Supreme Court New South Wales Medium Neutral Citation: Godolphin Australia Pty Ltd v Chief Commissioner of State Revenue [2022] NSWSC 430 Hearing dates: 16, 17, 18 August 2021 Date of orders: 13 April 2022 Decision date: 13 April 2022 Jurisdiction: Equity Before: Ward CJ in Eq Decision: 1. Revoke the land tax assessments. 2. Refer the matter to the defendant to assess for land tax excluding the taxable value of the Kelvinside and Woodland properties. 3. Order the defendant to pay the plaintiffs' costs. Catchwords: TAXES AND DUTIES — Land tax — Assessments — Exemption for land used for primary production — Where plaintiff used land for the maintenance of horses both for the purpose of training those horses for racing and for the purpose of selling those horses or their bodily produce, namely their semen — Distinction between dominant use of land and dominant purpose of land Legislation Cited: Income Tax Assessment Act 1936 (Cth), s 6(1) Land Tax Act 2004 (Vic), s 68 Land Tax Management Act 1956 (NSW), ss 3, 10, 10AA Local Government Act 1993 (NSW), s 516 Taxation Administration Act 1996 (NSW), ss 3, 97(1), 100 Valuation of Land Act 1916 (NSW), s 7 Cases Cited: Bayside Council v Karimbla Properties (No 3) Pty Ltd (2018) 99 NSWLR 66; [2018] NSWCA 257 Camden Park Estate Pty Ltd v Commissioner of Land Tax (NSW) (1983) 14 ATR 557 CDPV Pty Ltd v Commissioner of State Revenue (Vic) (2017) ATC 20-616; [2017] VSCA 89 Chief Commissioner of State Revenue (NSW) v Adams Bidco Pty Ltd (2019) 109 ATR 754; [2019] NSWCA 34 Chief Commissioner of State Revenue v Metricon Qld Pty Ltd (2017) 105 ATR 11; [2017] NSWCA 11 Commonwealth v New South Wales (1923) 33 CLR 1; [1923] HCA 34 Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493; [1957] HCA 15 Ferella v Chief Commissioner of State Revenue (NSW) (2014) 96 ATR 875; [2014] NSWCA 378 Illawarra Meat Co Pty Ltd v Commissioner of Land Tax (NSW) [1979] 1 NSWLR 188; (1979) 9 ATR 734 Ingle v Farrand [1927] AC 417 John v Commissioner of Taxation (Cth) (1989) 166 CLR 417; [1989] HCA 5 LeasePlan Australia Ltd v Deputy Federal Commissioner of Taxation (2009)74 ATR 33; [2009] FCA 1309 Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue (2011) 85 ATR 775; [2011] NSWCA 366 Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue (2010) 79 NSWLR 724; [2010] NSWSC 867 Leppington Pastoral Co Pty Ltd v Chief Commissioner of State Revenue (2017) 104 ATR 820; [2017] NSWSC 9 Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue (2013) 97 ATR 818; [2013] NSWCA 408 Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd (2005) 222 CLR 194; [2005] HCA 9 News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563; [2003] HCA 45 Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249; [2005] HCA 28 R & D Holdings Pty Ltd v Deputy Commissioner of Taxation (2006) 64 ATR 71; [2006] FCA 981 Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193; [2005] HCA 58 Tweddle v Federal Commissioner of Taxation (1942) 180 CLR 1; [1942] HCA 40 Vartuli v Chief Commissioner of State Revenue (2014) 98 ATR 545; [2014] NSWSC 678 Young v Chief Commissioner of State Revenue (NSW) [2020] NSWSC 330 Category: Principal judgment Parties: Godolphin Australia Pty Ltd (Plaintiff) Chief Commissioner of State Revenue (Defendant) Representation: Counsel: D Russell QC with J Emmett SC TL Wong SC with S Kanagaratnam Solicitors: Johnson Winter & Slattery (Plaintiff) Crown Solicitor for New South Wales (Defendant) File Number(s): 2019/00401271 Publication restriction: Nil Judgment 1. HER HONOUR: In this matter, the plaintiff, Godolphin Australia Pty Ltd (Godolphin), seeks a review, pursuant to s 97(1) of the Taxation Administration Act 1996 (NSW) (Taxation Administration Act), of the decision of the defendant, the Chief Commissioner of State Revenue (Chief Commissioner) to assess Godolphin for land tax in respect of two properties known as "Kelvinside" and "Woodlands" (the Land) for the 2014-2019 tax years (see the notices of land tax assessment issued on 19 March 2020 for the 2014-2016 land tax years (exhibited at Exhibit PK-1 to the affidavit of Prashanth Kainthaje affirmed 14 September 2020, marked Exhibit J at the hearing) and 20 July 2020 for the 2017-2019 land tax years, respectively) (the Assessments). 2. Godolphin contends that the Land was exempt from land tax on the basis of the exemption for rural land used for primary production conferred by s 10AA(3)(b) of the Land Tax Management Act 1956 (NSW) (Land Tax Management Act) because the dominant use of the Land, in each of the relevant land tax years, was for "the maintenance of animals … for the purpose of selling them or their natural increase or bodily produce". In summary, Godolphin (which operates a thoroughbred stud) maintains that the dominant use of the Land is the maintenance of stallions for the purpose of selling their bodily produce (specifically, their semen) or their natural increase; the maintenance of mares, foals and other horses for the purpose of selling those mares, foals, and other horses or their natural increase; and/or the maintenance of cattle for the purpose of selling cattle and their natural increase. 3. Godolphin seeks orders revoking the Assessments; to be assessed for land tax for the 2014-2019 land tax years excluding the taxable value of the Kelvinside and Woodlands land; and for costs. 4. It is not disputed that each parcel of the Land is rural land within the meaning of s 10AA(4) of the Land Tax Management Act (see Chief Commissioner's further amended appeal statement at [10](a)). Further, the Chief Commissioner accepts (and the Assessments reflect) that some parcels of the Kelvinside property were exempt from land tax pursuant to the primary production exemption (namely, PID 3619809, PID 3678272 and PID 292526). The Chief Commissioner also accepts that certain parcels of land were used for cattle grazing (although the Chief Commissioner says that the dominant use for each parcel was not cattle grazing) (see Chief Commissioner's further amended appeal statement at [10](b)(ii)-(iii)) and that s 10AA(3)(b) of the Land Tax Management Act does not require an animal maintained on the land to be sold at a particular age or sold at a particular time after it is born (see Chief Commissioner's further amended appeal statement at [10](b1)(i)). 5. However, the Chief Commissioner argues that, while the dominant use of the Land was for the maintenance of animals, that use was not for the requisite statutory purpose of selling those animals, their natural increase or bodily produce. Rather, it is contended that the purpose was for breeding and training thoroughbred racehorses and spelling thoroughbred racehorses in between race events; and that any sale of the thoroughbred horses was ancillary or incidental to that purpose. Alternatively, to the extent that a purpose of sale did exist, the Chief Commissioner says that it was not the dominant purpose or sufficiently proximate to the current use of the Land for the maintenance of animals and therefore did not satisfy the statutory test set out in s 10AA(3)(b) of the Land Tax Management Act. 6. Further or in the alternative, the Chief Commissioner says that, to the extent that the Land was being used for the maintenance of animals for the purpose of selling their natural increase or bodily produce, that use was not dominant in comparison to other uses of the Land (including the breeding and training of thoroughbred horses for the purpose of racing and the spelling of racehorses in between races). 7. The Chief Commissioner seeks orders that: the plaintiff's further amended summons be dismissed; that, pursuant to s 101(1)(a) of the Taxation Administration Act, the respective Land Tax Assessment Notices be confirmed; and that Godolphin pay the Chief Commissioner's costs of the proceeding. 8. The amount of land tax in issue is approximately $1,438,000. The Land 1. The Land the subject of the Assessments is located at Aberdeen and Jerrys Plains and comprises two large properties (the whole of Woodlands, comprising the parcels of land at Jerrys Plains and Doyles Creek; and most of Kelvinside, comprising the parcels of land at Aberdeen). 2. Woodlands consists of the parcels of land identified by Lot, Deposited Plan (DP), address and Parcel Identification Number (PID) in the second table at [5] of Godolphin's further amended appeal statement filed on 14 September 2020. Relevantly, there are only two PIDs in issue, being PID 194885 (the northern half and some small south-western lots) and PID 303702 (the southern half). 3. Kelvinside consists of four separate, but contiguous, PIDs (namely PID 292024, PID 292022, PID 292533 and PID 291959/4196725 (itself consisting of DP 624789 and DP 220425) (see Exhibit AH-1 to the affidavit of Ava Hurley sworn 8 December 2020, marked Exhibit 2 in the hearing, at tab 2) in the first table at [5] of the plaintiff's further amended appeal statement; excluding for this purpose the parcels of land which the Chief Commissioner has acknowledged are exempt from land tax) (see above) those exempt parcels being: Lot 1 in DP 1168564, Aberdeen NSW 2336, PID 3619809; Lot 159 in DP 712988, Aberdeen NSW 2336, PID 3678272; Lot 532 in DP 1180147, Aberdeen NSW 2336, PID 3678272; and Lot 134 in DP 752485, Lot 134 Aberdeen NSW 2335, PID 292526. 4. The remaining parcels are thus Lot 4 in DP 179687, Aberdeen NSW 2336, PID 292533; Lot 51 in DP 705560, Aberdeen NSW 2336, PID 292533; Lot 81 in DP 624789, Aberdeen NSW, PID 4196725 (in the 2016, 2017, 2018 and 2019 land tax years) and PID 291959 (in the 2014 and 2015 land tax years); Lot 1 in DP 220425, Rouchel NSW 2336, PID 4196725 (in the 2016, 2017, 2018 and 2019 land tax years) and PID 291959 (in the 2014 and 2015 land tax years); Lot 306 in DP 608406, Aberdeen NSW 2336, PID 292024; and Lot 303 in DP 255663, Aberdeen NSW 2336, PID 292022. 5. The Chief Commissioner's solicitor, Ms Ava Hurley has deposed that the PIDs in respect of Kelvinside partially overlap other lots (because some span two Local Government Areas, being Muswellbrook and Singleton; and/or exclude public roads) (see Ms Hurley's affidavit sworn 8 December 2020 at [10]). Further, I note that PID 291959 was replaced by PID 4196725 at some stage during the relevant land tax years (again, see Ms Hurley's affidavit at [8]). Godolphin's equine operations 1. Godolphin, as adverted to above, runs a thoroughbred stud operation that involves breeding and racing thoroughbred horses; and selling thoroughbred horses or their semen or progeny. It also engages in associated agricultural activities such as raising cattle and growing lucerne. 2. In essence, (although I accept that this is a generalisation) the opposing parties' contentions as to how to characterise Godolphin's operations might be said to involve different perspectives as to the slogan adopted to describe Godolphin's business model and referred to by Mr Vincent (Vin) Cox, Managing Director of Godolphin, namely, "breeding to race and racing to breed" (see Mr Cox' first affidavit sworn 25 August 2020 at [39]; Mr Cox' second affidavit sworn 16 October 2020 at [53]-[59]). Akin to a "chicken or egg" proposition, in colloquial terms, the argument in one sense is whether the dominant purpose of the breeding, training and maintaining of horses on the land in question is to race those horses or whether the dominant purpose of Godolphin's racing programme (and the activities leading up to this, including breeding, training and maintenance) is to increase the value to be attributed to the sale of their semen and/or progeny. 3. In this regard, it is relevant to note that when Godolphin initially entered the thoroughbred stud market in Australia (trading as Darley Australia – see T 100.21-30) it operated largely as a breeding stud and acquired Ingham bloodstock (see T 99.9-16). Its business model then expanded to include racing. 4. Godolphin emphasises in its submissions that, while there is a significant level of integration between different parts of Godolphin's operations, Godolphin has a different dominant use for different properties (which it says is reflected in its acceptance that some of the land it owns, in particular the Crown Lodge and Osborne Park properties to which I refer in due course, does not fall within the primary production exemption and is subject to land tax). Further, Godolphin notes that it does not use the Land or run its operations by reference to the boundaries of specific PIDs or DP lots. Rather, it operates four properties, each of which comprises a number of PIDs used for overlapping purposes; those being Kelvinside, Woodlands, Crown Lodge and Osborne Park (see below). Godolphin also carries out thoroughbred stud operations in Victoria but those are not relevant for present purposes. 5. I interpose to note that, while the activities on Osborne Park and Crown Lodge are not the subject of this proceeding, the Chief Commissioner says that it is important to have regard to those properties and the activities conducted on those properties because Godolphin's business is integrated, in that: thoroughbred horses progress in a cycle between each of Woodlands, Kelvinside, Osborne Park and Crown Lodge; Godolphin's financial records do not always differentiate between expenditure incurred and revenue generated on the basis of location (by reference to discrete properties); and Godolphin's business model as a whole is relevant to ascertaining the purpose for which animals are maintained on Woodlands and Kelvinside. 6. Briefly, the activities carried on by Godolphin on the four properties are described by Godolphin as follows. Woodlands 1. On Woodlands, Godolphin maintains thoroughbred broodmares and their offspring (Mr Cox' first affidavit at [20]-[27]). The substantial majority of the offspring (around 70%) will be sold by Godolphin, usually after they have commenced their racing career, with most being sold relatively early in their career (Mr Cox' first affidavit at [41]-[42]; Mr Cox' second affidavit sworn 16 October 2020 at [54]; Exhibit PAH-1 to the affidavit of Paul Hartmann, Financial Controller of Godolphin, affirmed 26 August 2020, marked Exhibit D at the hearing, at tab 11). Most of the thoroughbred horses that are not sold are used as part of Godolphin's breeding programme (as stallions or as broodmares). Godolphin also uses substantial parts of Woodlands for the purpose of maintaining cattle for sale (Mr Cox' first affidavit at [11]-[15]) and uses particular parts of Woodlands to grow lucerne (Mr Cox' second affidavit at [10](h)). 2. On Woodlands, Godolphin also maintains a small number of other horses for purposes ancillary to breeding or "education", being what are referred to as "nanny mares" and "hacks" (used to keep young horses calm) and "teasers" (used to prepare mares for insemination or "cover" by a stallion) (Mr Cox' first affidavit at [46]-[49]). Kelvinside 1. On Kelvinside, Godolphin maintains what it describes as a thoroughbred stud operation, in which stallions inseminate (or "cover") mares for substantial fees (see Mr Cox' first affidavit at [56]-[59]; Mr Cox' second affidavit at [7]-[9]). (Pausing here, I note that the Chief Commissioner points out that only about 10% of the relevant PID on Kelvinside is used for the stallion covering activities, although Godolphin's evidence is that the stallions also exercise on other parts of Kelvinside.) 2. It is relevant in this context to note that a horse is not recognised as a "thoroughbred" (in Australia and elsewhere globally) unless it is produced by natural cover; thus insemination by natural cover is the only way that thoroughbred stallion semen can be supplied to owners of thoroughbred broodmares (see Ms Jacqueline Stewart's first affidavit sworn 24 August 2020 at [7]-[24]). This also has the consequence that semen cannot be sold separately for use by way of artificial insemination while retaining the status of the resulting progeny as thoroughbred horses. The relevance of this for present purposes is that it appears that the Chief Commissioner accepts (consistent with Commonwealth Taxation Ruling No IT 219, issued 24 September 1969) that, if semen were extracted and sold separately, such a transaction would be the sale of bodily produce (see Exhibit PK-1 to Mr Prashanth Kainthaje's affidavit affirmed on 14 September 2020, marked Exhibit J at the hearing, at p 3 – being a letter from the Chief Commissioner of State Revenue to Mr Kainthaje concerning the application by Darley Australia for primary production land exemption) but did not initially accept that the process of insemination fell within the concept of sale of bodily produce. As apparent from the above, artificial insemination practices would result in loss of thoroughbred status and thus would not be feasible for a thoroughbred stud operation. 3. In its written submissions, Godolphin spends some time dealing with the characterisation of the contractual arrangements under which the stallions cover mares (the Live Foal Agreements). Suffice it to note that Godolphin submits that these contracts are properly characterised as contracts for the sale of goods (not for the supply of services). However, it is not necessary here to deal with this issue as the Chief Commissioner now accepts that stallion covering involves maintenance of animals for the purpose of selling their bodily produce (semen). Rather, the Chief Commissioner's contentions on this appeal is that the stallion covering services on Kelvinside are not a dominant use of the relevant land. 4. Godolphin also uses substantial parts of Kelvinside for the purpose of maintaining cattle for sale (Mr Cox' first affidavit at [11]-[15]), uses some parts to "spell" (i.e., rest) horses from other parts of its operations (Mr Cox' second affidavit at [41], [50]), and uses particular parts of Kelvinside for the raising and education of yearlings (including the process of "breaking in" of the horses) (see Mr Cox' second affidavit at [27]-[33]). Godolphin says that education of yearlings is carried out irrespective of whether the horses are destined for racing, sold or used for other purposes. Crown Lodge 1. On Crown Lodge, which is located next to the Australian Turf Club's Warwick Farm Racecourse, Godolphin trains racehorses (Mr Cox' second affidavit at [13]-[21]). As noted above, Godolphin accepted that the primary production exemption does not apply in relation to this property. Osborne Park 1. On Osborne Park, Godolphin operates its primary training facility for horses that have commenced their racing careers (Mr Cox' second affidavit at [22]-[26]). Godolphin also uses Osborne Park for spelling horses (Mr Cox' second affidavit at [50]). Again, Godolphin does not dispute that land tax is payable in respect of this property. Categorisation of horses maintained by Godolphin 1. At this point, it is convenient to explain the cycle or progress through Godolphin's equine operations of the horses maintained by Godolphin on the four properties. Foals 1. Mr Cox has deposed that foals are born, weaned, trained, and commence their education at Woodlands (see Mr Cox' second affidavit sworn on 16 October 2020 at [29]-[30)]. 2. In each of the land tax years, the overwhelming majority of foals are retained by Godolphin, with very few foals sold as "culls". So, for example, in the years 2013 to 2016, 210 foals were produced by Godolphin mares, 30 of which were sold as "foal culls" with the remaining 180 being retained (the Chief Commissioner says to enter Godolphin's race programme – see the Darley Flying Start 2013 Presentation); and in 2017 and 2018, 140 foals were produced by Godolphin mares with 137 being retained. Yearlings 1. Mr Cox has deposed that, during January to April of their yearling year, yearlings "begin education to race when they are able to be handled and led" (see Mr Cox' first affidavit at [78]). The education process (described in Mr Cox' second affidavit at [31]-[33]) includes use of "a sand training track that allows a horse to get used to a rider and become familiar with the look and feel of a racetrack" together with "wide practice barriers" to "familiarise the young horse with the feel of being led into a starting gate" (see at [33]). 2. Mr Cox' evidence is that the yearlings begin "an intensive 4-6 months of training, commencing when the horse is approximately 18 months old" (see Mr Cox' second affidavit at [34]). That intensive training involves the transportation of the entire foal crop (in each land tax year) in batches to Crown Lodge for one week of training after which they return to the Land. That process is repeated up to five times per yearling batch (Mr Cox' second affidavit at [35]). Mr Cox has deposed that the purpose of that "racehorse training is to get the yearlings accustomed to activities that take place on the racetrack" (Mr Cox' second affidavit at [36]). 3. The Chief Commissioner says that the clear purpose of the yearlings' intensive training cannot be artificially segregated into a purpose of racing while the yearling is maintained at Crown Lodge and a purpose of sale when the same horse is maintained on the Land. It is said that one informs the other. (Pausing here, to some extent Godolphin's argument accepts this – but, as adverted to above, Godolphin places emphasis on the racing being a fundamental part of the sale process rather than the sale process being ancillary to the racing.) 4. The Chief Commissioner argues that at no time during this period of intensive training is a yearling maintained on the Land for the purpose of selling it; rather, it is said that the evidence is that "when the yearlings are not at Crown Lodge they spell at Kelvinside". The Chief Commissioner argues that it would be nonsensical to suggest that, in the intermission between its second and third rotations of intensive training at Crown Lodge, a yearling spelling on the Land (awaiting its third rotation of intensive training) is maintained on the Land for the purpose of selling it. It is submitted that, having regard to the integrated nature of Godolphin's business, yearlings are maintained on the Land for the purpose of spelling in between intensive racehorse training rotations (i.e., they are maintained for the purpose of racing). 5. In each of the land tax years Godolphin sold very few yearlings compared to the "foal crop" engaged in racehorse training. Exhibited to the affidavit of Godolphin's Financial Controller, Mr Hartmann, is a spreadsheet prepared from data contained in Godolphin's Horse Management System that shows the number and "Age at Disposal" of thoroughbred horses (see Mr Hartmann's affidavit at [22] and tab 11 of Exhibit D). The summary of thoroughbred horses sold by Godolphin in each of the 2010 to 2018 seasons (ordered by Age at Disposal) records that, in 2013, six out of 113 disposals were under two years old (i.e., foals or yearlings) that in 2014 yearling disposals reduced to three (of 111); in 2015 to one (of 50); in 2016 to two (of 47); and that there were no sales of yearlings recorded in either 2017 or 2018. Horses of racing age – geldings, mares and stallions 1. Mr Cox' evidence is that Godolphin races mares between the ages of two and five to six years old and stallions between the ages of two and five years old (Mr Cox' first affidavit at [82]); and that such racehorses will race for a period and then "spell for a time", with approximately 85% of horses spelling in NSW doing so at Kelvinside (Mr Cox' second affidavit at [50]). Mr Cox' evidence is that all horses need to rest (or spell) (whether racing or training – see T 49.1-16) and that races are timed best to suit each horse's ability, age, distance and group (Mr Cox' second affidavit at [47]). Geldings 1. Mr Cox' evidence is that Godolphin gelds the "vast majority of the male thoroughbred horses that it does not consider to have stallion prospects" (Mr Cox' first affidavit at [50]), and that those geldings are "usually sold at three years of age" (Mr Cox' first affidavit at [52]). Mares 1. Mr Cox' evidence is that "once their racing career is finished", mares either become part of Godolphin's broodmare "band" or are sold to third parties (Mr Cox' first affidavit at [36]). 2. The Chief Commissioner notes, for example, that the Godolphin January 2017 Monthly Report records that in order to bring the broodmare number down to 150 "[Godolphin] aim[ed] to sell a further 70 mares this year" and that it is anticipated that from 2019 "we will be basing approximately 120 yearlings into the racing operation each year, lowering the number of racehorses in the system from 400 to 300". 3. The Chief Commissioner argues that the monthly report statement is indicative of purpose (and from this that the sale of 70 mares was not to "realise a return" on the sale but was driven by the desire to bring approximately 120 yearlings into the racing operation). It is thus submitted that the focus and purpose of Godolphin in maintaining mares on the land is breeding (in order to race offspring) and racing (not sale). Stallions 1. As to the stallions, as already noted the Chief Commissioner accepts that, during the times that they are maintained on Kelvinside (specifically PID 4196725), they are maintained for the purpose of selling their bodily product (i.e., semen). However, the Chief Commissioner says that this is not the dominant use of PID 4196725 (see the submissions on this issue in due course). Relevant legislation 1. Section 10AA of the Land Tax Management Act, which in its present form took effect on 7 December 2005, provides that: 10AA Exemption for land used for primary production (1) Land that is rural land is exempt from taxation if it is land used for primary production. (2) Land that is not rural land is exempt from taxation if it is land used for primary production and that use of the land - (a) has a significant and substantial commercial purpose or character, and (b) is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made). (3) For the purposes of this section, land used for primary production means land the dominant use of which is for - … (b) the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase or bodily produce … (4) For the purposes of this section, land is rural land if- (a) the land is zoned rural, rural residential, non-urban or large lot residential under a planning instrument, or (b) the land has another zoning under a planning instrument, and the zone is a type of rural zone under the standard instrument prescribed under section 33A (1) of the Environmental Planning and Assessment Act 1979, or (c) the land is not within a zone under a planning instrument but the Chief Commissioner is satisfied the land is rural land. 1. As noted above, it is common ground that the Land is rural land under ss 10AA(1) and (4) of the Land Tax Management Act. 2. Pursuant to s 100(3) of the Taxation Administration Act, Godolphin bears the onus of establishing its entitlement to the exemption conferred by s 10AA(1) of the Land Tax Management Act. Thus, Godolphin must establish (on the balance of probabilities) that in each of the land tax years the dominant use of the land was for the maintenance of animals for the purpose of selling them or their natural increase or bodily produce. 3. Prior to 7 December 2005, the primary production exemption was contained in s 10(1)(p), read with the definition of "land used for primary production" in s 3(1) of the Land Tax Management Act. The definition of land used for primary production relevantly included "land used primarily for … the maintenance of animals … for the purpose of selling them or their natural increase or bodily produce" (i.e., the exemption focused in terms on primary use as opposed to dominant use). 4. The legislative history to the amendment was summarised by Barrett AJA (with whom Macfarlan JA and I agreed) in Chief Commissioner of State Revenue v Metricon Qld Pty Ltd (2017) 105 ATR 11; [2017] NSWCA 11 (Metricon) (at [42]-[44]), his Honour extracting some passages from Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue (2011) 85 ATR 775; [2011] NSWCA 366 (Leda Manorstead). Barrett AJA in Metricon noted that the introduction of the "dominant use" test was to deal with the situation where land is used for more than one competing use (i.e., more than one physical activity), where only one of those uses satisfies one of subs-s 10AA(3)(a)-(f). It was there noted that "[r]unning a few head of cattle or sheep to attract a land tax exemption rather than to make profits will no longer suffice". 5. The operative language of sub-s 3(b) was, however, unaffected by the amendment; that sub-section being engaged if the activities comprising the dominant use are "the maintenance of animals … for the purpose of selling them or their natural increase or bodily produce". Relevant principles 1. There is broad consensus between the parties as to the applicable principles (albeit with some qualifications to which I will refer where relevant). At the outset, Godolphin notes the observation of Allsop P, as his Honour then was, in Leda Manorstead (at [28]) that there is no requirement to approach the matter in some beneficial fashion striving to expand the reach of the exemption or to narrow the taxing operation of the section according to strict language; and Godolphin submits that, by parity of reasoning, there is no requirement to do the reverse so as to deny the exemption. 2. In Metricon (at [59]-[60]), Barrett AJA held that the enquiry directed by s 10AA(3) is as to current tangible and physical development and its purpose (see also in this context the subsequent decision in Bayside Council v Karimbla Properties (No 3) Pty Ltd (2018) 99 NSWLR 66; [2018] NSWCA 257 (Bayside) at [109], [120] per Emmett AJA). His Honour observed that little is likely to turn on subjective purpose or intention, noting that the question is not what an owner, lessee or other person able to do so decides is to happen in relation to the land. Rather, the task is to determine whether, as an objective matter, the things that that person causes to happen constitute "use" and, if so, whether (and to what extent) that "use" is a use described in paras (a) to (f) of sub-s 3. 3. Pausing here, while the Chief Commissioner accepts that little is likely to turn on subjective purpose or intention (noting what was said in Metricon at [60]), the Chief Commissioner submits that the subjective intention of the person who claims to be using land for primary production can be a relevant consideration in making an objective evaluation of the whole of the circumstances; referring to Bayside, where Emmett AJA said (at [113]) that: The legislative framework … requires a central focus upon the physical activities that are being conducted on, or in respect of, the land at the relevant date, and an objective characterisation of those activities in order to determine whether the use of the land that those activities constitute is "for residential accommodation". In that process, regard cannot be had to the subjective intention, past, present or future, of the owner or the occupier, or of both, except in so far as that intention sheds light on the objective characterisation of the physical activities actually being conducted on, or in respect of, the land. [citations omitted] 1. As to the concept of "use", in Metricon, Barrett AJA expressed the opinion that it was the physical concept of land in the sense articulated by Isaac J's reference in Commonwealth v New South Wales (1923) 33 CLR 1; [1923] HCA 34 (at 33) to "the concrete physical mass, commencing at the surface of the earth and extending downwards to the centre of the earth", that was relevant to the interpretation of s 10AA(3). His Honour went on to say (at [61]) that: … the concept of 'use' relevant to s 10AA as a whole (and s 10AA(3) in particular) – a concept in which the preposition 'for' plays a central role – is one of physical deployment of Isaacs J's "concrete physical mass" in pursuance of a particular purpose of obtaining present benefit or advantage from it, with the deployment understood as including not only activity but inactivity deliberately adopted as a means of obtaining such actual and present advantage from the land; and with the purpose understood as objectively ascertained purpose. There is no requirement that immediate productive return be achieved, as long as some benefit or advantage accrues. 1. In Bayside, in the related statutory context of s 516(1)(a) of the Local Government Act 1993 (NSW) (Local Government Act), it was said at [112]: The word "use" … in relation to land … has a core meaning independent of statutory context. Examination of activities undertaken upon the land in question is central to the identification of the "use" of the land. … 1. Godolphin says that the "dominant use", in its ordinary meaning, connotes the ruling, prevailing or most influential use; and requires a determination of which use of the land is the main, chief or paramount use (citing the first instance decisions of Gzell J in Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue (2010) 79 NSWLR 724; [2010] NSWSC 867 at [69]-[71] and White J, as his Honour then was, in Leppington Pastoral Co Pty Ltd v Chief Commissioner of State Revenue (2017) 104 ATR 820; [2017] NSWSC 9 (Leppington Pastoral) at [152]-[153]). 2. Relevantly, in Leppington Pastoral (at [154]-[156]), White J considered that "dominant use" was not synonymous with land used "primarily" for a particular purpose (that being the previous statutory language); and said (at [157]) that "[t]he question is not simply whether primary production use is the chief use, being of a greater scale, intensity, character or importance than … the other … competing uses, but whether having regard to [the] competing uses, it is the use that dominates" (see also at [114]). At [158], his Honour said: Section 10AA(3) requires weighing the nature and intensity of competing uses, the physical areas over which they are conducted, the time and labour spent in conducting the different uses, the money spent or assets deployed in each use and the value derived or to be derived from it. 1. Physical acts by which land is made to serve some purpose have been said to be sufficient to constitute a "use" of the land (see Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493; [1957] HCA 15 at 508 per Kitto J; Leppington Pastoral at first instance at [115] per White J). 2. Further, as to the concept of use, "use" sometimes includes inactivity, such as land being left fallow as part of a crop rotation cycle. The deliberate maintenance of a state of inactivity can, of itself, be the implementation of a purpose "for" which the land is used, that is, the purpose of agriculture including by allowing time for soil regeneration; as is similarly the case if the owner intentionally derives actual and present advantage by keeping the land in a particular state (see Metricon at [57]). 3. The determination as to whether land satisfies the exemption must be made in respect of each individual parcel of land (see Chief Commissioner of State Revenue (NSW) v Adams Bidco Pty Ltd (2019) 109 ATR 754; [2019] NSWCA 34 (Adams Bidco) at [46] per White JA, and at [17] per Leeming JA). 4. As to the parcels of land themselves, the Chief Commissioner points in this regard to the definition of parcels of land by reference to the Valuation of Land Act 1916 (NSW) (s 7(2)) and notes that in Ferella v Chief Commissioner of State Revenue (NSW) (2014) 96 ATR 875; [2014] NSWCA 378, White J, as his Honour then was, said (at [34]) that: … The taxable value of the land on which land tax is payable is calculated by reference to an average of land values entered in the Register of Land Values kept under s 14CC of the Valuation of Land Act 1916 (NSW): Land Tax Management Act 1956 (NSW), ss 9(2), (3) and (4), 9AA and 3. Section 14A of the Valuation of Land Act 1916 (NSW) requires the Valuer-General to ascertain each year the land value of each parcel of land in New South Wales other than Crown lands and land in the Western Division that is not within the area of a rating or taxing authority (s 14A(1)). … 1. It is noted that the Registrar allocates a PID to each parcel for which it enters a value in the Register. Thus the Chief Commissioner says (and Godolphin accepts) that a "dominant use" falling within s 10AA(3)(b) must be demonstrated in respect of each disputed PID within the Kelvinside and Woodlands properties (of which there are relevantly seven – two of which are in respect of the same parcel of land at different times; see Ms Hurley's affidavit at [4]). 2. Godolphin notes that in Leppington Pastoral at [46], White J held that s 10AA does not refer to land which, from a practical point of view, should be regarded as one piece of land. However, Godolphin says that it is implicit from the decision in Adams Bidco (referring by way of example to [29] per Leeming JA, [141]-[150], [199]-[200] per Emmett AJA) that an integrated business may include substantial parcels of land used for primary purposes and other parcels of land used for non-primary purposes. Godolphin submits that where (as it says is here the case) land is not operated by reference to parcel boundaries, the dominant use of a particular parcel must often be affected, and may be controlled, by the dominant use of the larger property of which it forms a part. 3. As to that last submission, the Chief Commissioner says that, to the extent that Godolphin suggests that a "use" on one parcel of land that is not dominant may become dominant because of its proximity to a parcel of land where that use is dominant, this should be rejected. The Chief Commissioner emphasises that each parcel of land must be considered separately (by reference to evidence adduced in relation to its use and the purpose for which that use is being undertaken) and says that, to the extent that Godolphin has failed to establish use and purpose on that basis, then Godolphin will not have discharged its onus. 4. In reply submissions, Godolphin says that if the Chief Commissioner (instructions at CS [24]) suggests that for each parcel that comprises Kelvinside or Woodlands the Court is not permitted to consider that parcel in the context of operations that are conducted across all parcels, that position is not supported by the authorities. However, if the Commissioner simply means to say that each parcel must be assessed separately, but accepts that the activity on that parcel should be assessed in light of the full context including operations that are not confined by PID boundaries, then Godolphin agrees. 5. Both parties have referred to authorities in which there is consideration of the position where there are overlapping activities on the land in question. In Metricon at [46], Barrett AJA held that only a competing physical use of the land is to be taken into account in determining whether or not the primary production use was dominant; see also Payne JA (sitting at first instance) in Young v Chief Commissioner of State Revenue (NSW) [2020] NSWSC 330 (Young) at [130]. 6. It is said that, where the whole of the relevant land is used, the requisite enquiry is whether the land is used "for" any of the activities or purposes listed in sub-s 10AA(3) and, if so, whether it is also used "for" an activity or purpose not within the paragraphs in that sub-section. Where the land is used both "for" a purpose within those paragraphs and "for" a purpose not within those paragraphs, it is necessary to weigh the respective uses against one another in order to ascertain which is the "dominant use" (see Young at [132]; Metricon at [48]). 7. Godolphin says that, in Young at [132], Payne JA was addressing the situation where land was being used for multiple different activities or purposes. Godolphin argues that the position may be different if the dominant use is a single set of activities (such as the maintenance of horses) and those activities are for more than one (overlapping) purpose. It is said that the latter situation is addressed by his Honour (at [144] of Young), where his Honour said: Depending on the surrounding circumstances, the maintenance of horses on land leads to at least two possible conclusions. Horses, like other animals, may be maintained on land for the purpose of sale (including their progeny). Unlike many other animals, horses may also be maintained on land for purely recreational purposes. There is no necessary conclusion that horses are maintained on land for the purposes of sale. That must be established by proof. I am not satisfied that the necessary conclusion was established here. 1. Godolphin says that Payne JA's use of the word "purely" in [144] indicates an acceptance that horses might be maintained for the purpose of sale even if they are also maintained for an overlapping or complementary recreational purpose. Indeed, Godolphin argues that this follows from the text of s 10AA. It is noted that sub-s (3)(b) (as does each of sub-ss (3)(a) and (d)) refers to "the purpose of selling", which Godolphin contrasts with the chapeau to sub-s (3), which refers to "the dominant use", and the purpose in sub-s (2)(a), which must be "a significant and substantial purpose". Godolphin argues that many primary production activities which clearly fall within s 10AA(3) (such as cultivation of grapes or beekeeping) may have a significant recreational element or be a source of pleasure, while nevertheless being activities carried on for the purpose of profit-making sales. 2. Pointing to the admonition by Payne J (as his Honour then was) in Young against looking at particular words or phrases of the section in isolation, or breaking s 10AA(3)(b) down into two different tests, Godolphin argues that the operative words here focus on the requisite dominant use being for the maintenance of animals for the purpose of selling them or their natural increase or bodily produce. Godolphin draws a distinction between the position where animals are being maintained for a range of purposes, and only a minor one is the possibility of sale (where it accepts the dominant use may well not be the maintenance of the animals for the purpose of sale within the meaning of s 10AA(3)) and the position where the dominant use is the maintenance of horses for overlapping purposes (racing and sale), each of which reinforces each other (i.e., it argues that racing the horses increases the sale price of the horses, their natural increase and their bodily produce). Godolphin says that the fact that the maintenance of horses on Kelvinside and Woodlands is for multiple overlapping purposes is therefore not the end of the enquiry. 3. In this context, Godolphin refers to Illawarra Meat Co Pty Ltd v Commissioner of Land Tax (NSW) [1979] 1 NSWLR 188; (1979) 9 ATR 734 (Illawarra Meat), where Waddell J said (in a case involving land on which pigs and some cattle were maintained, some of which were taken off the premises to be slaughtered and others sold at markets), at 190, that: Prima facie, it seems to me that if land is used for maintaining animals for the purpose of selling them, it does not matter whether they are sold live or dead, after slaughtering. The emphasis in the definition is on the purpose for which the land is used in maintaining the animals. That purpose, it seems to me, is a purpose of sale, no matter how the animals are in fact sold. 1. Godolphin points out that Waddell J (at 189-190) rejected an argument that the purpose should be regarded as raising pigs and cattle for slaughter (with the process of breeding and raising livestock being treated as distinct from the process of slaughtering them and distinct again from the process of butchering the carcasses and selling them through retailers). Godolphin says that the situation in Illawarra Meat, which it argues is analogous to the situation in the present case, was one where the maintenance of animals was for overlapping purposes (including making the animals available to the abattoir business on different land; and making their carcasses available to the retail and smallgoods businesses). Godolphin says that they all had, as one of the ultimate objects or purposes (but not the only object or purpose) the sale of the animals or their bodily produce. 2. Further, Godolphin invokes the reasoning (albeit conceding that this is in a different legislative context) in LeasePlan Australia Ltd v Deputy Federal Commissioner of Taxation (2009)74 ATR 33; [2009] FCA 1309, where Middleton J said that the acquisition of goods can be "for the purposes of sale or exchange" under the section even if there is another purpose for the acquisition other than sale; and held (at [39]) that "the whole transaction was a composite operation, where the disposal of the vehicles for forecasted valuable consideration was integral to [the taxpayer's] business". 3. Godolphin also makes reference to the definition of "trading stock" in s 6(1) of the Income Tax Assessment Act 1936 (Cth) includes "anything produced, manufactured, acquired or purchased for purposes of manufacture, sale or exchange"; and notes that the High Court in John v Commissioner of Taxation (Cth) (1989) 166 CLR 417; [1989] HCA 5 (John) at 430 held that the definition does not require the relevant purpose to be the sole or even the dominant purpose (and that Finn J in R & D Holdings Pty Ltd v Deputy Commissioner of Taxation (2006) 64 ATR 71; [2006] FCA 981 held that the reasoning in John should apply to real property held for the dual profit-making purpose of sale and lease of subdivided lots). 4. Godolphin argues that the reference to "purpose" in sub-s (3)(b) must be considered as part of the whole expression contained in that sub-paragraph and that it is the "use" that must be dominant (not the "purpose" there specified). Accordingly, Godolphin says that where a particular use (that is, a particular physical activity of the land) has overlapping purposes, a taxpayer should not be required to establish that the purpose of sale is the dominant purpose (in the sense of prevailing over other overlapping or complementary purposes); rather, the question should be whether, as a matter of ordinary English, that use can be characterised as being "the maintenance of animals … for the purpose of selling them or their natural increase or bodily produce". 5. As observed earlier, Godolphin argues that overlapping activities may reinforce each other. It contends in this context that breeding horses to be successful racehorses (with the intention of racing some of those horses itself) is entirely consistent with the physical activity (breeding horses) being characterised as being for the purpose of sale. It says that this is especially the case if the racing career is part of what makes the horse an attractive sale prospect (whether the sale be of the horse itself, the horse's progeny or, if a stallion, the horse's semen). 6. Godolphin argues that where there are multiple competing uses (in the sense of multiple competing physical activities on the land or physical deployments of the land), the question is which of those physical activities or deployments can be characterised in the requisite terms; and that an assessment must then be made of the nature and intensity of competing uses, the physical areas over which they are conducted, the time and labour spent in conducting the different uses, the money spent or assets deployed in each use and the value derived or to be derived from it (adopting the terminology of White J in Leppington Pastoral). It is said that if the dominant use or uses satisfy s 10AA(3), then the land is "land used for primary production" as defined. 7. As to the position of overlapping or multiple uses, the Chief Commissioner submits that, in the context of s 10AA(3)(b), where the use of land has been undertaken for more than one purpose, then "the purpose of selling" must be the dominant purpose (i.e., the purpose which is associated with a dominant use of the land, and so is itself capable of being described as dominant) and, further or in the alternative, that "the purpose of selling" must be the proximate purpose of the current use of the land (in comparison to other purposes in respect of the activity which may lack that proximity). 8. The Chief Commissioner notes that the words "the purpose" have been given a range of meanings in different statutory contexts (in some instances, being construed to require the purpose to be the main or dominant purpose or the sole purpose, and in other instances such a limitation having been rejected). The Chief Commissioner does not seek to rely upon analogies drawn from authorities construing statutory provisions using the words "the purpose" in other statutory regimes (noting the strong caution against such a practice specifically in authorities regarding the interpretation of s 10AA). Rather, dealing with the issue of statutory construction from first principles, the Chief Commissioner submits as follows. 9. The Chief Commissioner maintains that "the purpose of selling" must be established in the context of a "dominant use" of land. The Chief Commissioner notes that the word "for" occurs more than once in s 10AA(3) (in fact it appears three times in that provision); and that the word "for" does not have an absolute meaning; rather, the statutory context reveals the nature of the relationship contemplated and the scope of "for" in the given statutory phrase. Further, the Chief Commissioner says that the word "for" in both the phrase "land the dominant use of which is for …" and the phrase "maintenance of animals for the purpose of selling them or their natural increase or bodily produce" in s 10AA(3)(b), serves a linking function, and presupposes a relationship between the dominant use of the land, the maintenance of the animal and the sale of the animal. 10. It is said that the expression "for" also serves a limiting purpose; noting that the statutory requirement that the activity on the land be "for" sale is found in each subparagraph of s 10AA(3) (and is expressly repeated in sub-ss 10AA(3)(a), (d) and (f)). Further, it is said that the additional qualifying uses in s 10AA(3)(c) and (e) have by their very nature (as commercial operations) the necessity for a sale of the produce. It is submitted that the inclusion of the words "for the purpose of selling" is thus to limit the application of the exemption (on the basis that if there were no limitation anticipated, then the words "for the purpose of sale" could easily have been omitted – reference being made in this context to Ingle v Farrand [1927] AC 417 at 423 per Viscount Cave LC). 11. In addition, the Chief Commissioner argues that the definite article "the", which precedes "purpose of selling", is used to indicate that it is solely the purpose of selling the horse or its natural increase or bodily produce that is relevant to the statutory enquiry in s 10AA(3)(b). Accordingly, it is said that (among any of the various purposes one may have for maintaining horses on the Land) it is "the" purpose of sale which must predominate over any other purpose in order to satisfy the statutory test. 12. Insofar as Godolphin contends that it is the "use" that must be dominant, not the "purpose" (and poses the question whether that use can be characterised as being "the maintenance of animals … for the purpose of selling them or their natural increase or bodily produce"), the Chief Commissioner says that this seeks to create two tests within a single expression (by construing "dominant use" separately and independently from the phrase "the purpose of selling") and that such a construction contravenes the principle of statutory construction that requires the expression to be read as a whole, and not "broken up and construed separately from its obvious context" (see Young at [117] per Payne J). 13. Thus as noted above, the Chief Commissioner contends that, where there are multiple purposes, "the purpose of selling" must be associated with the "dominant use" and must therefore itself be the dominant purpose associated with that use. It is submitted that to construe the statutory provision otherwise would enable a scenario where another purpose could be dominant over "the purpose of selling", and yet the land illogically would be described as having a "dominant use" that is "for the purpose of selling" animals maintained on that land. It is said that this would be contrary to the purpose of the exemption (which is to exempt only land used for primary production). 14. Insofar as Godolphin contends that Payne JA's use of the word "purely" in Young (at [144]) indicated an acceptance that horses might be maintained for overlapping purposes, the Chief Commissioner says that, while this may be so, it was common ground in Young that the purpose required by s 10AA(3)(b) must be the dominant (in the sense of ruling or prevailing) purpose (see at [136]), and that Payne JA's analysis was conducted on that basis. 15. As to proximity of purpose to use of the Land, the Chief Commissioner notes that in Metricon, Barrett AJA observed that the concept of "use" relevant to s 10AA is one of physical deployment "in pursuance of a particular purpose of obtaining present benefit or advantage from it" (at [61]). It is submitted that a real issue arises as to whether there is sufficient proximity between the purpose of sale and the use of the land in circumstances where the animal is maintained for other purposes after it leaves the land and before it is ultimately sold. 16. Insofar as Godolphin relies upon Illawarra Meat to deal with the issue of proximity, the Chief Commissioner says that a sale that occurs after the animal leaves the property will at some point lose its proximity, or causal relationship, with the maintenance of the animal on the land (giving as an example the situation where an animal may be born, trained, and raised on one property, its ownership retained, and the animal then maintained for years afterwards on a series of other properties as a working animal, for example, to drove sheep or for crowd control by police before ultimately being sold). It is said that such a sale would not be sufficiently proximate to the circumstances in which the animal was raised, such that the owner of the land would no longer be able to demonstrate that the animal was originally maintained "for the purpose of selling" the animal within the meaning of s 10AA(3)(b). 17. Thus, the Chief Commissioner says that, on the proper construction of s 10AA(3)(b), "the purpose of selling" must be the dominant purpose and must have sufficient proximity to the current use of the land to satisfy the statutory test. 18. In reply submissions, as to the Chief Commissioner's submission at [41]-[43], that there must be "proximity, or [a] causal relationship" with the maintenance of the animal on the land; Godolphin says this is not supported by the text of the legislation and that there is no independent requirement for "proximity". 19. Godolphin submits that the outcome in Illawarra Meat cannot be explained by this notion of "proximity". It is noted that in that case the pigs were not simply taken to another property to be slaughtered for sale but, rather the taxpayer's business included retail outlets and a small goods factory, through which the processed meat was ultimately sold. Far from requiring any element of proximity it is said that Waddell J's conclusion was simply that the purpose was "a purpose of sale, no matter how the animals are in fact sold" (at 190). 20. The Chief Commissioner says that the cases are clear that the exemption does not require productive return immediately (citing Leda Manorstead at [23] per Allsop P (as the Chief Justice of the Federal Court of Australia then was) and Camden Park Estate Pty Ltd v Commissioner of Land Tax (NSW) (1983) 14 ATR 557 (Camden Park) at 562 per Rogers J). The important question is whether the present use can be characterised as being for the relevant purpose. 21. As to the "purpose" of selling, the Chief Commissioner points out that in Metricon, each of the activities in sub-s 10AA(3)(a) to (f) was recognised as having "a purpose or objective of commercial gain" (see at [59] per Barrett AJA); and says that, in this context "commercial" and "for the purposes of selling" are synonymous, i.e., the "purpose of selling" has a "commercial" nature. The Chief Commissioner acknowledges that it is not necessary for the particular use of the land to be profitable in order to satisfy the statutory criteria (referring to the explanation given by Rogers J in Camden Park at 562); and drawing a distinction between purpose and outcome. However, the Chief Commissioner says that while commercial gain may not be generated either in the short, medium or long term, an actuating purpose to achieve commercial gain must be present for the requirements of the exemptions set out in s 10AA(3) to be met. 22. Further, the Chief Commissioner says that it is necessary (in order to establish the "purpose of selling") for there to be more than simply a demonstration that animals maintained (or crops cultivated) on land are sold at a later point in the cycle of activities being undertaken on the land or elsewhere (referring to the distinction between purpose and motive drawn by Gleeson CJ in News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563; [2003] HCA 45 (South Sydney Rugby) at [18]). 23. In reply submissions, as to the weight placed by the Commissioner (in its submissions at [26]) on Camden Park the observation in that case by Rogers J that the purpose of the exemption is that it enure "for the benefit of those whose primary source of income from the land is primary production and who use the land for the purpose of primary production"; Godolphin says that to state the perceived purpose of a provision, and then to construe the provision by reference to that purpose, is an error (citing Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd (2005) 222 CLR 194; [2005] HCA 9 at [21] per Gleeson CJ, Hayne, Callinan and Heydon JJ; Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249; [2005] HCA 28 at [28] per McHugh, Gummow, Hayne and Heydon JJ; Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193; [2005] HCA 58 at [34] per Gleeson CJ, Gummow, Hayne and Heydon JJ); and to reiterate that Godolphin's primary source of income from the Land is the sale of horses, their progeny or their semen. It is submitted that it is only indirectly that Godolphin's activities on the Land contribute to Godolphin's racing revenue (and that all of the success in racing in turn drives up the value of Godolphin's horses, their progeny and their semen). 24. As to "purpose" in the Land Tax Management Act, Gleeson CJ said in South Sydney Rugby (at [18]): … Thus, for example, in describing, for the application of a law relating to tax avoidance, the purpose of an individual, or of an arrangement, it will be necessary to look at what is sought to be achieved that is of fiscal consequence, not a more remote, but fiscally irrelevant, object, such as increasing a taxpayer's disposable income. Similarly, in the context of competition law, it is necessary to identify purpose by describing what is sought to be achieved by reference to what is relevant in market terms. … 1. Godolphin says that, in the present context, the statutory exemption is concerned with a purpose that has a particular fiscal (or commercial) consequence. Godolphin says that what is sought to be achieved from the activities on Kelvinside and Woodlands that is of commercial consequence is the generation of revenue from selling horses or their progeny or their semen, and that this is the main or prevailing objective of the use of the Land. It is submitted that even if it were correct to ask what is the "dominant purpose" of the activities on Kelvinside or Woodlands, in the sense of being the chief, main or prevailing purpose, it is the generation of horses the vast majority of whom will be sold or will enter the breeding programme. Godolphin says that the productive use of those horses on different land in the intervening period for the additional purpose of deriving racing revenue does not alter the position (a fortiori if there is a single statutory test which does not incorporate an additional requirement of a "dominant purpose" as well as a "dominant use"). 2. As to the Commissioner's submissions that protected purpose must predominate (at [37] of those submissions) Godolphin says that the parties agree that the statutory provision must be read as a whole, without being broken up and construed separately from its obvious context. Godolphin accepts that "the purpose of selling" must be associated with the dominant use. The Chief Commissioner submits (at [39] of its written submissions) that where there are multiple purposes, "the purpose of selling" mist be associated with the "dominant use" and must therefore itself be the dominant purpose associated with that use. Godolphin says that, to the contrary, there is nothing illogical about the proposition that, if a single dominant set of activities (i.e., a single use of the land) has overlapping and complementary purposes (i.e., commercial consequences sought to be achieved) one of which is sale, the activities are being carried on "for the purpose of sale". It submitted that, in such a case, the dominant use of the land is the maintenance of animals for the purpose of selling them, their natural increase or their bodily produce. 3. It is noted by the Chief Commissioner that in CDPV Pty Ltd v Commissioner of State Revenue (Vic) (2017) ATC 20-616; [2017] VSCA 89, when considering the application of the primary production exemption under s 68 of the Land Tax Act 2004 (Vic), which refers to use primarily for primary production, McLeish JA (with whom Tate and Santamaria JJA agreed) said (at [62]) that: … The inherent likelihood that a person who grows a crop will sell it if possible does not necessarily suffice to establish that the primary use of the land was growing a crop for that purpose. The prospect of sale may be merely incidental to a different purpose, so that the land is properly characterised as being used primarily for cultivation for that other purpose. … 1. Referring to what was said by Payne JA in Young (at [144]) (see above), the Chief Commissioner says that there is a range of objectives that a landowner might seek to achieve when maintaining animals that are not referable to a "purpose of selling", including the maintenance or improvement of land quality, recreation, or (as is here contended by the Chief Commissioner), the training and entry of thoroughbred horses into races. The Chief Commissioner says that the fact that a sale of the animals may occur as an ancillary or incidental step in achieving another purpose does not demonstrate that the requirements of s 10AA(3)(b) have been met. 2. In reply submissions, Godolphin accepted that if the sale of horses, their progeny or their semen is only "an ancillary or incidental step in achieving another purpose", then that may not be enough, but it is said that this is not here the case. Godolphin submits that, contrary to examples of maintenance in which sale is only ancillary or incidental to the achievement of an ulterior purpose, in the present case the purposes of the maintenance of the horses are not merely overlapping or consecutive, they are complementary or mutually reinforcing (not only in relation to each particular horse, but in relation to Godolphin's wider bloodlines). It is submitted that the purpose of sale and the purpose of racing are two aspects of a single composite purpose: the sale of horses or semen is a central part of that composite purpose (if necessary Godolphin says it predominates). Godolphin says that it is not a situation where competing purposes need to be weighed up; the purpose of sale is central to the dominant use (in the sense of the activities on the land). Accordingly, as a matter of ordinary English and as a matter of common sense, the dominant use of the land is the maintenance of horses for the purpose of selling them, their natural increase or their bodily produce. Evidence 1. Godolphin filed affidavit evidence from the following: Mr Vincent (Vin) Cox (the General Manager and Managing Director of Godolphin since 2018), who swore affidavits on 25 August 2020 and 16 October 2020, respectively; Mr Paul Hartmann (an accountant who is the Financial Controller of Godolphin), who affirmed affidavits on 26 August 2020 and 16 October 2020, respectively; Mr Prashanth Kainthaje (Partner of Johnson Winter & Slattery, and solicitor for Godolphin) who affirmed an affidavit on 14 September 2020; Mr Michael Fleming (Principal of Bhima Operating Pty Ltd, a customer of Godolphin), who swore an affidavit on 25 August 2020; Ms Linda Monds (Director of Tyreel Stud Pty Ltd, a customer of Godolphin) who swore an affidavit on 24 August 2020; Mr Michael O'Donnell (Principal of the Mike and Debbie O'Donnell Fairhill Farm Partnership, a customer of Godolphin) who swore an affidavit on 24 August 2020; Mr Charles Pulford (Head of Sales for Darley Stallions) who swore an affidavit on 26 August 2020; and Ms Jacqueline Stewart (Keeper of the Australian Stud Book, Racing Australia) who swore an affidavit on 24 August 2020. Godolphin also called an expert economist, Mr James Mellsop (Managing Director of NERA Economic Consulting) who produced a report dated 24 August 2020 (the Mellsop Report) addressing the value added through breeding and racing. 2. The Chief Commissioner relied on an affidavit of Ms Ava Hurley (solicitor employed by the Crown Solicitor for NSW) sworn on 8 December 2020 and adduced expert evidence from an agronomist, Mr Peter Schuster, who produced a report dated 8 December 2020 (the Schuster Report) addressing the relationship between the maintenance of cattle and horses by Godolphin on the Land in the relevant tax years. 3. During the course of the hearing, I had the benefit of a video presentation of drone footage taken of the facilities operated by Godolphin on Kelvinside and Woodlands. I also had the benefit of a video showing the manner in which stallions are marketed to customers for stud purposes (the "Darley Virtual Stallion Parade" on 31 August 2020 – at which stallions are shown to breeders, with emphasis on their genetic background, racing prowess, and the prowess of their progeny), a video regarding the training of yearlings ("Educating Yearlings in Australia"), and a video of staff at Godolphin explaining their roles to "Staff Stories", notably concerning the process of spelling (which was compiled around late June – early July 2018). 4. In the course of that video there was reference to the horses spelling on Kelvinside taking one additional paddock (to the west of Rouchel Road – see T 53.36-50). Featured on the "Staff Stories" video were a spelling manager, a stallion manager and a breaking-in manager, all of whom had experience at Kelvinside (and there was also some reference to yearlings at Woodland). Godolphin's submissions 1. At the outset I note that one of the key issues that Godolphin identified in the present case (as being of particular relevance to Kelvinside) was as to whether the transaction by which a stallion covers a mare owned by a third party falls within the concept of "selling [the stallion's] bodily produce". Godolphin maintains that the essence of the stallion stud operation is the sale of bodily produce (and cites various authorities in support of that proposition). Godolphin accepts that if the stallion stud activities do not fall within that concept then it cannot succeed in relation to Kelvinside (though it says that Woodlands may still be characterised as land used for primary production within the meaning of s 10AA, albeit that the issue as to characterisation of the stallion stud business may remain relevant given the integration of Godolphin's operations). Conversely, Godolphin contends that, if the stallion stud activities are the sale of bodily produce, that should be decisive of this proceeding in Godolphin's favour. 2. The Chief Commissioner, in his submissions, accepts that the stallion covering activities taking place on PID 4196725 (formerly PID 291959) at Kelvinside were (insofar as a Godolphin stallion covered a non-Godolphin mare) for an exempt purpose (i.e., the maintenance of animals for the purpose of selling their bodily produce) but contends that this was not the predominant use of the relevant PID (on the basis that these activities took place on only approximately 10% of the PID; the predominant use of which is said to be for non-exempt activities, namely the raising and training of thoroughbred horses to race and the spelling of thoroughbred horses that were racing) (this being one of the factual findings for which the Chief Commissioner here contends). 3. In light of the Chief Commissioner's acceptance of the proposition that stallion covering activities (at least in relation to non-Godolphin mares) would fall within the relevant category, it is not necessary here to set out in any detail Godolphin's submissions as to the characterisation of the stallion servicing activities as being pursuant to a contract for the sale of a good (i.e., the property in the stallion's semen) or the authorities on which Godolphin relies for that proposition. Rather, what is to be determined is whether these activities are the dominant use of the relevant Land. This involves consideration of the import of Godolphin's racing operations (which Godolphin says form part of its integrated business) on its stallion servicing operations (or more generally its breeding activities). 4. It is relevant, in this context, to note that the price for such activities varies widely depending on the perception in the market of the stallion's genetic composition (since this seems in large part to found the proposition by Godolphin that its racing activities do not detract from a finding that the Land is exempt). In this regard, see Mr Cox' first affidavit at [65]-[74] as to the variation in price for those activities. Godolphin points to the marketing of its stallions by reference to matters such as the stallion's bloodline, the stallion's own success and the success of other progeny or other horses related to the stallion (referring to Mr Charles Pulford's affidavit sworn 26 August 2020 at [14]-[18] and Godolphin's marketing brochure exhibited to that affidavit (at tab 8 of Exhibit CAP-1, marked as Exhibit H in the hearing)). Godolphin also points to the Mellsop Report which concludes that such considerations affect the fees that can be derived by the owner of a stallion. 5. Godolphin says that the centrality of the stallion's semen to the transaction is also reflected in the evidence from Godolphin's customers (referring to Mr Fleming's affidavit sworn 25 August 2020 at [22]-[28]; Ms Monds' affidavit sworn 24 August 2020 at [24]-[30]; and Mr O'Donnell's affidavit sworn 24 August 2020 at [25]-[31]). Again, Godolphin emphasises that thoroughbred broodmare owners bring their mares to be covered by the stallion (rather than obtaining semen for their mares to be inseminated artificially) because the thoroughbred stud books and racing rules require natural cover in order to recognise the progeny as thoroughbreds (referring to the Australian Stud Book, the Australian Rules of Racing and the International Agreement of Breeding, Racing and Wagering, as explained by Ms Jacqueline Stewart's affidavit sworn 24 August 2020 at [7]-[24]) (see also Mr Cox' first affidavit at [64]). Dominant use of the Land 1. Turning then to Godolphin's submissions as to the dominant use of the Land, Godolphin says that the market for selling thoroughbred horses, their progeny or their semen is heavily impacted by the racing career of those horses and of other horses related to them. It is said that the increase in the value of a thoroughbred horse with a successful racing career can be very significant (see Mr Cox' first affidavit at [40]; and the Mellsop Report). 2. Mr Mellsop has identified that each of the following has an effect on the fees that can be derived by the owner of the stallion from stallion covering: the pedigree of a stallion; the racing history of a stallion; and the performance of a stallion's progeny as a racehorse. Further, Mr Mellsop says that the racing history of a thoroughbred horse has an effect on the sale price of that horse in the secondary market (compared to the sale price that would be achieved if the horse were sold as a weanling or a yearling) and that the racing history of a mare has an effect on the sales price of the mare's progeny in a primary or secondary market. 3. Godolphin says that this economic evidence is reinforced by its own marketing activities (referring to Mr Pulford's affidavit at [7]-[18]) and by evidence from broodmare owners who pay for their broodmares to be impregnated with the semen of Godolphin's breeding stallions (referring to the affidavits of Mr Fleming; Ms Monds and Mr O'Donnell). It is noted that a successful breeding stallion's semen is a highly valuable commodity to the owner of a broodmare. Godolphin's evidence is that one of its stallions will typically cover 100 to 150 mares in a season, with a fee for each cover between $11,000 and $132,000 (see Mr Cox' first affidavit at [63], [67]-[72]). 4. Godolphin notes that, while there is also a market in Australia for stallions covering non-thoroughbred mares, Godolphin does not participate in this market (see Mr Cox' first affidavit at [75]). 5. Godolphin's evidence is that it breeds horses with a purpose of being able to sell them or their progeny as thoroughbred racehorses or their bodily produce (the semen) in circumstances in which the resulting progeny will be thoroughbred racehorses (see Mr Cox' first affidavit at [45]) and that this means that, until sale, Godolphin must raise and educate the horses in a manner consistent with them becoming racehorses. It is noted that this education is a fundamental training process for all Godolphin's horses (see Mr Cox' second affidavit at [29]-[32]) whether those are to be sold, raced or used in breeding operations, because it helps horses become accustomed to dealing with humans. 6. As adverted to above, Mr Cox has deposed that this part of the horse's education includes familiarising the horse with the look and feel of a sand racetrack, using a training track which is materially different from a usual racetrack (Mr Cox' second affidavit at [33]). It is said that, while this sand track aspect of the horse's education may be specifically referable to the horse's anticipated career as a racehorse, it is a necessary part of that horse's education if it is to be sold as a racehorse. Mr Cox' evidence is that the riders engaged in educating young horses are generally sourced from an equestrian pleasure horse background, whereas riders on racing sites are specialised with a specific racing focus (see Mr Cox' second affidavit at [40]). Mr Cox' evidence is that the race training of young horses to have them "race ready" does not occur at Kelvinside or Woodlands (see Mr Cox' second affidavit at [39]). 7. Relevantly, Mr Cox explains that there is a material difference between the education process referred to above (which happens for all yearlings and occurs on Kelvinside) and racehorse training (which he says is the next part of the horse's racing career and occurs, for horses that Godolphin has not already sold, at Crown Lodge) (see Mr Cox' second affidavit at [34]-[40]). 8. As noted earlier, Mr Cox has deposed that Godolphin operates a "breed to race, race to breed model" (see Mr Cox' first affidavit at [39]; as explained in more detail in Mr Cox' second affidavit at [53]-[59]). It is said that this integrated model reflects the fact that the racing career of a horse and its relatives has a demonstrable impact on the value of the horse for sale, or the value of the horse's progeny (see Mr Cox' first affidavit at [38]-[40], [65]-[73]; Mellsop Report). Thus, Godolphin's position is that one of the purposes of the racing activities is to improve the value of the horse and its relatives or progeny. 9. Further, Godolphin says that one of the aims of breeding is to produce a high quality sire. Although Mr Cox has estimated as one in 100 the chance that any given horse will be a high-quality sire (see Mr Cox' first affidavit at [34]), it is noted that the consequence of so doing (in terms of revenue generation) is enormous. In this regard, Godolphin points to the differential in the prices commanded per cover (from $11,000 to $132,000 – see Mr Cox' first affidavit at [67]), the number of covers per season (100-150 – see Mr Cox' first affidavit at [63]) and the period of productivity as a breeding stallion (15 years – see Mr Cox' first affidavit at [58]). Reference is also made to the table set out in Mr Cox' second affidavit at [41], summarising the typical course of a horse, if that horse is not sold, from birth until it is three years old. 10. As to the nature and intensity of competing uses, Godolphin says that while all of Godolphin's equine activities are partly referable to the business of selling horses, their offspring or their semen, some of those activities (including most of the activities on Crown Lodge or Osborne Park) are primarily or in substance referable to the racing career of a horse which Godolphin has kept to race. As noted above, Godolphin says that the position in relation to its equine operations is analogous to that of the integrated business which was considered in Illawarra Meat. 11. Godolphin says that the activities referable primarily or in substance to the racing career of a horse which Godolphin has kept to race may reasonably be regarded as falling outside the scope of s 10AA and, for that reason Godolphin does not suggest that either Crown Lodge or Osborne Park is "land used for primary production" within s 10AA(3)(b). However, Godolphin maintains that the evidence establishes that there is a substantial difference between, on the one hand, the equine activities on all parcels of Kelvinside and Woodlands (which it says are referable to breeding, preparing foals and yearlings, and stallion covering) and, on the other hand, the equine activities on Crown Lodge and Osborne Park (which it says are primarily referable to Godolphin's racing operations). 12. Godolphin says that the facilities at Kelvinside are adapted for the purpose of stallions covering mares, operating the stallion stud business, accommodating staff who work on Kelvinside, the spelling of horses, the education of yearlings, and the maintenance of cattle (referring to Mr Cox' second affidavit at [7]-[9], [27]-[33]); and that the facilities at Woodlands are adapted for the purpose of maintaining mares for the purpose of breeding, the birth of foals, operating the foal breeding business, accommodating staff who work on Woodlands, and the maintenance of cattle (referring to Mr Cox' second affidavit at [10]-[11]). 13. By contrast, it is said that the facilities at Crown Lodge are adapted for the race training of horses, operating the racing business, accommodating staff and spelling horses (see Mr Cox' second affidavit at [13]-[21], [34]-[36]); and the facilities at Osborne Park are adapted to the race training of horses and the spelling of horses (see Mr Cox' second affidavit at [22]-[26], [37]-[39]). 14. Godolphin says that the roles of the employees who work on these different properties reflect the purpose for which the facilities on those properties are adapted (referring to Mr Cox' second affidavit at [8]-[9], [11]-[12], [19]-[20], [25]-[26]). 15. It is noted that the activities on Kelvinside include the spelling of racehorses during their racing career (Mr Cox' first affidavit at [79]; Mr Cox' second affidavit at [37]), which involves accommodating horses on the land while they are rested (or spelled) from racing (Mr Cox' second affidavit at [47]). Godolphin contends that the maintenance of horses while they are spelling is not specifically referable to their racing careers. Rather, it says that this is part of their maintenance as assets which may be raced again the near future, with the expectation that the substantial majority will be sold or will enter Godolphin's breeding programme. It is also said that spelling horses during their racing career is a relatively small part of the activities on Kelvinside. 16. As at the date of Mr Cox' second affidavit, Godolphin had approximately 75 horses spelling, two thirds being situated in New South Wales (approximately 50 horses), of which 85% were at Kelvinside (approximately 43 horses) (Mr Cox' second affidavit at [48], [50]). Godolphin says that this is therefore a minor or subsidiary use; and, further, that it is also a use that is partly referable to the ultimate sale of those horses or their progeny or bodily produce. 17. Thus, Godolphin contends that the dominant use of the land on Kelvinside remains the maintenance of the horses for the purpose of sale of those horses, their progeny or their bodily produce. 18. Indeed, it is said that the Chief Commissioner accepted in the original decision that the stallion servicing operation on Kelvinside was the dominant use of the land at Kelvinside (see Exhibit J at p 3): … Due to the scale and intensity of the stallion servicing operation, this is considered to be the dominant use of the property [at Kelvinside]. 1. Godolphin says that, when its profit-making activities are considered as a whole, the sale of horses, their progeny or their semen predominates over racing (although it says both are important features of the integrated operations). While Godolphin accepts that the predominating activities are not determinative of the "dominant use" of each parcel of land, it is said that this is an important matter to take into account. 2. It is noted that the combined revenue from all stallion coverings and the sale of thoroughbred horses during the years ending 31 December 2013 to 2019 averaged over $40 million per year; and that the stallion coverings by stallions maintained at Kelvinside produced an average combined revenue of just under $35 million per year. (Although the contracted revenue from stallion covering was much higher than this, Mr Hartmann has deposed that about 30% of the contracted revenue is not collected because some mares do not fall pregnant and some mares do not give birth – see Mr Hartmann's first affidavit at [10]-[15]). By contrast, the prizemoney derived from racing horses varies from year to year (with the occasional exceptionally good year such as FY 2019), averaging just under $20 million per year. 3. Godolphin sells approximately 70% of all the thoroughbred horses that it has bred through auction house or private treaty (Mr Cox' first affidavit at [41]-[43]); the balance (see tab 11 of Exhibit D) being held by Godolphin until they die save for a very small number that are given as gifts. 4. It is noted that during the period from December 2013 to 2019, the stallions at Kelvinside covered a total of 1,101 mares owned by Godolphin and a total of 8,268 mares owned by third parties (Mr Hartmann's first affidavit at [14]); i.e., fewer than 12% of the stallion covers on Kelvinside are of Godolphin's own mares. 5. Of Godolphin's own foal crop, as noted earlier, the substantial majority have been sold, either at public auction or private sale, most being sold at three or four years old (see Mr Hartmann's first affidavit at [22]; Exhibit D at tab 11). Mr Cox deposes that the sale of horses is a necessary part of Godolphin's operating model, both as a significant contributor to revenue and to keep control of the horse count and quality (see Mr Cox' second affidavit at [54]). It is said that one reason that Godolphin does not sell its foals as weanlings or yearlings (see tab 11 of Exhibit D) is (here referring to Godolphin's stallion brochure) that it does not compete with the business of its broodmare owner customers (see Ex CAP-1 to the affidavit of Mr Pulford at tab 8, p 5). In other words, it is said that one of the commercial reasons for retaining the foals beyond their first two years is to reinforce the "business proposition" in respect of the stallion covering operations (i.e., the sale of the stallions' bodily produce). 6. Godolphin notes that in each relevant year, roughly half of all of Godolphin's thoroughbred horses are held at Kelvinside or Woodlands (although this figure necessarily varies as horses are moved between the various properties) (referring to Mr Hartmann's first affidavit at [19]-[21]). It is said that, with the exception of the small number of horses that may be spelling at Kelvinside, if horses are being held at Kelvinside or Woodlands they will be in the foal, education or breeding stage of their careers. 7. It is noted that if horses are retained as broodmares or breeding stallions, they are likely to spend the majority of their lifetime breeding. Mr Cox has deposed that mares and stallions both live to around 20 years of age (Mr Cox' first affidavit at [28], [58]); and that horses generally race from two years old to five or six years old (Mr Cox' first affidavit at [35], [58]). Mr Cox deposes that broodmares, if they are not sold by Godolphin, typically spend approximately 70% of their lifetime in breeding operations (Mr Cox' first affidavit at [30]); and that stallions, if they are not sold by Godolphin, typically spend approximately 75% of their lifetime in breeding operations (Mr Cox' first affidavit at [58]). 8. In addition to its equine operations, Godolphin maintains cattle on Kelvinside and Woodlands (approximately 200-400 head on Kelvinside and 400-1000 on Woodlands) (Mr Cox' first affidavit at [15]). Mr Hartmann has deposed that the cattle are maintained for the purpose of sale and realise an average revenue from sale just under $1 million per year (Mr Hartmann's first affidavit at [15]). It is said that those sales represent a comparatively small but nevertheless significant portion of Godolphin's revenue from the Land. 9. Godolphin says that the reasons for maintaining cattle and maintaining thoroughbred horses are complementary. Mr Cox has deposed that the cattle exterminate gastro-intestinal parasites, graze areas that are avoided by horses, assist with clearing the grass after horses have been through and assist in the re-growth of grass (Mr Cox' first affidavit at [18]). Godolphin says that this does not deprive this activity of its character as falling within s 10AA(3)(b). It is said to be common in agricultural industries for crops or livestock, being grown or maintained for the purpose of sale, to be deployed in a way that improves the quality of the land for related uses. 10. Godolphin also grows lucerne on Woodlands and in 2015 realised a small revenue from the sale of hay (Mr Hartmann's first affidavit at [17]). 11. Godolphin submits that the dominant use (in the sense of the physical activities which comprise the main, chief, paramount or prevailing use) of Woodlands is the maintenance of thoroughbred horses for the purposes of selling them, their natural increase or their bodily produce, and the maintenance of cattle for the purpose of selling them or their natural increase. Godolphin further submits that the dominant use of Kelvinside is the maintenance of thoroughbred horses for the purposes of selling them or their bodily produce, and the maintenance of cattle for the purpose of selling them or their natural increase. 12. As to the individual parcels of land (as adverted to above) Godolphin says that its activities on Kelvinside and Woodlands are not conducted by reference to parcel boundaries; though it accepts that dominant use must be determined for each parcel of land. 13. As to Kelvinside, Godolphin says that: PID 292533 (Lot 51 in DP 705560 and Lot 4 in DP 179687), PID 292022 (Lot 303 in DP 255663) and PID 292024 (Lot 306 in DP 608406) are used primarily for cattle and for raising and educating yearlings (see Exhibit VGC-1 to Mr Cox' first affidavit, marked Exhibit A in the hearing, at tab 4); the part of PID 4196725 that is on the north/west side of Rouchel Road (Lot 1 in DP 220425 and part of Lot 81 in DP 624789) is almost entirely used for Godolphin's stud operations; and the part that is on the south/east of Rouchel Road (part of Lot 81 in DP 624789) is also used for raising and educating yearlings, spelling thoroughbreds, and for cattle grazing. 14. Godolphin says that a minor or subsidiary use of all of the paddocks where horses stand is spelling active racehorses who are being rested from racing. It is submitted that this is entirely consistent with the dominant use of the land being maintenance of horses for the purpose of selling them, their bodily produce or their natural increase. It is noted that three PIDs of Kelvinside were accepted by the Commissioner as being "land used for primary production" and that these are not the subject of this appeal. 15. Godolphin thus says that the stallion covering operations comprise the main or prevailing use of Kelvinside. It is said that the other uses (all of which involve maintaining animals) are all referable either in whole or in substantial part to the purpose of selling the horses, their natural increase or their bodily produce. 16. As to Woodlands, Godolphin says that the dominant use of all parcels is the maintenance of broodmares and foals the purpose of selling them or their natural increase, and the maintenance of cattle for the purpose of selling them or their natural increase. 17. Godolphin says that some parts of the Land (which are not able to be delineated by reference to parcel boundaries) are used exclusively for cattle and some parts are used for both cattle and horses. Godolphin maintains that, if it is accepted that the cattle activities and the vast majority of the equine activities on the Land satisfy the exemption in s 10AA(3)(b), then the exemption should be allowed over the whole of the Land. However, Godolphin accepts that the cattle activities alone (if they were to be the only activities that fall within s 10AA(3)(b)), would not be enough to establish that the "dominant use" of the Land falls within the exemption. Chief Commissioner's submissions 1. In summary, the Chief Commissioner contends that Godolphin has not discharged its burden of proving that the activities undertaken on each parcel of land in each of the land tax years were for the purpose of selling horses maintained on the Land. The Chief Commissioner argues that, to the extent that Godolphin sold horses bred and/or trained on the Land, these sales occurred as an ancillary and incidental part of Godolphin's activities for the purpose of breeding horses to race. 2. Further or in the alternative, the Chief Commissioner says that Godolphin has not discharged its burden of proving that the activities undertaken on each parcel of land in each of the land tax years were for the dominant purpose of selling horses maintained on the Land. It is said that, to the extent any purpose of sale existed, it was not sufficiently proximate to the activities taking place on the Land to satisfy the statutory test. 3. As adverted to above, the Chief Commissioner accepts that the stallion covering activities taking place on PID 4196725 (formerly PID 291959) at Kelvinside were (insofar as a Godolphin stallion covered a non-Godolphin mare, which I note was the majority of such coverings over the relevant period) for an exempt purpose but the Chief Commissioner points out that these activities took place on approximately 10% of PID 4196725 at Kelvinside. The Chief Commissioner contends that Godolphin has failed to prove that the stallion covering activities were the dominant use of this PID. Rather, it is said that PID 4196725 was predominantly used for other activities that are not exempt (namely the raising and training of thoroughbred horses to race and the spelling of thoroughbred horses that were racing). 4. In relation to the grazing of cattle on both Woodlands and Kelvinside, the Chief Commissioner says that this was undertaken for purposes subservient to those associated with horse breeding, training and spelling on the properties (including the removal of parasites, prevention of disease and balancing of grazing pressure, which it is said are not exempt purposes). Thus, it is contended that the activity of cattle grazing cannot assist Godolphin to establish the requirements of s 10AA(3)(b) (and it is noted that Godolphin accepts that the cattle activities alone would not be enough to establish that the "dominant use" falls within the exemption). 5. Insofar as Godolphin contends that the Land was used to maintain horses for the overlapping purposes of racing and sale, the Chief Commissioner argues that in each of the 2014 to 2019 land tax years the dominant use of the Land was for the maintenance of animals for the purpose of breeding thoroughbred horses to race. To the extent that Godolphin concurrently held dual purposes (of racing and of selling the animals) it is said that the purpose of selling was not dominant over the purpose of breeding to race. 6. Reference is made to Godolphin's audited financial reports, which describe its principal activity in each of the land tax years as "thoroughbred horse breeding and racing". It is noted that in its submissions Godolphin refers to its operation of an integrated business where horses are moved between each of Woodlands, Kelvinside, Osborne Park and Crown Lodge (see at [9], [90] and [100]). The Chief Commissioner therefore says that, in considering the purpose for which horses are maintained on the Land, the activities occurring on Osborne Park and Crown Lodge inform the activities on the Land (and vice versa). 7. As to the various categories of horses maintained on the Land, the Chief Commissioner argues as follows. 8. First, as to the foals, the Chief Commissioner says that the number and quality of foals are controlled so as to optimise the number of horses that Godolphin wishes to race as two year-olds. (Mr Cox has, however, explained that the retention of foals is partly with a view to not being seen to compete with the business of broodmare owner breeders in the foal's early years.) 9. It is noted by the Chief Commissioner that Godolphin's stated objective is to produce a pre-determined number of yearlings "for the racing string in 2 years" (see the minutes of the Godolphin board meeting held on 16 December 2015). The Chief Commissioner says that that objective is consistent with maintaining foals for the purpose of educating them to race; and then racing them once they are trained and eligible to race as two year-olds. The Chief Commissioner submits that Godolphin's practice of retaining the overwhelming majority of foals in its racing programme (and selling only a very small minority as "foal culls") is inconsistent with the maintenance of foals for the purpose of sale. 10. As to the yearlings, the Chief Commissioner says that the education of yearlings (as above) (with its focus on the racetrack) is consistent with maintaining yearlings on the Land for the purpose of educating them to race and then racing them once they are trained and eligible to race as two year-olds. 11. The Chief Commissioner says that if yearlings were truly maintained on the Land for the purpose of selling them then it would be reasonable to see evidence that the number of yearlings sold would be greater than those that are engaged in intensive racehorse training and spelling in between that racehorse training. It is submitted that Godolphin's practices are consistent with the desire to produce an optimal number of foals, then yearlings and then two year-old horses to be part of Godolphin's racing string. 12. The Chief Commissioner contends that any horse of a racing age that is spelling between races on the Land is clearly maintained on the Land for the purpose of racing. 13. The Chief Commissioner argues that resting (or spelling) is therefore a necessary and integral part of racing (and is specifically referable to a thoroughbred horse's racing career); and that horses of a racing age which are spelling on the Land, in between races, are being maintained for the purpose of racing them and not for the purpose of selling them. It is submitted that the fact that a horse may eventually be sold does not affect this. 14. The Chief Commissioner argues that the fact that geldings are only sold after they are determined not to have stallion prospects (and after they have been trained as racehorses and raced for at least one year) indicates that (up to the age of 3) the purpose of maintaining those horses on the Land is either because the gelding may be a stallion prospect or a successful racehorse. It is said that only when neither of these purposes materialises is the gelding sold; and, hence, the sale of geldings is ancillary or incidental to the purpose of racing and breeding. 15. The Chief Commissioner submits that the incidental nature of the selling activities is reinforced by Godolphin's documentary records which stated that "[s]elling of lower end to lower-middle end performers has realised $3m over the last 12 months, primarily consisting geldings late 3YO's and above (see the Godolphin Report dated December 2018, p 3). 16. As to the mares, the Chief Commissioner says that it is therefore only after a mare has been trained and raced as a racehorse for five to six years that the mare is sold; and that, in those first five to six years, the purpose of maintaining a mare on the Land is initially to train the mare to race and then, while it is racing, to spell the mare in between races (i.e., it is again contended by the Chief Commissioner that the purpose of the maintenance is racing and not sale). 17. The Chief Commissioner notes that the sale of mares is only considered after the mare has finished her racing career and even at that point in time a mare may join the broodmare band. It is said that the evidence demonstrates that Godolphin focuses on quality and sought to reduce its broodmare band to the optimal number to produce the desired number of foals and then yearlings per year to be entered into its racing program. The physical use of the Land 1. The Chief Commissioner refers to the evidence as to the horses maintained on the Land during the relevant land tax years (see above) and contends that the overwhelming majority of foals, yearlings, horses of racing age, geldings and mares maintained on the Land are maintained for the purpose of racing. The Chief Commissioner says that the horses sold by Godolphin are only: the small minority of the "foal cull"; yearlings which cannot meet the training and trial standards set for it by Godolphin trainers; three year-old geldings which have already raced; and mares past their racing age that Godolphin has deemed are of unsuitable quality to produce foals with racing qualities. 2. The Chief Commissioner contrasts this with the maintenance on the Land of broodmares to breed with Godolphin's (or other) stallions in order to produce a pre-determined number of foals with racing quality (almost all of which it is said are retained by Godolphin and placed in the race programme); yearlings which are educated to race and placed in intensive race training at Crown Lodge and spelled from that intensive race training on Kelvinside; horses of racing age which are spelled on Kelvinside and the retention of mares who are past racing age as broodmares to commence the "breed to race" cycle again. 3. The Chief Commissioner says that Godolphin does not seek to identify, as at 31 December of each land tax year, which (if any) of the horses maintained on the land are for sale. It is said that Godolphin does not adopt the typical model of a breeder, by selling horses as yearlings (referring to Mr Cox' first affidavit at [39] and Mr Cox' second affidavit at [54]); rather, that whether a horse is ultimately sold depends on its racing performance, potential as a broodmare and bloodlines after a number of years spent on other non-exempt properties maintained by Godolphin. The Chief Commissioner says that, although Godolphin asserts that 70% of its horses are sold, the vast majority of those horses are sold after they have been educated to race, trained to race, and raced. 4. The Chief Commissioner says that this demonstrates that the next step in the life cycle of the foals and yearlings maintained on the Land was to race for commercial gain (not to be sold). Insofar as Godolphin accepts that horses were being maintained at Crown Lodge and Osborne Park for the purpose of racing, the Chief Commissioner argues that foals and yearlings being raised and trained to enter into the racing programme were being maintained for the purpose (or alternatively, the dominant purpose) of racing. It is said that the purpose of sale, if ultimately formed in respect of a particular horse, was also not a purpose that was present at the time the horse was being maintained on the Land (or, alternatively, was not a sufficiently proximate purpose to satisfy the requirements of s 10AA(3)(b) of the Land Tax Management Act. Expenditure and use of assets Financial statements 1. The Chief Commissioner submits that Godolphin's contemporaneous financial records for each of the land tax years are relevant to ascertaining "the time and labour spent in conducting the different uses, the money spent or assets deployed in each use and the value derived or to be derived from it" (noting that each of those matters is a factor to be used and weighed in determining which of several competing uses is dominant – see Leppington Pastoral at [114] per White J, as his Honour then was). The Chief Commissioner says that Godolphin's contemporaneous financial records also indicate the physical deployment of the land "in pursuance of a particular purpose of obtaining present benefit or advantage from it" (citing Metricon at [61]). 2. Godolphin has produced Management Accounts for each of the land tax years 2013 to 2019 together with Profit and Loss Performance Reports for each of Woodlands, Kelvinside, Crown Lodge and Osborne Park. Godolphin's Management Accounts report profit and loss by activity type, namely, stallions, breeding operations, racing operations, and horse sales or horse and nomination purchases. The Chief Commissioner submits that an analysis of Godolphin's financial records discloses that in each of the land tax years, Godolphin's focus (in terms of time, labour, money spent and value sought to be derived) was on the racing and stud farm aspects of its operations. The Chief Commissioner says that there was minimal focus on generating commercial gains from the selling of horses (or their natural increase) such that sales are incidental or ancillary to the breeding and racing operation. 3. The Chief Commissioner argues that the fact that Godolphin's financial focus is on its racing and breeding operation demonstrates that the dominant use of the land is not for the purpose of selling horses or their natural increase. (Rather, that the dominant purpose of Godolphin in each of the land tax years was the non-exempt purpose of breeding, training, and then racing thoroughbred racehorses.) 4. As to those management accounts, the Chief Commissioner points to the following. Stallions 1. It is noted that in each of the land tax years the net operating income from "stallions" was significantly positive; i.e., nomination sales exceeded expenses resulting in a very profitable activity type. 2. By way of example, it is noted that in 2019 (said by Godolphin in effect to be a typical year insofar as it is said to have been an "extraordinary year on the track") nomination sales were $23,845,000 generated from expenses of $5,976,000 (primarily consisting of staffing costs and other expenditure with only $834,000 attributed to "horse expense (stallions)") resulting in net income from "stallions" of $17,869,000. 3. As noted, the Chief Commissioner accepts that these records are indicative of the maintenance of stallions on PID 4196725 for the purpose of selling their bodily produce. However, the Chief Commissioner maintains that this is not the dominant use of PID 4196725. Breeding operations 1. In each of the land tax years, breeding operations were reported as cost centre. By way of example, in 2019 breeding operations expenses were $9,055,000 (predominantly made up of "horse expense", "staff costs" and "other expenditure"). In other land tax years breeding operations expenses range from $8,645,000 to $9,116,000. 2. It is noted that the Management Accounts do not contain any record of how these costs are allocated to "stallions" (net nomination sales), racing operations, horse sales or another activity type. Racing operations 1. In each of the land tax years, racing operations incurred losses despite significant race winnings and appearance money. 2. In 2019, Godolphin racehorses generated $34,327,000 in race winning and appearance money (a result described in the notes to the Management Accounts for 2019 as "an extraordinary year on the track"), which was offset against "total racing stable / office expense" of $25,423,000 resulting is a loss of $167,000. The Chief Commissioner notes that in other years, losses range from $12,065,000 to $16,806,000 and total allocated expenses range from $21,108,000 to $25,165,000. 3. Expenses on racing operations are the single largest category of expense incurred by Godolphin in each of the land tax years (being more than twice the amount spent on breeding and some three to four times more than that spent on stallions). The Chief Commissioner says that this expenditure is confirmed by a comparison of amounts recorded in Godolphin's profit and loss reports as spent at Crown Lodge and Osborne Park, on the one hand, and Woodlands and Kelvinside, on the other. Horse sales and purchases 1. In each of the 2014, 2015 and 2018 land tax years, net horse trading was negative (with 2019 only a small profit of $418,000). It is noted that when the cost of breeding operations is taken into account, there is only one land tax year (2017) in which net horse trading generated a positive return. 2. The Chief Commissioner says that this is a curious position to be in if the dominant use of the Land was to maintain horses for the purpose of selling them arguing that it lacks the requisite "purpose or objective of commercial gain" (citing Metricon at [59]). 3. The Chief Commissioner says, by reference to Godolphin's submission that the racing history of a horse is determinative of its price on sale, that the horses sold by Godolphin are not assisted by their racing history. The Chief Commissioner says that Godolphin typically sells "low value" horses and that this is consistent with the Godolphin Australia - Plan Overview (see below). 4. To the extent that expenditure on training of thoroughbreds for racing does contribute to the sale value of the horses (within the "racing operations" cost centre, rather than the "breeding operations" cost centre), the Chief Commissioner says that if the focus was upon selling the horses (rather than racing them) some portion of these costs would ordinarily be understood as reducing the profitability of the sales operation. It is said that by adding a portion of the costs associated with training the horses to race to the costs of sale would diminish even further the commerciality to Godolphin of its horse sales. 5. The Chief Commissioner says that Godolphin's contemporaneous financial records do not disclose a commercial focus on selling horses and (when compared to the "stallion" and "racing operation" activities) are not supportive of horse sales being Godolphin's dominant purpose. Average staff 1. The Chief Commissioner says that the Management Accounts demonstrate that approximately 52% of all staff employed by Godolphin in each of the land tax years 2016 to 2019 (noting that there are no records in 2013 to 2015) work in the racing operation; and that in each of these years, less than 7% of staff assisted with stallions, approximately 17% assisted with breeding operations, and the remainder were employed in support of all operations. 2. By way of example, it is noted that in 2019 Godolphin employed 159.3 full-time employees in "racing" compared to 18 for "stallions", 52.3 for "breeding" and 77.3 for "support". The Chief Commissioner says that this is a strong indicator that Godolphin's expenditure is focused on racing. Business Plans and other presentations 1. The Chief Commissioner says that a review of Godolphin's own business plans and precautions demonstrates that Godolphin's focus is on racing (see Exhibit 4, being the documents produced by the plaintiff in response to a request by the Crown Solicitor's Office dated 10 June 2021). 2. It is noted that Godolphin's Business Plan is described as "breed to race"; and that the "Business Plan" is explicitly one whereby racing and breeding operations are funded by the commercial stallion operation, prize money and the sale of "surplus mares, weanling and racehorses". The Chief Commissioner says that the fact that only "surplus" horses are sold is indicative of the purpose being racing and breeding not sale. 3. The recorded "commercial objectives" in the Business Plan focus on racing (see the Key Performance Indicators, which the Chief Commissioner says are dominated by racing success with "Gross Commercial Sales Revenue" listed ninth out of ten). 4. The Chief Commissioner also notes that the Godolphin Australia Strategy includes "Focus on quality - maintaining a broodmare band of 200 with a view to entering 120 horses into the racing program each year". 5. Emphasis is placed on the "Godolphin Australia - Plan Overview", as demonstrating Godolphin's focus on racing, noting that it refers to bloodstock, continual aggressive assessment of racing stock, sale of lower end to lower-middle end performers (geldings), fillies to be mated to Darley stallions and those excess to needs sold in breeding stock sales, selection of upper-middle end performers (around six geldings annually) sold to high yielding Asian markets, constant maintenance of breeding stock, sale of "foal mares" that are not of sufficient quality (around 70/year); and pointing to the statement as to sale "without selling the silver ware" of commercial pedigrees where Godolphin has "extended exposure", thereby utilising "the intellect and investment of our subsequent co-investors". 6. The Chief Commissioner says that these documents are a contemporaneous and objective record of Godolphin's purpose (one that is focused on breeding and racing with selling only incidental to achieve racing success or breeding objectives). 7. Thus, the Chief Commissioner says that Godolphin's contemporaneous financial records demonstrate that vast majority of expenses incurred by Godolphin in each land tax year were incurred on its racing operations which returned significant losses in each of the 2013 to 2018 land tax years and a smaller loss in 2019. The Chief Commissioner says that the fact that Godolphin's expenditure in each of the land tax years was focused on racing (for no reward) is indicative of the dominant purpose for which Godolphin maintains horses. 8. The Chief Commissioner says that, conversely, Godolphin's financial records disclose very little focus on determining the net commercial gain realised from sales. 9. The Chief Commissioner says that where Godolphin's submission is that the dominant use of the land was for the maintenance of horses for the purpose of selling them or their natural increase, one would reasonably expect a similar focus on sales and understanding the direct and indirect costs associated with such sales and their profitability. (Pointing out that this is not to be found in the financial records.) 10. It is submitted that the focus in the financial records is on breeding and racing horses, which is consistent with a model of "breed to race" but inconsistent with a "breed to sell" model. The Chief Commissioner says that Godolphin keeps the very best horses for racing and stud purposes, only selling those horses that do not fit that purpose or are surplus to needs, noting Mr Cox' evidence that Godolphin considers that "sales are necessary to keep control of horse count and quality" (Mr Cox' second affidavit at [54]). It is said that keeping control of "horse count" manifests in the production of an optimal two-year-old race string which can be raced, and "quality" manifests in the sale of horses of "lower quality" which are finished their racing career. 11. Thus, it is submitted that Godolphin's purpose is to breed to race and not to breed to sell. The Chief Commissioner says that the purpose which exists at the time the horses are being maintained on the Land is to breed, train and race successful racehorses which are fed back into the cycle of "breed to race"; and that any sale of horses was incidental and ancillary to that purpose. 12. Alternatively, it is said that in each of the land tax years the purpose of breeding and racing prevails and is dominant over any purpose of selling, noting that Godolphin only sells horses if they are considered to be of inferior racing quality or after their racing career is over (and they are not required for the broodmare band). 13. To the extent that Godolphin subsequently decides to sell a horse after it has shown the strength of its talents on the racetrack (or lack thereof), the Chief Commissioner says that the formation of that later intention or purpose is not sufficiently proximate to the maintenance of the animals on the Land to satisfy the requirements of s 10AA(3)(b) of the Act. Kelvinside's use 1. As noted, while the Chief Commissioner accepts that the maintenance of stallions on PID 4196725 (and more specifically DP 220425) is for the purpose of selling their bodily product, the Chief Commissioner says that that purpose was not the dominant use of PID 4196725 during each of the land tax years; rather, that the dominant use of PID 4196725 (and Kelvinside) during each of the land tax years was for: maintaining yearlings for the purpose of educating them to race; spelling yearlings between periods of intense racing training at Crown Lodge; and spelling thoroughbred horses in between race events. Physical area used to maintain stallions 1. The Chief Commissioner says that contrary to Godolphin's submissions, the evidence demonstrates that Godolphin only maintains stallions on DP 220425 (see Exhibit A at tab 4 and Exhibit 2 at tab 1, p 9). 2. PID 4196725 is comprised of (see Exhibit 2 at tab 1, p 9): DP 220425, which has an area of 34.35 hectares; and DP 624789, which has an area of 332.47 hectares. 3. It is noted that, in total, PID 4196725 is comprised of 366.82 hectares, of which DP 220425 comprises less than 10%. Accordingly, the Chief Commissioner says that less than 10% of PID 4196725 is used to maintain stallions. 4. The Chief Commissioner says that the remaining 90% of PID 4196725 is used for the maintenance of yearlings (which are being educated and trained as racehorses), horses of racing age which are spelling in between race events and the maintenance of cattle (which the Chief Commissioner says are used as part of a follow through operation and subservient to the maintenance of horses). 5. The Chief Commissioner says that there is no evidence to suggest that any part of PID 292024, 292022 and 292533 (within Kelvinside) are used for the maintenance of stallions or to conduct covering activities. Nature and intensity of use 1. As to the number of stallions compared to other horses, reference is made to the Godolphin "Horse Management System" (see Exhibit D at tab 10) which contains data on the number of horses "held and maintained by Godolphin at Kelvinside and Woodlands" as at 31 December of each year (excluding hacks, teasers and nanny mares) (Mr Hartman's first affidavit at [20] and [21]). It is noted that because the data on horse numbers has been compiled as at 31 December of each year, that number may not include any stallion that is shuttled to the Northern Hemisphere prior to 31 December (of which the Chief Commissioner says there is no evidence). 2. The Chief Commissioner says that analysis of that data demonstrates that the comparison between stallions maintained on Kelvinside and other stations was: in 2013, four stallions compared to 46 non-stallions; in 2014, eight stallions compared to 19 non-stallions; in 2015, four stallions compared to 58 non-stallions; in 2016, five stallions compared to 47 non-stallions; in 2017, eight stallions compared to 95 non-stallions; in 2018, eight stallions compared to 67 non-stallions; and in 2019, six stallions compared to 80 non-stallions. 3. Accordingly, it is said that the number of stallions maintained on PID 4196725 (and specifically, on DP 220425) is comparatively minor (four to eight stallions) compared with the number of horses (19 to 95) maintained on Kelvinside more broadly. The Chief Commissioner says that the non-stallions are maintained at Kelvinside for the purpose of training them to race or spelling them in between races. 4. As to intensity of use, it is noted that DP 220425 contains the stallion barns, covering sheds, arrival yards, preparation barn, horse walker (stallion) and lunging ring; as well as stallion specific areas (paddocks for individual stallions and a showing area) which are only used by stallions and for the purpose of Godolphin's stud operations. 5. The Chief Commissioner says that those parts of DP 220425 relating to the covering of mares (and the associated infrastructure) can logically only be in use during the breeding season which "begins on 1 September each year and ends around Christmas" (Mr Cox' second affidavit at [31]). Accordingly, it is said that for approximately eight months of each of the land tax years, the covering facilities and facilities associated with covering on DP 220425 are not in use. 6. Further, the Chief Commissioner says that when a Godolphin stallion is covering a Godolphin owned mare, that activity and the facilities used in that activity cannot be regarded as for the purpose of selling a bodily product. Accordingly, it is said that the proportion of time when stallions maintained on Kelvinside are covering Godolphin owned mares will also lessen the intensity of use of the land used for an exempt purpose. 7. The Chief Commissioner refers to the documentary evidence that establishes that Godolphin, in each of the land tax years, shuttled at least some of its stallions to the Northern Hemisphere for breeding purposes. By way of example it is noted that: Exceed & Excel shuttled to the Northern Hemisphere in each of 2013, 2014, 2015, 2016, 2017 and 2018 breeding seasons; Epaulette shuttled to the Northern Hemisphere for each of the 2014, 2015, 2016, 2017 and 2018 breeding seasons; Lonhro shuttled to the Northern Hemisphere for the 2013, 2014 and 2015 breeding seasons; and Hallowed Crown shuttled to the Northern Hemisphere for the 2016 and 2017 breeding seasons. 8. The Chief Commissioner says that Godolphin has not served evidence of the period of time that a shuttled stallion spends in the Northern Hemisphere or the total amount of time such a shuttled stallion spends away from Kelvinside but says that, logically, a stallion shuttled to the Northern Hemisphere for the Northern Hemisphere breeding season will spend time (potentially months), away from Kelvinside. It is said that during that period the intensity of use of that part of DP 220425 on which stallions are maintained during the Southern Hemisphere "off-season" will be lessened. (Pausing here, in cross-examination, Mr Cox' evidence was that shuttle horses would tend to leave from the northern hemisphere in early December and would return in about mid-August so would spend around seven months overseas – see T 59.31-33). 9. Mr Cox' evidence that stallions spend a vast majority of time (more than 95%, in fact) in the stallion complex is of note (see T 42.35-38). The Chief Commissioner contrasts intensity of use with the intensity of use of the remainder of PID 4196725 (the vast majority) to maintain non-stallion horses. 10. The Chief Commissioner points out that the number of horses of racing age maintained on the land increased significantly from 2015. The Chief Commissioner submits that the logical and reasonable inference is that these horses are spelling on Kelvinside in between race events. 11. As noted above, Godolphin spells its thoroughbred horses between race events at Kelvinside (Mr Cox' second affidavit at [48]-[50]). 12. It is said that Godolphin has not provided evidence of the precise number of horses spelling at Kelvinside in a given land tax year, nor of the length of time a horse spends spelling at Kelvinside in a given land tax year. It is noted that the evidence is that younger horses are raced for a four to six week period, older horses are raced for an eight to twelve week period, and each "then spell for a time" with 85% of horses racing in NSW spelled at Kelvinside (Mr Cox' second affidavit at [50]). 13. The Chief Commissioner says that in analysis of the data in the Godolphin "Horse Management System" by reference to the birth dates of horses maintained at Kelvinside, supports the inference that those horses that are of a racing age (two to six years old) are maintained on Kelvinside for the purpose of spelling. It is said that inference is further supported by evidence of the "typical timetable" of a horse (Mr Cox' second affidavit at [41]), which, from "26 months and continuing" is involved in "racehorse education, trials and racing, interspaced with spell" (at Kelvinside) and from three years old (to the end of its racing career) is involved in "racing and training, interspaced with spells" (at Kelvinside or Osborne Park). The Chief Commissioner says that this inference further supports the proposition that a significant part of the land at Kelvinside is used to maintain horses for the non-exempt purpose of spelling them in between races. 14. The Chief Commissioner says that the increase in spelling at Kelvinside from 2016 is explained in the document titled "Godolphin Australia - 5 December 2018" which records that Kelvinside has "recently developed intensive spelling (resting) facility on site, following the sale of Twin Hills in 2016/17". It is submitted that this is again an indication of the intensity of use of the land at Kelvinside for purposes not associated with maintaining stallions for the purpose of selling their bodily product. 15. Accordingly, the Chief Commissioner says that (despite the paucity of evidence on precise numbers and times spent by horses spelling at Kelvinside), when compared to the stallion operation involving four to eight stallions on a very limited part of Kelvinside (DP 220425 within PID 4196725), the spelling of racehorses is a very significant use of the land at Kelvinside. 16. It is noted that in each of the 2016 to 2019 land tax years, the number of yearlings and the number of horses of racing age significantly outweigh horses which are past the age of racing (including stallions). In 2015, the number of foals, yearlings and horses of a racing age significantly outweigh horses which are past the age of racing (including stallions). In 2014, the number of foals, yearlings and horses of a racing age were less than horses which are past the age of racing (including stallions) while in 2013, the number of foals, yearlings and horses of a racing age were almost the same as horses which are past the age of racing (including stallions). 17. Accordingly, it is said that in the land tax years 2015 to 2019, there were significantly more yearlings and horses of racing age maintained on Kelvinside compared to stallions maintained on an area of land that comprised 10% of Kelvinside. 18. As to the resources expended and value derived from the use of the land, the Chief Commissioner says that Godolphin's evidence (see Mr Hartmann's first affidavit at [10]-[13] and [15]-[18]) and submissions (see [101] and [102]) focused on revenue earned from stallion covering, sale of animals and prize money; does not readily speak to the dominant use of the land at Kelvinside because absent consideration of the expenditure incurred to earn the revenue a Court is unable to weigh the resources expended (including time, money and labour) in order to derive revenue; and the exercise of weighing expenditure against revenue cannot readily be performed from the evidence because Godolphin does not appear to allocate expenditure against revenue earned on the basis of operations conducted at discrete properties. 19. It is noted that there is no apportionment of expenditure on nomination activities in comparison to training and spelling activities at Kelvinside. However, the Chief Commissioner says that some understanding of the comparative intensities of use of the respective activities can be inferred from the expenditure analysis (see above). 20. Again, it is noted that the amounts expended on breeding and racing activities far exceed the amount generated by all activities undertaken by Godolphin (giving rise to the need for cash injections to ensure that the company does not trade whilst insolvent). 21. It is submitted that if the dominant purpose of the use of Kelvinside were for maintaining stallions for the purpose of selling their bodily product, one would expect a concentration of resources and expenditure on covering activities as opposed to breeding, training and spelling thoroughbred horses for the purposes of racing (but that Godolphin has not adduced any evidence to demonstrate that this is so). The Chief Commissioner says that analysis of the overarching trends of expenditure suggests that the moneys expended upon the maintenance of stallions for the purpose of covering mares are relatively small in comparison to the amounts expended on breeding, training to race, and racing more generally. 22. Thus it is submitted that even if the land at Kelvinside (other than the 10% of PID 4196725 on which stallions are maintained) is used for the non-exempt purpose of maintaining yearlings to educate and train them to race, spell them between racing training and spelling thoroughbred racehorses in between races, Godolphin has not discharged its onus and established that the dominant use of the land at Kelvinside (specifically PID 4196725) is for the maintenance of animals for the purpose of selling them, their natural increase or bodily product. 23. The Chief Commissioner says that the evidence is that, in each of the land tax years: approximately 10% of PID 4196725 (being DP 220425) is used for the maintenance of stallions and coverage activities; the coverage and associated facilities are only used in the breeding season which runs from September to December of each land tax year; stallions shuttle to the Northern Hemisphere and are not present on the land for periods of time; the comparative numbers of stallions (maintained for an exempt purpose) is typically far less than the numbers of yearlings and horses of a racing age (maintained for a non-exempt purpose) on Kelvinside; and the relative amounts expended on breeding and racing are substantially more than the amounts expended on stallion operations. 24. The Chief Commissioner says that this establishes that the dominant use of PID 4196725 is for the maintenance of yearlings for the purpose of educating them to race, spelling yearlings between periods of intense racing training at Crown Lodge and spelling thoroughbred horses in between race events. 25. Accordingly, it is said that the dominant use of PID 4196725 is not for primary production and does not qualify for the exemption conferred by s 10AA(1). 26. The Chief Commissioner says that the same conclusion applies to each of the other PIDs within Kelvinside (PID 292024, PID 292022 and PID 292533) (but more so because Godolphin does not maintain stallions on those PIDs). Cattle 1. The Chief Commissioner points to Godolphin's concession that the cattle activities alone, if they are the only activities that fall within s 10AA(3)(b) of the Land Tax Management Act, would not be sufficient to establish that the "dominant use" of the Land falls within the subsection (referring to submissions at [116]). 2. Thus the Chief Commissioner submits that if the breeding and training activities taking place at Kelvinside and Woodlands are a use of the land which is not for the maintenance of animals for the purpose of selling them or their natural increase; and the dominant use of Kelvinside is not for the maintenance of stallions for the purpose of selling them, their natural increase or bodily product, then the maintenance of cattle on the Land, separately and independently of the maintenance of horse on the Land, does not provide a foundation for the primary production exemption to apply. (Godolphin does not cavil with this.) 3. That said, the Chief Commissioner accepts that if the converse were found then the cattle operations will not assist the Chief Commissioner to establish that the primary production exemption does not apply, as they will be in aid of a purpose which otherwise satisfies the exemption and are relatively unimportant in comparison to the other uses to which the Land is put. 4. It is noted that Godolphin's evidence is that cattle are used to "implement follow-through rotations between cattle and thoroughbred horses in the same paddocks" (Mr Cox' first affidavit at [17]; and see at [18] as to the perceived benefit of such a follow-through rotation). 5. The Chief Commissioner's livestock expert, Mr Schuster, has set out the considerable benefits of the follow-through rotation of cattle to the "horse operation" conducted on the Land, including the removal of parasites, prevention of disease and balancing grazing pressure (Schuster Report at [29]-[35]). Mr Schuster's opinion is that the "maintenance of cattle is subservient to the maintenance of horses" (Schuster Report at [41]) and that "cattle are predominantly used as a management tool to favour the horse operation and to utilise portions of the Land or pastures which would otherwise not be used" (Schuster Report at [59]). 6. Mr Schuster was, based on the materials available to him at the time of his report, unable to form a view as to whether the cattle operation was "conducted to generate revenue" although he "suspect[s] this to be the case" (Schuster Report at [43] and [48]). In the circumstances, while unable to conclusively determine the purpose of the cattle operation Mr Schuster considered it "probable that the purpose is to assist in controlling internal parasites in horses, maintain pasture quality through strategic grazing management and generate revenue for the sale of cattle" (Schuster Report at [48]). 7. Noting that Godolphin did not require Mr Schuster for cross-examination, the Chief Commissioner says that his unchallenged evidence (that the cattle maintained on the Land are subservient to the maintenance of horses on the Land and are predominantly used as a management tool to favour the horse operation and to utilise those portions of the Land which would otherwise not be used) should be accepted. 8. The annual records of the acquisition and proceeds from sale of livestock in the years 2013 to 2018 (no data was provided for 2019) indicate that proceeds from the sale of livestock outweighed the cost of acquisition for livestock. The Chief Commissioner says that this alone is not determinative of purpose. 9. The Chief Commissioner says that a comparable of expenditure on cattle is against expenditure on horses (recorded as "horse expense" and "stud farm expense" in Godolphin's financial records) shows that the combined expenditure on "Stud Farm" and "Horses" at Woodlands and Kelvinside significantly outweighs expenditure on cattle in each land tax year. By way of example, in 2019 the total "horse expenses" at Woodlands was $1,307,722, while expenditure on cattle was $20,585. In the same year "horse expenses" at Kelvinside was $1,570,430 while only $6,664 was spent on cattle. 10. The Chief Commissioner says that the overwhelming preponderance of expenditure on Kelvinside and Woodland is on the "Stud/Farm" and "Horse" categories and that this, together with the expert opinion of Mr Schuster that the cattle operation (as a follow-through rotation) is subservient to the horse operation, provides an evidentiary basis for the finding that cattle are maintained on the Land in order either to enhance the horse operation or as an adjunct to the horse operation. Godolphin's submissions in reply 1. As to the factual matters, Godolphin accepts that its business involves breeding and raising racehorses. It says that one of the objectives of racing those horses is to increase their value and the value of related horses, including their sires, dams, progeny and others who share their bloodline (referring to the Mellsop Report at [18]-[30]); another objective (and one of the central objectives) is to produce a high quality sire with a view to selling that stallion's semen in the future: (referring to the Flying Start 2018 presentation on page 6; and the Godolphin Australia Report dated 5 December 2018 on pages 2 and 7 about the objective of producing a high quality sire). 2. Godolphin acknowledges that geldings are not capable of becoming a stallion sire (although it is said that the gelding's success on the racefield and the price for which it is sold will be relevant to the value of related stallions and other related horses). Godolphin cavils with the proposition that geldings are sold only when their racing or stallion prospects fail to materialise. Reference is made to Mr Cox' evidence in his first affidavit at [53]-[54] that Godolphin also sells high quality geldings (including for prices up to $1.3 million). Reference is also made to Godolphin Australia report dated 5 December 2018 on page 5 regarding the sale of "upper-middle end performers". 3. As to the submission by the Chief Commissioner to the effect that it is only a small minority of the foal cull; yearlings which cannot meet the training and trial standards set for them; three-year-old geldings which have already raced; and mares part their racing age of an unsuitable quality to produce foals which are sold by Godolphin, Godolphin says that while the horses described in that paragraph are among those sold, Godolphin says the evidence simply does not support the assertion that it is only those horses that are sold. Godolphin says that the revenue from sales speaks for itself; that on average, it generates roughly half the revenue generated from racing – and this is before one takes into account the future benefit (which will still be predominantly referable to sales) to be derived from the horses that are retained as broodmares or the stallions that are retained as (exceptionally valuable) sires. 4. Godolphin says that the Chief Commissioner's analysis of financial statements (at [68]-[87] of submissions) only reinforces Godolphin's case. It is accepted that the racing operations are not profitable when viewed in isolation, indeed, they are a substantial net cost to Godolphin. It is noted that the substantial majority of the activities that lead to the expenses on racing operations occur on Crown Lodge and Osborne Park. Godolphin says this reinforces the legitimacy of Godolphin's position that the dominant use of Crown Lodge and Osborne Park can be regarded as different from the dominant use of Kelvinside and Woodlands, even though all four properties are used as part of an integrated business. Godolphin submits that the same may be said concerning the disparity in numbers of staff across the various parts of the business. 5. As to the Chief Commissioner's submissions at [83]-[87], the Chief Commissioner introduces a somewhat distracting concept of "net horse trading", Godolphin says this is misconceived and is unsupported by the evidence. Godolphin says that it purchases horses as part of its operations and it sells horses as part of its operations, but that there is no sensible reason to set the cost of one off against the revenue of another. It is submitted that horses are purchased with a view to improving Godolphin's bloodlines, with the most expensive purchases being stallions purchased to be maintained on Kelvinside as part of the stallion covering operations (referring to Mr Cox' first affidavit at [34] and the purchase of Brazen Beau and 50% of Hallowed Crown in 2014; the purchase of Shooting To Win in 2015; and the purchase of Kermadec in 2016). It is said that the stallions are purchased not as part of a horse trading business, but are rather purchased as assets of diminishing value because of the revenue that can be realised from them in Godolphin's hands (i.e., from the sale of their semen). It is said that horse sales in fact are a significant source of revenue. It is said to be not surprising that Godolphin chooses which horses to sell by reference to what is best for its overall business. It is said Godolphin does so knowing that the substantial majority of all thoroughbred horses will be sold, thereby generating one of Godolphin's significant revenue streams. 6. Godolphin maintains that the real profit driver for the business is the stallion covering operations. As noted above and in its submissions in chief, Godolphin says that all of Godolphin's operations are directed principally towards producing top quality sires and maximising the price for which Godolphin can sell their semen. 7. As to the Commissioner's submission about the "focus" on racing (see submissions at [90]-[93]) Godolphin again says that is not surprising (referring to the complementary and mutually reinforcing nature of racing and selling horses, progeny or semen). It is submitted that the racing success of horses is one of the best advertisements there can be, not only for those horses, but for related horses. 8. As to the Chief Commissioner's submissions (at [100]-[107]) about stallion covering activities, Godolphin accepts that the actual stallion covering operations take place on a relatively small part of one PID, being PID 4196725. Hence, it is said that, viewing the activities on that PID alone, especially the level of development or infrastructure on the land, the financial benefit derived, and the centrality of the activity to the whole of Godolphin's operations, the stallion covering activities are dominant, in the sense of being the chief, main or prevailing activity. It is said that the fact that Godolphin puts the balance of the PID to other productive use is entirely understandable and is consistent with the stallion activities being dominant (as the Chief Commissioner found in the reasons for the original assessment: see Exhibit J, extracted above). Godolphin says that part of the productive use to which the balance of the PID is put (cattle maintenance) is also accepted to be an exempt activity. Thus it is submitted that even if the stallion covering activities and the cattle activities are the only exempt activities, PID 4196725 is exempt. 9. Similarly, Godolphin says the fact that some of the best stallions shuttle to the northern hemisphere does not deprive the stallion covering activities of their dominance. It is said, first, that it reinforces the primacy of stallion covering to Godolphin's operations. While the Australian stallions are being maintained at Kelvinside, it is for the purpose of selling their semen (including the possibility of selling that semen overseas in the northern hemisphere breeding season). When northern hemisphere stallions shuttle to Kelvinside for the Australian breeding season, while they are on Kelvinside they are maintained there for the purpose of selling their bodily produce. The productive use around the world of these stallions as assets, at times when they cannot cover broodmares in Australia, demonstrates how important these activities are to Godolphin's business. 10. Godolphin says that the stallion covering activities remain relevant to the use of the other Land because a significant objective of all of Godolphin's activities is producing a small number of high quality sires from a large number of horses; noting that such sires will then stand at Godolphin for the purpose of selling semen. 11. As to resources expended (see Chief Commissioner's submissions at [129]-[132]), Godolphin says that the most telling concentration of resources is the value of the assets themselves. It is said that the value of Kelvinside's stallion holdings during the relevant years is between $60 million and $150 million for a very small number of stallions. Godolphin says during the breeding season from 1 September to December (and preparation time in August), the activity is plainly intense, as can be readily inferred from the fact that the stallions cover 100 to 150 broodmares during the four month season. The stallions and mares are large, powerful animals and are also extremely valuable assets. They are capable of injuring and being injured. The requirements in terms of handlers, vets, supervisors, and other staff speaks for itself. The fact that staff expenses on stallions are a comparatively small portion of overall staff expenses highlights how profitable the stallion operations are, reinforces the primacy of those operations, and demonstrates the extent to which Godolphin's other operations are understandably geared towards producing high quality sires. It is noted that Mr Pulford gives evidence about the very substantial marketing expenditure (which of its nature is designed to boost sales and prices). Godolphin says that it is unsurprising that the marketing places significant weight on racing success of horses and their relatives, given the product being sold. 12. As to the spelling of horses, Godolphin says that, by their nature, when horses are spelling, it is because they are resting between race campaigns (i.e., four to twelve week periods during which the horse is racing) (see Mr Cox' second affidavit at [50]). When they are spelling on Kelvinside, they are away from all the training facilities at Crown Lodge or Osborne Park. It is submitted that the activity is also, among other things, a precursor to sale. 13. While the education of yearlings involves a greater level of activity and includes some infrastructure or facilities on the land (Mr Cox' second affidavit at [27]-[33]), Godolphin says that the evidence does not suggest it is as intense as the stallion covering operations. Further, it is said that it is not solely or primarily referable to Godolphin's racing activities, but is part of the horse's progression to adulthood and is therefore also a necessary precursor to sale and a necessary precursor to entering the breeding program as a broodmare or stallion. 14. As to the Chief Commissioner's submissions in relation to Mr Schuster at [141]-[148], Godolphin says that does not mean that conclusionary language in his report ("subservient" and "predominantly"), should be accepted. It is said Mr Schuster explains what he means in his report (i.e., that is, that they are a lesser activity and the use of cattle is in part a management tool, which is partly referable to the overlapping equine activities on the land and which puts parts of the land to incremental productive use). It is noted that Mr Schuster specifically stated at [43] of his report that he did not know whether Godolphin's cattle enterprise is conducted to generate revenue. Godolphin says the evidence before the Court that the cattle do in fact generate a small but significant amount of revenue and notes that the Commissioner accepted in his original assessment that "the cattle operation is a primary production use" (see Exhibit J at p 2). Again, it is noted that it is the common ground in relation to these activities that, if the equine activities do not fall within the exemption, the bovine activities would not be enough. 15. Godolphin notes (relying on Tweddle v Federal Commissioner of Taxation (1942) 180 CLR 1; [1942] HCA 40 (Tweddle) at 7 per Williams J) that it is not function of income tax legislation to dictate to taxpayers in what business they shall engage or how to run their business profitably or economically; and that the income tax legislation operates on the result of the taxpayers' activities as it finds them. 16. The application of Tweddle in the context of the Land Tax Management Act (and the purported irrelevance of profitability to the enquiry under s 10AA) has, however, been the subject of doubt in Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue (2013) 97 ATR 818; [2013] NSWCA 408 at [57]-[60] per Emmett JA and Vartuli v Chief Commissioner of State Revenue (2014) 98 ATR 545; [2014] NSWSC 678 (Vartuli) at [107]-[119] per White J (as his Honour then was). Notably, in Vartuli, White J held (at [109]) that, for a use of the land to have a commercial purpose or a commercial character, the purpose or character of the use "must be or include the making, or the potentiality for the making, of profits". On this basis, the Chief Commissioner submits that a willingness to engage in continued loss making without any regard to whether there might be commercial gain, would support an inference that purpose is not of sale but some other activity. Determination 1. As adverted to earlier, a principal difference in the parties' opposing contentions is the perspective from which the racing operations are viewed in the context of Godolphin's equine operations: the Chief Commissioner argues that the breeding, training, education and spelling are for this purpose of racing ("breed to race") and that this is the dominant purpose (and dominant use) of the Land. 2. Emphasis is placed by the Chief Commissioner on statements in Godolphin's documents which focus on the objective of racing success. Godolphin, however, contends that the racing operation is part of the integrated thoroughbred stud operation – in that racing success increases the value commended by the stallions in "nominations" (i.e., the stallion covering activities) and the value of the progeny that is sold. As to the value of the former, there is no doubt that this vastly exceeds revenue ($17,869,000 from stallion servicing in 2019 compared to losses incurred in racing operators and breeding operators). It is submitted that, if not for the stallion operations, any rational owner of the business would close down the racing operators. 3. Mr Cox explains the "breed to race, race to breed" model as being that the breeding and supply of stock for the racing stable on the one hand is followed by the racing stable improving the stock and creating the supply of bloodstock assets. This is reinforced by the fact that stallion covering fees are clearly the key revenue driver for the business. 4. The question thus is whether there are two separate activities (such that it is necessary to determine which is the dominant use on each parcel of land) or an integrated or composite activity (involving both breeding and raising) such that the dominant use of all parcels (whether for breeding, training or spelling) is for the purpose of the ultimate sale of the stallion's semen and the broodmares' progeny. 5. The Chief Commissioner emphasises that the horses are being bred and educated in order to race (and says that the fact that there is an incidental sale at some stage does not affect this). 6. I accept that much of the use of the Land is devoted to breeding, training and preparation of the horses for racing (and that an obvious objective is to maximise prize winnings or success on the track). However, viewed overall, I have concluded that this is an integrated operation in which the preparation of horses for racing is with the overall or dominant purpose or objective of increasing or maximising the revenue from the nomination fees (i.e., the sale of bodily produce) and from the sale of the progeny produced by the broodmares. 7. I do not accept that the integrated operation is for the dominant purpose of generating prizemoney (i.e., of racing). That does not make sense from an economic point of view. Thus (and assuming for the sake of argument for this purpose that one is looking for dominant purpose rather than dominant use – as the legislation provides) I have concluded that the document purpose of the stud operations is just that – to run a thoroughbred stud (with revenue generated from the stallions' covering services and, to a lesser degree, from the sale of progeny and any racing success). 8. To the extent that the Chief Commissioner says that the vast sums spent on training for the racehorse are for the production of stallions who might be capable of being sires (noting that Mr Cox accepts that the chances of producing such a sire are statistically low), and points to the fact that a number of stallions who assist with nominations are purchased (not bred by Godolphin); it seems to me that the expenditure can only logically be explained by an objective intention to increase the value of the thoroughbred stud and the purchase of stallions to achieve that simply reinforces this conclusion. 9. Mr Cox was, to my mind, quite candid in his evidence. Mr Cox had no hesitation in accepting (at T 47.43-46) that training was to have the best possible preparation to win at the racecourse; he agreed that spelling was an integral part of racehorse preparation for racing. The spelling manager on the Staff Stories presentation said that as at the time of that presentation, Godolphin had horses in every single paddock with grass and had taken over one side of the farm – which Mr Cox identified (at T 53.25-27) as the western side of Rouchel Road and accepted that this expansion included the erection of additional fencing (T 54.1-4). 10. There is a logical explanation for the timing of the majority of sales (given by Mr Cox) which is consistent with this being part of an integrated thoroughbred stud operation. Mr Cox introduced the policy to put mares in foal and then sell them once they are in foal (i.e., with the foal) – which he commenced his employment with Godolphin in January 2018. 11. Mr Cox accepted that yearlings were not sold until their racing potential was able to be assessed (T 66.9-14) and said that a view would be taken on whether they were going to "add to our racing stock and our prize money and profile of our stallions" (T 66.31-35). (Significantly, he then included reference to the "profile" of stallions.) 12. Mr Cox accepted that horses that go into their fourth year and are retained by Godolphin are those horses that Godolphin hoped would earn better prizemoney than those which were sold (T 92.44-49). 13. At T 116.37-50 and 117.1-30, Mr Cox accepted (consistently with Mr Mellsop's Report) that factors involved in marketing included: actual racing prowess (whether from Godolphin stock or not); the number of winners that the stallion has sired; the amount received from sale of progeny; and the fact that more established stallions would appear in the racing stakes. 14. Mr Cox accepted that the statements made in the "Flying Start" brochure given to new trainees included the objective to "enhance the residual value of its bloodstock holdings by achieving success on the racetracks at the highest levels" (see T 121.22-25). 15. At T 132.19-21, Mr Cox denied that achieving racing success was the dominant purpose of the use of the Land. His understanding was that it was one of two purposes – to strive for stallion excellence and to strive for racecourse success (T 132.21-23). 16. Mr Hartmann, to the contrary, accepted that the major emphasis was on the racing operations and that there was a strategy shift to "breed to race" (T 166.3-12). 17. Ultimately, the views of Mr Cox and Mr Hartmann are of limited assistance. The issue is to be determined objectively. However, Mr Cox' description of the activities on the Land and the rationale for those activities makes sense and in broad terms supports the conclusion that this is an integrated thoroughbred stud operation. 18. The significance of this conclusion is that, if there were two distinct purposes for the activities carried on at the land, then the relevant question would be whether use for any one such purpose was the dominant use. However, to my mind, the objectives of winning races and pursuit of stallion excellence are part of the overall objectives of increasing the value of Godolphin's stud operations (being nomination fees in particular and sale of the majority of Godolphin's progeny) at a time that does not compete with breeders and taking into account an assessment of racing potential but that the sales are sufficiently proximate – if that be a required element – to the maintenance of the animals on the Land. 19. Godolphin's submission is that one fallacy of the Chief Commissioner's argument is that it treats as a purpose in its own right something (racing) which Godolphin says is a means to an end. With all due respect, that brings me back to the chicken and egg proposition with which I started. Philosophically, the parties are divided as to whether racing is a means to the end or is the end objective. The Chief Commissioner's argument is only fallacious if the answer to that question is assumed to be in Godolphin's favour. 20. I consider that factors such as the uneconomic nature of the operations were they to be confined to racing alone; and the evidence that racing prowess (of the horse and of its progeny in due course) is an important factor in the pricing able to be commanded for the sale of stallions' semen, lead to the conclusion that this is indeed an integrated stud operation and that the dominant use of each of the parcels of land for each of the land tax years was for the maintenance of animals for the purpose of selling their bodily produce or natural increase. 21. Thus, I have concluded that the exemption applied and that the Assessments should be set aside. Orders 1. For the reasons above, I therefore make the following orders: 1. Revoke the land tax assessments. 2. Refer the matter to the defendant to assess for land tax excluding the taxable value of the Kelvinside and Woodland properties. 3. Order the defendant to pay the plaintiffs' costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 April 2022