SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION
CLARKE v COMMISSIONER OF LAND TAX (NSW)
13 April 1980 -
Woodward J This matter involves the hearing of two summonses in each of which relief is sought by a taxpayer against an assessment made by the Commissioner of Land Tax. Both the taxpayers and the lands involved are different. In respect of the years in question the lands which are within a short distance of each other, have been similarly used. In one instance the taxpayer is John Collonea Clarke and in the other Jaclac Pty Ltd of which the first-named taxpayer is the managing director.
Jaclac Pty Ltd, during the year 1962 purchased the land, the subject of its assessment. This land is situate at Hale Cross Road, Cattai, in the Shire of Baulkham Hills is known as "The Willows" and comprises about 260 acres. It has a frontage to Cattai Creek.
This land was subsequently occupied by Mervyn Mitchell of Pebbley Hill Road, Cattai, who (it is alleged) remained in occupation of the said lands pursuant to an oral lease at a fee of $200 pa until 31 May 1977. I refer hereafter to such land as "the Jaclac land".
During the year ending 31 December 1975, the plaintiff Clarke was the registered proprietor of the land the subject of his assessment. This land also was known as Ark Park, was situate at Cattai in the Shire of Baulkham Hills and comprised three parcels, one on Wisemans Ferry Road, one on Cheesemans Road and one on O'Briens Road. The first two were contiguous with a frontage to the Hawkesbury River and constituted the major area. The third parcel was removed from the others some few hundred yards. The total area of the lands was 310 acres.
Shortly after the parcels of land were purchased by Clarke it is alleged that they were also leased to Mitchell who remained in occupation of the lands pursuant to an alleged oral lease until 31 May 1977. There were no improvements on the said lands apart from fencing prior to 31 December 1975. It is alleged that at some time prior to 31 December 1970, there was planted on one of the said lands (probably Clarke's) a lemon orchard of some 300 trees in an area of about four acres. Clarke said that the orchard was planted for commercial purposes.
In respect of the land tax year 1977 Jaclac lodged a return in accordance with the provisions of the Land Tax Management Act 1956 in which it claimed that the above-mentioned land held by it was land used for primary production and was exempt from tax. Pursuant to the powers vested in him the Commissioner rejected such claim and assessed Jaclac for tax in respect of the land.
In respect of the land tax year 1976 Clarke lodged a return in accordance with the provisions of the said Act in which he claimed that the above-mentioned land held by him was land used for primary production and was exempt from tax. The Commissioner likewise rejected such claim and assessed Clarke for tax in respect of the land.
There was accompanying Clarke's return a statement made by him in the following terms:
"Note re sch 6
"During the year ended 31 December 1975 I commenced preparing the three properties owned by me for primary production. The nature of the work undertaken during that year was in the form of clearing and fencing.
"I have now terminated my full-time employment and have concentrated on developing these properties partly as a citrus orchard and partly for the fattening of cattle. To date I have not marketed any produce.
"The properties will be operated in conjunction with properties owned by Jaclac Pty Ltd and as disclosed in land tax return - file No 412861 (meaning thereby the properties referred to in this judgment).
"During the year ended 31 December 1975, the properties in question have been used to some extent for agistment purposes for which I have received a small amount of income.
J C Clarke."
Part of the Jaclac land was used by Mitchell as a picnic area and a fee was charged to enter it. This fee was stated by Mitchell to be twenty cents per car, and by Clarke to be forty cents per vehicle. Mitchell operated a kiosk in this area and hired out horses to picnickers for riding.
Improvements were existing upon the picnic area at the time the property was acquired by the company and included:
- (a) a timber and fibro shed used as a kiosk together with a covered shelter;
- (b) a single room plus kitchen hut which was used as a store room;
- (c) two galvanized iron enclosures used as toilets;
- (d) some boundary fencing of plain wire;
- (e) some rough yards. Mitchell did not make any improvements to the land. The picnic grounds had an area of about fourteen hectares.
There was some confusion in much of the evidence and I was unable to accept either Clarke or Mitchell as a reliable witness. Evidence was given in the first place by affidavit and the deponents were cross-examined by counsel for the Commissioner.
In relation to the Jaclac property Clarke alleged in an affidavit that Mitchell remained in occupation of the lands pursuant to an oral lease for a fee of $200 pa for the relevant period. He observed that during his occupation of the land Mitchell was engaged in the business of the purchase, breeding and improvement of horses and cattle for ultimate sale. Mitchell kept horses and cattle on the land and also on other properties which Clarke understood he either owned or leased nearby. From time to time Mitchell transferred stock to or from other properties in the vicinity including a property rented from Clarke personally which property had originally been purchased by Clarke from Mitchell - this refers to the property known as Ark Park.
He also observed that on Sundays and public holidays Mitchell used to allow people to use part of the land as a picnic area. He saw that persons were allowed into the property for a fee of forty cents per vehicle and to picnic in a part of the land adjacent to Cattai Creek. He understood that Mitchell used to offer some of his horses for sale to persons who were picnicking and that this became a useful outlet for livestock.
Mitchell in an affidavit referred to the leasing of the Jaclac property for a fee of $200 pa. He said that in the years 1975 and 1976 he used the lands primarily for the purposes of breeding, agisting and selling horses and cattle. He had been engaged in such a business since at least 1962. The number of horses which he held on those lands during his occupation would have varied from five to fifteen. The average number of cattle would have been five to six. He also kept horses and cattle on other properties nearby including the property at South Maroota/Cattai (presumably Clarke's own land) which he leased and which contained three hundred acres. He said that some of his horses and cattle had been bred on the land in question. At times there were on the subject land from twenty to forty horses and from ten to fifty cattle. On the evidence as a whole this appears to be a gross exaggeration.
He stated in his affidavit that the fee to enter the picnic area was twenty cents per car, that he operated a kiosk in the area and hired out horses to picnickers. His average weekly return from the area was not more than forty dollars per week.
He said the primary reason for his establishing the picnic area was to promote the sale of horses raised on lands owned or leased by him. He used the presence of visitors as an opportunity to show stock and negotiate for the sale of horses to individuals interested in acquiring them for recreation or show purposes. In this way the opportunity provided by the property was most beneficial to his business. When the picnic area was open he spent his time attending to the horses and negotiating for the sale of horses to potential customers. The affidavit sworn by him on 22 June 1980, created the impression (not supported by the evidence) that the business relating to the sale of cattle and horses and the grazing of them on the subject land was substantial.
Mr P S Carpenter, an accountant of Richmond, also completed an affidavit. He was the accountant for Mitchell and his wife and said that for approximately ten years until August 1977 the couple had leased 260 acres of land known as "The Willows" from the plaintiff company. The major source of the Mitchells income had been derived from livestock sales. He then set out for the three years ended 30 June 1975, 1976, 1977 the following details of the gross receipts from the sale of cattle and horses and from the picnic grounds' operation. These were:
|"Gross receipts from the sale of cattle and horses||Gross receipts from the picnic ground operation|
"The grounds upon which Jaclac relied in objecting to the assessment were:
"1. That the subject land was held as land used for primary production within the meaning of s 3 of the Land Tax Management Act 1956.
"2. Within the subject year ended 31 December 1976, these properties were being developed as citrus orchids ( sic) and also used for maintaining and the breeding of horses and dealing in horses."
The reference to the citrus orchard also appears in the objection lodged by Clarke to the assessment of his land.
Two affidavits by Clarke were filed in support of his summons, one sworn on 13 May and the other on 16 November 1980. In the first affidavit he set out details of the title of the various parcels of land and referred to the leasing of that land to Mitchell. He said that during Mitchell's occupation of the lands he observed that the latter was engaged in the business of the purchase, breeding and improvement of horses and cattle for ultimate sale, and that Mitchell kept horses and cattle on his lands as well as on other properties. Finally he said that prior to year ending 31 December 1970, he planted a lemon orchard on the said lands comprising some 300 trees.
In the affidavit of 16 November, Clarke reiterated the statement that during Mitchell's occupation of the land he had observed that horses and cattle were kept on the property. Clarke also kept some stock on the lands from time to time for the purpose of fattening cattle for sale. He does not say the purpose for which the horses were kept there. By 1976 the stock owned by him comprised approximately sixty head of cattle and six horses. The maximum number of cattle owned by him which were fattening on the subject land at any one time was seven.
In his earlier affidavit Clarke referred at one stage to Mitchell remaining in occupation of the lands pursuant to an oral lease but whether this was intended to mean that the lease originally granted was oral or not is not clear. No reference is made to the rent (if any) for the lease or to any consideration received by Clarke for it.
Mitchell, however, in an affidavit made on 16 November 1980, stated that he entered into several oral leases with Clarke at a fee of $50 pa until 31 May 1977. He said his intention in entering those leases was to use the lands primarily for the purpose of breeding, agisting and selling horses and cattle as an integral part of his overall business. He said that he had engaged in such business since at least 1962. I do not know what the reference to agisting means in the circumstances. The normal meaning of the word to agist is to take in stock for feeding or pasturing at a certain rate. If property is leased in these circumstances it is available for the pasturing of cattle and occupation of the property by the cattle and the feeding of them thereon is not properly referred to as agisting or the act of agistment.
Mitchell found that due to the presence of other cattle on the property the lands were frequently short of feed. His use of them was therefore limited. The number of cattle he had on those lands varied from time to time because of such shortgages. He had other lands available to him which he either owned or leased and he transferred stock between these various lands so using the subject lands as part of an integrated operation for the purpose of his business. His business, he said, involved the breeding of horses and cattle some of which were during his occupation bred on those lands.
He said there were no improvements on the said lands apart from fencing at the perimeters (other than those facing the Hawkesbury River) and a dam on portion of the land. The fencing he said was of fair quality only and some repairs were necessary from time to time. One would think that if stock were being grazed for fattening or other purposes and was of value it would be important to ensure that the fencing was of good quality and remained stock-proof. Mitchell does not say whether repairs when necessary were effected from time to time.
He described the land as comprised mainly of gullies and rocky outcrops providing considerable areas of good pasture for the grazing of stock particularly in the north-east. During his occupation the land was not used in any way other than for the purpose of his business apart from other cattle grazing on the land presumably owned by a neighbour Johnson. His and Johnson's stock were able for grazing to move between the properties. Whatever the arrangement upon which this depended it was made in 1968 and continued until 1977. It was a condition of the lease that Clarke have access to and use of the land at all times.
An affidavit was also sworn by Mr P S Carpenter, an accountant, to whom I have already referred. He mentioned the lease of "Ark Park" from Clarke. In other respects the affidavit sworn in relation to the Jaclac lands excluding the reference to the income derived from the picnic grounds. This of course can be understood because there were no picnic grounds involved in the land owned by Clarke. It is to be noted that in the statement attached to the return which I have set out in full above Clarke stated that during the year ended 31 December 1975, the properties in question had been used to some extent for agistment purposes for which he received a small amount of income.
The grounds upon which Clarke relied in objecting to the assessment were:
1 That the subject land was land used for primary production within the meaning of the Land Tax Management Act.
2 Within the subject year ended 31 December 1975, these properties were being developed as a citrus orchid (sic) and also being developed so as to be used for cattle breeding for the purpose of selling them.
A third ground was stated in the notice of objection but was not argued before me. The reference to the citrus orchard also appears in the objection lodged by Jaclac.
Evidence was given before me by Messrs Clarke, Mitchell and Carpenter each of whom were cross-examined by Mr Smart of counsel for the Commissioner.
Carpenter was shown the Mitchell tax return for the year ended 30 June 1977, and his attention drawn to an entry there for agistment having been paid in the sum of $102. In the same return in dealing with the picnic ground income there is included an item for rent of $240. This he said was included because he received instructions that there was a rent of $240 to be paid in relation to the picnic grounds. He could not say whether the agistment expense of $102 related to one of the other properties which Mitchell leased.
The return showed a net loss on the stock business of $3146, and a net income on the picnic ground of $2360.
He was shown the tax return for the year ended 30 June 1976. For that year there were gross sales to the extent of $22,732, the gross profit being $3088. The return also showed, as an additional source of income, cartage receipts amounting to $4450.90. No agistment expense was paid during the year. There was, however, an item in relation to the picnic grounds of "rent paid $480". All he could say was that that would have been the amount paid to Mr Clarke or Jaclac for that year.
In respect of the year ended 30 June 1975, there was shown under expenses an agistment fee of some $500 and no fee was shown for rent.
Finally, in respect of the year ended 30 June 1974, there was included under the expense items a reference to lease and agistment of $287.38. No entry appeared in relation to rent in respect of the picnic ground account.
Clarke was cross-examined in respect of the area owned by him and the area owned by Jaclac Pty Ltd. He described the picnic area as comprising thirteen and a half hectares.
The Jaclac area, except for the picnic area, was very heavily timbered. The only fence he had was a perimeter fence. The horses kept the grass down and saved it being mowed. He would go to the property about once a month. There was none of his cattle on the property. Mitchell kept about a dozen horses available for hiring on a Sunday on the property.
Coming to the Clarke property he said that the smaller paddock was heavily wooded and rocky and at the time of giving evidence was unfenced. It had been fenced but it was burned down a couple of years ago.
Clarke was an unsatisfactory witness and in order to avoid giving a truthful answer to embarrassing questions purported not to understand them. He kept no more than seven of his own cows upon the property at any given time. He was unaware of the carrying capacity of the whole of the land. He agreed it was hilly, fairly steep, rocky and heavily timbered - though not all of it.
He was vague about discussions had between him and Mitchell following the purchase of the land concerning the use to which Mitchell could put it and the payment to be made for it. There was very little discussion between them and the effect of it was that Mitchell would use the property. A figure for its use of about $200 was mentioned. For the use of the property Mitchell paid by cheque. After further questioning he agreed that amounts received in relation to agistment were received in cash and used to pay for property improvements. Later, being in further difficulties he said that he would assume that amounts paid for agistment would have been paid by cheque by Mitchell. Finally he said that all payments were made by cheque to him, he received them personally because they were sent to him. They came to him direct at Rosebery, he banked them in the usual way and the cheques were always crossed. He received no agistment fees from anybody other than Mitchell and they were usually paid on a regular basis. The moneys received would have been used in the administration of the property. He never received any cash from Mitchell whatsoever.
He was questioned concerning certain correspondence which passed between his accountant and the defendant Commissioner in relation to the disputed returns in respect of the years 1975 and 1976.
On 5 January 1978, in answer to a letter from the Commissioner seeking information in respect of the Jaclac property the plaintiff's accountants wrote:
"The whole of the land was used for primary production as at 31 December 1976. The area is boundary fenced only and there are no internal paddock fences ... The whole of the area is used for horse breeding and horse dealing and the growing of lemons."
On 20 January 1978, a further letter was written to the Commissioner containing the following statements:
"We refer to your two letters of 9 January and advise that we have replied to your letter of 17 October 1977. However, it would appear we did not state the name of the person using the property for agistment purposes. That person is Mr Mitchell of Cattai."
When that was put to him Clarke stated that he did not know where the author got "the agistment there".
In a letter dated 31 October 1978, from the accountants to the Commissioner the following appears:
"We refer to your letter of 15 September and advise we have discussed the questions raised therein with Mr Clarke of Jaclac Pty Ltd and advise as follows. 1 & 2 - No income was received during the period 1 January 1975 to 31 May 1977. A small amount of gross income was received in June 1977 from picnic ground takings, less than $100. During the six months ended 31 December 1977, the company would have received income from picnic ground receipts."
To this Clarke replied: "If this accountants says that that is what they are I suppose [ sic]."
The letter further stated: "No receipts were issued for the income received from agistment purposes. The amounts received were received in cash and were used to pay for property improvements."
In respect of that statement Clarke answered: "It was hardly worth issuing receipts for $100 was it."
He further said that that statement was a correct statement of fact.
It was at this stage that Clarke sought to give the impression that he was befuddled and did not understand the questions being put to him. Having agreed that the statement "the amounts received were received in cash and were used to pay for property improvements" was a correct statement of fact he was reminded that he had earlier stated that he believed there had been payments by cheque from Mitchell for the use of the Jaclac property. To this he replied, "There was payment made".
In a letter from the Commissioner of 15 September 1978, a question was asked in the following terms: "Was any income received during the period 1 January 1975 to 31 December 1977 for any purpose other than agistment fees."
In a letter of reply Clarke's accountants had said no income was received.
The final illustration of Clarke's unreliability as a witness appears towards the end of his cross-examination. About 10 April 1979, a letter was written by Clarke's accountants to the Commissioner. It was written in reply to a letter from the Commissioner of 8 March seeking certain information concerning both Clarke's property and the property of Jaclac. In relation to Clarke's property the letter said:
"As with the company the party agisting (horses only) was Mr Mitchell."
Clarke did not agree with this saying, "It was horses and cattle". The letter further stated: "As to agistment fees received they were paid spasmodically and generally in cash and were used either by Mr Clarke personally or in conjunction with operating the company's properties."
Clarke did not agree with this saying he did not know where the accountant got this from. It was not correct. The fees were usually paid on a regular basis and by cheque. It was correct that they would have been used in the administration of the property. Dealing with horse-breeding the letter continued: "The horse-breeding activities were not extensively carried out in the earlier years and it was not until 1 June 1977 that Mr Clarke took up residence and commenced to expand this activity."
With this statement Clarke agreed. The letter further continued: "Due to the problems encountered in commencing horse-breeding activities and attempting to make that a viable proposition, no cattle fattening activities have yet been commenced on the properties."
In relation to that statement Clarke said that there was cattle on the property in 1978 but it would be Mitchell's cattle prior to that, not his. He was then asked the following questions and gave the answers which I set out:
"Q- Was it correct to say that for your part no cattle fattening activities took place on the Clarke properties in 1975, 1976 and 1977? A- No it isn't, there was fattening took place.
"Q- Of your cattle? A - Yes.
"Q- So you say that is correct? A- Yes."
Clarke's evidence was irreconcilable with many of the statements made, no doubt on his instructions, by his accountants to the Commissioner.
The affidavit of Mitchell had been used to corroborate the case both of Clarke and of Jaclac. In evidence in chief he said that there was a fee payable to Jaclac or Clarke in relation to both of the properties. He paid by cheque and it was paid every Christmas. He said that at the original discussions nothing was said about agistment. The arrangement was that Mitchell would pay to Clarke an agreed figure and the stock could be left there while the feed was available. He thought that the amount to be paid each year was $200. That appeared to have been in relation to the property of Jaclac. He said that on the Clarke property he ran both horses and cattle. They were put there to graze and if there was plenty of feed there might be a dozen and if there was no feed there might be only half a dozen. Johnson, a neighbour, had cattle which would come through onto the property. He always had his cattle there although Mitchell did not have many there and at times none.
He said that the only amount agreed to be paid between him and Clarke for agistment was $200 for the Jaclac place and $50 for the Clarke place. That was paid once a year by cheque. Both amounts would usually go in together. They would be on the one cheque. No matter how much stock he had on the place he paid the same fee all the time. In relation to the difference between rent and agistment, he said that he knew there was a difference and that he would describe the payments made as rent. He thinks that the word "agistment" was not mentioned. He felt sure that all payments went in by cheque, one cheque every year.
Each of these matters involves an appeal by the plaintiff made pursuant to s 35 of the Land Tax Management Act 1956 against an amended assessment of land tax in respect of the land above referred to owned by each plaintiff. The plaintiff's claim exemption by reason of the provisions of s 10(1)(p) of the Act on the ground that the land was, in respect of the relevant year, (either 1975 or 1976) land used for primary production.
Section 3 of the Act provides that unless the context or subject matter otherwise indicates or requires, in the Act "land used for primary production" means land used primarily for:
"(b) the maintenance of animals ... thereon for the purpose of selling them or their natural increase or bodily produce."
Section 8 provides that land tax shall be charged on land as owned at midnight on 31 December immediately preceding the year for which the land tax is levied. Year means the period of twelve months commencing on 1 January. In these cases the years in question were, in relation to Clarke, 1976 and in relation to Jaclac Pty Ltd, 1977.
The task that confronts me has been described by Sheppard J in Longford Investments Pty Ltd v Comr of Land Tax (NSW) (1978) 8 ATR 656 at 660:
"However, I should emphasize it ought not to be thought that the enquiry here to be made is one which involves no more than asking the question, to what use was the land put at midnight on 31 December 1974. That would be far too narrow an approach. One must take into account the provisions of s 8 to which I have earlier referred and which provides that land tax is to be charged on land as owned on the relevant date immediately preceding the year for which the land tax is levied. Moreover one would need to look at the use of land not only after what I may call the relevant date, but prior thereto as well. In broad terms one must ask oneself, what may it fairly be said was the primary use of the property during a period not overlong and not overshort within which 31 December 1974 falls. I do not find it useful to endeavour to specify the period but I think, in having regard to it, one must bear in mind that it is the defendant's task to make an assessment and in normal circumstances he will do that during the year following the arbitrary date selected by the legislature for the ownership of lands. He will not usually be looking at the position, as I am, with the aid of what has happened in a period of more than three years after the date in question."
The provisions of s 18(1)(b) of the Act make it clear that the onus is cast upon the plaintiffs each to persuade me of the matters upon which they rely for success. That is a matter which in this case becomes important on the question of fact. The plaintiff must convince me of the facts upon which he seeks to rely, in order to avoid the tax levied upon him or it. (See Longford's case, supra.) In order for the land to qualify for the exemption provided in s 10 it is the use only which concerns me and not whether that use is made of the land by the owner or some other person. It is of no consequence that the use is made by a person who is not the taxpayer.
In the present cases it would seem that reliance is sought to be placed upon the fact that the relevant use of the land is that of Mitchell and Clarke although primarily that of Mitchell. In the case of Jaclac Pty Ltd it is not claimed on behalf of the Commissioner that the land, because of the ownership, is precluded from enjoying the exemption provided by s 10. Two distinct situations arise for consideration. In the case of Clarke it would seem that the property owned by him on the banks of the Hawkesbury River is used for one purpose which may be associated with primary production. The land owned by Jaclac on the other hand could be said to be used for two purposes one associated with primary production and the other with the conduct of the enterprise of a picnic ground by Mitchell. In respect of either property I am unable to rely upon the evidence provided by the plaintiff in either case from either Clarke, Mitchell or Carpenter the accountant. So far as Carpenter is concerned I do not mean to suggest that he is not a reliable witness. On the other hand his evidence is dependent solely upon what he is told by Mitchell and depends upon the reliability of the latter. As an independent witness Carpenter adds nothing to the case of either plaintiff.
The Jaclac property comprised about 260 acres of which something slightly over thirty acres was used as a picnic area at weekends and on some holidays. In the state of the evidence that I accept it seems to me that the principal use to which the property was put was the provision of picnicking facilities and the riding of horses at weekends. The improvements that existed upon it seemed to be used almost solely for the purposes of the picnic ground. It is not clear whether Mitchell paid anything to Clarke for the use of this land and, if he did, how much. Whether the payment, if made, was made by way of rent or agistment again is not clear.
I could not accept either Clarke or Mitchell as evidencing any genuine and sincere attempt at the appropriate time to engage in an occupation which could constitute the use of the property or indeed any part of it for the purposes of primary production within the meaning of the Act.
The way in which the matter had been handled for the purposes of gaining exemption from the taxing provisions of the Act indicated an incompetent effort on the part certainly of Clarke if not also on the part of Mitchell to bring Clarke and Jaclac within the exemption provisions of the Act.
An illustration of this is the way in which in his return Clarke dealt with the alleged citrus orchard.
In the relevant return he shows in Sch 6 that the whole of the property is used for the production of citrus fruit (lemons). In giving evidence Clarke located the citrus orchard upon his own property. In the statement attached to his land tax return for the tax year 1976 he said, referring to his own property, "I have now concentrated on developing these properties partly as a citrus orchard and partly for the fattening of cattle."
He stated that the properties would be operated in conjunction with properties owned by Jaclac. In his affidavit of 13 May 1980, sworn in the matter in which he is the plaintiff he said that prior to the year ending 31 December 1970, he planted the lemon orchard in the said lands comprising some 300 trees and states that the orchard was planted for commercial purposes. Schedule 6 in the Jaclac return for the relevant year contains no reference to the citrus orchard.
In the objections lodged in both matters against the assessment one of the grounds upon which reliance is placed is that within the subject year the properties were being developed as a citrus orchard as well as for other purposes. This is not easy to reconcile with the evidence given by him that the trees were planted about 1962, the orchard was an old-established one, the trees became diseased so that the produce was to a large extent not fit for sale and the few lemons which were fit for sale were generally sold at the picnic ground kiosk or given away.
The principles to be applied in determining the issue presently before me have been dealt with on several occasions and do not appear to me to be capable of much doubt. In Greenville Pty Ltd v Comr of Land Tax (NSW) (1977) 7 ATR 278 Helsham CJ in Equity, said at 280 that the test to be applied was objective and in applying it:
"One must adopt a broad approach and a commonsense one ... 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."
In Longford's case, supra, Sheppard J following the Greenville case, held that the fact that part of the land was used for primary production and the rest unused did not necessarily mean that land was primarily used for that purpose. In Abbott v Comr of Land Tax (Vic)  VR 297 Lush J said at 302:
"In construing the word primarily in its application to a case where a parcel of land is divided into two parts, one of which is devoted to an exempt use and one not it must be remembered that the question is whether the whole of the parcel is primarily used for the exempt purpose. In my opinion it is not sufficient to inquire whether some difference can be discerned between the uses to justify classifying one as the main use or predominate use. The predominance must be of such a degree as to impart a character to the parcel as a whole."
In the present case so far as the Jaclac property is concerned it is my view that the primary use to which the property is put is that of a picnic ground upon which horses can be hired and the whole of the property is provided then for the use of the riders of those horses. This is not an exempt use. In so far as any other use is made of either property it is not sufficient in my view to say that the only use to which the property is being put is for a purpose which is part of a business of primary production. The use of the land in my view must be substantial in pursuit of the primary production. Neither land is in the present case being used substantially for primary production. The use may be said to be minimal and much points to the fact that if the evidence of Mitchell and Clarke is to be accepted (and I do not accept it) the property is being used at times for the purpose of running some stock in the hopes that thereby such use will qualify to enable the property to be exempt from land tax. In the circumstances therefore I am of the view that neither property qualifies for exemption and I dismiss the summonses.
I order the plaintiffs in each case to pay the costs of the defendant.
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