High Court of Australia Gibbs, Stephen, Mason, Murphy and Aickin JJ. Hope v Bathurst City Council [1980] HCA 16 ORDER Appeal allowed with costs. Order that the judgment of the Supreme Court of New South Wales (Court of Appeal) be set aside and in lieu thereof order: (a) That the appeal to that Court be allowed with costs; (b) That the questions asked in the Stated Case be answered as follows: Question 1: Did I err in law in holding that it was a question of fact whether the activities of the appellant on the land fell within the description of one or both of the words "business" or "industry" in the definition of Rural land in s. 118 of the Local Government Act 1919? Answer: Yes. Question 2: If the answer to Question 1 is yes, should I have allowed the appeal as a matter of law? Answer: No; other issues remain to be decided. Question 3: On the facts found and admitted should I, as a matter of law, have held the appellant had discharged the onus of proof (vide s. 118 (7)) that the land was rural land? Answer: No; see answer to Question 2 above. Question 4: If the answer to Question 3 is yes should I, as a matter of law have allowed the appeal? Answer: No; see answer to Question 2 above. (c) That the matter be remitted to the Land and Valuation Court to be dealt with in accordance with the above answers and for determination of the other issues involved. 20 June 1980 Cur. adv. vult. The following written judgments were delivered:— June 20 Gibbs and Stephen JJ. We have had the advantage of reading the reasons for judgment prepared by our brother Mason and agree with them. There are a few additional observations which we wish to make. The question whether the appellant's land came within the definition of rural land in s. 118 (1) of the Local Government Act, 1919 N.S.W., as amended, involved a number of subsidiary questions, including the following: (a) Was the land used for carrying on a business? (b) If so, was it so used by the occupier and was the business that of grazing? and (c) If yes to all these questions, was it wholly or mainly used for carrying on that business. The learned judge of the Land and Valuation Court decided the first of these questions against the appellant, and for that reason did not proceed to decide the remaining questions, although, in relation to the second of the questions which we have stated, he said that he inclined to the view that a business of agistment is not a business of grazing. For the reasons given by our brother Mason, the learned primary judge erred in law in deciding that the appellant's use of the land was not significant enough to bring it within the scope of the common or general meaning of the word "business". That was not the same as deciding that the manner in which the appellant used the land did not have "a significant commercial purpose or character", although the reasons of the learned primary judge suggest that he may not have fully appreciated the distinction between the two ideas. When Walsh J. in Thomas v. Federal Commissioner of Taxation [13] said that he left "out of account the pine trees, the growing of which did not have a significant commercial purpose or character", it is perfectly clear that he did not intend to suggest that a commercial activity cannot be described as a business if it is small in scale. In that case Walsh J. was considering whether the appellant was a "primary producer" within s. 157 of the Income Tax Assessment Act 1936 Cth, as amended, that is, whether he was a person who carried on "a business of primary production". It was enough for Walsh J. to hold that, in the circumstances of that case, the appellant had set out to engage in producing macadamia nut trees and avocado pear trees as a business; that having been decided, it was immaterial whether the growing of pine trees was also done in the course of carrying on a business. In succinctly disposing of the issue of fact concerning the pine trees, Walsh J. was not purporting to make an exhaustive statement of the test to be applied in deciding what is a business. 1. (1972) 46 A.L.J.R. 397, at p. 401. It is unfortunate that it is not possible finally to dispose of this appeal, but the form of the stated case does not permit that to be done. Although it might have been possible to discuss in the abstract the question whether a business of using land for agistment is a business of grazing, it is quite impossible, having regard to the facts stated, to consider whether the appellant's land was "wholly or mainly" used for carrying on such a business. We would answer the questions in the manner proposed by our brother Mason. Mason J. The appellant, who is the owner and occupier of certain land known as "Hassall Park", situated at Kelso near Bathurst, appealed under s. 118 (7) of the Local Government Act, 1919 N.S.W., as amended, against the decision of the respondent Bathurst City Council that his land, the subject of a rate notice for the year 1978, was not rural land, with the consequence that he was not entitled to the benefit of the lower general rate made in respect of rural land. The non-rural rate levied on the appellant's property was $3,784.20; the rural rate would have been $1,050.00. The appellant's appeal was dismissed by the Land and Valuation Court (Rath J.). At the request of the appellant the judge stated a case for the decision of the Supreme Court pursuant to s. 17 of the Land and Valuation Court Act, 1921 N.S.W., as amended. By majority the Court of Appeal (Glass and Samuels JJ.A., Reynolds J.A. dissenting) held that the decision of the primary judge involved no error of law. From this decision the appellant has appealed to this Court pursuant to a grant of special leave to appeal. The expression "rural land" is defined in s. 118 (1) of the Local Government Act, so far as it is material, to mean a parcel of ratable land which is valued as one assessment and exceeds 8,000 square metres in area, and which is wholly or mainly used for the time being by the occupier for carrying on one or more of the businesses or industries of grazing, dairying, pig-farming, poultry farming, viticulture, orcharding, bee-keeping horticulture, vegetable growing, the growing of crops of any kind or forestry. This definition threw up as an issue for determination by the primary judge the question whether the appellant's land was wholly or mainly used by him for carrying on the business or industry of grazing. The facts admitted or found by the primary judge appear in pars. 2 to 11 inclusive of the case stated. They are as follows: 2. The total area of the land exceeds 8,000 square metres, being 6.263 hectares, or 15.475 acres. 3. 12.42 acres, i.e. 80.24 per cent of the total area, is used by the occupier for the agistment of other persons' cattle or horses (which for the year in question were all horses). 4. The 12.42 acres has been reasonably fully utilised by the agistment of stock, and grazing is the best agricultural use of the land. 5. The appellant started advertising in 1965 that agistment was available for stock, and stock has been on agistment on the land continuously since that time. 6. The appellant carries on the activity of the pasturing of cattle for the purpose of profit. 7. The appellant charges for agistment at a rate per head per week, and keeps records of income and expenditure pertaining to the agistment services. 8. Over 90 per cent of the land has been pasture improved, and the pastures are still in good condition. 9. The appellant has maintained the pastures by eradication of thistles and burrs, watering (i.e. irrigating) and stock management. 10. The appellant has erected fences to ensure good stock control; has kept fences in repair; has installed and maintained troughs for stock watering and has ensured the water supply for the stock. 11. The appellant has sought and received expert advice on the care and the use of the land. The case stated then records that the Court inferred "that there appeared to be a minimum of activity on the appellant's part" (par. 17), whatever that may mean, and that the Court decided "as a matter of fact, that the appellant's use of the land, albeit for commercial purposes and for the purpose of profit, was not significant enough to bring it within the scope of the common or general meaning of either of the words "business" or "industry" " (par. 18). The judgment of the primary judge was annexed to the case stated. The case presented the following questions of law: 1. Did I err in law in holding that it was a question of fact whether the activities of the appellant on the land fell within the description of one or both of the words "business" or "industry" in the definition of Rural land in s. 118 (1) of the Local Government Act, 1919? 2. If the answer to Question 1 is yes, should I have allowed the appeal as a matter of law? 3. On the facts found and admitted should I, as a matter of law, have held that the appellant had discharged the onus of proof (vide s. 118 (7)) that the land was rural land? 4. If the answer to Question 3 is yes should I, as a matter of law have allowed the appeal? The Court of Appeal answered questions 1 and 3 "No" and found it unnecessary to answer the other questions. The appellant was ordered to pay the respondent's costs of the case stated. Before I turn to the reasons given by the majority in the Court of Appeal in support of these answers I should refer to the critical passage in the judgment of the primary judge and to the criticism of it which is made by the appellant. After reviewing the facts, Rath J. said: I am mindful that it has been said that it is not necessary that the business should be a large one (Dolus Pty. Ltd. v. Wyong Shire Council [14] ); but there must be some activity of which it can be said that it has a significant commercial purpose or character. The words "business" and "industry" are familiar words which are in common and general use in the English language; and the question whether the facts of this case bring the activities of the appellant on the land within the description of one or both these words is one of fact (Fennell v. Wyong Shire Council [1] ). It is a question of fact which in my view must be answered against the appellant. 1. (1975) 31 L.G.R.A. 58, at p. 60. 2. (1975) 31 L.G.R.A. 164, at p. 169. The appellant submitted (1) that the question whether the appellant's activities as found answered the statutory description was a question of law; (2) that the primary judge misdirected himself in law as to the meaning of the word "business" by finding, as he did in par. 18 of the case, that the appellant's use of the land, though for commercial purposes and for the purpose of profit, "was not significant enough" to bring it within the common or general meaning of "business" or "industry"; and (3) that in any event his Honour's conclusion that the activities as found did not constitute a business was not reasonably open and that he thereby erred in law. The principal judgment in the Court of Appeal was that of Samuels J.A. His Honour's reasoning proceeded in this fashion. As "business" is an ordinary English word, its meaning is not a question of law and, accordingly, whether the activities of the appellant constituted a business was a question of fact. Further, the primary judge's determination involved an ultimate finding of fact. Finally, his Honour concluded that in deciding that the commercial purposes for which the appellant used the land were insufficiently real or important, the primary judge did not make any error of law. The reasoning of Glass J.A. followed a similar track. Many authorities can be found to sustain the proposition that the question whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law. One example is the judgment of Fullagar J. in Hayes v. Federal Commissioner of Taxation [2] , where his Honour quoted the comment of Lord Parker of Waddington in Farmer v. Cotton's Trustees [3] , which was adopted by Latham C.J. in Commissioner of Taxation v. Miller [4] , that where all the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only. Fullagar J. then said [5] : this seems to me to be the only reasonable view. The distinction between the two classes of question is, I think, greatly simplified, if we bear in mind the distinction, so clearly drawn by Wigmore, between the factum probandum (the ultimate fact in issue) and facta probantia (the facts adduced to prove or disprove that ultimate fact). The "facts" referred to by Lord Parker are the facta probantia. Where the factum probandum involves a term used in a statute, the question whether the accepted facta probantia establish that factum probandum will generally—so far as I can see, always—be a question of law. 1. (1956) 96 C.L.R. 47, at p. 51. 2. [1915] A.C. 922, at p. 932. 3. (1946) 73 C.L.R. 93, at p. 97. 4. (1956) 96 C.L.R., at p. 51. However, special considerations apply when we are confronted with a statute which on examination is found to use words according to their common understanding and the question is whether the facts as found fall within these words. Brutus v. Cozens [6] was just such a case. The only question raised was whether the appellant's behaviour was "insulting". As it was not unreasonable to hold that his behaviour was insulting, the question was one of fact. 1. [1973] A.C. 854. The judgment of Kitto J. in N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation [7] is illuminating. Kitto J. observed that the question whether certain operations answered the description "mining operations upon a mining property" within the meaning of s. 122 of the Income Tax Assessment Act 1936, as amended, was a mixed question of law and fact [8] . He went on to explain why this was so: "First it is necessary to decide as a matter of law whether the Act uses the expressions "mining operations" and "mining property" in any other sense than that which they have in ordinary speech." Having answered this question in the negative, he noted that the "common understanding of the words has to be determined" as "a question of fact". He continued [9] : The next question must be whether the material before the Court reasonably admits of different conclusions as to whether the appellant's operations fall within the ordinary meaning of the words as so determined; and that is a question of law [9a] : see also per Isaacs and Rich JJ. in Australian Slate Quarries Ltd. v. Federal Commissioner of Taxation [10] . If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact: see per Williams J. in the Broken Hill South Case [11] . 1. (1956) 94 C.L.R. 309. 2. (1956) 94 C.L.R., at pp. 511-512. 3. (1956) 94 C.L.R., at p. 512. 4. (1941) 65 C.L.R., at p. 155. 5. (1923) 33 C.L.R. 416, at p. 419. 6. (1941) 65 C.L.R. 150, at p. 160. Although it has been common ground that "business" is used in its ordinary meaning in s. 118 (1), the courts below have refrained from saying what that meaning is. This is perhaps understandable because, as a glance at the Shorter Oxford Dictionary will show, the word has many meanings. Ironically it is the last meaning given by the Shorter Oxford Dictionary, "19. A commercial enterprise as a going concern", that comes closest to the popular meaning which the courts appear to have acted on in the present case. In truth it is the popular meaning of the word as used in the expression "carrying on a business", rather than the popular meaning of the word itself, that is enshrined in the statutory definition. It is the words "carrying on" which imply the repetition of acts (Smith v. Anderson [12] ) and activities which possess something of a permanent character. This conclusion serves to emphasize that it is necessary to engage in a process of construction in order to arrive at the meaning of the word in s. 118 (1). 1. (1880) 15 Ch. D. 247, at pp. 277-278. I accept, then, that "business" in the sub-section has the ordinary or popular meaning which it would be given in the expression "carrying on the business of grazing". It denotes grazing activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis. Putting aside the question whether the activities have a "grazing" character, the critical issue for decision is whether the material before the Court reasonably admits of different conclusions on the question whether the appellant's activities constitute a "business". On the facts as found, I conclude that the appellant's activities amounted to a business and that no other conclusion was reasonably open. In this respect I agree with what Reynolds J.A. said in his dissenting judgment. Transactions were entered into on a continuous and repetitive basis for the purpose of making a profit. The activity had a permanent character in that it had been carried on without interruption since 1965. The appellant sought customers by advertising and kept appropriate financial records. The land, though small in area, was put to its best potential use and the pastures were improved and facilities including fences were provided for that use. There is nothing in the findings to suggest that the activities were other than genuine and real. But for one circumstance this conclusion would establish that the primary judge, and for that matter the Court of Appeal, erred in point of law. However, and this is the circumstance to which I refer, there are some indications that Rath J. erred in assigning to "business" a meaning which was not, strictly speaking, its popular meaning. It will be recalled that, according to Kitto J., the determination of the common understanding of a word is a question of fact. Certain it is that their Honours below were beguiled by the remarks of Walsh J. in Thomas v. Federal Commissioner of Taxation [13] . As par. 18 of the case shows, Rath J. concluded that the appellant's use of the land was not "significant enough" to constitute a business, although, as we have seen, his Honour expressed it very differently in his judgment. A similar idea, albeit otherwise expressed, emerged in the judgment of Glass J.A. when he spoke of the primary judge's conclusion that the activities "did not amount to a genuine, real or significant business". And Samuels J.A. expressed the view that "significant", as used by the primary judge, meant "important", "real", "genuine" or "weighty". 1. (1972) 46 A.L.J.R. 397. It seems that the emphasis given to the need for activities which were "significant", "real", "important", "genuine" or "weighty" had its origin in what was said in Thomas by Walsh J. [14] : But a man may carry on a business although he does so in a small way. In my opinion the appellant's activities in growing the trees ought not to be found to have been carried on merely for recreation or as a hobby. I leave out of account the pine trees, the growing of which did not have, I think, a significant commercial purpose or character. The issue in Thomas was whether the taxpayer was carrying on the business of growing avocado, macadamia nut and pine trees. Walsh J. in the passage quoted did no more than say that he left the pine trees out of account because the growing of them did not have a commercial purpose or character which was significant for the purpose of characterizing the taxpayer's other activities as a business. His Honour's remarks did not go to the magnitude or size of the activities necessary to constitute a business, nor indeed to the genuineness or bona fide character of those activities. His Honour had expressly conceded that a man may carry on a business though in a small way. 1. (1972) 46 A.L.J.R., at p. 401. In deciding whether Rath J.'s decision involved an error of law, it is to his decision expressed in the stated case, as explained by his judgment, that we must look. His Honour may have erred in arriving at the common understanding of the word "business". However, if this was an error, it was associated with an omission to relate the word to the expression with which it was associated, this being an error in construction and accordingly of law. Be this as it may, it is my opinion that the primary judge arrived at a conclusion which cannot reasonably be supported, having regard to the meaning which I ascribe to "business" in the statutory definition, for on the facts as found the appellant's activities manifested the essential characteristics required of a business. Whether his activities amounted to a grazing business is a question not capable of being answered on the present materials. It is to be regretted that the stated case raised for consideration only the question whether the appellant's activities amounted to a "business" without raising the related and equally live questions whether the activities could be labelled as "grazing" activities and whether the land was wholly or mainly used for carrying on a grazing business. As it stands, the stated case does not enable the Court to resolve the whole of the controversy between the parties. In the result I answer the questions asked as follows: 1. Yes. 2. No; other issues remain to be decided. 3. No; see answer to question 2 above. 4. No; see answer to question 2 above. Murphy J. Most of the difficulties in this case arise from the stated case procedure. These have resulted in much time being wasted by judges, counsel and other legal representatives at the various stages of this case and they are typical of the procedure. I agree with Mason J. that, on the facts stated, the appellant's land was used for business. Whether it was "wholly or mainly used" for the business of grazing is not open to us for decision on the case stated, although that is the important question for the resolution of the real issue. The questions should be answered as proposed by Mason J. Aickin J. I have had the advantage of reading the reasons for judgment prepared by my brother Mason and I agree with them. I have nothing to add.