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SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

COMMISSIONER OF LAND TAX v SHENNEN, RICHMOND & CHRISTIE

Jacobs P Hutley and Bowen JJA

12 December 1973 - Sydney

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Hutley JA    The resolution of the issues in these three appeals involves the proper construction of the provisions of s   9(3)(e) of the Land Tax Management Act 1956 (NSW), the relevant part of which is in the following terms:

   

" Where, as at midnight on 31 October 1970 or any succeeding year, land owned by a person is used and occupied by that person solely as the site of a single dwelling-house as defined in subsection   (9) of s   160C of the Local Government Act 1919, or is held in trust by that person for another person and is used and occupied by that other person solely as such a site. "

   It is expedient to deal with the respective contentions as to the proper construction and then apply this construction to the facts of each case.

   The critical question is what is meant by occupying and using land as a site. It is conceded that this does not confer a deduction only in respect of the area enclosed by the foundations of the dwelling house; the actual area of the house and the land around it reasonably necessary to permit the dwelling house to be used for dwelling was the land entitled to the deduction given by the paragraph.

   The Commissioner relied on the judgment of Herron J in Royal Sydney Golf Club v Federal Commissioner of Taxation (1942) 6 ATD 235 at 242 in support of his submission. His Honour ' s language was very tentative; he said: " However, it appears to me that the site is not limited to the land upon which the walls of the building stand, and it would extend to the lands reasonably necessary to the use of the building as a club house. It would include a reasonable area for parking and garaging motor cars, a reasonable area of lawns and gardens immediately adjacent to the club house, and the area used for a drive way " and his Honour was not directing his attention to the problem which this Court has to consider, namely, what are the outer limits of a site, he was merely rejecting the submission which would have confined to the building itself the exemption from land tax.

   In any event I do not consider that any assistance can be gained from cases concerning parts of sporting complexes. The present exemption is concerned with home sites, a well known though difficult to define concept, limited in certain ways (a) upon the site there must be a single dwelling as defined and (b) occupation as a single dwelling must be the sole use of the site.

   The legislature could hardly have intended to prescribe so unpractical a test as was contended for by counsel for the Commissioner, eg, the reasonably necessary area would depend upon the type of construction of the building and the way in which services were provided. The deduction might depend in part upon the way in which the house was connected to the sewer, or to the water supply, or where in relation to the house the absorptive qualities of the soil dictated the siting of the septic tank. If the water and sewerage lines for a deep block came from the rear the land traversed by such lines would be reasonably necessary to permit the land being used as a dwelling. It could mean that in a single street containing what would be properly classed as home sites, all of the same area and all with the same unimproved value, some owners would have a deduction and some would not.

   Though in most cases by merely looking at the area, nature of the land and the locality one can say that a block is a home site, the way the land is used may determine the issue in a borderline case.

   Ordinarily, having regard to the realities of life in the metropolitan area, two or three acres would be too large an area to describe as a home site but, if, for example, the owner has landscaped the whole area and planted it with ornamental trees and shrubs one could describe this area as the site of his dwelling house, and he would obtain the benefit of the paragraph provided he complied with the other conditions.

   On the basis that this provides the proper test, I propose to consider the facts in each of these three appeals. In each, the Commissioner appeals against the decision of a single judge that the owner is entitled to the deduction provided for in the paragraph. Commissioner of Land Tax v Christie:

   This is an appeal from the judgment of his Honour, Mr Justice Nagle, given on 25 May 1973.

   The land has a frontage to Noonbinna Crescent, Northbridge, and consists of four contiguous lots having a frontage of 120 feet and a depth of 407 feet on the eastern side, and 330 feet on the western side; the northern boundary is a creek. The fact that the land consists of four lots and is contained in two certificates of title I consider quite irrelevant in relation to the problem facing the court. The house erected on the block is on Lots 12 and 13, this being dictated by the topography and the availability of services. There is some development on Lot 14 and some clearing on Lot 15. The rear of the area is steep and has been left in its natural state, the owner stating in evidence: " Frankly, I have only gone down that area about half a dozen times in the twenty years I have been the owner of it. " His Honour found: " Lots 12 to 15 are an entire area undivided by any physical delimitation upon which the appellant has chosen … to build his home, erect a barbecue and place rails for the protection of his family and guest. The remainder of his land he has left in its natural state to enjoy with and as part of his house. " In my opinion this land clearly constitutes a home site and nothing but a home site. There can be no doubt that there is only a single dwelling upon the site and that unless the land is not used at all, use and occupation as the site of a single dwelling is the only use to which the land is put.

   It was contended that in this case the rare occasion upon which portions of the land had been visited by the owner and his family proved that the land was not used and occupied solely as a home site. It is possible for land to be neither used nor occupied by the owner; thus in Commissioner of Taxation v Trustees St Marks Glebe [1902] AC 416 it was held that in respect of those portions of the glebe which the trustees had let they were neither using it nor in occupation of it, and the lands which were not let were neither used nor occupied for any purposes, but it would only be in a most exceptional case that one could properly characterize part of a dwelling house site as not being used.

   If it is a true site, it is used and occupied simply by virtue of the fact that it is a site for a home. His Honour found that Christie used the land by leaving it in its natural state. In my opinion, it is not only possible so to use land but the evidence establishes that this was the use in this case.

   In my opinion this appeal should be dismissed with costs. Commissioner of Land Tax v Shennen:

   This is an appeal from a judgment of Else-Mitchell J given on 2 May 1973.

   The facts in this case are similar to those in Christie ' s case. The land consists of three lots having 198 feet frontage to Harvey Street, West Seaforth, and a depth of 184 feet. The land is contained in a single certificate of title and for reasons stated before I do not consider the fact that it is in three lots or the state of the title are relevant considerations. The general terrain is rough and precipitous; the house and the surroundings developed are principally in the centre lot but extend over into Lot 54. There is also a substantial part of the area left in its natural state, though there is evidence that the owner has taken steps to improve the native bush.

   Though there are three lots, the land clearly constitutes a single home site, and it is solely used and occupied for this purpose. In my opinion this appeal should also be dismissed with costs. Commissioner of Land Tax v Richmond:

   This is an appeal from a judgment of Else-Mitchell J given on 10 May 1973.

   The land in question has a frontage of some 245 feet to Hastings Road, Castle Hill, and a depth of 890 feet, the area in all being about five acres. The land is situated in a rural area by virtue of the County of Cumberland Planning Scheme Ordinance, with the result that it is incapable of subdivision into any area of less than five acres, and a dwelling house cannot be erected in such a zone on a parcel of land of any smaller area.

   An area of land of this size cannot, in my opinion, be readily described as constituting a home site so that prima facie the paragraph would not apply to it. However, the manner of its use may make it a home site.

   In this case there is a residence erected 155 feet from the street, also a garage and feed-shed behind the residence, and the land is used for grazing two horses used for recreation and enjoyment of the family, particularly the children.

   The whole of the area is fenced and in addition there is internal fencing at the rear of the shed so that the property is divided into two parts. The owner contemplates running a small number of beef cattle on the property at some future time.

   His Honour stated that the fact that the land could not be subdivided was the significant though not conclusive factor in the determination of the question of fact required to be made under s   9(3)(e) . In my opinion the question as to whether or not it is possible to subdivide the land or whether it has been subdivided is a factor of no relevance in determining whether a particular area of land comes within the paragraph. The question of whether something is or is not the site of a home does not depend in any way upon whether a minimum area into which the land can be divided has been fixed.

   Once it is accepted that the fact that the site is already subdivided is not a relevant consideration, the fact that the site cannot be subdivided ceases to be a relevant consideration. If this very area has been subdivided prior to the coming into effect of the County of Cumberland Scheme so that two houses could have been erected thereon, it would not, in my opinion, have made any difference. If, for example, development restrictions prescribe that land could not be subdivided into blocks of less than 100 acres upon which only one residence could be erected, this would not make the 100 acres a site for a single dwelling house. Admittedly his Honour described it only as a factor, but if it is a factor it is hard to see why it is not a conclusive factor unless the land is in part used and occupied for some other purpose.

   It is necessary in all cases where the area is not on the face of it a home site in the conventional understanding of the word to look at the way in which the property is used. In this case his Honour has found that the whole area is used as a home site because it is used as a grazing area for the children ' s horses.

   Though, in my opinion, this is an extreme case, stretching the concept of a home site to its outer limits and perhaps beyond, I am not prepared to maintain my doubts as to the correctness of the decision of the trial judge against the firm opinion of the other members of the court.

   The appeal should be dismissed with costs.