Chief Commissioner of State Revenue v Hayson Group of Companies Pty Limited (RD) [2005] NSWADTAP 51

Set aside by Appeal : Set Aside by Appeal on 23/8/2006- Chief Commissioner of State Revenue v Hayson Group of Companies [2006] NSWCA 233

Appeal Panel - Internal

CITATION: Chief Commissioner of State Revenue v Hayson Group of Companies Pty Limited (RD) [2005] NSWADTAP 51 APPELLANT PARTIES: Chief Commissioner of State Revenue RESPONDENT Hayson Group of Companies Pty Limited FILE NUMBER: 059050 HEARING DATES: 10/10/2005 SUBMISSIONS CLOSED: 10/10/2005 DATE OF DECISION: 10/31/2005

Hayson Group of Companies Pty Limited v Chief Commissioner of State Revenue [2005] NSWADT 146 DECISION UNDER APPEAL: BEFORE: O'Connor K - DCJ (President); Hole M - Judicial Member; Bennett C - Non Judicial Member CATCHWORDS: statutory interpretation MATTER FOR DECISION: Principal matter FILE NUMBER UNDER APPEAL: 056005 DATE OF DECISION UNDER APPEAL: 07/01/2005 LEGISLATION CITED : Parking Space Levy Act 1992 CASES CITED: APPELLANT REPRESENTATION: I Mescher of counsel instructed by Crown Solicitor's Office RESPONDENT M Richmond of counsel instructed by S Reus, solicitor, Harris and Co ORDERS: Appeal dismissed

REASONS FOR DECISION 1 This appeal concerns the proper interpretation of s 9 of the Parking Space Levy Act 1992. Section 9 provides: ' 9 Levy (1) 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. (2) The first levy payable under this Act becomes payable on 1 September 1992.' 2 This Act commenced on 1 July 1992. 3 As at 1 July 1992, and in the years since, a commercial car parking business has been conducted on the affected premises. The respondent is the present owner. When the respondent became the owner in 2003, the premises were subject to a lease to a commercial car park operator. Following notice given by the respondent, the lessee vacated the premises and they ceased to be used as a car park on 30 April 2004. The respondent commenced redevelopment works to convert the site to residential and related uses. The Commissioner accepts that there were no liable parking spaces at the premises as at 1 July 2004. 4 There is a more detailed summary of the facts in the Tribunal's decision, which we will not repeat. 5 In September 2004, the appellant (the Commissioner) issued a notice of assessment to the respondent for payment of the levy (Exhibit A). The respondent objected to payment. The Commissioner dismissed the objection. The respondent applied to the Tribunal for review. The Tribunal set aside the Commissioner's decision. The Tribunal agreed with the respondent's submission that the assessment was not valid, as the respondent was no longer the owner of premises with car parking spaces as at 1 July 2004. The Commissioner now appeals to the Appeal Panel. 6 The Tribunal rejected the Commissioner's submission that the assessment related to the previous financial year ending 30 June 2004. The Tribunal found that s 9, properly construed, applied to the financial year in which the notice of assessment was issued (i.e. the year ending 30 June 2005). As there be no extant liable parking spaces at the premises as at 1 July 2004, there was no liability. 7 The appeal relates to the Tribunal's construction of the provision. If the Commissioner's interpretation is correct, then clearly the respondent is liable to pay, a point not disputed by the respondent. 8 The Commissioner says that his office's construction flows from the words in the second half of s 9(1) – the words that impose liability 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'. The Commissioner emphasises the words 'during the previous financial year'. 9 A difficulty with this submission is that this was not the way the Act worked in Year 1 of the new levy, the year 1 July 1992-30 June 1993. The Commissioner does not dispute that in that year the levy was collected in relation to car parking spaces that were in existence during that year. To use words adopted in the case by the parties, the tax for that year was 'contemporaneous' or 'prospective' in its operation not 'retroactive' or 'retrospective' in its operation. It is said by the Commissioner, however, that after that, the effect of the law is that the tax is levied retroactively, i.e. it applies to the financial year that immediately preceded the year to which the dates 1 July and 1 September belonged. 10 It is said by the Commissioner that this construction of s 9 is supported by reading it in conjunction with what it is said are transitional provisions – s 13 of the Act and Schedule 1, cl 2 of the original Act (now appears as Schedule 1, Part 2, cl 1). That view, it is said, gains further support from the wording of s 6A containing similar transitional provisions when the geographical coverage of the scheme was extended in the year 2000 (see s 6A). 11 The Tribunal has dealt at some length in its reasons with the scheme of the Act, and the arguments relating to construction. We have received substantial written and oral submissions from counsel for both parties. 12 The respondent expressed, through its submissions at first instance and before the Appeal Panel, perplexity as to how this interpretation could now be the interpretation of the relevant provisions by the Commissioner and his staff. In that regard, the respondent placed in evidence before the Tribunal the history of levy payments in respect of these premises. 13 The history (obtained through a Freedom of Information request to the Office of State Revenue (OSR)) shows that the prior owner had received assessments due on 1 September in each financial year, the first due date being 1 September 1992. There was no evidence to indicate any failure to pay the tax. The Office of State Revenue assessment notices (most of which were in evidence) did not carry any suggestion that they were imposing the levy in respect of the year gone by. Their text would, we think, be interpreted as indicating that they were raising a tax early in the current financial year to cover the whole of the financial year. As we see it, consistent with that administrative approach, the OSR made available a quarterly progress payment facility. 14 The collision in views that this case reveals is one of wide importance. If the Commissioner is right, the liability to tax imposed by the Act is retroactive in its operation. The assessment issues early in the financial year, but collects tax in respect of the usage of the premises for the previous financial year. That must mean, a view pressed on counsel for the Commissioner by both the Appeal Panel and the applicant, that there must have been a year after the first year of the operation of the tax when the Commissioner, in line with this understanding, shifted from contemporaneously imposing the tax (as had clearly occurred for the year 1 July 1992 to 30 June 1993 – a proposition not disputed by the Commissioner) to imposing the tax on a retroactive basis. 15 Counsel for the Commissioner could not tell us whether there had ever been a change of policy of this kind; and he did not consider it relevant to obtain instructions on the matter. If the Commissioner is right, it must, we think, mean that double taxation was imposed on liable taxpayers at some point in the past and taxpayers have not been recompensed for this. The case raises a systemic issue of seriousness, and if the Commissioner's interpretation prevails, urgent consideration will need to be given to reimbursing taxpayers who paid double tax. Counsel for the Commissioner acknowledged this point. 16 We accept, of course, the Commissioner's submission that past administrative practice cannot be invoked as a guide to the construction of a statute; and, if the Tribunal below did misconstrue the Act (as submitted by the Commissioner), it was in error. 17 In our view, the Tribunal's primary conclusion was correct. 18 Our starting point is the words of s 9 itself, and in particular, s 9(2). In this instance the Act commenced on 1 July 1992, and we find in s 9(2) the words – 'The first levy payable under this Act becomes payable on 1 September 1992'. Then if one goes back to s 9(1) we read that 'The owner, as at 1 July in a financial year, of premises to which this Act applies' must pay a levy 'on or before 1 September … for each parking space on the premises'. The two provisions read together, at this point, would appear to indicate that the liability attaches to persons who own certain kinds of premises as at 1 July, and they must pay the tax by 1 September. 19 The next words of the provision would appear to deal with the method of assessment of the tax. It is not a flat tax, for example, one that attaches as a fixed amount to any kind of car parking business, big or small. The approach taken, understandably, is to use a unitised form of measurement so that big car parks pay more tax than small ones. Section 9 applies the tax to 'each parking space on the premises if the space existed as a parking space to which the Act applies at any time during the previous financial year'. There are two questions. The first is are there parking spaces now 'on the premises', the relevant date for this purpose being 1 July. The second is did they exist as a parking space of the premises at any time during the previous financial year. They need not have existed for the whole year. 20 The Commissioner's position is that the words – 'each parking space on the premises if the space existed as a parking space to which the Act applies at any time during the previous financial year' – should be read as 'each parking space on the premises which existed as a parking space to which the Act applies at any time during the previous financial year'. Accepting for the moment that this is a proper rewording of the provision, we still fail to see how that overcomes the reference to 'each parking space on the premises' which we consider can only be properly construed as each parking space on the premises as at 1 July in the year of the assessment. 21 Statutes should be construed in a purposive way. Adopting a purposive approach should ensure that a construction is given which does not result in an absurd consequence. 22 We can find no basis in the statute for the Commissioner's submission that the first year was a unique year, and for that year it was necessary to collect the tax prospectively. In our view, had the legislature intended such a strange state of affairs, it would have said so in plain terms. 23 As previously noted, a date for commencement of the liability was set – 1 July 1992. The taxpayer had to pay by 1 September 1992. The method of estimating the liability involved counting the car spaces in existence on 1 July 1992. This all makes commercial and revenue collection sense. The revenue collector gets in the tax early in the year of liability. The taxpayer knows what amount is due for the year, and the operator of the car parking spaces (to whom presumably the owner of the freehold passes on the liability through contractual arrangements if the owner is not the operator) sets prices that are sufficient to provide for recovery of the tax. So the tax is ultimately passed on to those that drive cars into the geographical area subject to the tax. 24 Much was made of the transitional provisions by the Commissioner. There is no doubt that they tend to confuse the issue. There is an element of retroactivity found in these provisions, and we refer in particular to s 13, the original Schedule 1 cl 2 (now Schedule 1, Part 2, cl 1) and the new s 6A. 25 These provisions state: ' Section 13 Parking spaces that exist for part of year 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.' 'Schedule 1, Part 2, cl 1 Credit on levy payable in first year of operation of Act' (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. Such amount is due and recoverable in accordance with section 10.' 'Section 6A Special provisions when Act extended to new area (1) This section applies to premises that become premises to which this Act applies as a result of the area in which they are located being prescribed by the regulations as a Category 1 area or Category 2 area. (2) When premises first become premises to which this Act applies after the commencement of this section, section 9 applies in respect of those premises as if the reference in section 9 (1) to "the previous financial year" were a reference to "the financial year commencing on that 1 July". This subsection applies only for the purposes of the first levy payable under this Act in respect of those premises. (3) The following provisions apply in respect of the levy (the first levy) for a parking space on premises that becomes payable on 1 September immediately following the date on which the premises first become premises to which this Act applies: (a) section 13 does not apply to that first levy, (b) if the parking space does not, or will not, exist as a parking space to which this Act applies for a part or all of the current financial year (the year commencing on 1 July immediately preceding that 1 September), the owner by whom the levy is payable may apply to the Chief Commissioner for an appropriate levy credit, (c) the appropriate levy credit is that proportion of the levy that corresponds to the portion of that current financial year for which the space does not, or will not, so exist (but no credit is to be allowed if the proportion is less than one twelfth), (d) 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, (e) however, if during that current financial year 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 section, the Chief Commissioner may demand that an appropriate amount of levy be paid in respect of that part of the year, and that amount is due and recoverable as a levy payable under this Act.' 26 The car park the subject of these proceedings was in the City of Sydney. That area was covered by the original legislation. In 2000 the legislation was amended to extend the tax to a number of other business districts of Greater Sydney affected by traffic congestion such as Chatswood, Parramatta and Bondi Junction. Thus the reference now in the legislation to 'category 1' and 'category 2' districts. Section 6A is the provision which deals with the position to apply in relation to 'first year' assessments for the new category 2 areas. 27 In our view the submission of counsel for the respondent provides the explanation for these provisions. They simply seek to provide a mechanism for counting the car spaces in Year 1 of the application of the tax. In Year 1, the car spaces are counted as they exist on 1 July of that year. But henceforth they are counted by reference to the number that existed during the entirety of the previous financial year. That is all that the closing words of s 9(1) are seeking to achieve. The words are not providing that the relevant tax year is the previous year, and the tax collected appertains to that year. 28 There were some criticisms in the Commissioner's submissions as to subordinate aspects of the Tribunal's reasoning. We do not need to deal with these submissions, as, even if correct, they do not affect our primary conclusion. Nor were we assisted by the extracts relied upon by the Commissioner from the Parliamentary debates. They had nothing relevant to say about whether the tax was intended to operate prospectively or retroactively. Order Appeal dismissed.