Hayson Group of Companies Pty Limited v Chief Commissioner of State Revenue [2005] NSWADT 146

CITATION: Hayson Group of Companies Pty Limited v Chief Commissioner of State Revenue [2005] NSWADT 146 DIVISION: Revenue Division APPLICANT PARTIES: Hayson Group of Companies Pty Limited RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 056005 HEARING DATES: 23/05/2005 & 27/06/2005 SUBMISSIONS CLOSED: 06/27/2005 DATE OF DECISION: 07/01/2005

BEFORE: Block J - ADCJ (Judicial Member) APPLICATION: Parking space levy - assessment of MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Freedom of Information Act 1989 Parking Space Levy Act 1992 CIC Insurance Limited v Bankstown Football Club Limited 187 CLR 384 CASES CITED: Cooper Brookes (Wollongong) Proprietary Limited v The Commissioner of Taxation 147 CLR 297 Webster v McIntosh (1980) 32 ALR 603 APPLICANT REPRESENTATION: M Richmond, barrister RESPONDENT I Mescher, barrister ORDERS: The decision under review is set aside

REASONS FOR DECISION 1 The decision under review is the disallowance of an objection against a parking levy assessment issued by the Respondent on 16 September 2004 in respect of the car parking station at 380 Harris St, Pyrmont (referred to in this decision as the "parking station" or the "station"). 2 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 together with exhibits A1 and 82 (witness statements of Richard Thomas and Richard Tallent respectively) and Exhibit A3 and being a batch of documents obtained by the Applicant under the Freedom of Information Act 1989. 3 The Respondent's chronology attached to his written submissions reads as follows: Respondent's Chronology 6.6.03 Car Parking Station – 380 Harris Street Pyrmont NSW Lot 2 DP 774834 ("the property") sold by Dalport Pty Limited to Hayson Group of Companies Pty Limited ("the Applicant") (2) 1.9.03 Parking Space Levy Change of Details Form lodged by Applicant (1) Annual Return July 2003 form lodged by Applicant with levy payable totalling $611 635.07 (2) 11.12.03 Notice of Investigation sent by Respondent to Applicant – audit will not commence before 2.2.04 – questionnaire enclosed (3) 19.12.03 Questionnaire returned by Applicant – Parking Levy Report by Secure Parking Pty Ltd ("Secure") enclosed (4) 2.3.04 Respondent inspects car parking premises (5) 3.3.04 Facsimile from Respondent to Applicant seeking clarification of exempt spaces claimed (5) 8.3.04 Applicant responds to above facsimile (6) – received by Respondent on 12.3.04 (7) 10.3.04 Date of expiry of lease of commercial car park between the Applicant (as lessor) and Secure Parking Pty Limited ("Secure") (as lessee) – Secure continues in occupation as a monthly tenant (Statement of Richard Thomas) 29.3.04 Applicant gives Secure Notice to Vacate by 30.4.04 (Statement of Richard Thomas) 14.4.04 Respondent inspects car parking premises again (7) Secure vacates property – No longer a car parking station -Property becomes construction site (Statement of Richard Thomas) 12.5.04 Applicant gives possession of the Property to Abigroup Contractors Pty Limited (Statement) State Tax Audit Report prepared by Respondent (7) Letter from Respondent to Applicant – correct liability for current tax period (1.7.03-30.6.04) but will still have to pay levy for next tax period (8) Applicant claims credit for balance outstanding on basis that property ceased operating as a car park on 30.4.04 (becoming construction site for residential apartments) (9) 13.8.04 Respondent informs Applicant that liability for 2003 financial year relates to car park spaces held from 1.7.02-30.6.03 and therefore no credit could be applied (10) 18.8.04 Applicant replies to the above letter (11) 26.8.04 Change of Details Form lodged by Applicant requesting cancellation of registration – premises ceased being a car park on 30 April 2004 (Annexure "G" to Statement) 31.8.04 Respondent replies to the above letter (12) – letter dated 18.8.04 by Applicant treated as an objection 3.9.04 Facsimile from Respondent to Applicant (13) – cannot treat letter dated 18.8.04 as an objection under the Act 16.9.04 Assessment issued for the 2004 financial year in an amount of $898500.98 for car parking spaces in respect of year 1.7.03-30.6.04 (14 & 18) 9.11.04 Objection lodged to above assessment (15) 10.12.04 Determination of objection by wholly disallowing it (17) & (18) 4.2.05 Application for Review filed with the ADT with disputed assessment annexed (18) 8.3.05 Section 58 documents filed with the ADT 23.5.05 Hearing of matter before ADT 4 The Applicant's submissions, but confined to clause 4 under the head of "Background", read as follows: Background 4. The relevant facts (which do not appear to be in dispute) are as follows: A copy of the Assessment is Annexure G to the Statement of Richard Thomas dated 2 May 2005 ("Thomas"). 2 (a) On 6 June 2003 the Applicant acquired the Property subject to a lease in favour of Secure Parking Pty Ltd ("Secure Parking") dated 23 February 1999 (the "Lease"). (b) The term of the Lease expired on 10 March 2003 and, at the time the Applicant acquired the Property, Secure Parking was holding over under the Lease as a monthly tenant. (c) On 29 March 2004 the Applicant gave Secure Parking one month's notice in writing terminating the Lease with effect from 30 April 2004. (d) No car parking spaces have existed on the Property since 30 April 2004. (e) On or about 12 May 2004 the Applicant gave possession of the Property to Abigroup Contractors Pty Ltd pursuant to a construction contract entered into between the Applicant and Abigroup Contractors Pty Ltd. (f) Since 12 May 2004 the Property has been under redevelopment and construction for the purposes of converting the Property into residential apartments, residents' parking and a new public car park in accordance with the Development Application granted on 13 May 2003. 5 The issue which is in dispute relates to the interpretation in particular of section 9 of the Parking Space Levy Act 1992 (the "Act"); that section reads as follows: The owner, as at 1 July in a financial year , of premises to which this Act applies must, unless exempt , pay a levy to the Chief Commissioner on or before 1 September in that financial year for each parking space on the premises if the space existed as a parking space to which this Act applies at any time during the previous financial year." (Each of the underlined expressions is defined) 6 It will be noted that the Respondent's chronology indicates that the assessment in question was referable to the financial year ending 30 June 2004 (the "2004 year"); the Applicant contends that it relates to the current financial year which commenced on 1 July 2004 and will end on 30 June 2005 (the "2005 year"). Under the Act the levy is payable by not later than 1 September of each financial year; the Applicant contends that it is payable in each September in respect of the financial year in which that September falls; the Respondent by contrast contends that the levy is payable in each September in respect of the financial year preceding the financial year in which that September falls. The issue is one of considerable commercial importance. 7 The provisions of the Act which are relevant for the purposes of this decision are set out (in part) in clauses 7 to 15 of the Applicant's submissions; it is convenient to include them in this decision in the form in which they appear in the Applicant's submissions, but excluding section 9 contained in clause 7 because that section has been included previously in this decision. 7. (Content omitted for the reasons set out previously) 8. The expression "financial year" is defined in s.4(1) to mean a year commencing on 1 July. 9. The expression "premises to which this Act applies" is defined in s.4(1) to mean "premises referred to in s.6". It is not in dispute that the Property is "premises to which this Act applies." 10. The expressions "exempt" and "levy" are defined in s.4(1) as follows: "exempt , in relation to a parking space, means exempt by or under section 7, and in relation to a person, means exempt by the regulations." "levy means the levy imposed under this Act in respect of a parking space." 11. The expression "parking space" is defined in s.4(1) as follows: "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 it does not include a space which is part of the carriageway of any street, road or lane open to or used by the public." The Regulations have not made a prescription for the purposes of paragraph (c) of this definition. 12. The expression "parking space to which this Act applies" is defined in s.4(1) to mean "a parking space referred to in s.7(1)". Section 7(1) provides: "(1) This Act applies to a parking space on premises to which this Act applies, other than an exempt parking space. The remainder of s.7 contains categories of exempt spaces. 13. The levy is payable on 1 September in the relevant financial year: see s.9(1). The levy is payable by return pursuant to s.15. 14. The amount of the levy is determined by the combined operation of: (a) ss. 11 and 12, which fix the levy for the 2004 financial year at $800 per parking space adjusted for inflation. According to the Assessment, the amount of the levy was $860 per parking space; and (b) s.13, which provides for a reduction of the levy otherwise payable under s.9(1) in respect of a parking space where the parking space existed "as a parking space to which this Act applies" for only part of the previous financial year. 15. Section 13 provides: "The amount of levy payable on 1 September in a financial year after 1992 for each parking space to which this Act applies which existed for only part of the previous financial year is that proportion of the amount of levy determined in respect of the financial year which corresponds to the portion of the previous financial year for which the space existed as a parking space to which this Act applies. " (Underlining added) 8 It is my view that in addition to the provisions of the Act referred to in the preceding clause, it is necessary to have regard to clause 1 of Schedule 1 to the Act and which reads as follows: (1) If a parking space in respect of which a levy is payable on or before 1 September 1992 does not, or will not, exist as a parking space to which this Act applies for a part or all of the financial year commencing on 1 July 1992, the owner by whom the levy is payable may apply to the Chief Commissioner for an appropriate levy credit. (2) The appropriate levy credit is that proportion of the levy which corresponds to the portion of the financial year for which the space does not, or will not, so exist. However, no credit is to be allowed if the proportion is less than one twelfth. (3) Once satisfied that grounds for a credit have been established, the Chief Commissioner must set the amount of the credit off against the sum of levies payable by the same owner under this Act, or refund part or all of the credit if the sum has been paid. (4) However, if during the financial year commencing on 1 July 1992 a parking space does exist as a parking space to which this Act applies for that part of the year in respect of which a credit was allowed under this clause, the Commissioner may demand that an appropriate amount of levy be paid in respect of that part of the year. (5) Such amount is due and recoverable in accordance with section 10. 9 The starting point must be section 9 of the Act. On 1 July 2004 the Applicant no longer owned a parking station. As appears from clause 4, the parking station ceased to exist on 30 April 2004. There are references in the submissions, and there was discussion at the hearing, as to the question of a refund for the months of May and June 2004 and when the parking station no longer existed. There was, as I understood them, agreement between the parties as to the fact that a refund is due although it may be that refunds on this nature are granted as a matter of discretion rather than as one of right. This question is not one which I need decide. 10 It is clear enough that the levy is payable by reference to each parking space which is not exempt. Section 7 specifies the bases upon which a parking space may be exempt and it is not necessary for me to set out the categories in detail. Section 7 (1) of the Act makes it clear that the Act does not apply to an exempt parking space. 11 It is also clear that in relation to any given financial year, the question of whether or not a parking space is exempt (or will exist) for all or part of that financial year will not (and cannot be known) until the end of that financial year. In relation to any given financial year circumstances can change, and the Act provides a measuring device in the form of a reference to the preceding financial year; sections 9 and 13 are particularly significant. Under section 9 the levy is payable for each parking space if the space existed as a parking space during the previous financial year. Section 13 then goes on to provide that where in the previous financial year a parking space existed as a parking space to which the Act applied (and thus excluding a parking space which was exempt) for a part of the year only a proportioning mechanism applies. A parking space might have been exempt during the previous financial year (or part of it); it is also possible (as is the case here) that it ceased to exist during a financial year because the parking station ceased to exist during that financial year. 12 The Applicant's argument is that section 9 operates in respect of a financial year only if on the first day of that financial year there is a parking station owned by it. Where for whatever reason, there is on that day no parking station then, so the Applicant contends, there is no liability. The Applicant contends, in other words, that the levy is payable prospectively and not in arrear. 13 The amount of the levy per parking space payable on the 1 September 2004 was $860 while the amount payable on the previous 1 September 2004 was $840. The fact that the relevant assessment was made at the higher rate tends (albeit not conclusively) to support the Applicant's argument. 14 The Act commenced on 1 July 1992. Section 3 provides: "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." 15 Section 14 of the Act provides for the use to which the revenue is to be put in the following terms: All levies paid to the Chief Commissioner under this Act are subject to a statutory trust for carrying out the construction and maintenance of car and bicycle parking facilities (and other infrastructure) which facilitate access to public transport services to and from the City of Sydney and any other area prescribed as a Category 1 area or Category 2 area, for the provision of public transport services, and for other purposes referred to in section 18 (3), and must be used accordingly 16 In his Second Reading Speech on the seventh of May 1992, Mr Baird said: "It is with great pleasure that I bring this Bill before the House. It is a landmark in the necessary process of changing the community's attitude towards the effects on the environment of car usage in densely developed urban areas where public transport is readily available. The Government's decision to introduce this levy flows directly from its concerns about the problems of pollution and traffic congestion in the central commercial areas of Sydney. The concept of a parking space levy was outlined in the Premier's "Facing the World" statement. It is a step towards improving Sydney's air quality by sending a price signal to those using cars to travel to high density commercial areas of central Sydney that their car usage imposes a cost on the community.... Clearly, if people are encouraged to reduce their use of cars to travel to our most densely developed urban areas and to make greater use of public transport, there will be direct benefits to our environment. Road users need to be made aware of the external costs which they impose and are now being asked to contribute to the cost of providing transport systems. The parking space levy provided for in this proposed legislation is a modest step, but a significant one, in making costs more explicit. Before turning to specific aspects of the Bill, I would make the point that it is important to the achievement of the strategic goals of affecting car usage and increasing public transport usage for the journey to work that the levy be imposed in such a way that its cost is ultimately met by those at whom it is targeted. Where parking spaces are on leased premises, the levy will be recovered by lessors under existing lease arrangements or under specific provisions in the legislation. Parking station operators will be able to reflect the levy in their parking fees. ... As I said at the outset, the Government, in introducing this legislation, is making an important step towards addressing the quality of Sydney's air and encouraging the greater use of public transport. I commend the Bill." 17 The Explanatory Note to the relevant bill provided that: "The levy is designed to be met ultimately by the occupiers or users of those spaces". 18 The Respondent does not dispute the fact that there is an administrative practice pursuant to which taxpayers are permitted to pay the levy by four quarterly instalments in each financial year. The Applicant contends that the effect of this arrangement is that operators can collect the levy (in approximate terms) contemporaneously with payment of the levy, and thus leading a degree of support to its argument. 19 In CIC Insurance Limited v Bankstown Football Club Limited 187 CLR 384 the High Court said at page 408: It is well settled that at common law, apart from any reliance upon s 15AB of the Acts Interpretation Act 1901 (Cth), the court may have regard to reports of law reform bodies to ascertain the mischief which a statute is intended to cure [34]. Moreover, the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy [35]. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd [36], if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent [37]. 20 See also Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia 147 CLR 297 one at page 321 as follows: "The fundamental rule of interpretation, to which all others are subordinate, is that a statute is to be expounded according to the intent of the Parliament that made it; and that intention has to be found by an examination of the language used in the statute as a whole. The question is, what does the language mean; and when we find what the language means, in its ordinary and natural sense, it is our duty to obey that meaning, even if we think the result to be inconvenient or impolitic or improbable." 21 I referred previously to clause 1 of schedule 1; it is my view that is possible (and necessary) to draw inferences from its terms. In the first year of the operation of the Act i.e. the 1993 year an owner was obliged to pay the levy by no later than 1 September 1992. At that time it could not be known whether and to what extent parking spaces would exist (or cease to exist) or become exempt during the remainder of that year. Accordingly clause 1 of schedule 1 provided for a credit mechanism so as to give the owner, where appropriate, a refund when the full position thereafter became known. This was required because there was at that time no available measuring device and being of course the extent (inter alia) of exempt parking spaces in the preceding financial year. The clear inference to be drawn from the terms of clause 1 of Schedule 1 is that the Act does apply prospectively as the Applicant contends, and not in arrear as the Respondent contends. The Respondent's view would apply if and only if the first payment had fallen due in September 1993; in fact the first payment became due on 1 September 1992. The Respondent contends that the provisions of clause 1 of schedule 1 operated as a transition provision and is thus to be regarded as sui generis. It is true enough that it operated as a transition mechanism but it does not follow that it must be regarded in isolation. The Respondent referred to the Explanatory Note in respect of clause 1. I do not include that note because I do not believe that it favours either party in particular, although it might be said that, if anything, it favours the Applicant. It is my view that the matter can be tested in the following manner. Under the Act the first payment became due on 1 September 1992; it was payable in respect of the year which commenced on 1 July 1992 and ended on 30 June 1993. What then of the payment which fell due on 1 September 1993? If it applied to the year ending 30 June 1993, as the Respondent contends, then surely there would have been a specific credit mechanism to avoid double counting. 22 The Applicant in its submissions in reply dealt with clause 19 of the Respondent's written submissions in clauses 5 to 8 as follows: -- 5. The Respondent's contention that the Applicant's interpretation of section 9 "frustrates" the intention behind the Act is not correct. This could be shown by the following simple example. Assume that: - as at 1 July 1992 A owns premises to which the PSL Act applies which contain a parking station, and - on 30 April 2004 the parking station is closed and the land is redeveloped. … 6. On the Applicant's interpretation of section 9, the position is as follows: (a) A was liable to the levy for the financial year commencing on 1 July 1992: see PSL Act, section 9 (1) and Schedule 1, para 2... If there were one or more exempt parking spaces during that year, a levy credit was available for that year under Schedule 1, para 1. (b) A was liable to the levy for each subsequent financial year commencing on 1 July until the financial year commencing on 1 July 2003. (c) It will be seen that the levy was imposed for each financial year during which the car park was in operation since 1 July 1992. In addition the levy was imposed for the months of May and June 2004 notwithstanding that it was closed during that period, but there is no relief available to A for this period unless the Commissioner exercises his discretion under section 16 (1) of the PSL Act. (d) A was able to pass on the levy to the users of the car park during the entire period that the premises were used as a car park, i.e. during the period from 1 July 1992 until 30 April 2004 through the charges made for use of the car park. (e) No levy is imposed for the financial year commencing on 1 July 2004 (the 2004 year) when they were no parking spaces on the premises. 7. Accordingly, it will be seen that on the Applicant's interpretation of section 9, the levy is imposed by the entire period of the premises when used as a car park, and not for the 2004 year when the premises when not used or capable of being used as a car park. This is consistent with the purpose of the PSL Act, being to impose a tax on the use of the premises for the parking of motor vehicles and, through a user pays principle, discourage that use. 8. In contrast, on the Respondent's interpretation of section 9, A pays the levy both for the entire period from 1 July 1992 to 30 June 2004 and for the 2004 year when they were no parking spaces on the premises. A is not able to recover the levy from the users of the car park in the 2004 year -- because there are none. This is not consistent with the purpose of the PSL Act. 23 In support of its submissions in the preceding clause, the Applicant furnished a diagrammatic time line, and which is summarised as follows: 1 July 1992 PSL Act commences 1 Sept 1992 First levy paid for entire year commencing 1 July 1992 30 April 2004 Car park closed 16 Sept 2004 Applicant assessed for levy for year commencing 1 July 2004 1. Dalport Pty Ltd was liable for the levy for the year commencing on 1 July 2002 with no reduction under s.13. The levy was payable on 1 September 1992. 2. Dalport Pty Ltd was liable for the levy in each subsequent year up to and including the year commencing 1 July 2002. The Applicant was liable for the levy for the year commencing 1 July 2003. 3. The car park was closed on 30 April 2004. There is no reduction in the levy for the period from 30 April to 30 June 204 (unless the Commissioner exercises his discretion under s.16(1) which he has so far declined to do). 4. The Applicant has been assessed for the levy for the year commencing 1 July 2004 although no car spaces were on the premises on 1 July 2004 (or subsequently). 24 Although I have no note which would suggest that the Respondent contended that the Act must be interpreted in accordance with the regulations, Mr Richmond cited authority to the effect that it cannot be so interpreted. Apart from the fact that the regulations were promulgated some years after the Act, the regulations were promulgated in accordance with a power contained in the Act. See Webster v Macintosh (1980) 32 ALR 603, cited in clause 3.37 of "Statutory Interpretation in Australia by Pearce and Geddes; the opening part of that clause reads as follows: "It Australia the general rule has been that delegated legislation made under an Act should not be taken into account for the purpose of interpretation of the Act itself. In John Burke Ltd v Insurance Commissioner [1963] Qd R 587 Hanger J. refused to take into account an order-in-council that amended the schedule to an Act, that schedule being part of the Act as passed by the parliament. More recently in Webster v Macintosh (1980) 32 ALR 603 at 606 Brennan J., with whose judgment and Deane and Kelly JJ agreed, commented that "the intention of Parliament in enacting an Act is not to be ascertained by reference to the terms in which a delegated power to legislate has been exercised." 25 Mr Richmond dealt in some detail with the evidence before the Tribunal and in particular exhibit A3 and certain of the section 58 documents. It is unnecessary for me to deal with that evidence except to say that I agree that it supports the Applicant's contention that assessments were made consistently with the Applicant's contention as to how the Act operates. 26 I also agree with the Applicant's contention that the starting point is section 9 of the Act. That section must be considered in conjunction first with section 13 and then with section 7. So considered, it is my view that the position in respect of the prior year is simply a measuring device. Put in other words, the payment made on any given 1 September does not relate to an estimated amount, but rather to an actual amount, which is measured by reference to the preceding year. 27 It is then my view that as the Applicant contends, the words "at any time during the previous financial year" which appear at the end of section 9 (1) do not qualify the words "for each parking space on the premises". This is so because they appear after the word "if", which acts in all respects as a condition. 28 As set out previously the Act makes it clear that it is intended that the levy be recouped from users. These purposes are best met through the interpretation of the Act for which the Applicant contends. . 29 In my view the terms of the Act, read as a whole, and having regard to the extrinsic material to which I have referred, (and even without that extrinsic material), lead inevitably to a conclusion in favour of the Applicant, whose contention is in my view moreover supported by the actual words of section 9. Thus the Act operates prospectively; if there was no parking station on 1 July 2004 (and there was not) there cannot be a levy payable on 1 September 2004. 30 Accordingly the objection decision is set aside, and the assessment to which it relates cannot stand and must similarly be set aside.