future or actually to occupy it as a supported residential service is not sufficient to attract the existence of the relevant exemption. He referred to passages in the judgment of Nettle JA as a judge of the Court of Appeal in Applewood Residential Development Pty Ltd v Commissioner of State Revenue [2006] VSCA 207; (2006) 64 ATR 291, 296 [20] and 299 [33].
Mr Young noted that Section 111 of the Health Services Act 1958 rendered it an offence for a proprietor of a health service establishment to carry on the establishment if it was not registered under the relevant part of the Health Services Act 1988. The definition of 'health service establishment' in Section 3 of the Act includes 'a supported residential service'.

It is a matter of annoyance and perplexity that the circumstances in which the registration of Silvan Country Cottage under the Health Services Act terminated remain uncertain. It would have been easy enough for either the taxpayer or the Commissioner to obtain a statement from a relevant officer of the department administering the statute or production of the file. I note however that the burden of proof in these circumstances lies on the taxpayer. See Section 26 of the Land Tax Act 1958. That being the case any deficiencies in proof must be redound to the disadvantage of the taxpayer. I believe there is no reason why I should not accept the evidence constituted by the letter of 30 September from the Department to the Commissioner that the registration terminated in October 2005. Mr Mondous' evidence was that Ms Rangasami stopped payment of rent under the lease 'early in 2006'. This was given as an approximation and without much pretence at exactitude. Mr Mondous did not purport in giving this evidence to have consulted the taxpayer company's books. It was just a vague impression. That being the case I do not regard his evidence as significantly at odds with the view that Mrs Rangasami was either evicted or de-camped in late 2005. The Health Services Act provides for cancellation of licences subject to a 'show cause' procedure and presumably registration can also be surrendered. In the circumstances I find that the registration of Silvan Country Cottage terminated in October 2005. Likewise I think it likely that this is when the occupancy of Mrs Rangasami came to an end. The question then becomes whether the land was 'available for occupation' as a supported residential service on and after that date. Mr Young made elaborate submissions as to the various things which he said were necessary before it could be concluded that land was 'available for occupation' as a supported residential service, by reference to the definitions in the Health Services Act. It is unnecessary for me to canvass all of those matters. The Australian Concise Oxford Dictionary gives as the primary meaning of the adjective 'available' 'capable of being used; at one's disposable within one's reach'. Given that we are dealing with a definition in a statute, that is part of the law of the State of Victoria, in my view the concept of 'availability', the question whether these premises were 'capable' of being used for the relevant purpose must be judged in light of the legal situation. Absent the certificate I do not believe that the premises could be said to be 'available' in the relevant sense. That being the case the exemption eased in October 2005 and the special land tax was properly levied. With the exemption having ceased in October 2005 likewise the exemption was not available and the other assessments were properly made.

Tate-Louery & Dwyer Pty Ltd v Commissioner of State Revenue

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Judgment (17 paragraphs)

Tate-Louery & Dwyer Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 160 (15 February 2012)

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