St. George Leagues Club Ltd. v. Commissioner of Land Tax (N.S.W.).Judges:
Supreme Court of New South Wales
These proceedings were begun by two summonses which are being heard together. The question which the summonses seek to bring to this Court is the liability to land tax under the Land Tax Management Act 1956 as amended for the years 1972 to 1975 inclusive of two areas of land owned by the plaintiff, the St. George Leagues Club Limited (to which I shall hereafter refer as ``the Club'').
The two properties are respectively situated at Windang Rd., Wollongong and River Rd., Baulkham Hills. The Wollongong property is used as a caravan park for members of the Club; the Baulkham Hills property is used by the water-skiing enthusiasts of the Club who have, within the Club, formed themselves into a water-ski Club.
The first summons relates to the assessment of land tax made by the Commissioner on the two properties for each of the years mentioned. The notices of those assessments were each issued on 5th March 1980. The Commissioner assessed both properties liable to land tax. The Club, pursuant to sec. 35(1) of the Act, objected to each assessment claiming that each property was wholly exempt from tax pursuant to sec. 10(1)(g)(iii) and the Commissioner, having considered this objection pursuant to sec. 35(3) gave notice to the Club on 28th September 1982 pursuant to sec. 35(4) that the objection in respect of the Baulkham Hills property was wholly allowed (so that no tax was payable) and that the objection in respect of the property, Windang Rd., Wollongong, was partly allowed. In the case of the latter property he advised that he would seek a valuation by the Valuer-General pursuant to sec. 54(1)(d) and (1B)(ba) of the Act so that he could assess the tax payable.
The Club, being dissatisfied with the partial exemption given to the Wollongong property and claiming that it was wholly exempt under sec. 10(1)(g)(iii), requested the Commissioner, pursuant to sec. 35(5) to treat the objection as an appeal and forward it to the Supreme Court and this was done. At the same time, pursuant to Pt. 52 r. 13 of the Supreme Court Rules the Club filed a summons claiming that the objection be allowed and joining the Commissioner as defendant. The summons was filed on 27th October 1982.
Notwithstanding that there was on foot an appeal governed by the provisions of sec. 37 of the Act (and I shall refer later to the provisions of that section); the Commissioner, by letter dated 1st December 1982 sought to vary his decision of 28th September 1982 which gave full exemption to the Baulkham Hills property and partial exemption to the Wollongong property by advising that both properties were wholly liable for tax under the Act as per the assessments he had earlier made.
The Club then appears to have treated this decision as a further decision under sec. 35(3) of the Act and, having objected, requested, pursuant to subsec. (5) of that section, that its objection be treated as an appeal and forwarded to this Court. This was done, and on 24th December 1982, the Club issued its second summons in these proceedings. That summons sought the following two orders:
- (1) An order that the objection of the plaintiff dated 24th December 1982 to the purported variation or assessment dated 1st December 1982, for the years 1971/72, 1972/73, 1974 and 1975 for the property Item 6 Part Portion 43 River Road, Baulkham Hills then owned by the plaintiff be allowed.
- (2) An order or declaration that the Commissioner for Land Tax has no legal power to vary by letter dated 1st December 1982 the allowance of objection by letter dated 28th September 1982 for the said property Item 6 Part Portion 43 River Road, Baulkham Hills.
In the result then, this second summons is seeking to appeal against a purported variation of a decision made in respect of the original assessment, which decision is itself the subject of the appeal under the first summons.
The first question which arises is whether the purported variation by the letter of 1st December 1982 of the decision given in the letter of 28th September 1982 - that being a decision under sec. 35(4) - is of any legal consequence.
In my opinion the Commissioner is precluded from altering any decision made by him pursuant to sec. 35(3) after an appeal has been instituted in this Court pursuant to sec. 35(5). The plain intention of the appeal provisions is that after the appeal has been initiated under sec. 35(5), the Court shall decide upon the correctness or otherwise of the Commissioner's decision and, having decided, shall act under sec. 37(4), that is, ``may make such order as it thinks fit and may reduce, increase or vary the assessment''. That section, to the extent that it refers to reducing, increasing or varying the assessment, contemplates that the Court will in any of those events, by its orders, alter ``the assessment'' and the assessment referred to is the original assessment or, if it has been reduced by the Commissioner after considering the objection, the reduced assessment (sec. 37(3)). The intention of sec. 37 is, in my view, that if the Commissioner's decision is favourable and results in reduction of the liability stated in the assessment he will then assess the tax payable and that that assessment will be before the Court on the appeal. That then becomes ``the assessment appealed from'' (sec. 37(5)). If the decision on the objection is not favourable the original assessment is the assessment appealed from. In making the reduced assessment the Commissioner will be exercising the power given to him by sec. 16 to amend an assessment. The Act, it is to be noted, does not require that an assessment be in any particular form, and there is only one assessment in respect of all the land owned by the taxpayer at the appointed time (sec. 14). The absence of the reduced assessment at the appeal will not of itself, as the counsel for the Commissioner quite properly conceded, render the appeal incompetent. In a case such as the present, where the decision to exempt part of the land requires a valuation of that part of the land requires a valuation of that part of the land pursuant to sec. 54 of the Act, the assessment can only be made after the valuation is made and this may take some time, but that need not in most cases prevent the question raised by the objection being determined by the Court.
It follows from the foregoing, that for all purposes, the Commissioner's letter of 1st December 1982 advising the Club that the decision of 28th September 1982 was varied, was of no effect and the plaintiff is entitled under the second summons issued by it to a declaration to that effect.
It will be recalled that the first summons was issued to challenge the Commissioner's decision on the objection lodged by the Club to the original assessments, that decision being that the Wollongong land was only partly exempt and not wholly exempt as the Club claimed but that the Baulkham Hills property was wholly exempt. As the Commissioner allowed total exemption in respect of the Baulkham Hills property, it was not necessary for the Club, in its summons, to ask for any more than an Order that its objection to the assessments for the years in question, so far as they related to the Wollongong property, be allowed. If there were nothing more, the next step in the
ATC 4740present proceedings would be to consider whether the Commissioner was correct in exempting only part of the Wollongong land or whether the whole of the land should have been exempt. In the present case, however, the Commissioner had made it clear from the fact that he sought to vary his decision on the objection lodged, as earlier set out in this judgment, that he was of the view that neither property was entitled to any exemption at all, and his counsel asserted that view at the commencement of the proceedings. In the result the liability of each property in whole or in part to tax, has been argued before me by counsel for both parties.
In the ordinary course of events, where the Commissioner's decision on an objection is to allow it or allow it in part, the Commissioner, in this Court, does not resile from the decision which he has made and the Court proceeds to consider the matter by reference to the objection lodged. The present case is therefore quite different, and a preliminary question arises as to whether it is open to the Commissioner in such circumstances to submit to the Court that the decision under sec. 35(4) which he has made is incorrect and that the original assessment should stand.
In my view, for reasons I now give, this course is open to him although one might hope that it will be a rare case, in which the Commissioner, having decided that an assessment should be reduced, later comes before the Court to contend to the contrary. It is firstly to be observed that sec. 16 gives the Commissioner power of his own motion or upon the application of the taxpayer to amend any assessment "by making such alterations in or additions thereto or such further alterations in or additions thereto as he thinks necessary to ensure its completeness and accuracy". (The emphasis is mine.) The prime objective of the Commissioner on the matter of assessment may thus be seen to be the bringing into existence of an assessment which is complete and accurate, i.e. which states the extent of the tax liability as the Act intends. The words of Isaacs J. in
W. & A. McArthur Ltd. v. F.C. of T. (1930) 45 C.L.R. 1 at p. 10 are, if related to land and not a business, in my view, wholly appropriate to the Commissioner's powers under the Act with which I am concerned here:
``There must be an assessment for each year in respect of every business to which the Act applies, be it right or wrong. If right, it must be enforced; if wrong, it must be corrected or declared wrong. Its existence cannot be administratively annihilated, but it may be altered from time to time until the Court finally declares the mutual rights of the Crown and the taxpayer.''
It will secondly be noted that sec. 37(4) expressly gives the Court power to ``increase'' an assessment, and it stipulates no qualification of this power. I am unable to give any significance at all to the word ``increase'' in this section of the Act unless it implies that the Court, irrespective of any decision of the Commissioner under sec. 35 is empowered nonetheless to assess the tax payable and increase the amount of duty beyond that assessed to make the assessment of a proper expression of the provisions of the Act. The conclusion I think is fairly open that the legislature contemplates that the Court will in fact give a decision on the evidence before it which carries out the provisions of the Act, and that if it is apparent from the evidence before the Court that the Commissioner is mistaken in a view he has taken, whether favourable or unfavourable to the taxpayer, the Court will give that decision which should have been given. This approach carries with it, of necessity, the conclusion that if the Commissioner wishes to contend before the Court that he has erred in some respect in making the assessment (whether the original assessment or a reduced assessment) so that the amount of tax payable should be greater, the Court will receive his submissions. The requirement, however, that the Court shall, on the evidence before it, ``reduce, increase or vary'' the assessment so as to bring into existence an assessment which is ``complete and accurate'', has a consequence in regard to the application of sec. 37(2) of the Act. That section provides that the taxpayer is limited on the hearing of the appeal to the grounds stated in its objection, but it must, however, be read in the light of the overall purpose of the Act that the taxpayer shall pay the tax which the Act provides for, no more and no less. When, therefore, the Commissioner comes before the Court and claims that he has erred in making a decision favourable to the taxpayer on the taxpayer's
ATC 4741objection (whether he has issued a reduced assessment or not) and claims that a greater amount of tax is payable than his decision would require, it seems to me that the taxpayer should thereby be regarded as free of the restriction placed upon him by sec. 37(2), and be entitled to rely upon any ground of exemption or circumstance which is relevant to the question of the proper amount of tax payable. In other words, the matter of the liability of the land to tax and the amount of tax is then at large. Justice between the taxpayer and the Commissioner in my view requires that in that situation sec. 37(2) should have no application (and I do not mean necessarily to be suggesting that that would be the only situation in which sec. 37(2) should have no application). The extent to which sec. 37(2) is to be rigorously applied generally, need not be considered here but I would refer to my remarks in
Pro-Campo Ltd. v. Commr. of Land Tax (N.S.W.) 81 ATC 4270 at p. 4280 where I said:
``The Act does not give any power to the Court to amend a notice of objection. In
Molloy v. F.C. of Land Tax (1938) 59 C.L.R. 608 the Court considered sec. 44M(3) of the Land Tax Assessment Act, 1910-1934 which is in the same terms as sec. 37(2) of the New South Wales Act. In the judgment of the Court (Latham C.J., Rich J., Starke J.) at p. 610 the following appears:
- `Section 44M(3) is a positive statutory provision that upon appeal the taxpayer is limited to the grounds set out in the notice of objection. This we regard as an imperative direction to the court, not as a provision merely for the benefit of the commissioner which he is in a position to waive. The provision is made for the purpose of protecting public revenue, and the court is bound to give effect to it.'
Whether the same view would be taken of the section if the matter came up de novo today might be regarded as doubtful, but I am bound by that decision and must apply it. However, it has been held that grounds of objection should not be construed narrowly or technically (
Heath v. Commr. of Land Tax (N.S.W.) (1964) 81 W.N. (N.S.W.) (Pt. 1) 409 at pp. 415-416;
S.E. McCutcheon v. Commr. of Land Tax (1974) 4 A.T.R. 628 at p. 635) and the words of Windeyer J. in
White v. F.C. of T. (1968) 15 A.T.D. 89 at pp. 102-103; (1968) 120 C.L.R. 191 at p. 212 should always, in my view, be borne in mind. His Honour was there considering sec. 190 of the Income Tax Assessment Act, 1936-1966, which is in the same terms as sec. 37(2) of the New South Wales Act, and said:
- `If facts fairly given in evidence within the scope of the objection showed that the taxpayer was entitled to an allowable deduction, and that this had not been allowed in making the assessment, I do not think that the Court should confirm the assessment expressly or by implication.''
The fact that the Court has a duty, on the evidence before it, to come to the conclusion which the terms of the Act require, so that when the Commissioner resiles from his earlier decision or assessment the taxpayer may go outside the grounds of objection stated by him, has a particular significance in this case. For the evidence shows that after the Commissioner had purported to vary his decision of 28th September 1982 the taxpayer not only objected to this but claimed that the Baulkham Hills property was exempt under sec. 10(1)(h). In the result, the claim has been made before me that that property is exempt under sec. 10(1)(g)(iii) and 10(1)(h).
The case thus now stands that the Commissioner has claimed that neither property is entitled to any exemption from the full amount of tax payable on each property as assessed in the original assessments and the Club has claimed (i) that the Baulkham Hills property (which the Commissioner in his notice of decision of 28th September 1982 acknowledged was exempt) is wholly exempt under either sec. 10(1)(g)(iii) and/or 10(1)(h), and (ii) that the Wollongong property (which the Commissioner in his notice of decision held to be partially exempt) is also wholly exempt under sec. 10(1)(g)(iii).
Let me now deal with the Baulkham Hills property. I have already held that by reason of the Commissioner resiling from his decision to exempt these lands from tax the Club is not restricted to contending exemption under sec. 10(1)(g)(iii) as in its notice of objection but may rely upon sec.
ATC 474210(1)(h) and accordingly it is convenient to determine first whether the land falls within this latter paragraph. The plaintiff company which was incorporated on 28th April 1955 is a company limited by guarantee. I mention here that it is common ground between the parties that it is a Club under whose constitution the income and property of the Club is applied solely towards the promotion of the objects of the Club and no portion thereof is to be paid or transferred by way of profit to any member of the Club. This has the consequence that it is a Club, ``not carried on for pecuniary profit'' within sec. 10(1)(g)(iii). That expression means ``not carried on for the pecuniary profit of its members'' (
N.S.W. Cricket Association v. F.C. of T. (1930) 1 A.T.D. 7;
F.C. of T. v. Royal Sydney Golf Club (1943) 7 A.T.D. 274 at p. 276; (1943) 67 C.L.R. 599 at p. 604;
Theosophical Foundation Pty. Ltd v. Commr. of Land Tax (N.S.W.) (1965) 82 W.N. (N.S.W.) (Pt. 1) 545; (1966) 67 S.R. (N.S.W.) 70, especially at pp. 84-85.) Accordingly the requirement in para. (h) that the land should not be used ``for the pecuniary profit of the members of that club or body'' is satisfied. The Club is registered under the Liquor Act and is permitted to have fifty thousand members. It has large club premises at Princes Highway, Kogarah, and it provides a wide range of sporting, cultural and leisure activities for its members. Members are organised together in many ``clubs'' within the Club with the result that there are football, golf, swimming, chess, snooker, water-skiing, etc., clubs operating within the main body.
The land was purchased by the Club in 1967. It comprises the whole of the land in Certificate of Title Vol. 8386 Fol. 92 and has an area of 5 acres, 35 perches, with a frontage to the Hawkesbury River at Lower Portland. It had, prior to the purchase, been used by members of the Club for the sport of water-skiing. The members interested formed the St. George Leagues Club Water Ski Club and it has had at all relevant times about 100 members. Full financial membership of the Club is necessary before a member is accepted into the Water Ski Club.
There is a committee elected annually which supervises water-skiing and disciplines members as required. A number of subcommittees are involved in the administration of the sport and the managing of its affairs. The secretary of the club is regularly in attendance at Lower Portland when there are water-skiing competitions. There are duty officers present on the day and other tasks are performed by members of the committee. When major competitions are conducted they are administered by the New South Wales Water Skiing Association. A large and well-attended annual competition called the St. George Leagues Club Gold Cup is conducted from the land.
The evidence shows that there is a large carpark, about two-thirds of the size of a rugby league football ground, which has a capacity for about 200 cars. On competition days - usually weekends - about fifteen boats participate and these boats are brought to the land on trailers. There would usually be about thirty cars on the land during the summer months. In holiday periods - Christmas, Easter and school holidays - there are upwards of 100 people assembled for the purposes of participating in the sport, viewing it or taking part in activities such as swimming and barbecues on the land. The sport is one in which entire families of members frequently come to the land for the day and social occasions are organised from time to time by the committee of the club.
Cabins have been built on the property by individual members at their own cost and these members from time to time stay on the land overnight, at weekends or at other times - for example holidays. At the time the land was bought it only had a house on it but the Club prior to 1971 built on the land a club house with recreation facilities, a toilet block, pool and enclosure and a shop (with petrol bowser) and residence. The club house is 40 x 24 and it has a bar, rooms for meetings and for refreshments after water-skiing and it generally serves as a recreation room. The house which was on the property at the time of purchase, was during the relevant years mainly used by the directors of the Club and the officials of the water-skiing club when they stayed there at weekends but it has been used thereafter as a manager's residence: it is a two-storey building. The pool is 30 x 15 and has a safety fence around it. The residence attached to the shop is occupied by the persons who conduct the shop.
A boat ramp has been built for putting the boats into the water and the boats are winched up. Members bring caravans to the land and leave them parked there and from time to time sleep in the caravans overnight. There are thirty-six caravan sites. Those who have cabins use their cabins in association with the caravan, the caravan being used for sleeping accommodation and cooking and the cabin area being used for relaxing, leisure and storing of water-skiers' gear.
The sport of water-skiing is conducted mainly in the summer time but there are many enthusiasts in the Club who attend the land in the winter and indulge in that sport during that season. Throughout the summer period the land is in constant use - throughout the winter period the use is less. On week days about twenty-five people on an average would be using the land. The actual sport of water-skiing is mainly restricted to young people and most of the users of the land do not reside there permanently although the evidence suggests that there may be a few who do. It is common ground that water-skiing is ``an athletic sport or exercise'' within sec. 10(1)(h).
Water-skiing, of course, is a sport conducted on water but this does not mean that land cannot be used ``primarily and principally for the purposes of'' water-skiing. Although water-skiing is a sport which can be conducted solely from a boat it is, in most instances, conducted from a portion of the land alongside which or near which a boat can come. To the extent that a particular area of land is in the present case used specifically for the take-off and landing of the skiers and the mooring of boats, that use, in my view, would be ``for the purpose of water-skiing'' and one could not possibly on that approach hold that the land in question as a whole was ``primarily and principally'' used for water-skiing. But para. (h) refers not to ``purpose'' but to ``purposes'' and the word ``purposes'' widens the considerations which need to be taken into account in determining the area of land which may be exempt in the paragraph. (See for example
Newcastle City Council v. Royal Newcastle Hospital (1959) A.C. 248;
Cooke v. Lovegrove (1893) 2 Q.B. 44.) The particular sport under consideration, and the fact that conduct of that sport by the members of a club is contemplated, will be the factors which define ``the purposes'' of the particular sporting activity.
One takes the particular sport under consideration and considers all that is reasonably incidental to that activity as a club activity in determining whether the whole or part of the land is exempt under para. (h). One looks, therefore, not merely to the user of that portion of the land where the skiers enter and leave the water, but to the use of the land for the ordinary purposes of water-skiing and that would include the use of the land to enable the boats to be drawn over to the water, use for storage of boats, for changing rooms for skiers, for toilets. It would contemplate some sort of club premises to which officials and members may resort for matters connected with the sport and some form of premises in which participants and spectators can meet for social purposes. It would contemplate facilities for food and refreshments.
The extent and nature of the facilities on the land and of the provision made for the enjoyment of the sport by members and spectators will no doubt be directly related to the number of members involved in the activity and the extent to which the sport holds interest for families and friends of members of the Club.
In my opinion the evidence establishes that the Baulkham Hills land is used ``primarily and principally for the purposes of'' water-skiing. Not only does the evidence establish that the land was acquired for that purpose, but the evidence shows that the whole of the activities on the land and the user of the buildings and structures thereon - with perhaps one qualification, which I shall mention in a moment - are directed to or incidental to the carrying on of the sport of water-skiing by a water-skiing club. The qualification to which I refer is the user of the cabins for extended or permanent residence on the land. It may be said that such user can be regarded as wholly unrelated to the ``purposes of water-skiing''
This in itself, however, does not prevent para. (h) applying. The expression ``primarily and principally'' is not the same as ``solely'' and does not deny exemption in a case where there is some other user of the whole or part which, however, does not prevent a conclusion that the land is used
ATC 4744``primarily and principally'' for the purposes of the sport under consideration. This may give rise to questions of fact and degree in some cases, but on the evidence in the present case there can be no doubt that the whole of the land is used ``primarily and principally'' for the purposes of water-skiing and, accordingly, it is within the exemption provided under para. (h).
This conclusion makes it unnecessary to deal in detail with the claim made in para. (g)(iii). The very findings which have been made, make it clear that the buildings on the land are in a real sense there so that the sport can be enjoyed from the land. It would be impossible to hold that the whole of the land fell within para. (g)(iii). The approach to be made to the question whether that part of the land upon which the buildings are erected can be said to fall within para. (g)(iii) when the rest of the land is being put to a particular use is more fully dealt with in regard to the Wollongong land, and applying the approach I have made there I think it can properly be held that only the land upon which the buildings stand would be exempt under para. (g)(iii).
Let me then now turn to consider the land at Wollongong and in this regard only para. (g)(iii) comes under consideration.
The land at Wollongong is known amongst its members as the St. George Leagues Club's Beachcomber Holiday Park. It was acquired by the Club in April 1965 and consists of a little more than fifteen acres of land, being the whole of the land in Certificate of Title Vol. 9202 Fol. 210. The evidence is that it was purchased from a Mr. and Mrs. Luscombe who, at the time, were carrying on a caravan park on the property and it would seem that the fact that many members of the Club were living there in caravans stimulated the directors of the Club to purchase the land. A club within the main Club called ``the Beachcombers' Sports and Recreation Club'' was formed and this consists of those members who have been allotted caravan sites on the property. Only members of the Club can obtain a site.
There is a plan, Ex. C, which shows the buildings which are on the land and it can be said that these buildings, with the exception of a recreation hall and toilet block adjoining, were all on the land over the whole period covered by the assessments.
The evidence shows that the Club constructed a pool and additional toilets after acquiring the land and that late in 1973 constructed a recreation hall. This was a building some sixty feet by forty feet alongside the pool which was described by the manager of the Club in his evidence as, ``a social room for the community to meet socially and also for meeting rooms, games, table tennis, darts, bowls, and they have a bar, unlicensed''. Movie films are shown at night in this hall to the members and the members put on their own stage entertainment from time to time.
At all relevant times there have been some four hundred permanent on-site caravans which are used as permanent homes by the members. Most of these caravans have what have been described as annexes made of aluminium or canvas, about the same size as the caravan and these are used essentially for leisure and dining whilst the caravan itself is used for sleeping and cooking. Many of the caravans and their annexes have gardens around them and barbecues are common. The annexes are secured to the ground on a concrete block. They are provided, not by the Club, but by the members themselves.
At times there have been over one thousand people in the park. At the present time the evidence shows that there is a waiting list of some eight years for members of the Club who wish to obtain a site. The annual cost of a site is $630 including electricity and the use of amenities. Many of the residents are permanent residents whose children attend the local schools and who themselves work in the district. A manager lives on the site in a house provided.
The buildings on the land and shown on the plan are the pool, pool equipment shed, toilet block (built 1973), recreation hall (built 1973), laundry, drying room and then another group of buildings some appreciable distance away comprising manager's and residents' toilets and amenities block, laundry and garages, office accommodation and shops.
The evidence shows that the Club exercises a disciplinary supervision over the conduct and behaviour of members and all other persons on the site.
A number of photographs have been tendered in evidence showing the buildings on the property but it is unnecessary to refer
ATC 4745to these exhibits except to say that they do not really indicate the proportion between the land actually occupied by the buildings and the whole area of the land.
The Commissioner, in allowing partial exemption to the property in his letter of 28th September 1982 asserted that the area of the sites of the buildings and their curtilage comprised some 8,200 square metres and it was that amount of land which he acknowledged was exempt.
The question then which remains is whether the whole of the land should be treated as coming within para. (g)(iii) or only that part upon which the buildings stand or whether no part of the land is exempt.
Counsel for the Commissioner submits that this is a case in which it can be said that the buildings on the land are in truth nothing other than the ordinary equipment required for a caravan park and that therefore no part of the land is exempt, and he relies upon the decision in
Stephen v. F.C. of T. (1930) 45 C.L.R. 122. That case concerned the provisions of the Commonwealth Land Tax Assessment Act 1910-1930, in particular sec. 13(g)(3). The terms of that section are identical with the terms of sec. 10(1)(g)(iii) of the Land Tax Management Act except that it does not require that the buildings be ``solely occupied by'' the Club, etc. The case concerned the Randwick and Warwick Farm racecourses and whether they were exempt from tax. There were buildings on both racecourses and in each case the buildings were to be found on different parcels of land. At Randwick Racecourse they were described as, ``two cottages for caretakers, judge's box, grandstands, tea rooms for members and the public, car stalls, horse stalls, turnstiles, lavatories, offices, workshops, sheds and tote dividends offices''. For Warwick Farm Racecourse they were described as, ``four cottages for caretaker and other employees, official stands, grandstands and lawn, turnstiles, horse stalls, totalisators, judge's box, lavatory, casualty room and veterinary hospital, stables, workshops and parking areas''.
Isaacs J. decided the case without reference to para. (g)(3). Starke J. at p. 136 said:
``The buildings in respect of which the exemption is claimed are all used in connection with the respective race-courses and are within the race-course enclosures. They are not owned or occupied separately from the race-courses. And the race-courses are not used solely as a site for the buildings. Consequently, the case falls outside the exemption allowed by sec. 13(g)(3).''
Dixon J. (as he then was) at p. 141 held that the claim for exemption failed under para. (g)(3):
``It fails because the buildings do not stand on distinct parcels of land and are not separately occupied. They are built upon the land used as a race-course and form part of its equipment. Their `site' is the race-course and this is not solely used for the buildings owned and occupied by the Club.''
The effect of that decision was considerably altered by Royal Sydney Golf Club v. F.C. of T. (1943) 7 A.T.D. 274; (1943) 67 C.L.R. 599, which held that exemption for that part of the land on which the buildings stood could be obtained notwithstanding that the whole of the land could not be said to be the site for the buildings thereon. It was not necessary that the buildings should stand on distinct parcels of land. But that case left untouched the notion of ``site'' expressed in Stephen v. F.C. of T. (supra). It concerned the Royal Sydney Golf Club upon which was erected a club house and also bowling greens, tennis courts and squash racquet courts. Herron J. at first instance held that the land on which the club house was erected was exempt under sec. 13(g)(3) and the courts were exempt under sec. 13(h). Latham C.J. followed Stephen's case and held that the club house was not exempt. Rich J. referred to Stephen v. F.C. of T. (supra) in the following terms at A.T.D. p. 281; C.L.R. p. 612:
``It was said that this case decided that these provisions are not applicable to the case such as the present case where the site of a building is only part of a unit of land owned and occupied as such or where the tennis courts and other playing grounds cannot be disintegrated and regarded as separate portions of the unit. But I consider that, whichever way the exemption sections are interpreted, the decision in that case was based on its
ATC 4746particular facts, namely that there was no site for the buildings other than the whole racecourse and it was not used solely as a site for the buildings. The buildings had no significance except as part of the racecourse and no building had an independent site. Whereas in the present case the admissions and evidence established, as Herron J. found, that the Club House at the relevant date was mainly used for purposes not connected with golf, but as a social rendezvous or Club...''
Starke J. at A.T.D. pp. 282-283; C.L.R. p. 615 said:
``The suggestion has been made that the buildings on the racecourse had no significance apart from the racecourse whilst the buildings on the land of the Golf Club stand in a different category. One has only to look at the nature of the buildings on the racecourses; cottages for caretakers, grandstands, luncheon and tea rooms for members and the public, lavatories, offices, workshops, sheds, totalisator buildings, casualty rooms and so forth to deny the suggestion and hold that it cannot be sustained either as a matter of fact or of reason. The suggestion sounds well but means nothing. It is an indolent way of avoiding the decision in Stephen's case without accepting any responsibility for a proper construction of the Act and Stephen's case though it may be wrong was at least the unique decision of four members of this Court and should be followed unless the Court is prepared upon consideration to overrule it.''
McTiernan J. at A.T.D. p. 284; C.L.R. p. 617 said in regard to Stephen's case:
``In that case the claim for the exemption of an area from taxation on the ground that it came within s. 13(g)(3) failed because the site of the buildings was the racecourse and the buildings formed part of its equipment.''
He had a little earlier said at A.T.D. p 284; C.L.R. p. 616:
``It is a question of fact whether any area of the land is used or occupied solely as a site for the Club House.''
He went on to say that to be exempt it had to be shown that the land upon which the club house stood ``is a site which is independent of the golf course and forms the site of the club house''.
Those cases do not make entirely clear what is involved in the expression ``used or occupied... solely as a site for'' a building in sec. 10(1)(g)(iii), particularly when there is some specific activity being carried on on the land, but it is my view that the question in such last-mentioned cases will in most cases be very much a question of fact and degree. I have no hesitation in holding that the Commissioner is correct in his assertion that the whole of the land could not be regarded as used ``solely as a site for'' the buildings on it, so the question then is whether it is in part exempt under the section. There may well be cases where the nature of the building or buildings on land in relation to the evident user of the land requires a conclusion that the building or buildings is but equipment of or a facility for the use of the land in the way it is being used. But, where, as here, one finds a complex of buildings, comprising a pool, laundry and drying facilities, an office, a shop, toilets and a manager's residence - and from 1973 a large recreation hut - availed of by members of the Club when they are present on the land - it seems to me impossible to say because the land is in fact being used as a caravan park in which people reside - most of them permanently - those buildings should be regarded only as equipment for that park and the land on which they stand not the sites for those buildings. It is my opinion that the buildings during the entire period in question should be regarded as having an independent existence, and that one can properly say that the land upon which they stand is land used and occupied by the Club solely as a site for those buildings. Whilst no doubt they contribute very substantially to a greater enjoyment of caravan-living their relevance is not restricted to the carrying on of the land as a caravan park. They have a relevance and a significant relevance as buildings which a club requires to have on land in order to function as a club. In my view the land upon which the buildings stand should be held exempt under para. (g)(iii). This of course means that not merely the area of the buildings is exempt but that an appropriate curtilage also be allowed.
Commr. of Land Tax (N.S.W.) v. Joyce & Ors. (1973-1974) 132 C.L.R. 22.) The Commissioner in giving notice of his decision on 28th September 1982 that he had allowed the Club's objection in part, stipulated that the area exempt was 8,200 square metres and advised that the unimproved capital value of that portion would be determined by the Valuer-General pursuant to sec. 54(1)(d) and (1B)(ba). Apparently no precise detail of the area covered by the 8,200 square metres has been given by the Commissioner to the Club. The valuation has not been obtained and accordingly the Commissioner has not been in a position to assess the amount of tax payable. The parties have agreed that, in these circumstances, the matter of the actual area of land to be exempted be left for agreement between the parties and in the event of disagreement that that aspect be brought back for determination by the Court.
In the result then the plaintiff fails on its first summons and the formal orders in the matter therefore will be: In the first summons (proceedings No. 732/82), summons dismissed. In the second summons (proceedings No. 747/82) I make a declaration that the letter dated 1st December 1982 from the Commissioner for Land Tax to the Club purporting to vary the Commissioner's decision of 28th September 1982, in regard to the objection of the Club to the assessments made by the Commissioner on 5th March 1980, effects no variation of the said decision and is devoid of all legal consequence.
The Club has failed in its contention that the whole of the land at Wollongong should be exempt and the Commissioner has failed in his contention that the Baulkham Hills property is wholly liable to tax and that the Wollongong property is likewise wholly taxable. The position is now as it was when the Commissioner gave his decision on the objection except that the Baulkham Hills property is exempt under para. (h) not para. (g)(iii) as the Commissioner had then decided. In all the circumstances it seems to me that the proper order for costs in this case is that both parties pay their own costs of each summons.
Subject to the parties being entitled to apply in respect of the area of land to be exempted from taxation, the orders made now may be entered.