BBLT PTY LTD & ORS v CHIEF COMMISSIONER OF STATE REVENUE (NSW)

Judges:
Gzell J

Court:
New South Wales Supreme Court

MEDIA NEUTRAL CITATION: [2003] NSWSC 1003

Judgment date: 12 November 2003

---

Gzell J

On 21 February 2002, the Chief Commissioner of State Revenue forwarded to BBLT, BBLT Pty Ltd, assessments to land tax for the 2000, 2001 and 2002 years. On 5 March 2002 the Chief Commissioner issued to the third and fourth plaintiffs, assessments to land tax for the 1998 to 2002 years. The proceedings before the court arose as a result of those assessments.

---

ATC 5065

2. The Land Tax Management Act 1956, s 7 provides that land tax is levied on the land value of all land in New South Wales that is owned by taxpayers. Section 8 provides that land tax is charged on land as owned at midnight on 31 December immediately preceding the year for which the tax is levied. The assessments of BBLT were raised with respect to land at 9 Wolseley Crescent, Point Piper, Sydney. The assessments of the third and fourth plaintiffs were raised with respect to land next door at 8 Wolseley Crescent.

3. The land at No 9 was purchased by the second plaintiff and her then husband in 1991. It was transferred to BBLT consequent upon the divorce of the second plaintiff from her then husband on 24 June 1999. BBLT held No 9 pursuant to the terms of a fixed trust deed for the children of the marriage each of whom was entitled to one fourth of the beneficial interest in the trust property. The third and fourth plaintiffs are two of those beneficiaries.

4. The land at No 8 was purchased by the second plaintiff and her then husband in 1994. It was transferred to the third and fourth plaintiffs in 1997.

5. The Land Tax Management Act 1956, s 12(1) provides that the Chief Commissioner may by order published in the Gazette, require all persons or specified classes of person to furnish land tax returns for a specified year or years or for a specified year and each subsequent year. Section 12(1A) requires every person subject to such a requirement to furnish a land tax return to the Chief Commissioner on or before 31 January in that year. By notices published in the Gazette, land tax returns were required to be lodged by persons owning land at midnight on 31 December of the prior year for the 1998 to 2002 years.

6. Neither BBLT nor the third and fourth plaintiffs lodged land tax returns subsequent to the transfer of No 9 and No 8 to them. Land tax assessments for the 2000 and 2001 years with respect to No 9 were issued by the Chief Commissioner in the name of the second plaintiff and her former husband and were paid by the second plaintiff in amounts totalling $137,849.

7. The Taxation Administration Act 1996, s 106B(1) provides that a Hardship Review Board may, if so authorised, waive the payment of tax either wholly or in part. The Land Tax Management Act 1956, s 50 provides that the Hardship Review Board may exercise its functions in relation to land tax. BBLT and the third and fourth plaintiffs applied to the Hardship Review Board to waive payment of the land tax the subject of the assessments. Those applications were ultimately rejected. But, in consequence of representations made, the Chief Commissioner reduced the assessments against BBLT to $293,625.65 including interest of $34,364.65.

8. Objections were lodged against the assessments on behalf of BBLT and the third and fourth plaintiffs.

9. The Land Tax Management Act 1956, s 10(1)(r) as it applied to the 1998 year exempted from land tax land that had a land value less than $1 million that was used and occupied as the principal place of residence of the owner of the land or, if there were joint owners, as the principal place of residence of one or more of them, and for no other purpose. For the 1999 year, the provision applied to land that had a land value less than the premium tax threshold.

10. For the 1998 year, No 8 had a land value in excess of $1 million and in respect of the 1999 year it had a land value in excess of the premium tax threshold.

11. The Land Tax Management Act 1956, s 9(3) provided with respect to the 1998 year that in the case of land that was a principal place of residence and would be exempt under s 10(1)(r) but for the fact that its land value was not less than $1 million, land tax was payable by the owner of the land. The Land Tax Act 1956, s 3AG charged tax at the rates set out in Sch 8. It prescribed rates applicable only to the excess of land value over $1 million. With respect to the 1999 year, the Premium Property Tax Act 1998, s 6(1) provided in like terms where the land value was not less than the premium tax threshold and s 8 prescribed the rates applicable to that excess.

12. The third and fourth plaintiffs did not occupy No 8. It was vacant land in a derelict condition. However, in May 1998 Woollahra Municipal Council approved a development application to construct a residence on No 8. It was the intention of the third and fourth plaintiffs that upon construction they would occupy No 8 as their principal place of residence.

13. The Land Tax Management Act 1956, s 10T(1) provides that if the Chief Commissioner

---

ATC 5066

is satisfied that the owner of land or, if there are joint owners, any one or more of them, intends to use and occupy the land solely as his or her principal place of residence, that intended use and occupation of the land is to be regarded as its actual use and occupation for the purposes of s 10(1)(r). The concession was limited by s 10T(4) to the two years immediately following the year of acquisition of the land unless the Chief Commissioner extended the period.

14. Consequent upon the letters of objection of the third and fourth plaintiffs, the Chief Commissioner issued amended assessments for the 1998 and 1999 year allowing tax at the concessional rates under the Land Tax Act 1956 and the Premium Property Tax Act 1998 on the basis of the third and fourth plaintiffs' intended use of No 8 solely as their principal place of residence for the purposes of the Land Tax Management Act 1956, s 10T(1). In consequence the assessments with respect to No 8 were reduced.

15. Apart from this issue, the Chief Commissioner rejected the notices of objection of BBLT and the third and fourth plaintiffs.

16. The Taxation Administration Act 1996, s 86(1) provides that a taxpayer dissatisfied with an assessment or other decision of the Chief Commissioner may lodge a written objection. Section 97(1)(a) provides that a taxpayer may apply to this court for a review of a decision of the Chief Commissioner that has been the subject of an objection if the taxpayer is dissatisfied with the Chief Commissioner's determination of the objection.

17. This right to review is limited to the person liable to pay the tax the subject of the assessment in question (
McDonald's Australia Ltd v Commr of Taxes (NT) 2000 ATC 4607; (2000) 10 NTLR 76,
Grice Holdings Pty Ltd v Commissioner of Taxes (2000) 45 ATR 530).

18. It follows that the second plaintiff is not entitled to a review by this court of the Chief Commissioner's decisions on the notices of objection against the assessments raised against BBLT and the third and fourth plaintiffs.

19. In
Cerche & Ors v FC of T 2001 ATC 4604, Goldberg J held it appropriate to join in the one proceedings appeals by taxpayers from disallowances of their notices of objection claiming that their share of a rent inducement payment was not received by them as assessable income. His Honour took the view that common questions of law and fact arose and the rights claimed by each taxpayer arose out of the same transaction.

20. In my view, similar considerations apply in this case so far as the reviews by BBLT and the third and fourth plaintiffs are concerned. While the landholding is different, the family history with respect to No 8 and No 9 has common aspects making it appropriate that each of the reviews be determined in the one proceeding.

21. In
Carter v FC of T 2001 ATC 4260; (2001) 109 FCR 215, an appellant from an adverse decision on his notice of objection against the disallowance of deductions claimed with respect to an investment project, failed in his application to join a number of other dissatisfied taxpayers who had invested in the project. Goldberg J held that the joinder in the existing appeal would not constitute the institution of an appeal by the joined applicants.

22. That is not the position with respect to the second plaintiff. While she initially sought relief by way of review of a decision in terms of the Taxation Administration Act 1996, s 97(1), she was clearly not entitled to such a review as there had been no written objection lodged by her in terms of s 86(1). The second plaintiff's claim lies outside the review procedure. Her claim was for a refund with interest of the land tax paid by her of $137,849.

23. Subsequent to the commencement of the proceedings in this court, that amount was refunded by the Chief Commissioner and the second plaintiff's claim was reduced to one for interest. Again, it seems to me that it is appropriate for that claim to be determined in the one proceeding with the review of the assessments against BBLT and the third and fourth plaintiffs. There is sufficient commonality in the family history to make it appropriate for this issue to be determined at the same time as the reviews.

24. I allowed an amendment to the summons for the second plaintiff to raise a claim for a declaration that as at the date of repayment or, alternatively, as at the date of the commencement of the proceedings, she was entitled as against the Chief Commissioner to an order in the nature of mandamus pursuant to the Supreme Court Act 1970, s 65 or s 69 requiring the Chief Commissioner to perform his duty pursuant to the Taxation Administration Act 1996, s 18 to pay the second

---

ATC 5067

plaintiff $137,849 and an order pursuant to the Taxation Administration Act 1996, s 18 or the Supreme Court Act 1970, s 94 that she was entitled to interest payable by the Chief Commissioner for the period the $137,849 remained unpaid.

25. The Land Tax Management Act 1956, s 9C(1) provides that the land value of land on which a flat is situated is to be reduced by the allowable proportion in relation to the flat.

26. For the 2000 year, the Chief Commissioner was required to keep a register of land values under the Land Tax Management Act 1956, s 62U(1). If an apportionment factor with respect to land on which was situated a flat was not entered on the register, s 9C(2)(b) provided that the allowable proportion was the proportion specified in an application for a reduction under the section as the fair and reasonable proportion of the land value of the land to be attributed to the flat unless the Chief Commissioner was not satisfied as to the fairness and reasonableness of that proportion, in which event the allowable proportion was the proportion that the floor area of the flat bore to the total floor area of all the buildings on the land. Section 9C(2A) provided that apportionment factors were to be ascertained under Div 4 of Pt 7.

27. For the 2001 and subsequent years, the Tax Management Act 1956, s 9C(2A) provided that apportionment factors were to be ascertained in accordance with Div 5 of Pt 1B of the Valuation of Land Act 1916. Section 14X in that Division provided that the Valuer- General might ascertain apportionment factors which were required to be entered in the register of land values kept by the Valuer- General.

28. For the 2000 year, the Tax Management Act 1956, s 62P(1) in Div 4 of Pt 7 provided that the Chief Commissioner might ascertain an apportionment factor for the land value of mixed development land. Section 62T provided that expressions in the Division had the meanings given by the Valuation of Land Act 1916, s 58C unless inconsistent.

29. The Valuation of Land Act 1916, s 58C(1) then provided that ``mixed development land'' meant a parcel of land occupied or used solely as the site of one or more buildings comprising one or more flats and one or more offices. A ``flat'' was defined in the same provision to mean a room or suite of rooms occupied or used, or if not occupied or used, so constructed, designed or adapted as to be capable of being occupied or used, as a separate dwelling other than a strata lot. An ``office'' was defined in like terms to be occupied or used, or be capable of being occupied or used, for any commercial, industrial or professional purpose.

30. The Land Tax Management Act 1956, s 62Q(1) provided that the apportionment factor was the proportion which the rental value of the part of the land that was non-residential bore to the rental value of the mixed development land as a whole.

31. For the 2001 and subsequent years, the Valuation of Land Act 1916, s 14X(1) provides that the Valuer-General may ascertain an apportionment factor for the land value of mixed development land. ``Mixed development land'' is defined in s 14BB(1) to mean a parcel of land occupied or used solely as the site of one or more buildings comprising one or more flats and one or more offices. The term ``flat'' is defined in s 14BB(7) to mean a room or suite of rooms occupied or used as a separate dwelling or so constructed, designed or adapted as to be capable of being occupied or used as a separate dwelling and the term ``office'' is defined to mean a room or suite of rooms separately occupied or used for a commercial, industrial or professional purpose or so constructed, designed or adapted as to be capable of being separately occupied or used for a commercial, industrial or professional purpose.

32. Accompanying the notices of objection was an application by BBLT, the second plaintiff and each of her children for reduction of the land value of No 9 under the Land Tax Management Act 1956, s 9C.

33. It was submitted in the application that the four children of the second plaintiff, each of whom had a 25% interest under the fixed trust deed, had rooms in the dwelling at No 9 for their exclusive use and that they constituted flats. There was no suggestion in the application that the dwelling at No 9 contained one or more offices. In the absence of an office at No 9, it did not constitute mixed development land and neither the Chief Commissioner for the 2000 year nor the Valuer-General for the 2001 and 2002 years could determine an apportionment factor for its land value.

---

ATC 5068

34. The Chief Commissioner did not reject the application for reduction nor did he act under the Land Tax Management Act 1956, s 9C(2)(c) when he received the reduction application. He acted under s 9C(2A) as it stood when the application was made and referred the matter to the Valuer-General.

35. In my view the Chief Commissioner should have dealt with the application and either rejected it or accepted the proportion in the application or acted under s 9C(2)(c) pending the determination of an apportionment factor by the Valuer-General.

36. The Chief Commissioner submitted that the issue was not before the court under the Taxation Administration Act 1996, s 97(1)(a). Assuming that the Chief Commissioner made a decision not to determine the reduction application, or his failure to make a determination constituted a decision for the purposes of s 86(1)(b), none of the plaintiffs lodged an objection to that decision and no determination on an objection was made by the Chief Commissioner under s 91(1). In those circumstances, the necessary dissatisfaction of a taxpayer with the Chief Commissioner's determination of an objection was absent and s 97(1)(a) was not enlivened.

37. I agree with that submission. There is no entitlement in a taxpayer to review every decision of the Chief Commissioner. That entitlement is limited to those decisions against which objections have been raised that receive adverse determinations from the Chief Commissioner. In my view, therefore, the plaintiffs fail in their application to review any failure by the Chief Commissioner to determine their reduction application under the Land Tax Management Act 1956, s 9C.

38. In the further amended summons, the plaintiffs claimed, in the alternative, a declaration that pursuant to the Land Tax Management Act 1956, s 9C the land value of BBLT was zero and that of the four children of the second plaintiff was 25% each. The plaintiffs sought an order that the Chief Commissioner determine, or cause to be determined, the s 9C application according to law.

39. While such an order does not arise on review of the adverse decision on BBLT's notice of objection, the question arises whether an order in the nature of mandamus should be granted under the Supreme Court Act 1970, s 65 or s 69 with respect to the Chief Commissioner's failure to determine the application.

40. In this court, the Chief Commissioner submitted that the application was doomed to fail for another reason.

41. The Land Tax Management Act 1956, s 3(1) defines terms subject to the context or subject matter otherwise requiring. It contains the following definition:

```Owner' includes:

• (a) in relation to land, every person who jointly or severally, whether at law or in equity:
  • (i) is entitled to the land for any estate of freehold in possession; or
  • (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise;
• (b) (Omitted)
• (c) in relation to any leasehold estate in land, whether legal or equitable (other than under any lease to which section 21C or 21D applies), a person, or a person who is a member of a class or description of persons, prescribed for the purposes of this paragraph; or
• (d) a person who, by virtue of this Act, is deemed to be the owner.''

42. The four children of the second plaintiff were owners of No 9 in terms of the definition. In
Chief Commr of Land Tax v Macary Manufacturing Pty Ltd 2000 ATC 4001; (1999) 48 NSWLR 299, the Court of Appeal held that a corporate trustee as registered proprietor of land was an owner under both limbs of par (a) of the definition and the legislation contemplated that there could be a number of owners. On that basis, BBLT was also an owner of No 9.

43. The Land Tax Management Act 1956, s 9C(3)(e) provides that a reduction applies only if the owner of the land is not a company or a company jointly with another person or persons except in the case of a trustee company acting in its representative capacity. A trustee company is defined in s 3(1) to mean a company within the meaning of the Trustee

---

ATC 5069

Companies Act 1964. That legislation does not apply to BBLT. The Chief Commissioner submitted that since BBLT was a company and an owner of No 9 the exclusion was enlivened.

44. The Land Tax Management Act 1956, s 10(1)(p)(a) used to provide that land used for primary production, not being land owned by a company, was exempt from land tax. In
Woodlock v Commissioner of Land Tax [1975] 2 NSWLR 97 land owned by each of three individuals and a company was used by a partnership for grazing purposes, the partnership agreement providing that the lands were not a partnership asset. The Court of Appeal held that where one of a number of owners of land was a company, the land was owned by a company and the exemption did not apply.

45. The Court of Appeal reached a like conclusion in
Commr of Land Tax (NSW) v Opalfield Pty Ltd 94 ATC 4171. The principal residence exemption in the Land Tax Management Act 1956, s 10(1)(r) is subject to an exception in s 10(1D). Residential land is defined as not being land that is owned by a company. In Opalfield, the registered proprietor of land was a shelf company that held as nominee for family members who lived in the property as their principal place of residence. The Court of Appeal followed Woodlock, saying at 4175, that its conclusion was inevitable and there was no way in which the expression could be read as solely owned by a company. If a company was an owner, the land was not residential land and the exemption in s 10(1)(r) did not apply.

46. It was submitted on behalf of BBLT that it was not an owner within the meaning of the definition of that term in the Land Tax Management Act 1956, s 3(1).

47. In Macary, the corporate registered proprietor of land was the trustee of a discretionary trust. The beneficiaries occupied a dwelling on the land as their principal place of residence. An attempt was made to vest the trust so that the company became a bare trustee. That attempt failed. The court held that, whether or not the trust had vested, the trustee as registered proprietor fell within both limbs of par (a) of the definition of ``owner''.

48. It was submitted that Macary was distinguishable because it involved a discretionary trust and the fixed trust in the instant circumstances created an entitlement in the children of the second plaintiff to the land for an estate of freehold in possession and an entitlement to receive the rents and profits thereof.

49. I do not think that is a correct analysis of the situation. No 9 was vested in BBLT. As registered proprietor it was entitled to the land for an estate of freehold in possession and it was entitled to receive rents and profits from the land, albeit that it had absolute trust obligations imposed upon it. In any event, the analysis of the situation in Macary was not limited to the terms of a discretionary trust. The Court of Appeal held that, whether the respondent was the trustee of a discretionary trust or a fixed trust, it fell within the definition.

50. It was submitted that the Court of Appeal in Macary failed to take account of what had been said by Griffith CJ in
Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 at 498 with respect to the then definition that the essential element of an estate in possession was that the owner of it had a present right of beneficial enjoyment whether accompanied by physical possession of the land or not.

51. In
Opalfield Pty Ltd v Commr of Land Tax (NSW) 93 ATC 4863, Sully J took the view that a registered proprietor of land who held as bare trustee was not within the definition of ``owner'' in the Land Tax Management Act 1956, s 3(1). That view was reversed on appeal. In Macary at first instance, Black AJ followed Sully J in Opalfield. In reversing that decision, Mason P with whom the other members of the Court agreed on this point, said at ATC 4009; NSWLR 310-311:

``In my respectful view Sully J in Opalfield and Black AJ in the present case elided two distinct legal concepts and, in so doing, erred when they held that a bare trustee does not fit within par (a) of the definition of `owner' because it has no present right of beneficial enjoyment. A trustee of the entire fee simple (ie where no future interest is involved) holds an estate in possession whether the trust is bare or active. It is beneficial in that (common law) sense. The legal estate confers a legal right to enjoyment or possession of the land and its rents and profits, even though the trustee may be compelled to hold that right for the benefit of the beneficiary.''

---

ATC 5070

His Honour went on to quote the passage from Glenn.

52. In my view, the Court of Appeal in Macary did not fail to have regard to Glenn. Nor did it err in its determination that a registered proprietor holding land as a bare trustee is within the definition of ``owner'' in the Land Tax Management Act 1956, s 3(1).

53. BBLT drew attention to the wording of the Land Tax Management Act 1956, s 9C(3)(e) which excludes reduction if ``the owner'' of land is a company. Section 9C(3)(c) excludes from reduction ``an owner'' of land who occupies a flat merely because of being a trustee and s 9C(3)(b) requires that the occupier of the flat be ``the owner or one of the owners'' of the land. It was submitted that the contrasting language was deliberate and that the exclusion of reduction in the case of a company only arose where a company was the sole owner of land.

54. That submission was rejected by the Court of Appeal in Woodlock and in Opalfield. While the language is different in the Land Tax Management Act 1956, s 9C(3)(e) the legislative intention is, in my view, the same. The concessions are not available to a corporate owner. That intention would be thwarted if s 9C(3)(e) were limited to the situation in which a company was the sole owner of land. In my view once a company is an owner of land the exclusion in s 9C(3)(e) comes into effect.

55. The definition of ``residential land'' was introduced to the Land Tax Management Act 1956, s 10(1D) excluding land owned by a company by the Land Tax (Amendment) Act 1973. In his second reading speech in the legislative Assembly, the Assistant Treasurer said (Hansard, Vol 107, 2089):

``It is important to note that the exemption is intended to apply to ordinary homeowners and, under the definition of residential land contained in clause 5(b)(iv), does not extend to land owned by a company; owned by a mortgagee of a company's land who has entered into possession; owned by a trustee for or on behalf of a company; or in respect of which a company is jointly assessed with any other person.''

There is no reason to suppose a change in legislative intent when s 9C(3)(e) was introduced by the Land Tax Management (Amendment) Act 1990.

56. The plaintiffs submitted that the legislative intention with respect to the Land Tax Management Act 1956, s 9C was to ensure that an owner was not taxed on those portions of a structure on land to which the owner was not beneficially entitled. That result can be accepted as a consequence of the purpose to relieve an owner of mixed development land from land tax on that portion used as a principal place of residence by others. But it does not address the purpose of the exclusions. There was a deliberate intention to exclude the corporate owner consistent with the exclusion of corporate owners from other concessions within the legislation.

57. The plaintiffs submitted, in the alternative, that the word ``owner'' in the Land Tax Management Act 1956, s 9C(3)(e) should be given a different meaning from its definition in s 3(1) and should be confined to a beneficial owner. That submission was based upon the legislative intention underlying s 9C. As I have said, however, that approach ignores the legislative purpose of the exceptions. When the exception with respect to a company is taken into account, there is no justification, in my view, for giving the word ``owner'' in s 9C(3)(e) a meaning different from the definition in s 3(1).

58. In
Kilcare Investments Ltd v Commr of Land Tax (NSW) 81 ATC 4379; (1981) 12 ATR 14 it was held that a company that owned a home unit in which it permitted its directors to live, was entitled to the exemption for a principal residence. It was submitted that it was to this situation that s 9C(3)(e) was directed and it should be so interpreted as to limit it to that situation.

59. As I have pointed out, the Land Tax Management Act 1956, s 9C was introduced in 1990. There is no reason to suppose that s 9C(3)(e) was a response to Kilcare. Furthermore, the exclusion of companies from other concessions under the legislation pre- dated Kilcare. In any event, there is no justification for confining the general terms of s 9C(3)(e) to the circumstances that arose in that case.

60. The plaintiffs sought to distinguish Macary on a number of grounds. In addition to the argument that the judgment was confined to a discretionary trust, it was argued that the decision was limited to the principal residence exception.

---

ATC 5071

61. A ``special trust'' is defined in the Land Tax Management Act 1956, s 3A(1) to mean a trust, the trust property of which includes land of which the trustee is the owner of the legal estate that is not a fixed trust. The taxable value of land the subject of a special trust is subjected to a higher rate of tax under the Land Tax Act 1956, s 3AH(2)(b). The respondent's attempt in Macary to vest the trust so that it became a fixed trust failed. Its other argument, which also failed, was that it was not the owner of the land. That question turned on the meaning of the definition of ``owner'' in s 3(1). For the reasons already expressed, that issue applies equally to the use of the term in s 9C(3)(e).

62. It was submitted that Macary could be distinguished on the basis that none of the beneficiaries in that case were owners and there was no scope for the operation of the Land Tax Management Act 1956, s 9C. That is a point of difference but it does not lead to a distinguishing feature with respect to the definition of the term ``owner''.

63. The land value of No 9 exceeded the premium tax threshold. It was submitted that the Premium Property Tax Act 1998 was a code that did not apply to the circumstances in Macary.

64. However, the Premium Property Tax Act 1998 refers back to the Land Tax Management Act 1956. Relevantly for present purposes, the Premium Property Tax Act 1998, s 7(1) provides that if the value of the allowable proportion determined in accordance with the Land Tax Management Act 1956, s 9C(2) is not less than the premium tax threshold for a land tax year, the flat is taken for the purposes of both Acts to be land having a land value equal to the value of the allowable proportion. Section 7(2) provides that land tax is payable by the owner of the flat on this land value as if the flat were the only land owned by the owner.

65. Whether or not land is subject to an allowable proportion is determined in accordance with the Land Tax Management Act 1956, s 9C and not under some different regime established by the Premium Property Tax Act 1998.

66. The plaintiffs submitted that Macary was wrongly decided because it was inconsistent with the decision of the High Court in
Sendall v Federal Commissioner of Land Tax (1911) 12 CLR 653.

67. The Land Tax Management Act 1956, s 25 provides that the owner of any equitable estate or interest in land is liable in respect of land tax as if he or she were the legal owner of the estate or interest. The equivalent provision considered by the High Court in Sendall went on to provide that the owner of the lesser interest should be taxed on a hypothetical best rent obtainable for the land basis rather than on the value of the lesser beneficial interest. This concession only applied to settlements made before 1 July 1910.

68. The appellants were the trustees of a will of a deceased who died before the relevant date having devised to the appellants all his real estate upon trust to pay the income to his widow for life and after her death to reversionary beneficiaries. Land tax was raised against the appellants in reliance upon the equivalent of the Land Tax Management Act 1956, s 24 which provides that any person in whom land is vested as a trustee shall be assessed and liable in respect of land tax as if he or she were beneficially entitled to the land.

69. The High Court held that the appellants were only liable to be assessed for the amount of tax that would be payable by the widow as life tenant. At 659-660, Griffith CJ said of this provision:

``For the purpose of the assessment of land the trustee stands in the place of the cestui que trust. He does not incur a different and independent liability. He is liable in the same way as if he were the person beneficially entitled: no more and, generally speaking, no less. The contention for the Commissioner, however, is that, where land is held on trust, the trustee is to be taxed in respect of the whole unimproved value of the land whether the beneficiaries are liable to pay tax or not. It would be a very singular result if the trustee should be bound to make an expenditure out of the trust funds for the cestui que trust which he is declared to be not liable to pay. As I have said, the plain meaning of the section is that the trustee stands in the place of the cestui que trust.''

70. There is an attraction in the proposition that the Chief Commissioner should not be entitled to collect a greater tax against a trustee than the tax to which he would be entitled by assessing the beneficiaries. In
Cooper v Federal Commissioner of Land Tax (1941) 65 CLR 320 at 332, Williams J cited Sendall for the

---

ATC 5072

proposition that if there is a beneficial owner the Chief Commissioner cannot, by assessing the trustees, levy a greater tax than he would obtain if he assessed the beneficial owner.

71. On the other hand, Sendall was heavily criticised by Isaacs and Rich JJ in
Kuhnel & Co Ltd v Deputy Federal Commissioner of Taxation (SA) (1923) 33 CLR 349 at 360:

``We are aware that in Sendall v Federal Commissioner of Land Tax (1911) 12 CLR 653 it was held that under words substantially identical a trustee was to be assessed as if he were not, but as if some other person were, beneficially entitled. In that case it was the Land Tax Assessment Act 1910 which was under consideration, and the words were `as if he' (the trustee) `were beneficially entitled to the land,' which we take to mean the whole land and every interest in it. It was certainly held by two Judges that, nevertheless, a trustee must be assessed as if he stood in the position of the beneficial owner of some limited interest who was being assessed for his limited beneficial interest. We are, with the deepest respect, utterly unable to follow the reasoning that led to that conclusion; and the Acts being different Acts we do not feel bound to adopt the conclusion even though the decision referred to should stand on the terms of the Land Tax Assessment Act.''

72. Sendall was also referred to in
Commr of State Revenue (Vic) v Famajohn Nominees Pty Ltd 99 ATC 5077. In that case a trustee was the registered proprietor of adjoining blocks consolidated under a single certificate of title. It held one block as trustee for an individual and the other as trustee for that individual's discretionary family trust. It was held that while the trustee was the owner of different lands, they were not held in trust for different beneficial owners with the consequence that the trustee was bound to make an expenditure out of trust funds for land tax in respect of a piece of land in which no beneficiary presently had an interest.

73. The taxpayer submitted that the philosophy of the legislation was that the beneficiary should bare the ultimate burden of tax and the Commissioner's interpretation would have the effect of imposing on the trustee the burden of the aggregate valuation of the land and the consequent payment of higher tax while depriving the trustee of the ability to recover that amount from the beneficiaries. At 5083-5084, having quoted the above passage from Sendall, Balmford J remarked that Griffith CJ would find it to be a very singular result for a trustee to be bound to make expenditure for a beneficiary who was not liable to pay the tax but concluded that such expenditure was an incidental expense of the holding of land by a trustee of a discretionary trust.

74. The attraction of the proportion that a trustee ought not to be liable for a greater amount of tax than the agglomerated liability of the beneficiaries assumes that there is a liability in the beneficiaries and that it is a lesser liability than that to which the trustee is liable.

75. There are two things to be said about that proposition. First, the structure of the Land Tax Management Act 1956 is to place the primary liability upon the trustee and a secondary liability upon the beneficiaries who are to be given credit for any payment made by the trustee under s 25. The Act does not expressly provide for the situation in which the liability of the secondary taxpayers is less than that of the primary taxpayer.

76. Secondly, it presupposes a concessional entitlement in the secondary taxpayers which, for the reasons already given, I am of the view does not exist in this case.

77. Sendall was considered and distinguished in Macary. At ATC 4010; NSWLR 312 Mason P pointed out that in the case before the court, the trustee conceded that if it were an owner, there was no objection based on the proposition that the beneficiaries might have been exempt if they had been assessed as such. His Honour said the concession was properly made and Sendall did not suggest to the contrary because it was a special case imposing a concessional tax on life interests that arose before 1910. Mason P pointed out that the High Court held that that exemption could not be circumvented by assessing the trustee and relying upon provisions corresponding to the Land Tax Management Act 1956, s 24 and s 25.

78. Furthermore, as Sheller JA had pointed out in Opalfield at 4175, even if one were to treat the company as standing in the place of the shareholders, they were not entitled to the principal residence exemption under the Land Tax Management Act 1956, s 10(1)(r)(ii) because the property was owned by a company. In my view Macary was not wrongly decided.

---

ATC 5073

79. The plaintiffs submitted that the reasoning process in Macary was outdated in light of the decision of the High Court in
Maurici v Chief Commr of State Revenue (NSW) 2003 ATC 4163; (2003) 77 ALJR 727. In that case, the appellant objected to the unimproved value attributed to his improved land. His objection centred on the valuation's almost exclusive reliance on sales of vacant parcels of land in the relevant area. The appellant argued that those sales were inflated because of the scarcity of vacant land in the area and were thus unreliable as comparable sales.

80. It was held that the method adopted by the respondent was unduly selective, that the sales relied upon were not representative of sales in the relevant area and the sales evidence needed to be relevant and sufficient in volume. At ATC 4168; ALJR 731 the Court observed that the valuer, not only valued the subject land as if its improvements had been shorn from it, but also as if it was a notionally unimproved and, therefore, vacant site as scarce as the vacant sites the subject of the sales to which he had regard. The Court pointed to the paradox that if every improved parcel of land was required to be treated in that way, the consequence would be that all parcels were notionally vacant and there would no longer be any scarcity of vacant land.

81. The plaintiffs submitted that that approach to the instant circumstances require an operation of the Land Tax Management Act 1956, s 9C to reduce the land value of BBLT to nil by attributing land values to the flats occupied by the children of the second plaintiff. In my view there is nothing in Maurici that compels this result.

82. While the Chief Commissioner did not reject the plaintiffs' application under the Land Tax Management Act 1956 s 9C, I am of the view that if consideration had been given to the question, he must have rejected it. No 9 was not mixed development land and, BBLT being an owner, the owner of the land was a company for the purposes of s 9C(3)(e), thereby excluding the right of reduction to any of the owners of No 9.

83. The court is not bound to make an order in the nature of mandamus. It has a discretion to refuse to make an order if good reason is shown for a discretionary refusal (
R v Kelly; Ex parte The Victorian Chamber of Manufactures (1953) 88 CLR 285 at 309. In my view, good reason is shown if the only possible result is that the Chief Commissioner must reject the application. In these circumstances, an order in the nature of mandamus would lack utility. I therefore decline to make such an order. In my view, none of the plaintiffs is entitled to the benefit of the Land Tax Management Act 1956, s 9C.

84. BBLT claimed in the alternative to the Land Tax Management Act 1956, s 9C that s 21B(1) applied. That section requires land to be owned by joint owners. BBLT did not own the land jointly with any other party. The four children of the second plaintiff were beneficiaries of a fixed trust. That they are treated as if they were the legal owners of their equitable interests under s 25(1), does not constitute them joint owners with BBLT. That argument was rejected in Woodlock.

85. The Premium Property Tax Act 1998, s 6(1) provides that in the case of land that is a principal place of residence and would be exempt from taxation under the Land Tax Management Act 1956, s 10(1)(r) but for the fact that the land has a land value of not less than the premium tax threshold, land tax is payable by the owner as if it were the only land owned by the owner.

86. That provision only comes into operation if a principal place of residence exemption is available. The exemption was not available in the instant circumstances because the Land Tax Management Act 1956, s 10(1D)(a) as it then stood provided that for the purposes of s 10(1)(r) residential land meant land used and occupied for residential purposes and for no other purpose that use and occupation being use and occupation of a building or buildings designed, constructed or adapted for residential purposes, not being land that was owned by a company.

87. Since BBLT was an owner of No 9, the principal residence exemption was not open. The reasoning of the Court of Appeal in Woodlock that where one of a number of owners of land is a company, the land is owned by a company for the purpose of the then Land Tax Management Act 1956, s 10(1)(p)(a) applies equally to the former s 10(1D)(a)(i).

88. In their further amended summons, the plaintiffs claimed that the Chief Commissioner erred in the imposition and/or calculation of interest.

---

ATC 5074

89. The Taxation Administration Act 1996, s 21(1) provides that if a tax default occurs, the taxpayer is liable to pay interest on the amount of tax unpaid. On the view I hold of the matter, a tax default occurred with respect to BBLT. The Chief Commissioner is, however, empowered to remit interest by any amount in such circumstances as he considers appropriate.

90. For reasons that appear hereafter, I am of the view that the second plaintiff is not entitled to interest on the amount of $137,849 refunded to her. Those moneys were paid by the second plaintiff with respect to the land tax liability of the owners of No 9. I have found that that liability rested with BBLT.

91. It follows, that the Chief Commissioner was not totally out of pocket with respect to the liability of BBLT. He had received amounts totalling $137,849.

92. In my view, the Chief Commissioner should remit portion of the interest of $34,364.65 raised against BBLT to take account of the receipt of moneys from the second plaintiff.

93. In my view, apart from partial remission of interest, BBLT has failed to make out any case for the relief it seeks.

94. The third and fourth plaintiffs obtained the principal residence exemption for the 1998 and 1999 years based on their intended use and occupation of No 8 solely as their principal place of residence in terms of the Land Tax Management Act 1956, s 10T(1). Section 10T(4) limits the exemption to the two tax years following the commencement of ownership unless the Chief Commissioner extends its operation on the basis of an acceptable delay.

95. That concept is defined in the Land Tax Management Act 1956, s 10T(5) to mean a delay in the commencement or completion of the building or other work necessary to enable the intended use and occupation of the land to become its actual use and occupation that the Chief Commissioner is satisfied is due primarily to reasons beyond the control of the owner. The Chief Commissioner did not accept that there were reasons beyond the control of the third and fourth plaintiffs.

96. Neither the third nor the fourth plaintiff had any capacity to pay for the construction of the dwelling on No 8. It was always understood that the moneys would come from the second plaintiff. Construction was commenced in 2003 at the expense of the second plaintiff in order to protect the approval of the development application.

97. It was submitted on behalf of the Chief Commissioner that there was no evidence that the third and fourth plaintiffs had requested the second plaintiff to provide moneys to commence construction of the residence and she had refused.

98. I do not regard the lack of that evidence as significant. The second plaintiff delayed till the last moment the commencement of construction. That moment was defined by the time at which the approval of the development application would lapse. The inference is clear. Had either the third or fourth plaintiff requested money from his mother to commence the construction, it would have been refused.

99. The point is that the delay in the commencement of construction was beyond the control of the third and fourth plaintiffs. It was in the control of the second plaintiff. In my view, the Chief Commissioner should have acted under the Land Tax Management Act 1956, s 10T(4) to extend principal residence exemption under s 10(1)(r) for the 2000, 2001 and 2002 years.

100. The third and fourth plaintiffs lodged an application for an unutilised value allowance for the 1999 to 2002 years with the Chief Commissioner in May 2002. The Land Tax Management Act 1956, s 62K(1) provides that the owner of land may apply to the Chief Commissioner for an utilised value allowance to be ascertained for the land value of the land.

101. When that application was lodged, the Land Tax Management Act 1956, s 62K(1A) provided that if satisfied that the land to which such an application related satisfied the description in any of the paragraphs of s 62J(1), the Chief Commissioner must refer the application to the Valuer-General for determination of an unutilised value allowance.

102. The Chief Commissioner did not communicate any satisfaction that the Land Tax Management Act 1956, s 62J(1) applied. As with the application under s 9C, he forwarded it to the Valuer-General.

103. Again, any complaint in this regard is not the subject of review under the Taxation Administration Act 1996, s 97(1)(a) because there was no objection by the third and fourth plaintiffs to the Chief Commissioner's failure to

---

ATC 5075

determine whether s 62J(1) applied and there was no decision by the Chief Commissioner on such an objection. But, again, the question arises whether an order in the nature of mandamus should be made against the Chief Commissioner.

104. For the 1999 to 2001 years, the Land Tax Management Act 1956, s 9A(1) provided that if there was an unutilised value allowance entered in the register in respect of the land value of land, a person liable to pay land tax was entitled to a postponement of part of the tax as provided by the section. For the 2002 year, s 9A(1) provided that the section applied to land if an unutilised value allowance was entered in the register in respect of the land.

105. In
Gaffey v Chief Commr of State Revenue 2000 ATC 4342, the taxpayers sought to postpone part of the land tax pursuant to the Land Tax Management Act 1956, s 9A for the years 1987 to 1999. The application was made in 1999. The Chief Commissioner obliged for the 1996 to 1999 years but said he had no authority in relation to the 1995 and earlier years. Young J held that the taxpayers were not entitled to a postponement of land tax in any of the years under review, since there was no entry of an unutilised value allowance on the register.

106. At par 13, his Honour said that the word ``is'' in the section plainly referred to the land tax year in question and that, unless the land had an attributed part value from the Valuer- General at that time, the section was inapplicable.

107. That must be so in the instant circumstances. Under either version of the Land Tax Management Act 1956, s 9A(1) what was required was an entry in the register for the year in question. In none of the years in question was that the case.

108. Counsel for the plaintiffs conceded that a claim to an unutilised value allowance in the years in question was not sustainable in light of the decision in Gaffey. In my view that concession was correctly made.

109. It follows that no utility would be served in issuing an order in the nature of mandamus for the Chief Commissioner would be duty bound to determine the matter against the third and fourth plaintiffs.

110. BBLT and the third and fourth plaintiffs argued that various kinds of estoppel arose against the Chief Commissioner. As I have dealt with each claim for relief, either under review under the Taxation Administration Act 1996, or in terms of the Supreme Court Act 1970, s 65 or s 69, those issues do not arise.

111. It should be noted, however, that with few exceptions the courts have concluded that estoppel does not lie against a fiscal authority on the basis that the authority cannot be prevented from carrying out the public duties cast upon it by the legislation (
FC of T v Wade (1951) 9 ATD 337; (1951) 84 CLR 105,
AGC (Investments) Ltd v FC of T 91 ATC 4180,
FC of T v Australia and New Zealand Savings Bank Ltd 94 ATC 4844; (1994) 181 CLR 466,
Bellinz Pty Limited & Ors v FC of T 98 ATC 4634; (1998) 84 FCR 154,
Oamington Pty Ltd (Receiver and Manager Appointed) & Anor v Commr of Land Tax & Anor 98 ATC 5051).

112. In
FC of T v Winters & Anor 97 ATC 4967 and in
Remuneration Planning Corporation Pty Ltd v FC of T 2001 ATC 4130 the courts refused summary termination of proceedings in reliance upon the principle preferring that the matter be debated at trial.

113. The second plaintiff's claim to interest is based on the Taxation Administration Act 1996, s 105 or the Supreme Court Act 1970, s 94. As to the former, it provides that in addition to an amount refunded under Div 3 of Pt 10, the Chief Commissioner is required to pay interest. Division 3 applies if a taxpayer's objection is allowed in whole or in part, or a taxpayer's application for review is successful. The Chief Commissioner must refund any amount paid in excess of a requirement for payment under the relevant taxation law.

114. In
Citivale Pty Ltd v Office of State Revenue (1998) 100 LGERA 127, the taxpayer had paid land tax but subsequently submitted, successfully at first instance, that it was not liable for the tax. It was held that the statutory provisions for refund of land tax were exhaustive and since there was no provision for interest applicable to the case, no interest was payable.

115. In so finding, the court followed
Chippendale Printing Co Pty Ltd v FC of T & Anor 96 ATC 4175; (1996) 62 FCR 347 in which a Full Court of the Federal Court held that there was no interest payable on the refund of overpaid sales tax on the ground that the statutory regime in relation to such refunds was exhaustive.

---

ATC 5076

116. The Commissioner succeeded in his claim that there was no exemption from land tax in
Chief Commr of State Revenue v Citivale Pty Limited 2000 ATC 4327; (2000) 107 LGERA 338. There was no cross appeal on the question of interest.

117. In
The Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 a majority of the High Court held that a restitutionary right to the recovery of interest could not succeed because the entitlement to refunds was derived under the Customs Act which provided for the payment of refunds without interest.

118. These principles apply equally in the instant circumstances. In my view, the second plaintiff had failed to establish an entitlement to interest on the moneys repaid to her by the Chief Commissioner.

119. Save in respect of the remission of interest with respect to BBLT and save in respect of the principal residence exemption with respect to No 8 for the years 2000, 2001 and 2002, the plaintiffs are not entitled to any of the relief they claim. I will hear the parties on costs. I direct the parties to bring in short minutes of orders reflecting these reasons.