Saville & Ors. v. Commissioner of Land Tax (N.S.W.).

Judges:
Roden J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 27 August 1980.

Roden J.

I have heard together two summonses. Together, they represent four appeals by the plaintiffs against assessments made by the Commissioner of Land Tax. Those assessments are:

  • 1. No. 65659 of 1975
  • 2. No. 49679 of 1976
  • 3. No. 49719 of 1977
  • 4. No. 47976 of 1978

The defendant has raised the question of the competency of the last two appeals, the submission being that the plaintiffs are out of time and that there is no power in the court to extend time. The relevant provisions of the Land Tax Management Act are to be found in subsec. (1), (4) and (5) of sec. 35.

The relevant facts, so far as this issue is concerned, are as follows:

As to the 1977 assessment, the Notice of Assessment was issued on 24 April 1979, and addressed to the plaintiffs care Mr. D.J. Russell, P.O. Box 513 Albury, 2640. No objection was posted to or lodged with the Commissioner until 14 August 1979. The defendant with regard to that assessment seeks to rely upon the failure of the plaintiffs to post or lodge an objection within the time prescribed by subsec. (1) of sec. 35 of the Act.

As to the 1978 assessment, the Notice of Disallowance was despatched by the defendant on 6 May 1980 and received on 9 May 1980, the date which, as I understand it,


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it is agreed may be taken to be the date upon which it would have been delivered in the ordinary course of post.

The request to the defendant to treat the objection as an appeal was made by letter on 24 June 1980. With regard to this appeal, the defendant seeks to rely upon the failure of the plaintiffs to make such request within the time specified in subsec. (5) of sec. 35 of the Act.

Power to extend the time, both for lodging an objection and for requesting that an objection be treated as an appeal, is conferred upon the Commissioner by the provisions of sec. 35 of the Act, and there is no express provision conferring power upon this Court to extend the time for either purpose.

Mr. Timbs on behalf of the plaintiffs sought to rely upon the provisions of subsec. (4) of sec. 37 of the Act which reads:

``(4) On the hearing of the appeal, the Court may make such order as it thinks fit, and may reduce, increase or vary the assessment.''

He asked me to interpret the words ``may make such order as it thinks fit'' as including an order extending time for either or both of those purposes.

It was argued by Mr. Smart on behalf of the defendant that the jurisdiction here exercised is a statutory jurisdiction and that any power to enlarge time must be found in the relevant statutory provisions.

The proceedings before this Court in appeals of this nature are governed by the provisions of Div. 2 of Pt. 51A of the rules of the Supreme Court. It is significant to note that Div. 1 of that Part, which relates to certain other appeals to this Court, contains, but Div. 2 does not contain, an express provision empowering the Court to extend the time for the institution of an appeal. The only relevant provision, or at least the only provision that might be relevant, appears to be the general provision relating to extension and abridgement of time contained in Pt. 2 r. 3.

It is to be noted that subr. (1) of r. 13 of Pt. 51A requires that any person who makes a request pursuant to sec. 35(5) of the Land Tax Act ``shall at the same time file a summons''. The requirement that that be done ``at the same time'' is one which I should imagine is rarely if ever strictly complied with, and I have no doubt that any failure to comply with the strict terms of that provision could be overcome by the exercise of the Court's discretion under Pt. 2 r. 3.

The position regarding a failure to act within the prescribed time under subsec. (1) or (5) of sec. 35 of the Land Tax Management Act is, however, in my view a matter which cannot be cured by any extension of time which this Court might purport to grant under the provisions of that rule. The steps to be taken under subsec. (1) and (5) of sec. 35 of the Act are steps which it is necessary to take in order to impose upon the Commissioner the obligation to treat the objection as an appeal and to forward it to this Court. If those steps are not taken in the manner and within the time prescribed, then in my view no such obligation is imposed upon the Commissioner, and the matter does not come properly before this Court.

The Commissioner has appeared in respect of the 1977 objection. He has not forwarded the objection to the Court. In respect of the 1978 assessment, which he has forwarded, it has not been argued that by forwarding the objection to the Court he may be taken, impliedly, to have granted an extension of time, and indeed by letter of 4 July 1980, which is before me as part of Exhibit A, he informed the plaintiff's solicitors:

``I cannot accept the request to forward the objection as an appeal to the Supreme Court as it was not made within the time allowed by the statutory provisions.''

It may well be that, in the circumstances, it would have been appropriate for the Commissioner not to forward the objection to this Court and for any necessary question to be litigated by one party or the other seeking a declaration or by the plaintiff seeking an order directing the Commissioner to forward the objection to this Court. I do not regard the procedure that was followed as precluding me from determining the matter upon the basis of the view that I have formed that a taxpayer who fails to act within the time prescribed by sec. 35, and who does not obtain an extension of time from the Commissioner, has no matter properly before this Court.


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I turn now to the appeals in respect of the 1975 and 1976 assessments. It is useful first to make some reference to the subject land and to the circumstances surrounding its purchase by the plaintiffs, their intentions with regard to it and their use of it. Relevant surrounding circumstances include the following:

1. The land was purchased by the plaintiffs in 1969.

2. It is situated at Lavington on the outskirts of the City of Albury and it contains an area of approximately 49 acres.

3. The vendor from whom the plaintiffs purchased the property had used it as a dairy farm and was currently farming at the time when it was purchased by the plaintiffs.

4. It was at that time zoned non-urban A under Interim Development Order No. 7 of the City of Albury.

5. From the time of their purchase, the plaintiffs were anxious to sell the land in household blocks when zoning and other circumstances made that possible.

6. From 1 February 1970, the land was agisted to one Yovna Brundusic. The relevant agreement of that date provided that it was to operate until terminated by either party by giving six months' notice, and further provided that the plaintiffs by one month's written notice might reduce the area to which the agreement referred. There was a further agreement in similar terms, entered into, apparently, 12 months later.

During 1972, a son of Mr. Brundusic with his family went into occupation of a dwelling house on the property, and it was a term of that agreement that he would remove the dwelling house when and if it became necessary because of surrounding development. One or other or both of Mr. Brundusic senior and Mr. Brundusic junior depastured cattle on the subject land during the period of the residence of Mr. Brundusic junior in that house. This continued until the house was burnt in late 1974. Use of the land by the Brundusics for agistment purposes ceased when Mr. Brundusic junior left. The exact date when this occurred does not emerge from the evidence, but there may be some relevance in the fact that the income tax return of the plaintiffs for the year ended 30 June 1974 shows no income from agistment fees.

7. In the meantime, on 29 June 1973, the land was re-zoned residential A8. In June 1973 the plaintiffs caused to be prepared a plan for the subdivision of the land, and this was submitted to the Albury City Council for approval in principle.

8. On 25 September 1973, an amended plan of proposed subdivision was sent by the plaintiffs to the Albury City Council. This amended plan provided for the subdivision of the subject land into some 197 blocks with provision for roads and other reserves.

9. The intention of the plaintiffs at the time was first to subdivide and dispose of blocks around the perimeter of the land which was served by existing roads, and later to subdivide and sell blocks in the interior of the land.

10. In September 1973 the plaintiffs caused to be prepared a detailed plan relating to 42 perimeter blocks.

11. That plan was approved by the Albury City Council in February 1975 and was registered in July 1976.

12. During the second half of 1976, sales of 10 building blocks, being 10 of the 42 referred to above, were completed. There have been seven further blocks sold since then.

13. A number of factors, including a change in government policy towards Albury-Wodonga development, led to a diminution in the prospects for the proposed subdivision after it was embarked upon.

Those matters to which I have referred relate to some extent to the use of the land, and relate also to the intention of the plaintiffs with regard to its use. What is of direct concern for present purposes is the actual use to which the land was put, having regard in particular to the position as at 31 December 1974 and 31 December 1975 respectively for the purpose of the two appeals which I am presently considering.

The plaintiffs seek, in the case of each assessment, an order that the objection by the plaintiffs be allowed. The effect of such order would be to allow the plaintiffs an exemption from taxation under the Act. That exemption is claimed on the basis that the land was at the relevant time used for primary production in the sense in which that


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term is used in sec. 10(1)(p) of the Act. The plaintiffs assert, in the terms of the relevant part of sec. 3(1) of the Act, that the land at the relevant time was used primarily for the maintenance of animals thereon for the purpose of selling them or their natural increase or bodily produce. During the course of argument, a number of matters was raised regarding the meaning of that expression and the relevance of certain matters to it. With regard to those arguments, reference might conveniently be made to the following:

1. The meaning of the expression ``land used primarily for''. Consideration was given in argument to the question whether it is appropriate only to have regard to uses to which the land is put and to determine primacy among those uses, or whether non-use is a relevant consideration so that land use for one purpose only may still properly be regarded as not being land use primarily for that purpose. Strictly and grammatically, it would appear that the first of those interpretations is available. It would, however, lead to some absurd conclusions, it does not accord with interpretations that have been placed upon the Act in the past, and, as I understand it, ultimately at least, neither counsel contended for that interpretation.

I am of the view that, for any use of the land to justify the statement that the land is used primarily for that purpose, it is necessary not only that that use prevail over any competing use but also that it be sufficiently substantial to prevail over the proposition that the land is primarily to be regarded as unused land.

2. The relevance of intention with regard to use of the land. Basically, what is to be determined is the actual use of the land, and this of course may be quite different from any intention that the owners may have as to its later or ultimate use, or indeed any wish that the owners might have as to its use at that particular time. Nevertheless, it having been stated that, even where there is only a single use of the land, that fact alone does not necessarily establish that the land is used primarily for that purpose, I believe that intention is a matter to which regard can properly be had as a matter capable of characterising a use of the land in a manner which may not emerge from a consideration simply of the rate of activity or the area of the land actually used or the period for which it is used.

3. The position if the relevant date falls during an ``hiatus period''. If, upon the relevant date, there is no activity relating to any use or claimed use of the land, it is clearly appropriate to look both to the period prior to that date and to the period subsequent to it in order to determine the nature of the use of the land during that hiatus period, as it has been termed. Such a period can arise in any of a number of different circumstances. If land is allowed to lie fallow before and after periods of cultivation, that clearly, it seems, does not represent an interruption of the use of the land for the purpose of that cultivation, and the land can properly be said at that time to be being used for that purpose.

There can be a chance occurrence which causes the land to be unused in the sense that there is no relevant activity going on at any particular time. Such occurrence could be the disposal of the owner's entire stock which is being replaced, with the replacement stock not yet arrived. In such a case, again it seems clear that it would be proper to say that during that hiatus period the land was being used for that purpose.

The third situation in which there would be no activity is one in which a person gives up a particular use of the land for a period for a reason, with the intention of resuming it at a later date. If that were done it seems to me that, irrespective of the intention of the owner, it would be difficult to say that the land was being used for the purpose during that period of discontinuance.

Because of the different circumstances in which there may be a cessation of activity on land, it appears that whenever there is a cessation of activity, and whenever there is a claim that that represents an hiatus period, it would be appropriate to have regard to the intention of the owner or person in occupation of the land as to its future use. The same situation would arise in the event of there being a substantial reduction in the intensity of activity, even without a complete cessation in that activity, particularly if it is reduced to such a level that, having regard to it alone, one would not be prepared to say that the land was being used primarily for that purpose.


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Each of those matters is relevant to the matters presently before me.

In order to determine these appeals it is necessary first to have regard to the activity on the relevant land, which, it is claimed by the plaintiffs, represents a use of the land for the purpose specified. The evidence satisfies me that after the Brundusics left the land, there was very little use made of the land for the exempt purpose. Such use as there was relates to cattle owned by a partnership of the Howell family, and cattle owned by a Mr. O'Shaughnessy and his family. Having regard to the evidence concerning the use that was made of the land for purposes relating to that cattle, I am satisfied that that use can be properly characterised as slight, intermittent and spasmodic, and so slight that even looking at the position on the basis that there was no competing use, if that use is considered in isolation from the surrounding circumstances, it is not sufficiently substantial or intensive to support the proposition that the land was being used primarily for the purpose of primary production.

Mr. Smart on behalf of the defendant contended that the plaintiffs were not entitled to raise at the hearing of these appeals the proposition that the land was in fact used for agistment purposes, and that by reason of the manner in which the grounds were stated in the relevant Notice of Objection. It seems to me that the degree of detail required in the statement of grounds in a Notice of Objection for this purpose is a matter of degree. Regarded in one way, the proposition that the land was in fact used, represents a departure from the grounds as stated in the Notices of Objection. I have, however, taken the evidence concerning actual use of the land into consideration, as I regard its relevance as arising in this way, namely that it is evidence capable of supporting the plaintiffs' proposition that the cessation of intensive activity represented an hiatus period and that the plaintiffs' intention remained to use the land for the purpose upon which the plaintiffs sought to rely.

The plaintiffs' argument, as I understand it, is that at the relevant time the land was subject to such an hiatus period; that the plaintiffs' intention with regard to the land was relevant; that that intention was to restock the land, and that the reason for there being little or no activity at the relevant time was twofold, (1) that it would have been uneconomic for them to do so themselves, and (2) that despite their endeavours they were unable to find others who required the land for agistment purposes. It was argued that on the evidence I would find that the intention of the plaintiffs remained at that time to use the land for the purposes of primary production as and when that became feasible, and that it was the plaintiffs' intention for the time being to put it to no other use.

Plaintiffs' counsel submitted that where there was an hiatus period, a lesser degree of activity would be sufficient to satisfy the requirement that the land was used primarily for the relevant purpose. It was further submitted that when a particular use is competing only with non-use, less activity need be shown than when there is a competing use. As a general proposition I am of the view that each of those statements is valid, but they are only another way of saying that in determining this question of ``fact and degree'' all relevant matters must be taken into account, and that where there is a considerable degree of non-use, intention can and should be looked at as one of the matters capable of assisting in determining whether the slight actual use is sufficient, in all the circumstances, to give the land the required ``character''.

As is the case with all matters that are properly to be regarded as questions of fact and degree, a multitude of principles can be stated but none of them will necessarily be decisive. All criteria have to be considered, and there is no formula by which they can be weighed one against the other. In the final analysis, each case falls to be determined on its own facts. In this case, such use of the subject land for the purposes of primary production as there was at the relevant date was minimal and there was no competing activity. It accordingly is, in my view, appropriate to have regard to the intention and purpose of the taxpayers with regard to the land. Matters which in that regard are relevant are:

1. That the land was purchased and at all times maintained for the purpose of subdivision and sale.


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2. That when that was not possible for reasons of zoning and other reasons, the land was put to other use. Through the Brundusics it was used for the purposes of primary production, and although the question is not before me for determination, it is probably appropriate to say that at that time the land was being used primarily for purposes of primary production.

3. When the zoning disability was removed, and indeed in anticipation of the removal of that disability, activity commenced with a view to putting the land to its intended use.

4. Even while this was occurring during late 1973 and probably into 1974, the actual land use continued as before and the land probably retained the character established by that use.

5. When the O'Shaughnessys ceased using the land, certainly before 31 December 1974, this actual use of the land ceased.

6. Inasfar as purpose or intention is relevant, the plaintiffs' purpose or intention with regard to the land remained as it had been, namely to subdivide and sell.

7. Subsequently the plaintiffs were frustrated in that purpose. They also sought to restock the land and were frustrated in that endeavour.

If it were possible to give the land any character by reason of intended use, in my view at the material times use for the purposes of subdivisional development would prevail over use for primary production purposes on the basis of that background. It is, however, my view that the land in question at the material times was substantially unused, and that to such extent as to render it inappropriate to describe it as primarily used for any purpose.

In consequence the plaintiffs fail in respect of each of the appeals.

Each of the summonses, accordingly, is dismissed with costs.


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