1
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
VINCENTIA STH PTY LTD v COMMISSIONER FOR ACT REVENUE (Administrative Review) [2017] ACAT26
AT 59/2016
Catchwords:ADMINISTRATIVE REVIEW – prescribed date when land became rateable – meaning of Commonwealth land under section 8 of theRates Act 2004– whether land exempted as rateable prior to first lease over the land – land became rateable upon first lease over the land
Legislation cited:ACT Planning and Land Management Act1988 (Cth) ss 27, 28, 29
Commonwealth of Australian Constitution Act(Cth) s 125
Legislation Act2001 ss 5, 155, 156
Rates Act 2004 ss6, 8
Subordinate
Legislation cited:Planning and Development (Technical Amendment – Rezoning of FUA) Plan Variation 2015 (No1), Variation No 2014-22, 22 June 2015
Variation to the Plan No 281, Molonglo and North Weston, August 2008
Cases cited:Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (the engineer’s case) (1920) 28 CLR 129
C and J Clark Ltd v Inland Revenue Commissioners [1973] 1 WLR 905
Commonwealth v Baume (1905) 2 CLR 405
Deputy Commissioner of Taxation (NSW) v Mutton (1988) 12 NSWLR 104
Grey v Pearson (1857) 6 HLC 61
Harding v Coburn [1976] 2 NZLR 577
Junstamp Pty Ltd and Ors v Commissioner for ACT Revenue [2013] ACAT 50
Minister for Resources v Dover Fisheries Pty Ltd (1993) 43 FCR 565
Qantas Airways Ltd v Chief Commissioner of State Revenue [2008] NSWSC 1049
Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VR 342
List of
Texts/Papers cited:D C Pearce and R S Geddes, Statutory Interpretation in Australia (Lexis Nexis, 8th Ed, 2014)
Tribunal:Senior Member L Beacroft
Date of Orders:11 April 2017
Date of Reasons for Decision:11 April 2017
AUSTRALIAN CAPITAL TERRITORY)
CIVIL & ADMINISTRATIVE TRIBUNAL)AT 59/2016
BETWEEN:
VINCENTIA STH PTY LTD
Applicant
AND:
COMMISSIONER FOR ACT REVENUE
Respondent
TRIBUNAL:Senior Member L Beacroft
Senior Member D Lovell
DATE:11 April 2017
ORDER
The Tribunal orders that:
1.Thedecisionunder review is confirmed.
………………………………..
Senior Member L Beacroft
Delivered for and on behalf of the Tribunal
REASONS FOR DECISION
1.In summary, Vincentia Sth Pty Ltd (the applicant) seeks review of a decision by ACT Revenue (the respondent) to disallow the applicant’s objection to a determination of the unimproved value (UV) of the applicant’s land at block 14, section 98 Weston ACT (the land). The reasons below explain why the ACT Civil and Administrative Tribunal (the Tribunal or ACAT) has dismissed the applicant’s application as set out in the order above.
2.In summary, the Tribunal has found that the land was Commonwealth land and exempted from being rateable under section 8(b)(vii) of theRates Act 2004 (Rates Act) until the date of the first Crown lease over the land (the lease), being 2 February 2016. The land was zoned commercial CZ3 when it became rateable.[1] The parties agreed that with this zoning the UVis $5,700,000[2], which is the basis of the valuation and rates assessment notices (the notices) issued by the respondent,dated 19 May 2016.[3]
Background
3.Until the applicant obtained the lease over the land, the land had never been leased. In 2008 the Territory Plan was amended to allow for new residential areas in the Weston area, and the land was part of an area that was declared as ‘Future Urban Area’.[4]Later, on 26 June 2015, the land was rezoned from ‘residential RZ1’ to ‘commercial CZ3 services’.[5]
4.In November 2015 the Land Development Agency (LDA), which is an ACT Government agency that releases land in the ACT for development, auctioned the land. The applicant successfully bid for the land and on 2 February 2016 a Crown lease over the land was issued to the applicant, which is a corporation. The lease includes terms that entitle the applicant, after completion of certain works detailed in a deed, to subdivide the land and to obtain further leases of the subdivided land to on-sell or lease.
5.On 19 May 2016 the Commissioner issued the notices to the applicant, showing a valuation of $5,700,000 for the land and rates payable of $121,534.20.[6]The applicant made an objection to the unimproved value (UV) set out in the notices, in a letter dated 15 July 2016.[7] On 7 September 2016 the respondent disallowed the objection.[8] The decision being reviewed by the Tribunal is the decision by the Commissioner to disallow the applicant’s objection to the notices, more specifically an objection to the UVstated in the notices (the reviewable decision).A hearing was held on 9February2017.
Conduct of the hearing
6.At the hearing the applicant was represented by Mr Brodie Buckland, Barrister, instructed by Mr Greg Brackenreg, Special Counsel, Meyer Vandenberg. The respondent was represented by Dr Doug Jarvis, Barrister, instructed by Ms Kate Smyth, Senior Solicitor, ACT Government Solicitor.
7.Before the hearing the parties had exchanged and filed with the ACAT various documents. Importantly, the parties had agreed and filed with ACAT a ‘Statement of Agreed Facts’ which narrowed the contested issues to those set out in paragraph 8 below.[9] During the hearing the Tribunal requested that any issues about procedural matters or fairness be raised, and any that were raised were dealt with during the proceedings.
8.Uncontested matters were as follows:
(a)The applicant purchased the land at auction from the LDA on 25 November 2015 for $5,750,000 (excluding GST), and the first Crown lease for the land was issued on 2 February 2016.
(b)Prior to the lease, the land was not leased, was unoccupied, and neither the Territory nor the Commonwealth had developed or occupied the land.
(c)On 26 June 2015 the land was rezoned from RZ1 (which permits only residential use) to CZ3 (which permits commercial use).
(d)If the land is valued as if it was zoned RZ1 then the UVis $3,000,000, and if the land is valued as if it is CZ3 then the UVis $5,700,000.
9.There was one contested issue as follows:
(a)Determining the UVfor land requires settling what is the ‘prescribed date’in order to identify the circumstances that apply.[10]What is the prescribed date in turn hinges on settling when the land became ‘rateable’[11] as defined under section 8 of the Rates Act. Determining when the land became ‘rateable’ in this case involves settling whether the land was exempted as rateable land until it was leased.[12] The core contested issue in this case is how section 8 of the Rates Act applies to the land,particularly the exemption to land being rateable under section 8(1)(b)(vii) of the Rates Act.
Legislative Framework
10.In summary, the land is part of the ACT. Land in the ACT is vested in the Commonwealth[13], which acquired it from NSW for the Federal seat of government. When the ACT became self-governing, various legislation was put in place to allow for this including the ACT Planning and Land Management Act1988 (Cth) which provides for the ACT executive to grant leases of land in certain circumstances. The Rates Act allows the ACT government to charge rates for land in certain circumstances.
11.The applicant applied for review of thereviewable decision under section 68 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) The review is provided for in section 108A of the Taxation Administration Act 1999 (Tax Administration Act), together with section 73 of the Rates Act 2004 (Rates Act). The applicant bears the onus of proof under section 101 of the Taxation Administration Act.
12.The case concerns the statutory interpretation of section 8 of the Rates Act. The Legislation Act2001 (Legislation Act) applies, and also the common law on statutory interpretation applies which is well set out in D C Pearce and R S Geddes, Statutory Interpretation in Australia (Lexis Nexis, 8th Ed, 2014) (Pearce & Geddes).
Applicants’ Contentions
13.The applicant’s contentions in respect of the contested issue, howsection 8 of the Rates Act applies to the land (refer to paragraph 9 above), are as follows.
14.The applicant uncontroversially explained that the UV is determined according to a formula set out in the Rates Act. This involves determining the “....price that might have been offered for the lease of the land, assuming …the circumstances that existed on the prescribed date also existed at the date of the hypothetical sale of the land [on the base date], being 1 January 2015 in this case”.[14] If the land was rateable prior to its rezoning on 26 June 2015 (ie if the prescribed date was prior to 26 June 2015), then its UV would be much reduced since the UV on the base date would be calculated as though it was zoned RZ1. The applicant contended that this indeed was the case.[15]
15.The applicant contended that the land became rateable at the commencement of the Rates Act, 1 July 2004.[16] The applicant’s case concerned the statutory interpretation of section 8 of the Rates Act. In summary, the applicant contended[17] that the land was rateable from the commencement of the Rates Act in that it was “land in the ACT”[18] and did not meet any of the exemptions.[19]
16.The applicant contended that the term ‘Commonwealth land’ in the exemption to rateable land set out in section 8(1)(b)(vii) has the same meaning as in section 8(1)(a), and that it cannot just mean land where the Commonwealth holds title. The term ‘Commonwealth land’ is defined in the dictionary of the Rates Act as “land that is the property of the Commonwealth”. Since the Commonwealth holds title to all land in the ACT, even if leased, the phrase ‘including Commonwealth land’ in section 8(1)(a) is either redundant or means something other than just holding title. The applicant contended that applying basic principles of statutory interpretation to section 8 leads to the conclusion that:
‘property’ has a greater meaning than simply ‘holds title to’. Rather, ‘land that is the property of the Commonwealth’ in section 8 Rates Act means land which the Commonwealth holds title to and exercises some propriety rights over…[for example] possession, occupation, or extraction of resources.[20]
17.The applicant summarised his approach to interpreting ‘Commonwealth land’ in section 8 as referring to a ‘sub-set of land’ where the Commonwealth holds title to it and where the Commonwealth occupies it.[21] On this argument, the land was not exempted from being rateable under section 8(1)(b)(vii) since the land “was not ‘Commonwealth land’ as the Commonwealth only held title …and did not exercise any other propriety rights over the land.”[22]
18.The applicant contended that the land management arrangements in place in the ACT under the ACT Planning and Land Management Act 1988 (Cth) (PLM Act) provides evidence that ‘Commonwealth land’ means something more than holds title, it means that the Commonwealth occupies it. Under the PLM Act the Executive of the Territory may grant and dispose of ‘Territory land’, as if it was the owner unless it is declared ‘National land’.[23] The title held by the Commonwealth to Territory land is protected by the Australian Constitution, however the Commonwealth’s property rights under the PLM Act are exercised in a unique manner, indeed “given away”.[24] The applicant contended that the PLM Act provides support for the view that ‘Commonwealth land’ under section 8 Rates Act refers to more than title, but it refers to land where the Commonwealth has a relationship with it,that is occupies it
19.Regarding the principles of statutory interpretation that are particularly relevant here, the applicant argued as follows. The “language used in the statue as a whole” is to be considered[25], unless that leads to an “absurdity” in which case the there may be a modification by the court “so as to avoid that absurdity and inconsistency but no farther”.[26] Further, all words or sentences are not to be regarded as “superfluous or insignificant”, in the first instance.[27] In some circumstances, courts may consider another meaning that “produces a more reasonable result.”[28] An interpretation that gives some effect to a provision is to be preferredto another that renders it ineffectual or absurd.[29]
Respondent’s Contentions
20.The respondent’s contentions against the contested issue in paragraph 9 above are summarised below.
21.When interpreting section 8 the respondent contended that it needed to be read in the context of the legislative scheme summarised as follows.The provision relates to a unique legislative scheme where the Commonwealth acquired land from NSW for the territory of the ACT.[30] Later, to effect self-government, the ACT Government was authorised to grant leases on behalf of the Commonwealth.[31]The respondent contended that the Commonwealth’s interest in Territory land is a unique right – a “sovereign right” which includes propriety rights.[32] The respondent contended that the PLM Act provides no support for the applicant’s contentions. Under the PLM Act the Commonwealth delegates its power to grant leases to the ACT Government, but it does not provide for the granting of freehold rights and therefore does not give away its property rights as the applicant contended. The Rates Act like the PLM Act supports a self-government legislative scheme in that it provides for the ACT Government to collect revenue for certain lands, even though all lands in the Territory remain vested with the Commonwealth.
22.The respondent contended that when the holding lease for the land was issued on 2February 2016 to the applicant, being the first lease for the land issued, the land became rateable. Until then the land was exempt from being rateable under section 8(1)(b)(vii) of the Rates Act since it was unleased vacant land belonging to the Commonwealth.[33]
23.When interpreting section 8, the respondent contended that the provision needed to be read as a whole. The term ‘Commonwealth land’ appears twice in the provision, has the same meaning for each use, and is defined in the dictionary of the Act as “land which is the property of the Commonwealth.” There is no absurdity if this statutory definition of Commonwealth land is applied throughout the provision. Rather, applying the applicant’s approach, that ‘Commonwealth land’ refers to Commonwealth land that is occupied, leads to a peculiar result in section 8(1)(b)(vii) – Commonwealth land that is occupied that is not leased or occupied is exempt from being rateable.
24.Finally, the respondent contended that applying the applicant’s approach leads to consequences not intended under the legislation. An unintended consequence of the applicant’s approach to interpreting ‘Commonwealth land’ under section 8 of the Rates Act would be that the prescribed date for all unleased Commonwealth land would be 1July 2004. Furthermore, in this case the prescribed date on the applicant’s arguments would be prior to the base date (agreed to be 1 January 2015). The respondent contended that this is inconsistent with the framework of law recognised in Junstamp Pty Ltd and Ors v Commissioner for ACT Revenue [2013] ACAT 50 (Junstamp case).
Findings and Decision
25.The issue concerns the statutory interpretation of section 8 of the Rates Act, specifically the meaning of ‘Commonwealth land’ in that section. The applicant contended that a literal reading of section 8(1)(a) results in an ‘absurdity’ and on this basis the applicant presented his alternative interpretation of the section, citing Higgens J in the Engineer’s Case at 161-162. The applicant’s argument is that when the statutory definition of ‘Commonwealth land’ is inserted into section 8(1)(a) there is an absurdity in that the phrase following the word ‘including’ is left without meaning, is redundant. That is, rateable land “means all land in the ACT [which is all vested in the Commonwealth], including Commonwealth land [which is land that is the property of the Commonwealth].”[34] The Tribunal is not persuaded by the applicant’s contentions. The Tribunal finds that the phrase ‘including Commonwealth land’ in section 8 of the Rates Act is not absurd. Rather, it makes clear certain matters in the context of a unique legislative scheme which is an example of co-operative federalism involving the Commonwealth, NSW and ACTGovernments. The Tribunal’s reasoning is set out below.
26.A threshold question in this case is whether redundancy in words is necessarily an absurdity? When considering the literal analysis of a provision for any absurdity, Lord Wensleydale clarified this issue: as Pearce & Geddes explain “[the literal approach] contemplates the modification of the literal meaning of the words used to overcome an error or defect perceived in the text.”[35] The Tribunal can find nor an ‘error’ or ‘defect’ arising from the words used in section 8.
27.A further consideration here is that the alternative interpretation of ‘Commonwealth land’ contended by the applicant requires the Tribunal to find that a defined termunder the Rates Act, ‘Commonwealth land’, has a different meaning in section 8 Rates Act. Under the common law there is a presumption that words in legislation are used consistently[36], and under the Legislation Act a statutory definition of a term applies to the entire Act unless provided for otherwise.[37] Under the Legislation Act, where a term is defined, that definition applies unless there is a “contrary intention.”[38] The common law also recognises that a statutory definition is not to be displaced “without good reason”, that is “unless the contrary intention appears.”[39]Maloney JA in Deputy Commissioner of Taxation (NSW) v Mutton (1988) 12 NSWLR 104, 108 expanded on the circumstances when a definition is not followed[40], and the circumstances that might arguably apply here are where the definition if applied “would not work” or “would lead to confusion”. It is true that in some cases redundant words may create an “absurdity” according to the tests set out in this and the prior paragraphs, however the Tribunal finds that this is not the case here.