Taylor v Lismore City Council

LEGISLATION CITED: Local Government Act 1993, s 526

Colby v Lismore City Council 30248 of1991; Costa v Lismore City Council 30181 of 1989; Hope v Bathhurst City Council [1980] 144 CLR 1; CASES CITED: Lismore City Council v Durheim 30182 of 1989; Meriton Apartments Pty Ltd v Parramatta City Council [2003] NSWLEC 309; Page v Parkes Shire Council 30090 of 1990

DATES OF HEARING: 14 March 2005 EX TEMPORE JUDGMENT DATE : 03/14/2005

APPLICANTS Mr and Mrs Taylor themselves LEGAL REPRESENTATIVES: RESPONDENT Mr J Beacroft, council officer

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

31537 of 2004: Ross Kenneth Taylor and Maree Lee Taylor v Lismore City Council

1 This is an appeal under s 526 of the Local Government Act 1993 in respect of the applicants' property at Howards Grass Road, Goonellabah. The property comprises lot 3, DP 212498, having an area of approximately 4.5 acres or 1.8 ha and lot 14, DP 551625 having an area of approximately 28 acres or 11.2 ha, together with an area covered by enclosure permit 40242. According a valuation notice relating to the subject land the total area of the land is 13.11 ha. The council rated the land as residential land but the applicants claim that the land should be rated as farmland. 2 I incorporate in my judgment the relevant portions of ss 516 and 526 of the Local Government Act 1993:

516 Categorisation as residential (1) Land is to be categorised as residential if it is a parcel of rateable land valued as one assessment and:

(a) its dominant use is for residential accommodation (otherwise than as a hotel, motel, guest-house, backpacker hostel or nursing home or any other form of residential accommodation (not being a boarding house or a lodging house) prescribed by the regulations), or (b) in the case of vacant land, it is zoned or otherwise designated for use under an environmental planning instrument (with or without development consent) for residential purposes, or (c) it is rural residential land.

526 Appeal against declaration of category (1) A rateable person who is dissatisfied with:

(a) the date on which a declaration is specified, under section 521, to take effect, or (b) a declaration of a council under section 525, may appeal to the Land and Environment Court.

(2) An appeal must be made within 30 days after the declaration is made. (3) The Court, on an appeal, may declare the date on which a declaration is to take effect or the category for the land, or both, as the case requires. 3 Evidence for the applicants was given by the applicants themselves in the form of affidavit evidence as well as oral evidence, and certain documents and books of account were tendered. 4 In considering all the evidence, I have been aided by a view of the subject land. 5 In his affidavit Mr Taylor stated that lot 3 was purchased by him and his wife in May 1987. Lot 3 as I mentioned has an area of approximately 1.8 ha. It includes the family home, but surrounding the curtilage of the family home is pastureland within that lot. 6 The other main part of the subject land, being lot 14, together with the area within the enclosure permit is the main pastureland of the subject land, which is largely cleared land. On my inspection, the grass was luscious and quite suitable for grazing. Lot 14 was purchased by the applicants with the express purpose of running cattle on it, together with using part of lot 3. Lot 14 was purchased in April 2003. 7 The applicants also manage another property located at least 60 km away from the subject land, and their partnership tax returns relate both to the other property which is at Billinudgel as well as to the subject land. 8 For the year ended 30 June 2004 the partnership return of the applicants indicates that for both these properties there was a total business income of $26,505 less expenses of $14,730 giving a net business income of $6,335. 9 Within the expenses was a substantial sum, relatively speaking, for interest of $3,158, which relates to interest on moneys borrowed for the purchase of lot 14. Nevertheless, as I mentioned, the interest amount was included in the expenses and still there was what would appear to be a substantial net income.

10 It is necessary, however, to separate out the income attributable to the subject land as distinct from income attributable to grazing activities on the Billinudgel property, and likewise to do so for the expenses. In Mr Taylor's affidavit he sought to do that, and he stated in February 2005 that for the preceding 12 months the income from the sale of cattle from the subject land totalled $12,398, and that the expenses during the same period were only $314.

11 During their oral evidence I drew to the attention of the applicants other expenses which would appear to be attributable to the subject land, and after my inspection of the properties with the parties a more detailed break up of the expenses was presented to the Court in exhibit F. One of the problems with exhibit F is that the expenses relate to a 12-month period running from, it would appear, a slightly earlier period than the actual income from sales of cattle. It is not clear to me exactly what that period would relate to, but it would appear to me to relate to a year surrounding the date at which it was requested the declaration be made as to whether or not the land was farmland.

12 Originally, the applicants had sought a declaration from 1 July 2003. The evidence does not establish that the applicants' land as at 1 July 2003 was farmland because the partnership return for that year discloses a loss. That loss would seem to be attributable to the fact that stock relating to the newly purchased lot 14 might not have been sold in the year ending 30 June 2003. But as I indicated earlier there was a substantial net business income from both the subject land and the Billinudgel property for the year ended 30 June 2004. Although the evidence is not altogether satisfactory, it seems to me likely that as at 1 January 2004 there would be a net profit received for the year surrounding that date, or at least from 1 July 2005, of $4,750 attributable solely to the applicants' property the subject of this appeal. This figure is derived from taking the sales that have occurred over a 12-month period amounting to $12,398 gross, and deducting all expenses (including a substantial amount for interest) of $8,898, giving $3,500.

13 However, within those expenses the amount for rates was the amount that would be payable for a residential rating categorisation. The appropriate amount would be a farmland rate of approximately $1,150, and so if that figure is used instead of $2,500, as rates, the figure of $4,850 is arrived at as the net profit attributable only to the subject land, and excluding income and expenses relating to the Billinudgel property.

14 Originally, lot 3 by itself could not have been held to be farmland. Its dominant use would have been for the purpose of a residence. However, once lot 14 was added together with the area of the enclosure permit, there was a substantial increase in the area of the subject land, which then totalled 13.11 ha.

15 I am of the opinion that the dominant use of the subject land is now for the purpose of the business of grazing.

16 In Hope v Bathurst City Council (1980) 144 CLR 1 at pp 8-9 Mason J considered the meaning of the expression "carrying on the business of grazing." His Honour said "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 basis."

17 The applicants have certainly been carrying on such a business. I did not refer earlier to the time that is spent by them in relation to the subject land alone. That is deposed to in the affidavit of Mr Taylor. Mrs Taylor also said in her affidavit that she helps out in the management of the cattle operations, as does her eldest son (17 years old). Admittedly, Mr Taylor is employed elsewhere for 21 hours a week, and also is engaged in some work on the other property, but it would appear that his other time is spent in relation to the subject land where his residence is also located, and where he can attend to the needs of the grazing business that the applicants conduct there. The good condition of the subject property for grazing purposes indicates that the subject land is well maintained for the business. 18 The issue is, however, whether the grazing business has a significant and substantial commercial purpose or character. 19 I was referred to three cases by Mr Beacroft, who appeared for the Council, namely, Colby v Lismore City Council 30248 of 1991 Assessor Watts, 31 July 1991; Costa v Lismore City Council 30181 of 1989; Assessor Andrews, 4 December 1989; and Page v Parkes Shire Council 30090 of 1990 Cripps J, 26 February 1991. 20 In each of these cases it appears that there was a loss incurred in each of the relevant years that were considered. Page is also distinguishable on its facts from the present case insofar as I do not have details as to the nature or quality of the land in that case, whereas I have referred to what appears to be the good quality grazing land of the subject land. In addition, the subject land is larger than the 7.2 ha that was being considered in Page. 21 On the facts of this case, I am of the opinion that there is genuine primary production occurring from the subject land; and that there is a significant and substantial commercial purpose or character involved in the business insofar as it relates only to the subject land. I do not think that this finding of fact is contrary to the decision of Bignold J in Lismore City Council v Durheim 30182 of 1989, 20 July 1990. 22 It is important for the applicants in future years to ensure that business records clearly distinguish between expenses and incomes attributable to the subject land, as distinct from the other property that they manage, even though for tax purposes a consolidated return can be made for the partnership. This will establish then for the benefit of the council (if it should so wish to inquire) as to whether or not the significant and substantial commercial purpose or character of the business relating to the subject land is in fact continuing, which on the evidence before me seems likely to occur. But I cannot judge future years and it will be a matter for the council to consider subsequent years. 23 In accordance with the decision of Meriton Apartments Pty Ltd v Parramatta City Council [2003] NSWLEC 309 the Court has a wide discretion as to the declaration of the date on which the categorisation of the land is to change. There was some discussion during the hearing and it seems to me that the date of 1 January 2004 is an appropriate date on which to declare the subject land to be farmland. 24 Accordingly the orders of the Court are: (1) The appeal be upheld. (2) On and from 1 January 2004, lot 3 DP 212498, lot 14 DP 551625, together with an area covered by enclosure permit 40242, at Howards Grass Road, Goonellabah, is to be categorised as farmland, and such categorisation shall continue until such time (if any) that a subsequent declaration of another category may be made by the council. (3) The exhibits, other than exhibits B, F and C, may be returned. ___________ A J Nott Commissioner of the Court rjs

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