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SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION

GREENVILLE PTY LTD v COMMISSIONER OF LAND TAX NSW

HELSHAM CJ

22 March, 1977 -

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Helsham CJ    Until very nearly the end of 1974 Riverwood Golf Course Pty Ltd, now Greenville Pty Ltd, owned land at Hammondville near Sydney upon which it conducted a golf course known as Greenwood. It then closed down the golf course and commenced to use the land for growing pumpkins and other activities. It was assessed to land tax for 1975 as the owner of the land comprised in the golf course, but claims to be exempt because at the relevant time the land was used for primary production. The facts are not in dispute. The question of whether the company was properly assessed to land tax is.

   The company at all relevant times owned and conducted two golf courses. Greenwood was purchased in 1949, laid out and prepared as a golf course, and began operating about five years later. It operated successfully for a while, catering solely for the social and public golfer. However, it became uneconomical to run, largely through the competing attractions of a number of other golf courses in the neighbourhood which, as licensed clubs with clubhouse facilities, poker machines and liquor sales, were able to attract more custom and more finance and to absorb better rising costs of maintenance. The directors of the plaintiff decided that Greenwood would have to be closed; engagements made it impossible to do so before 22 December 1974.

   Faced with the economic necessity of closing the golf course, the directors investigated alternative uses for the land. It is not difficult to infer from the evidence that the one they chose was one that might give the company relief from land tax as well as produce an alternative source of income. Market gardening was decided upon, with an intention to preserve fairway areas for prospective turf sales. The presence of two dams and irrigation facilities for golf course purposes no doubt aided the choice. It was realized that cattle raising was also a possibility. Investigations as to the feasibility of these various activities were made before the golf course was closed.

   On 23 December 1974, the day after the closure, there commenced a flurry of activity, the reason being not difficult to find. Some one and a half acres was ploughed up and worked over and pumpkin seed planted; irrigation was brought to the patch and, it is said, the seeds had sprouted before the end of the year. Perhaps they did. That is a little difficult to accept in the light of the evidence of Mr Whitely, who was the employee of the company engaged in getting this crop in. But it does not matter anyway. The court was never told how many pumpkins were harvested or picked or whatever one does with pumpkins; the crop virtually failed - the whole of the seeds used had produced male flowers. Another crop of pumpkins was planted in the following November - but the cattle were let in to eat these up. Those cattle were bought in December 1975 - obtained cheaply, too. Something like 7 acres of turf was sold off in September 1975.

   The area of the golf course comprises about 160 acres. Swamp land takes up about 33 acres of this, timber and dams about 15-23 acres; fairways accounted for about 70 acres; presumably the land between the fairways accounted for the balance perhaps one should not infer much from the director's remark (transcript p 4): "Then there is the area between the fairways; it is hard to know when it stops being bush and becomes fairways".

   Land tax for each year commencing on 1 January is charged on land owned at midnight on the preceding 31 December. Section 10 exempts certain land from taxation; subs (1)(p) does so in respect of taxation payable for the year in question in respect of land used for primary production (the plaintiff was not a company prevented by the subs from taking the benefit of it). It is agreed that the land must be used for primary production at the relevant time, that is to say 31 December preceding the year in question - here 1975. "Land used for primary production" is defined as meaning: "… land used primarily for - (a) the cultivation thereof for the purpose of selling the produce of such cultivation;". There are other categories of use but they are not relevant in the present case.

   The plaintiff claims that the whole land is exempt, not merely the one and a half acres.

   The only question argued was the extent of the use as at 31 December 1974, and whether the extent of the use was in all the circumstances such that it could be said that the whole land was used primarily for cultivation for the purposes of selling the produce of such cultivation; presumably the Commissioner was content to regard such cultivation as there was as being for that purpose and not for some other.

   I think the only question to be decided here is this: can it be said that land most of which is not being used at all is used primarily for the cultivation of it for the purpose of selling the produce of that cultivation if a very small part of it is under cultivation? Another way of putting the question I suppose is: when does land which is not being used at all become land used primarily for cultivation? The plaintiff would have the court answer the first question: yes, and the second question: as soon as any cultivation commences.

   As counsel for the plaintiff conceded, whether land is being used for primary production within the meaning of the definition must be decided by an objective test - the inquiry is an inquiry into actual land use; it is not to be tested by the intention of the owner (cf Southern Estates Pty Ltd v FC of T (1967) 117 CLR 481; 10 AITR 525). And in applying that test one must adopt a broad approach and a commonsense one. For example, it would not be sufficient merely to look at the area actually under cultivation at the relevant time, if cultivation were being relied upon as the use, so as to ascertain whether for example more than half of the whole of the land was under cultivation - because of course, the part not under cultivation might be unusable or lying fallow, although in the latter instance fallow land might be regarded as passive use of land similar to the kind that was held to be a use in Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493; [1957] ALR 277, and akin to the kind of use to which Lord Denning referred when giving examples in his judgment on the appeal from that decision, reported in 100 CLR 1; [1959] 1 All ER 734. It would probably not be sufficient to look merely at the financial return from the cultivation; the fact that there was none would not of itself warrant a finding that the land was not used primarily for cultivation, nor would the existence of a more rewarding cottage industry carried on by the owner on the land at the same time. Likewise the quantity of produce of the cultivation taken from the land would not of itself be a determinant of its primary use. The matter will be one of degree in each case. To claim an exemption under the Act the owner must be able to point to an activity being conducted on the land that will give the land the character of being mainly used for that activity, or that will enable a person having to decide the matter to say that the land is, in substance and looked at as a whole, being used for an activity that gives rise to an exemption.

   I do not think the question: what is the main use of the land, is to be answered by pointing to the only activity on the land. An activity going on on the land does not necessarily characterize the use of the land taken as a whole, so that one can say the land is used primarily for that activity. That is evidently a correct proposition if there is more than one activity going on on the land; it does not cease to be correct where portion of the land is not being put to any use. It may follow that one activity being conducted on land means that the land is used primarily for that activity; but it does not necessarily follow. And for the plaintiff to succeed here it must necessarily follow.

   For in no real sense at all was the land in question here being used at the relevant time primarily for cultivation. The owner, had, by the relevant date, managed to get ready an acre and a half out of a total usable area of about 130 acres, and to plant pumpkin seeds. The evidence makes it clear that to get the land ready and to water the seeds the owner was even able to use the golf course equipment and machines and use the water and irrigation equipment already there for golf course use. I do not regard the use of that portion of the property for pumpkin growing as requiring or indeed enabling the finding that the land was used primarily for the cultivation thereof for the purpose of selling pumpkins. If it was a real use, rather than a token or colourable one, as I must assume it was, the degree of use does not in all the circumstances and at the relevant time endow the land comprised in the golf course with the character of being used primarily for growing pumpkins, nor enable me to say that in substance and looked at as a whole the land was being used for this activity.

   Mr Young, in reply, submitted that actual use was not necessary, and that it was sufficient if the land was devoted to use for cultivation. This is reminiscent of an expression used by Taylor J in his reasons for judgment in Council of the City of Newcastle v Royal Newcastle Hospital, supra, at 515. I am not sure that I understand what it means. However, Mr Young only employed the word in suggesting that it is not necessary to restrict the consideration of what use is being made of the land to the precise moment of midnight on 31 December. But if one considers the question of use as depending on whether the land had, at the relevant time, been turned over to cultivation or to some other activity, then I do not think it affects the result here. This land, as a whole, had no more been turned over to the growing of pumpkins at the relevant time than it had been used to grow them.

   The summons did not seek any order that the one and a half acres should be separately assessed and no argument was put by the plaintiff that this course should be taken, if it could be.

   The summons will be dismissed.