Beretta and anor v Chief Commissioner of State Revenue [2007] NSWADT 156

CITATION: Beretta and anor v Chief Commissioner of State Revenue [2007] NSWADT 156

DIVISION: Revenue Division

APPLICANTS PARTIES: Judith Marie Beretta & Margaret Jill Kneebone RESPONDENT Chief Commissioner of State Revenue

FILE NUMBER: 066103

HEARING DATES: 13 March 2007

SUBMISSIONS CLOSED: 4 June 2007

DATE OF DECISION: 25 July 2007

BEFORE: Hole M - Judicial Member

CATCHWORDS: Parking space levy - assessment of

MATTER FOR DECISION: Principal matter

Environmental Planning and Assessment Act 1979 Local Government Act 1919 Parking Space Levy Act 1992 LEGISLATION CITED : Parking Space Levy Amendment Act 2000 Parking Space Levy Regulation 1997 Retail Leases Act 1994 Taxation Administration Act 1996

Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor [2004] NSWADTAP 19 CASES CITED: Plummer v Needham (1954) 56 WALB1 Wright v Edwards (1961) SASR

APPLICANTS E Beretta, agent REPRESENTATION: RESPONDENT K McKee, solicitor

ORDERS: That the assessments of the respondent be set aside and that new assessments be issued for each of the years 2001-2, 2002-3, 2003-4, 2004-5 and 2005-6 for 10 car parking spaces and that interest at market rate be payable.

REASONS FOR DECISION Application 1 This application is made for a review of the decision by the respondent to assess the applicants' for twelve (12) liable parking spaces pursuant to the Parking Space Levy Act 1992 (PSL Act) and the Taxation Administration Act 1996 (TA Act) and to impose interest (market rate only) for the years 2001-2, 2002-3, 2003-4, 2004-5 and 2005-6. Facts 2 The applicants are the registered proprietors of a property at Harris Park which is within the business district of Parramatta City Council. 3 The applicants are principals of Kneebone & Beretta Pty Ltd, Consulting Structural and Civil Engineers. This company leases part of the premises constructed on the property from the applicants. Another company, Compudraft Pty Ltd, leases another part of the premises constructed on the property. 4 The backyard of the property has been cemented over and, in accordance with Parramatta Council's approval in 1977, six (6) car parking spaces have been provided. According to a plan prepared on behalf of the applicants there are eight (8) parking bays and the remainder of the cemented yard is used for access and turning bays. From time to time there are two (2) other areas in which temporary parking is permitted. 5 The respondent forwarded a letter to the applicants dated 6 February 2006 noting that there may be a liability to pay a parking space levy and requesting completion of an enclosed questionnaire to be returned by 27 February 2006. 6 The applicants completed and returned the questionnaire under cover of a letter dated 13 February 2006. The letter drew attention to the need for parking for staff members and other users of the parking, and further claimed that the parking should be exempt in a similar way to retail shops, restaurants, clubs, hotels, car salesyards and funeral parlours. The questionnaire response noted eight (8) parking spaces and queried whether any would be exempt. 7 The respondent issued notices of assessment to the applicants dated 15 March 2006. The applicants sought a review of the assessments by letter dated 28 August 2006. The reasons for objections to the assessment were considered and, by letter dated 31 July 2006, the respondent disallowed the objections and confirmed the assessments. 8 Officers of the respondent visited the property on 13 March 2006 and calculated that there are twelve (12) parking spaces on the property. Legislation 9 The PSL Act introduced the concept of a levy being imposed on car spaces in particular areas to encourage the reduction of the use of cars in particular areas and to encourage use of public transport. The object of the Act is: 3. Object The object of this Act is to discourage car use in business districts by imposing a levy on off-street commercial and office parking spaces (including parking spaces in parking stations), and by using the revenue so raised to finance the development of infrastructure to encourage the use of public transport to and from those districts. 10 The property is within an area designated as subject to the PSL Act. 11 "Parking Space" is defined at Section 4(1): parking space means: (a) a space set aside for the parking of a motor vehicle (whether or not the space is used for the parking of a motor vehicle), and (b) a space used for the parking of a motor vehicle, and (c) any other space prescribed by the regulations to be a parking space for the purposes of this definition, but does not include a space which is part of the carriageway of any street, road or lane open to or used by the public. 12 Section 8 of the PSL Act permits regulations to be made to make provisions regarding to matters relating to parking spaces: 8 Determination by the regulations of matters relating to parking spaces (1) The regulations may make provision for or with respect to the basis and means of assessing: (a) the number of parking spaces there are on any premises, and (b) the length of time in any financial year for which a parking space is, or is not, a parking space to which this Act applies, (c) for the purposes of this Act. (2) The regulations may specify circumstances in which a parking space is taken, or is not taken, for the purposes of this Act, to be set aside or used for the parking of a motor vehicle. 13 Regulation 7 of the Parking Space Levy Regulation 1997 provides: 7 Determination of number of parking spaces For the purposes of the Act, the number of such parking spaces on any premises as are not individually delineated by permanently marked lines is to be assessed in accordance with this clause. In a case where a development consent under the Environmental Planning and Assessment Act 1979 specifies the number of parking spaces that the premises are to contain, the number of parking spaces is the number so specified. In any other case, the number of parking spaces is the number obtained by taking the total area occupied by the parking spaces and dividing it by 25.2 square metres and disregarding any remainder. For the purposes of this clause, a sign or temporary barrier purporting to indicate that a space is not a parking space is not, of itself, evidence that the space is not a parking space. 14 Certain exemptions from the levy are set out at Section 7(2): 7 Parking spaces to which this Act applies … A parking space on premises within a Category 1 area or Category 2 area is an exempt parking space if it is set aside or used exclusively for one or more or the following purposes: (a) the parking or a bicycle or motor bicycle, (b) the parking of a motor vehicle by a person resident on the same premises as those on which the space is located or on adjoining premises, (c) the parking of a motor vehicle for the purpose of loading or unloading goods or passengers to or from the vehicle, (d) the parking of a motor vehicle by a person who is providing services on a casual basis on the premises where the space is located, (e) the parking of a motor vehicle while a disabled person's parking authority is displayed on the vehicle in the manner specified in the authority, the conditions specified in the authority are being observed and the authority is in force, (f) the parking without charge of a motor vehicle on premises owned or occupied by the council of the local government area in which the premises are situated by a person other than an officer or employee of the council, (g) the parking without charge of a motor vehicle on premises owned or occupied by a religious body or religious organisation, being a religious body or religious organisation in respect of which a proclamation is in force under section 26 of the Marriage Act 1961 of the Commonwealth or a religious body within a denomination in respect of which such a proclamation is in force, (h) the parking without charge of a motor vehicle on premises owned or occupied by a public charity or public benevolent institution. (2A) A parking space on premises within a Category 2 area is an exempt parking space if the Chief Commissioner is satisfied that the parking space is set aside for or used exclusively for the parking of a motor vehicle: (a) by customers of a retail shop, or (b) by guests or customers of a hotel or motel, or (c) by members and guests of members of a registered club, or (d) by customers of a restaurant, or (e) by patients of a medical centre, or (f) by customers of a car sales establishment, car servicing or repair centre, or car wash, or (g) by clients and guests of clients of a funeral parlour, or (h) that is displayed or stored on the premises for the purpose of its being offered for sale or hire on the premises. (3) In addition, the regulations may provide for other circumstances in which a parking space is an exempt parking space. (4) For the purposes of this Act, it does not matter is the same parking space is not set aside or used for one or more of the purposes referred to in subsection (2) or (2A) or in circumstances which may be prescribed under subsection (3) as long as for each such parking space there is, at all times, at least one parking space set aside or used for such a purpose or in those circumstances on the same premises. (5) For the purposes of this Act, it does not matter if a parking space is not marked. (6) In this section: disabled person's parking authority means an authority issued by the Roads and Traffic Authority to a disabled person or to a person or organisation in respect of a vehicle used for the conveyance of disabled persons. 15 There is also another exemption provided in the Regulations at Regulation 6: 6 Other circumstances of exemption of parking space For the purposes of section 7(3) of the Act, a parking space is an exempt parking space if it is set aside or used exclusively for one or more of the following purposes: (a) the parking, without charge, of an ambulance, fire brigade motor vehicle or police motor vehicle, but only if the parking space is the one used for garaging the vehicle overnight, (b) the parking, without charge, of a mobile crane, a forklift truck, a tractor or a front-end loader, (c) the parking, without charge, of a vehicle which is used only for carrying out deliveries or only for the provision of services, but only if the parking space is the one used for garaging the vehicle overnight on premises owned or occupied by the owner of the vehicle, (d) any purpose specified in section 7(2) of the Act. 16 Regulation 6A exempts named premises being e.g. Westfield Parramatta: 6A Exemptions in category 2 areas A parking space on premises to which this clause applies is an exempt parking space if the parking space is provided or made available for the use of customers of, or persons employed at, a retail shop on those premises. The Act applies to parking spaces on premises to which this clause applies as if this clause had taken effect on 1 July 2001. This clause applies to premises described in the Table to this clause, as shown on the plan marked "Parking space exemptions in Category 2 areas" signed by the Minister, dated 30 June 2002 and deposited in the office of the Department of Transport in Sydney. Table Levy Area: Parramatta Premises: Westfield Shoppingtown Address: 171-175 Church Street Parramatta Bounded generally by: Argyle, O'Connell, Campbell and Church Sts … 17 Regulation 6B requires the respondent to have regard to certain principles: 6B Assessment of exemptions for parking spaces In assessing for the purposes of section 7 of the Act whether a parking space is set aside for a purpose, the Chief Commissioner is to have regard to the following principles: (a) the presence of measures (such as access control measures) or other features to limit the use of a parking space to use for a particular purpose or purposes indicates that the parking space is set aside for that purpose or those purposes, (b) the absence of measures or other features as described in paragraph (a) indicates that a parking space is not set aside for any particular purpose, (c) a parking space in a parking area that forms part of a retail shopping centre (being a parking area that is in the same building as the shopping centre and that operates generally only at times when shops in the shopping centre are open for business) should be considered to be set aside for the parking of a motor vehicle by customers of a retail shop, unless the parking space is a non-retail space as provided by subclause (2), (d) the fact that a parking space is available or permitted to be used for a purpose, or is indicated (by advertising or otherwise) to be available for use for a purpose, does not of itself indicate that the parking space is set aside for that purpose. (2) A parking space is a non-retail space for the purposes of subclause (1)(c) if it is available for the use of persons who may not be customers of a retail shop in the retail shopping centre concerned. (3) In assessing for the purposes of section 7 of the Act whether a parking space on premises is used exclusively for a purpose, the Chief Commissioner may make a determination based on such investigation, study or survey as to the use of parking spaces on the premises as the Chief Commissioner thinks fit. (4) For the purposes of the making of a determination under subclause (3), the Chief Commissioner may require the owner of premises on which there is a parking space to which the Act applies to carry out and report the results of such investigation, study or survey as to the use of parking spaces on the premises as the Chief Commissioner may from time to time direct. Hearing 18 The applicants were represented by Mr E Beretta. He supplied comprehensive written submissions filed on 14 December 2006, 13 February 2007 and 27 March 2007. The matter came before the Tribunal for hearing on 13 March 2007 and was then adjourned for further submissions to be filed or a further hearing date to be set. On 4 June 2007 the parties requested that the matter be decided on the basis of evidence. Further that the parties agreed that there are eight (8) car parking spaces on the property. Evidence 19 Mr Beretta gave oral evidence to the Tribunal whereby he stated that there were eight (8) car parking spaces. He stated that the Council had placed an order on the property that delivery vehicles were to enter and exit the rear lane in a forward direction. He drew attention to the backdating of the levies and that the costs thereof could not be recovered and that the Respondent had raised the levy, imposed interest and only permitted 14 days to pay. 20 Mr Beretta was cross examined, particularly as to the percentage of "one-off jobs" undertaken by the occupying companies over the six (6) year period. Mr Beretta agreed with the representative of the respondent that 298m2 was set aside for parking and delivery. Mr Beretta impressed the Tribunal as an honest reliable witness. Applicants' Submissions 21 The applicants' representative submitted that the parking spaces were provided in accordance with the Local Council requirements in 1977 in that at least six (6) were to be provided. It was further submitted that eight (8) car spaces were in fact provided and that the remainder of the concrete area was required as the turning bay and entrance area. The Applicant's representative provided a sketch, drawn to scale, of the site to the Tribunal. 22 The Council's approval dated 18 August 1977 required a minimum of six (6) car parking spaces, with "all employee parking to be conducted on site", and all loading/unloading to be conducted on site. The car parking spaces plus two (2) extra spaces were provided. That according to photographs included in the Section 58 documents and the sketch included in the written objections by the applicants' filed on 14 December 2006, six of the car parking spaces are covered by a carport which discloses that the area covered thereby is affected by supporting pillars which would have precluded parking haphazardly. 23 The applicants' representative submitted that the work undertaken by the engineering company was such that the exemptions provided in the Regulations should be applied, particularly Regulations 7(3) and 6(3). 24 A comprehensive description of the activities undertaken by the engineering company was supplied. The applicants' representative submitted that in excess of 27% of these activities were "one off" akin to the activities undertaken in "retail", and that therefore the exemption in Section 8(2A) of the PSL Act should be applied, especially as there is sign posting for "client parking". It was also submitted that the employees' parking was for vehicles used by the employee for a large percentage of that use and that the vehicles were a tool of trade of the employees and were therefore within the spirit of Regulation 6(c). 25 The applicants' representative submitted that no interest ought to be sought as the applicants were unaware that the PSL Act applied to the property and there was some confusion as to whether the property was in a liable area. Respondent's Submissions 26 The respondent's representative provided comprehensive submissions as to the applicable legislation and the instant facts. The basis of the claim that the applicants should be assessed for twelve (12) car parking spaces was a site inspection by officers of the respondent and measurement of the concreted area and the respondent's representative noted that there was no evidence of what car spaces were on the site other than a sketch provided in submissions. The area so attained was subdivided in accordance with Regulation 7(3) providing the number 12. The respondent's representative noted that the applicants indicated a total area as 298m2 was available and that therefore the number of assessable spaces was eleven (11). The respondent accepted the area as 298 m2. 27 The respondent's representative submitted that there were no exemptions available to the applicants in that: (a) the provisions of the Local Council's development application predated the Environmental Planning and Assessment Act 1979 ("EP&A Act") and that, consent not having been given under that Act, the exemption provided under that Act as referred to in Regulation 7(2) is not available; (b) the provisions of the PSL Act or the Regulations do not permit excluding the parking spaces used by the vehicles of the employees as an exemption, irrespective of whether the vehicles are used by the employees in the course of their work; (c) there is an exemption for the parking of a vehicle by a person providing services "on a casual basis"; this exemption is not available in the extant circumstances as the exemption is claimed for parking spaces used for vehicles of fulltime employees; (d) the onus to prove that the two companies are retail shops rests on the applicants. The applicants must prove that each firm provides services to members of the public as "ultimate consumers" and that other than submissions made, that onus has not been discharged. In any event, in the absence of a definition of the expression "retail shop" in the PSL Act those words must be given their ordinary meaning. The definition of "retail" in the Macquarie Dictionary is: "noun1. the sale of commodities to household or ultimate consumers, usually in small quantities (opposed to wholesale)." The view taken in authorities is that, generally, the ordinary meaning of the expression "retail shop" is a shop from which goods are sold to ultimate consumers on a retail basis: see for example Wright v Edwards (1961) SASR at 282 per Napier CJ and also Plummer v Needham (1954) 56 WALB1 at 10, per Walker J. Taking this into account, neither of the premises used on the property, as a matter of common usage, is a "retail shop" for the purposes of section 7(2A)(a) of the PSL Act. It is noted that a reference to "clients" as opposed to "customers" is now a general trend in retailing. (e) the Retail Leases Act 1994 ("RLA") does not include the description of businesses operated by the two companies on the property, and the PSL Act and the RLA are not interrelated. 28 The respondent's representative drew attention to the Second Reading Speech to the Parking Space Levy Amendment Act 2000 (NSW) ("PSLA Act") which introduced section 7(2A)(a) and included comments concerning the exemptions. Those comments were directed to the lobbying by shopping centres that they would retain free parking if a levy was applied but would pass it on to the retailers and thus increase costs to the retail prices, resulting in increased costs at the time of introduction of the goods and services tax. 29 Insofar as the assertion that approximately 27% of the commissions undertaken by the engineer were "one off jobs" directly to the public, this does not disclose the income generated thereby. In any event, 73% of services were provided to commercial clients and those clients are not to be regarded as "ultimate consumers". Further, there is no evidence disclosing that the services of Compudraft is provided to "ultimate consumers". 30 The respondent's representative submitted that the imposition of market interest was correct in view of the failure of the applicants to discharge their onus to furnish a return in respect of the property. The respondent did not impose any premium component as the applicants had promptly co-operated when the questionnaire was forwarded. The market interest was intended to compensate the State Government for not having received the benefit at the due date. This accords with the relevant principles governing the imposition and remission of interest as considered in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor [2004] NSWADTAP 19 at paragraphs [60]-[63]. Reasons 31 The onus rests on the applicants to prove that the property is not liable to the PSL Act as assessed by the respondent. 32 There are three particular issues that need to be proven to achieve an exemption in this matter, having regard to: (a) determination of number of spaces, Regulation 7 (b) applicability of exemption: Regulation 7(2)(c),Regulation 7(2A)(a), Regulation 7(4), Regulation 6(c) (c) principles to be considered by Chief Commissioner for assessment: Regulation 6B. 33 When determining the number of spaces, the officers of the respondent have relied on the overall area of the surfaced area of the property originally and the respondent then chose to rely on the calculation supplied by the applicants. The resultant figure in accordance with Regulation 7 was that there are eleven (11) spaces. This bald calculation does not take into account the other features on the property which limit the use of a parking space in accordance with Regulation 6B(a). The other features which should have been considered are the supporting pillars of the carports, which require the driver of vehicles to undertake at least a three point manoeuvre to park and exit the parking area; the positioning of gates, as shown on the sketches of the parking area; and the requirement for delivery vehicles to enter and exit the property from and onto Peace Lane (the back lane) in a forward direction. These facts must be taken into account together with any evidence from either party that the other features should be disregarded or that the use of the area permits application of an exemption. The parties have agreed that there are eight (8) spaces that are used for parking vehicles. 34 There is an area, other than those eight (8) spaces referred to in paragraph 33, which has to be considered by application of the provisions of the PSL Act and Regulations. The sketch provided by the Applicant with the written submissions filed on 19 March 2007 discloses that when other features of the carports, including the pillars, erected on the site are taken into account, there are eight (8) spaces under the carports covering an area of 134.77 m2. The drive in and out of the site (upon which is sited a temporary space for trucks loading and unloading goods) is an area of 99.69 m2 which leaves a remainder of 63.54 m2 of the agreed area of 298 m2. 35 The Local Council provided a development approval in 1977 requiring a minimum of six (6) car parking spaces. There is no maximum requirement. This approval was given pursuant to the Local Government Act 1919 ("LGA") and Ordinance 70. The planning provision referred to in PSL Act is the EP&A Act. As the approval given in 1977 does not prescribe the maximum number of car parking spaces it is unnecessary to consider whether the LGA approval would be sufficient to invoke Regulation 7(2). 36 The applicants have not supplied sufficient evidence to consider whether the businesses carried on in the premises on the property are such that they would be regarded as "retail shops". In any event the type of businesses are not ones that would usually be regarded as retail shops although a small amount of the business activity undertaken would be retail in nature. The applicants have not discharged the onus of proof to permit an exemption under section 7(2A)(a). 37 The suggestion that the exemption provided in Regulation 6 should be applied to the cars of the employees may only be so applied if Regulation 6(c) is satisfied. The applicants are the owners of the premises. There is no evidence that they own the vehicles that park in the eight (8) spaces on the sketch supplied by the applicants, nor that the vehicles are garaged on the property overnight. There is no provision in the legislation relating to "tools of trade". 38 There is a temporary parking space shown on the sketch for loading and unloading goods or passengers and as no contrary evidence has been supplied to the Tribunal this space is exempt pursuant to section 7(2)(c). 39 The signage outside the parking area must be considered pursuant to Regulation 7(4) and does not indicate that any specific area is not a parking space. 40 Having regard to the facts, legislation and submissions the area that must be considered pursuant to Regulation 7 is 298m2 less one parking space being a temporary space for loading and unloading and allowing for the items referred to in paragraph 33. The PSL Act is accordingly applicable in respect of ten (10) car parking spaces. 41 The imposition of market interest is applicable as this interest compensates the Chief Commissioner for the period of time from when the levy was due to payment. The non-imposition of the premium rate is justified in view of the co-operation of the applicants prior to an investigation and there was no wilful default. Order That the assessments of the respondent be set aside and that new assessments be issued for each of the years 2001-2, 2002-3, 2003-4, 2004-5 and 2005-6 for 10 car parking spaces and that interest at market rate be payable.