Reported Decision : 175 LGERA 169 Land and Environment Court of New South Wales CITATION : Lend Lease GPT (Rouse Hill) Pty Ltd v The Hills Shire Council [2010] NSWLEC 130 APPLICANT Lend Lease GPT (Rouse Hill) Pty Ltd PARTIES : RESPONDENT The Hills Shire Council THE INTERVENERS The Minister Administering the Environmental Planning and Assessment Act 1979 & Landcom FILE NUMBER(S) : 30125 of 2009 CORAM: Sheahan J KEY ISSUES: RATING :- availability of statutory exemptions from rating; is the subject land owned by the Crown held under a lease for public or for private purposes; tests to be applied Environmental Planning and Assessment Act 1979 Landcom Corporation Act 2001 LEGISLATION CITED: Local Government Act 1919 Local Government Act 1993 Sydney Regional Environmental Plan No 19 - Rouse Hill Development Area Brush Park Bowling Club Ltd v Ryde Municipal Council (1970) 19 LGRA 380 Chalford Holdings Pty Ltd and others v Sydney City Council 78 LGERA 212 City of Rockingham v Port Kennedy Resorts Pty Ltd (1999) 107 LGERA 296 Equestrian Sports Centre v Campbelltown City Council (1987) 9 NSWLR 126 Goulburn City Council v Haines (1992) 78 LGERA 281 Knowles v Newcastle Corporation (1909) 9 CLR 534 CASES CITED: MWSDB v Botany and Mascot Municipal Councils (1935) 12 LGR(NSW) 116 Port Kennedy Resorts Pty Ltd v City of Rockingham (2000) 112 LGERA 296 Ryde Municipal Council v Macquarie University (1978) 139 CLR 633 Statewide Roads Pty Ltd Holroyd City Council (1996) 39 NSWLR 115 Sydney City Council v Garbett Pty Ltd (1993) 80 LGERA 289 Sydney City Council v University of Technology, Sydney (1992) 78 LGERA 200 Sydney Grammar School v Sydney City Council (1957) 3 LGRA 68 DATES OF HEARING: 15 February 2010, 9 March 2010 DATE OF JUDGMENT: 27 July 2010 APPLICANT Dr J Griffiths SC with Mr S Free SOLICITORS Freehills RESPONDENT LEGAL REPRESENTATIVES: Mr B Walker SC with Mr J Kildea SOLICITORS The Hills Shire Council THE INTERVENERS Ms M Cairns SOLICITORS Clayton Utz JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Sheahan J 27 July 2010 30125 of 2009 Lend Lease GPT (Rouse Hill) Pty Ltd v The Hills Shire Council JUDGMENT Introduction 1 His Honour: The substantive dispute in this matter concerns the question of whether certain lands held by the applicant company, to be developed as a "regional town centre" at Rouse Hill, are liable to pay rates and charges levied by the respondent Council. 2 I acknowledge the assistance I received from Commissioner Bly, prior to his retirement from the court, in the hearing and consideration of this matter. 3 The subject lands comprise an area of 98ha (or perhaps 122ha). They were acquired by the Crown in the 1980s for the purpose of establishing such a centre, to serve expanding urban development and population (perhaps 250,000 people). 4 They are now held by the applicant company under a commercial arrangement, contained in a Project Delivery Agreement ('PDA') and an Occupation Licence ('OL'), entered on 3 October 2003 with the Government of New South Wales, through one of its Ministers (the Minister Administering the Environmental Planning and Assessment Act 1979 as a corporation sole under that Act – "EPA Act"), and a State Government agency known as "Landcom". 5 Many documents relevant to the arrangement were among the evidence tendered by the parties in the proceedings, largely by agreement, but both the Minister and Landcom intervened at the end of the substantive hearing, seeking orders to protect the confidentiality of their commercial arrangements with the applicant (see T15.2.10, p47, L40–p51, L50). Appropriate orders were made in that respect, on 9 March 2010. 6 Suffice to say that, under the arrangements, the developer takes full responsibility to carry out the development, accepts all risks associated with doing so, and guarantees a substantial financial return to the Minister over a ten-year period. 7 There was no significant difference between the parties as to the principles which now apply to the granting of a rating exemption, only a difference on the characterisation of the purpose for which the subject lands were held at the relevant times. 8 If land is owned by the "Crown", and held under an arrangement other than "a lease for private purposes", it is exempted from rates under s 555(1)(a) of the Local Government Act 1993 ("LG Act"). 9 The Council says the purpose and functions of the applicant, under the arrangements in this case, are not of the type with which the Crown is normally involved, being "essentially a private sector project facilitated and encouraged through the government's making available the necessary land". Accordingly, Council submits, the subject lands are rateable. 10 The applicant contends, on the other hand, that it holds and uses the land for a public and not a private purpose, albeit that it may make an "incidental" private profit in fulfilling the PDA. Background 11 The general principles and objectives relevant to establishment of the Rouse Hill regional centre were broadly defined in the 1989 Sydney Regional Environmental Plan No 19 - Rouse Hill Development Area (SREP 19). The aims of the SREP are contained in cl 2 of it (Exhibit A2, vol 4, tab 9), and broadly provide the following (paraphrased at tab 8, fol 2337): To facilitate the early establishment of a multi-functional subregional centre; To facilitate and promote major development for the purpose of retailing and offices; and To provide human services, including health, education and sporting facilities, to serve the needs of all the residents of and employees within the Rouse Hill Development Area. 12 In November 2001, the Minister and Landcom called for Expressions of Interest in relation to the development of the Rouse Hill Regional Centre. In July 2002, an Invitation to Tender was issued jointly by Landcom and the Minister's Department ('Planning NSW') (see Exhibit A2, vol 4, tab 8). Key objectives additional to those in SREP 19 for the assessment of tenders included (tab 8, fols 2337-8): (a) to create a multifunctional regional centre which meets the social, economic and environmental needs of the community; … (k) to provide an optimal return to the Government and a commercial return to the joint venture partner; … and (at fol 2340) the document spelt out the government's commitment to provide for organisations such as Australia Post, police, health and education agencies, an Anglican private school, a country club, and community facilities generally. 13 Having successfully tendered for the development of the Regional Centre, the applicant entered into the PDA on 3 October 2003 (Exhibit A2, vol 1, tab 1A). The PDA has been the subject of several amendments of no particular relevance to the matter presently before the court (see Exhibit A2, tabs 2-5), but it essentially provides for the development of the regional town centre (including development of residences, retail and commercial premises, open spaces, public and private schools, community facilities, and associated infrastructure, consistent with the general objectives and principles in SREP 19). The PDA spells out in detail the applicant's precise obligations regarding approvals, etc. 14 Clause 4.1 of the PDA (Exhibit A2, vol 1, tab 1A, fols 18-19) provides that: "(b) in consideration of the services performed by the Developer under this deed and the Procuration Rights, the Developer shall be entitled as against the Minister to amounts comprising a percentage of the Residential Revenue and Commercial Revenue described in clause 4.2 as the percentages to be retained by the Developer (Development Fee )", and (c) " the Developer will, on behalf of the Minister, collect the Proceeds and in accordance with this deed account to the Minister for the Proceeds less the Development Fee ". These financial matters are the subject of detailed clauses later in the PDA. 15 The PDA (in cl 17) establishes a seven-member Joint Management Committee ('JMC') for the project, comprising three representatives of the Minister and Landcom and three representatives of the developer, plus an independent chairman. 16 Clauses 1 and 2.1 of the PDA record: (1) that the Minister will contribute the land to the project, and neither money nor other assets, (2) that the applicant will procure the development of the regional centre at its sole risk and expense (subject to the deed, but see cl 29.3 at Exhibit A2 , fol 80), and (3) that the Minister will grant the OL to the applicant so it can access and use the land to carry out the development according to the PDA. 17 Recitals to the OL dated 3 October 2003 (Exhibit A2, vol 4, tab 6, fols 2279-80) provide: "A The Minister owns the Land. B The Minister and the Developer have entered into a PDA which sets out the Minister's and the Developer's respective rights and obligations in respect of the Development. C The Minister has previously granted a Permit to Enter the Land which is replaced by the terms of this deed. D Subject to the terms of contained in this deed, the Minister has agreed to grant to the Developer the Licence for the purpose of undertaking the Development." 18 The PDA contemplates that the Land, once developed and subdivided, will be sold or leased by the Ministerial Corporation. In fact, a number of the subdivided lots have been sold by the Ministerial Corporation (see Landcom Annual Report 2007 (Exhibit A2, vol 4, tab 11, fols 2709-2710)). The Exemption Provision 19 When the LG Act came into force on 1 July 1993, s 555(1)(a) replaced s 132(1)(g) of the 1919 Act, which provided for the exemption in these terms: "(g) land owned by the Crown not being: (i) land held under a lease from the Crown by any person for private purposes…" (emphasis on words not carried forward into s 555). (The Court of Appeal has said, in the Statewide case to which I will return in detail later, that " nothing turns " on the change in wording of the exemption). 20 Both "Crown" and "lease" are defined in the LG Act: " Crown includes any statutory body representing the Crown. … lease : (a) includes an original lease, derivative lease or an under-lease or an agreement for any of them, and extends to any case where there is the relation of landlord and tenant, whether there is or is not any instrument in writing, and (b) in relationship to Crown land, land owned by or vested in the Crown or land within a State forest, includes a licence, permit, permissive occupancy or authority…" 21 Section 8(2) of the EPA Act provides that the Ministerial Corporation involved here represents the Crown, and, for the purposes of the LG Act, the OL is treated as a lease. Under s 560(2) lessees are liable to pay the rates struck on property. 22 Since its insertion into the 1919 Act in 1931, the relevant exemption section has been the subject of frequent consideration in this court (and its predecessor, the Land and Valuation Court) and in the NSW Court of Appeal. The additional words "by any person" are not considered to impact upon the principles established by the authorities. 23 Three significant post-1992 Court of Appeal decisions were primarily relied upon by one or both parties to these proceedings, and they are quoted extensively in both parties' written and oral submissions. 24 It is fair to say, as did Mr Walker SC, appearing for the Council, that these cases settled, and restated, at the end of a period in which the principles to apply were evolving, and that the application of those principles to particular factual situations cannot "supplant the words of the statute" (T15.2.10, p26, LL33-4). 25 Those cases need to be seen against the background of relevant older authorities decided earlier in the evolutionary process, and a few other possibly relevant decisions. 26 All the relevant decisions need to be considered in some detail, and I turn now to address that task. Early Relevant Authorities Lakes Golf Club 27 MWSDB v Botany and Mascot Municipal Councils ("Lakes Golf Club") (1935) 12 LGR(NSW) 116 concerned the Lakes Golf Club's status for rating purposes. Pike J held that the term "private purposes" in the relevant section had to be seen in "contra distinction" from the different public purposes referred to in other parts of the section and the (1919) Act. Relevant factors regarding the privately owned and controlled golf club were whether the public paid fees to gain access to the land and whether the land could be disposed of in any way the lessee thought fit. The court held that the club lands were rateable. Sydney Grammar School 28 Sydney Grammar School v Sydney City Council ("Grammar") (1957) 3 LGRA 68 concerned the use of lands (known as Weigall Ground) leased to the school by the NSW Housing Commission, subject to a covenant requiring they be used for no purpose other than as tennis courts and playing fields without the lessor's prior consent in writing. The school was incorporated under its own statute and was governed by trustees. 29 Hardie J noted that Sydney Grammar School was not conducted for profit, that its own statute had established it as a public school, and that half of its managing body consisted of representatives of the Parliament and the university. His Honour held that, in coming to his decision that the land came within the exemption, the court should examine the school's statutory regime and how it had been conducted (see p 78). 30 His Honour (at 74) would not accept that "private purposes" as used in the section included "all purposes except Crown purposes, in the sense in which that phrase has been defined in the English rating authorities, as expanded to include the purposes of the various statutory authorities deemed by the Local Government Act to be the Crown". He said (at 77) that the section "should be construed as a separate and independent exempting provision, and not as one deriving its meaning or colour from the other provisions of [that section]". This conclusion was contrary to that expressed in Lakes Golf Club. Brush Park Bowling Club 31 In Brush Park Bowling Club Ltd v Ryde Municipal Council ("Brush Park") (1970) 19 LGRA 380, Hardie J applied the principles in Grammar and rejected a claim by a bowling club (leased from the Council) for exemption. The main object of the club was promotion of the game of bowls and it covenanted its members free right of access to the leased land and covenanted to allow the public to view games in progress. No dividend was payable to members and the profits and income of the club were to be applied to promote the objects of the club. Hardie J held that the land was used for private purposes. Macquarie University 32 In Ryde Municipal Council v Macquarie University ("Macquarie") (1978) 139 CLR 633, part of the improved grounds of the university (known as the "market") was devoted to commercial and shopping facilities, and businesses were conducted on land leased from the university with a view to profit, but also with a view to providing for the convenience of the staff and students of the university. The relevant lands were not a separate parcel, and much of the university land was clearly not rateable. Waddell J declared that the relevant lands were entitled to the exemption. He was upheld by majorities in both the Court of Appeal and the High Court. Other provisions of s 132 were in dispute in this case and the various judgments examined also the university's statute. The High Court held that the land devoted to commercial and shopping facilities was used by the university "solely for the purposes thereof" within s 132(1)(fii). Equestrian Sports Centre 33 In Equestrian Sports Centre v Campbelltown City Council ("Equestrian") (1987) 9 NSWLR 126 the applicant centre leased land from the Crown for 99 years for specified purposes, dominated by use for equestrian sports. In this court, Perrignon J held that the land was not entitled to the exemption, and the Court of Appeal "considered and applied" Grammar, and upheld His Honour on appeal, on the basis that the centre's purposes, including the specific object of "furtherance of equestrian disciplines", were pursued for private gain. 34 The Court of Appeal was unanimous, but two separate judgments were delivered – Hope JA agreed with Priestley JA's reasons, and McHugh JA delivered a concurring judgment. Both Priestley and McHugh JJA agreed that the court should have regard in appropriate cases not only to the terms of any lease but "also other external matters including the use in fact of the land". 35 The case is authority for the proposition that the term "private purposes" in the exemption provision means purposes directed to the private profit, advantage or benefit of the lessee, or some other person or persons, and not to or for the benefit of the public or a section of the public, so that when an individual or group of people obtains a profit, benefit or advantage from the use of land which is denied to the public or a section of the public, a claim for exemption must fail. A lease of Crown land for 99 years to the company for specific purposes, the principal or dominant use being equestrian sports, did not fall within the exception. 36 McHugh JA observed (at 131D) that the simple words of the section were "not easy to apply to a case where the lessee holds the land for the benefit of or for use by others". His Honour appears to have had some difficulty reconciling the authorities. 37 In Lakes Golf Club, the land leased to the Golf Club was not within the exemption because the fees paid by the public became the property of the club. In Grammar, the school was not conducted for private profit, it was established by statute as a public school, and it was subject to control and supervision by "the legislative and executive organs of the State Government". The public had no right of access to the school facilities at Weigall Ground. The clubhouse in Brush Park was used to generate revenue from bar sales and poker machines, but the land in Grammar was not used to raise revenue for the lessee or its pupils. In Equestrian, members of the public were entitled to use the land for horse riding without a fee but one of the purposes of the lease was to enable the company to charge fees for the use of the land. His Honour commented (at 134A-C): "It is impossible to accept that members of the public will obtain the same benefits and advantages from the land as the company and its members … [T]he whole purpose of the lease is to create special benefits and advantages for those who are members of the company and other equestrian organisations which are denied to the ratepayers of Campbelltown and the general public. To hold that the ratepayers of Campbelltown should subsidise the concept envisaged by the lease is altogether contrary to the rationale of s 132(1)(g)(i) which is to preclude exemption from rates in respect of land which is a source of private profit, use and advantage". 38 McHugh JA concluded (at 133D) that Grammar "has no ratio decidendi which can be usefully applied outside its very special facts. It is simply a decision that on those facts the land was not used for private purposes". His Honour went on to agree with Hardie J's preferred view as to the meaning of the section, namely that private purposes meant purposes directed to private profit, advantage or benefit of the lessee or some other person or persons (see 133E/F). His Honour also agreed with Hardie J that: "in some cases it is legitimate to go outside the lease to determine the purposes for which the lessee holds the land. In many cases the terms of the lease will be decisive as to the purpose or purposes for which the land is held. But in other cases the terms of the lease will be of little or no use in determining that question. In that class of case it is open to a party by evidence external to the lease to show for what purpose the land is held. ... It is not necessary that the land should be held solely or predominantly for private purposes to lose the benefit which s 132(1)(g)(i) confers". 39 His Honour also said (at 134C-D): " it is difficult to conceive of any case coming within the exemption in s 132(1)(g)(i) where the lease is held by an organisation with a membership which has rights in respect of the use of the land which go beyond the rights of the general public to use the land". Later cases relied upon 40 I turn now to the three decisions on which the parties principally relied: Goulburn City Council v Haines (" Haines") (1992) 78 LGERA 281 per Mahoney JA (with whom Clarke and Meagher JJA agreed), on appeal from Graham DCJ. Haines concerned dwellings leased by the government to senior police officers. Sydney City Council v Garbett Pty Ltd (" Garbett" ) (1993) 80 LGERA 289, per Priestley JA (with whom Kirby P and Handley JA agreed), on appeal from Bannon J in this court. Garbett concerned a lease by a Crown authority for a proposed private enterprise tourist hotel. Statewide Roads Pty Ltd Holroyd City Council ("Statewide") (1996) 39 NSWLR 115, per Clarke JA (with whom Powell JA agreed; Cole JA dissenting), again on appeal from Bannon J. Statewide concerned the rateability of tollways built and operated by private developers under leases from the Crown. 41 However, I should add to that mix another 1992 Court of appeal decision Sydney City Council v University of Technology, Sydney ("UTS") (1992) 78 LGERA 200, per Cripps JA (with concurring judgments from Gleeson CJ and Sheller JA). UTS concerned a profit making carpark in the university grounds. Haines 42 In Haines, the Minister for Public Works was the registered owner of two residences occupied by senior police officers and their families. There was no "formal" lease, but there were "instruction" documents which dealt with the relevance, to "administrative efficiency", of providing housing to key officers, when they moved around country postings, as a "necessary adjunct" to their duties. 43 Graham DCJ held that the relevant land attracted the exemption and the appeal to the Court of Appeal was dismissed. Clarke and Meagher JJA agreed with the judgment delivered by Mahoney JA, who held that the purpose achieved by the use was a public purpose of the Crown, as use of the shelter provided was subsidiary to the achievement of Crown purposes and not the determinative purpose for the purpose of the exemption provision. 44 The exemption provision invites attention to the purpose of the "holding" of land, and so requires ascertainment of that purpose. The purpose of the holding of the land, as in its "end" or "objective", may be, but need not be, stipulated by the lease arrangement. The lessee's purpose in entering the lease arrangement may differ from the lessor's, as it did in this case, and it may be inferred from the context within which the lease was granted, or from what the parties to the arrangement said. His Honour distinguished Equestrian – in this case, the lessees accepted and held the land as their residence, but also as part of remaining available as senior members (a superintendent and a divisional inspector) of a disciplined force, potentially on call 24 hours per day for matters across a wide geographical area (see p 284). 45 Mahoney JA said (at 285): "In my opinion, the provision provides for or admits of different levels of purpose. The matter may be illustrated by an example. The Crown may, to achieve its purpose of having a lighthouse operating on a particular place, lease the lighthouse to its employee and require him to live in the lighthouse and tend the light. It may provide in the lease that that is the purpose for which the lessee is to hold the lease. But the lessee may see the acceptance of the lease and the holding of the lighthouse as having the effect of providing shelter and accommodation for him: that, in a practical sense, may be the purpose that he subjectively desires most to achieve. But, in my opinion, the operation of s 132(1)(g)(i) is such that the purpose of having an operative lighthouse at the particular place would be seen as the purpose for which the lease was held and the purpose of providing or securing shelter and accommodation would be seen as resultant upon or subsidiary to the Crown's public purpose and, accordingly, as not being the or a purpose for which the lease is held. This, I think, accords with the function which the provision seeks to achieve. Essentially, s 132(1)(g) provides that land owned by the Crown will not be rateable because the purpose of the Crown in holding it will be the kind of public purpose which the Crown ordinarily performs. It assumes that such a purpose may be achieved notwithstanding that the Crown has leased the premises to a third person if the purpose to be achieved by that lease is the public purpose of the Crown: … Often, if not ordinarily, the Crown may achieve such a public purpose only by leasing the land to a third person who is to carry out that purpose. In the present case, the purpose to be achieved by the occupancy of the premises by the officers is essentially the public purpose of the Crown in relation to a police force. That, as the Instruction suggests, is best or expediently achieved by the provision of official quarters and requiring the officer to occupy them. If and in so far as the purpose of the officer in occupying them is the provision of shelter and accommodation for himself and his family, that purpose is, in the relevant sense, subsidiary to the achievement of the Crown purposes and not the determinative purpose for the purpose of s 132(1)(g)(i). Upon this basis, the provision, if considered in principle, does not defeat the basic exemption granted to the Crown by s 132(1)(g)(i)." 46 His Honour then articulated what has become known and understood as "the three step test" – "whether the purpose for which the land is held is essentially that of the lessor or the lessee; how that purpose is to be evidenced; and what is, within the provision, the meaning of 'private'". Both judges in Equestrian assumed or accepted that the first question was resolved by choosing the purpose of the lessee as the determinative issue. His Honour analysed the differences between McHugh and Priestley JJA on the second question. The determinative purpose for the purposes of the provision, is not the lessee's purpose, but the purpose for which the land is held. If that is specified in the lease, as it generally would be, Mahoney JA thought it determinative. 47 His Honour concluded (at 287): " The fact that, in carrying out the public purpose for which the land is held, the lessee derives collaterally a profit, advantage or benefit does not, in my opinion, mean that the land is held by the lessee for a private and not a public purpose. Thus, a public watchman may be given a lease of premises to which each night he is to go to carry out his watch. The purpose for which the premises are held is public. The fact that, during his nightly watch, the premises keep him warm and dry does not mean that the purpose for which he holds them is other than the public purpose of his watch ." 48 His Honour concluded (at 288) that the purpose for which the land was held (regardless of the fact that the lessees took advantage of it for accommodation and shelter) was not a private purpose, but the purpose for which the Crown had them live where they did – to have them available as part of a disciplined force. The lessees accepted and held the land in the relevant sense for that purpose. UTS 49 In UTS, the university leased and occupied land owned by the Crown. It allowed its Union to operate a profit making carpark for students, staff and the public, with staff and students having priority. Bignold J in this court held that, although there was no instrument of lease, the definition in the Act was wide enough to cover the circumstances. Gleeson CJ in the Court of Appeal used the term "permit", when that court unanimously dismissed the appeal and held that the land was exempt from rating. 50 Gleeson CJ referred to that part of Haines in which Mahoney JA commented (at 285-6) that the Crown may achieve a public purpose only by leasing land to a third person to carry out that purpose. His Honour contrasted Equestrian, because the lessee in that case was not a public institution, and said (at 202): " Not all activities of the University are, in a context such as the present, necessarily to be regarded as being for purposes other than private purposes. It may be accepted that, if the University held a lease of land from the Crown, and used that land solely or principally, for commercial activity designed to raise income, were in such a way that the commercial activity was to be seen as one substantial purpose for which the lease was held, the exemption in question would not be attracted". 51 His Honour held that although in the present case the parking activity had a commercial aspect, it was "properly regarded as wholly ancillary to carrying out the principal objects of the University" (c.f. Macquarie). The fact that its staff and students paid a parking fee did not alter the case, nor the fact that members of the public were invited to use the parking facilities and charged for doing so. 52 Sheller JA held that the arrangement amounted to a lease within the meaning of the LG Act. In the context of 132(1)(g)(i), His Honour said "It is possible to construe 'private' to mean, in contrast to public, 'non-public'", but he preferred Hardie J in Grammar and McHugh JA in Equestrian, where the connotation is private profit, advantage or benefit. "Even so the land may be used for the public purposes for which it is held under the lease. The emphasis is rather on the nature and extent of the revenue or benefit producing activity than on the purpose" (see p 203). His Honour agreed with Gleeson CJ that the activity being conducted on the land, as found by Bignold J, was properly regarded as ancillary to the purpose of conducting the university. Accordingly, the subject land was not held under a lease for private purposes. His Honour concluded (at p 204): "to say that the land is used for public purposes, namely for the conduct of the University, does not of itself answer the question whether the land is used for private purposes within the meaning of par (g)(i)". 53 Cripps JA agreed that university purposes and functions could not usually be described as private purposes, and did not think that Equestrian required the court to adopt the contrary view. 54 In the context of Haines, Cripps JA also referred to Knowles v Newcastle Corporation (1909) 9 CLR 534 which concerned a house vested in the Chief Commissioner for Railways and occupied rent free by a station master who was required to reside there as a condition of his employment. (See O'Connor J at 543). Garbett 55 The next Court of Appeal case, chronologically, and the one most heavily relied upon by the Council in the present matter, is the 1993 decision in Garbett. The first instance decision of Bannon J (Chalford Holdings Pty Ltd and others v Sydney City Council) handed down on 23 December 1992 is reported immediately after UTS (at 78 LGERA 212). 56 In 1987 the Darling Harbour Authority executed a document entitled "Agreement for Lease", providing for a construction phase and a lease phase for a proposed private enterprise International tourist hotel on land vested in the Crown. The Court of Appeal applied Haines to hold that during the construction phase provided for in the agreement, the land was held under a lease from the Crown for private purposes and was not exempt. 57 Priestley JA surveyed the chain of authority (see p294), and endorsed many of the comments made by Mahoney JA in Haines. What was to happen to the subject land was clearly derived entirely from the agreements for lease – they were "so fully set out in the documents that it would be quite unrealistic to try to ascertain the relevant purpose otherwise than by reference to those documents" (p296). It was then possible to see from the documents that, at one level of purpose, the land was held for the public purpose of ensuring that, in a part of Sydney which the Crown intended to be developed in a particular way, there should be two hotels, which would contribute to the implementation of the development in the desired way. At another level of purpose, it was plain that the land was held pursuant to each 1990 agreement for the private purposes of, first, building a hotel and, second, operating it for private profit. 58 His Honour commented (at 296-7): " In Haines the court decided that (a) the land was held for a public purpose and (b) the private elements of its use did not mean that the purpose was a private purpose. The Police Force purpose was a purpose in furtherance of a continuing government activity. It was not contemplated at any relevant time to the Haines decision that the Police Force might be privatised. In the present case the public purpose as I have above described it is one which involves the government acting in its belief as to the public interest in a very broad sense, setting in motion a project which from its beginning is not treated by the government as incidental to a governmental activity. The project essentially involves getting a private sector project going with the government encouragement provided by the making available of the necessary land." 59 Then His Honour continued: " This brings me to what seems to me to be the heart of the present point which, although its difficulty is shown by the way in which minds may differ on it, is a very short one. When he got to the stage I have now reached, Bannon J came to the view, with which I agree, that the land was held for the purposes of both the DHA and the lessees. He continued: 'Nevertheless, to adopt the language of Mahoney JA [in Haines] during the building process, the determinative purpose appears to me to be the purpose of the DHA stated in the agreements, namely the public purpose, alleged to be fundamental to the Government, of providing an international standard tourist hotel at Darling Harbour.' My own opinion is that this view is correct so far as it goes, but that it needs to be more fully stated, and when so stated, leads to the opposite result from that reached by Bannon J The public purpose of the DHA stated in the agreements of providing an international standard tourist hotel at Darling Harbour is a public purpose of providing a private sector international standard tourist hotel; that is, a public purpose of seeing that private enterprise contributes to tourist facilities. In the construction phase all risk capital is supplied from the private sector with a view to the private sector profit hoped to be made from subsequent operation of a tourist hotel conducted by the private sector. It seems to me a proper presumption that all Crown leases under which land is held for private purposes must have a level of public purpose in them, in that the Crown must be assumed to be granting the lease in the general public interest. Thus in every case involving land held for private purposes under s 132(1)(g)(i) there will be a public purpose involved at some level. The exemption is nevertheless denied to land held for private purposes, so by the terms of the section itself the existence of a public purpose is not of itself inconsistent with there being a simultaneous exemption-denying private purpose." 60 His Honour then agreed with Mahoney JA's observation in Haines that the purpose of s 132(1)(g)(i) was to exempt Crown land where it was held for the kind of public purpose ordinarily performed by the Crown. In this case the public purpose of the Darling Harbour Authority was clear from the instruments namely tourism. The private project was not one the Crown would contemplate as within its ordinary functions, so the conclusion followed that the lands were held by the lessees for private purposes. That was clearly so for the second phase, but the reasoning "seems to me to lead just as firmly to the same conclusion in regard to the construction phase". Accordingly, the site was not exempt from rating. 61 Handley JA published a short, separate judgment in which he essentially agreed with Priestley JA, but made the following relevant cautionary comments (at 303): "If the company was a deemed lessee for rating purposes while it only had the use of the land for construction purposes, it would seem to follow that a builder building on Crown land not otherwise leased may also be a rateable lessee during performance of the building contract in cases where the land was held by the builder for private purposes. My agreement with Priestley JA does not involve any view that the company was rateable before it became presently entitled to a lease of the property, or that a builder in possession of Crown land for building purposes is ever rateable. It is possible that licences under the general law of Crown land are not deemed to be leases of such land for rating purposes, or at least in all cases. It would be absurd for example if every Wood v Leadbitter licence (1845) 13 M & W 838; 153 ER 351 was a deemed lease for this purpose". Statewide 62 The next case in this line of authority is Statewide. The relevant lands were owned by the RTA in the right of the Crown, but leased to the companies which constructed the M4 and M5 motorways. The Court of Appeal reversed Bannon J. Powell JA expressly agreed with the judgment of Clarke JA. 63 Cole JA published a dissenting judgment, and found it unnecessary to "revisit" the various cases. His Honour concluded that the tollway companies took the lease to embark upon a profitable enterprise and that "there is a sufficient private purpose … to impose upon the lease the characterisation of being a lease for 'private purposes' within the meaning of the section". The exemption from rating was, therefore, not available. 64 The Clarke/Powell JJA majority view was that to establish whether the lease was held for private or public purposes regard was to be had to whether the purpose which was the subject of the lease was the kind of public purpose which the Crown ordinarily performs. The headnote records that "the presence or absence of any legislative charter for the lease was not relevant to the inquiry and it was not necessary that the activity involved be a traditional governmental function. In this case the construction and operation of toll roads was a purpose ordinarily performed by the Crown" (see [68] below). 65 The court applied both Haines and UTS. To qualify for the exemption, the leased Crown land need not be used solely for a public purpose. The fact that the lessee could use the land for private profit did not prevent the land being leased for public purposes. Privately constructed tollways are roads the public are entitled to use and were, therefore, "public places" for the purposes of a different rating exemption under s 132(1)(i). The court looked at not just the purposes and motivations of the tollway operators in entering into the leases, but also the motivations of the RTA and the reasons lease arrangements were utilised. Clarke JA held that the purpose of the lease was to facilitate the implementation of the project, namely the financing, design, construction, operation, repair, and maintenance of the motorway and all things necessarily incidental thereto. His Honour noted that the fundamental purpose of the tollway projects was stated in the deed as "enhancing and modernising the State's public infrastructure for the benefit of the people of New South Wales". His Honour found that specification "conclusive of the question". 66 Clarke JA noted the Hardie/McHugh formulation of the definition of "private purposes" (see [35] above) and continued (at 119C): " Taken literally, this statement would imply that as soon as a lessee gains some profit or advantage from the use of the land, the relevant purposes of the lease automatically become private purposes. However, in Goulburn City Council v Haines, Mahoney JA was of the opinion that the provision "provides for or admits of different levels of purpose". He continued (at 285-286): '... Essentially, s 132(1)(g) provides that land owned by the Crown will not be rateable because the purpose of the Crown in holding it will be the kind of public purpose which the Crown ordinarily performs. It assumes that such a purpose may be achieved notwithstanding that the Crown has leased the premises to a third person if the purpose to be achieved by that lease is the public purpose of the Crown: cf generally Ryde Municipal Council v Macquarie University (1978)139 CLR 633. Often, if not ordinarily, the Crown may achieve such a public purpose only by leasing the land to a third person who is to carry out that purpose.'" 67 His Honour noted that this statement from Haines had been quoted with approval in UTS (at 201, per Gleeson CJ) and in Garbett (at 295, per Priestley JA). 68 His Honour then considered whether the "financing, design, construction, operation, maintenance, and repair" of toll roads was a purpose ordinarily performed by the Crown. The Councils contended that no statutory warrant existed for the leasing of the land for the operation of the toll roads and it was, therefore, a private project. Bannon J had referred to the absence of any legislative scheme. The respondent Council also submitted that merely because a power is given to a public authority by statute, does not necessarily mean that acts done in accordance with that power obtain the status of "public purpose". Clarke JA said (at 120B): " In my opinion, such arguments misconceive the issue. The aim of the inquiry is not to determine whether the leasing of the operations of toll roads is a purpose ordinarily performed by the Crown. Rather, the issue is whether the function or purpose which is the subject of the lease can be characterised as such. The presence or absence of any legislative charter, scheme or power for the leasing out of the toll roads is therefore not relevant to the inquiry. In addition, there is no requirement that the activity involved be a traditional government function. The question is simply whether the construction and operation of roadways or tollways is a purpose that the Crown ordinarily performs. The answer to this question can only be yes. However, deciding that the purpose of the lease is a purpose ordinarily performed by the Crown does not dispose of the matter. Further arguments have been raised as to why the purposes of the lease should be characterised as private rather than public." 69 After considering further what McHugh JA said in Equestrian, and Mahoney JA said in Haines, His Honour continued: "Contrary to what has been argued by the respondents, in order to be entitled to the exemption, it is not necessary that the use for a public purpose be the exclusive purpose of the lease. The recent New South Wales cases simply do not support the application of the English sole purposes test in the present context. … As I have pointed out, despite McHugh JA's statement in Equestrian Sports Centre that 'private purposes' meant purposes directed to the private profit, benefit or advantage of the lessee (at 133), the existence of private benefit or profit-making by the lessee will not necessarily prevent the land from falling within the exemption. However, given the difference in terminology used by the courts in the various decisions, the difficulty of deciding in what circumstances the receipt of profits or benefit by the lessee should lead to the characterisation of the purpose of the lease as private remains." 70 Returning to the case at hand, His Honour said (at 122): " In this case the construction and operation of a roadway, or tollway, for use by the public performs and was intended to perform a public function, but the question remains whether the evident private purposes of the lessees in anticipating a profit or benefit is merely ancillary or incidental to the public purpose. If so, the exemption applies. If on the other hand, the private purpose is collateral, and not merely incidental, the appellants must fail. Applying these principles to the facts of the present case, the appellants argued that the private profit motive of the lessees was merely the spur by which this particular financing technique was adopted. If there had been no hope of serving the profit motive, there would have been no incentive for the lessees to proceed with the project, and as such the receipt of profit was merely ancillary or incidental to the public purpose of providing the tollway. In contrast, the respondents argued that the construction of the tollway is only incidental or subsidiary to the purpose of achieving a profitable investment in a revenue raising project that the lessees would be required to provide a roadway which the public might use. If that achieved the public purpose of the Roads and Traffic Authority, it is only as an incident of the purpose of the lessee to make a profitable investment in a commercial venture. … …[It] is clear that Priestley JA's decision [in Garbett] rested on the fact that the essential purpose of the lease was the facilitation of a private enterprise, different from the classes of activity in which the Crown is ordinarily involved. The crucial factor was that the arrangements essentially involved getting a private sector project going with government encouragement provided by the making available of the necessary land (at 296-297). Unlike Garbett, I do not think this case can be characterised as one which involved the government getting a private sector project off the ground. It involved the government using the resources of the private sector in order to provide necessary infrastructure to the public which the government did not itself have the financial resources to construct. Certainly, one of the end objectives of the lease is that the lessees would earn a profit from the operation of the toll roads, but I do not think that this private purpose means that the land was held 'for private purposes'. The terms of the lease and its political setting make it clear that the purpose of the lease was to finance the construction and operation of part of a system of highways available for use by the public. The private benefit expected by the lessees is subservient or ancillary to that public use." 71 His Honour concluded that the exemption was available to the tollway operators. Rockingham 72 Although the relevant provisions in Western Australia were different in form, there was some discussion by the parties in the present case concerning the attitude of the Supreme Court of Western Australia to the line of thinking drawn from the NSW Court of Appeal cases. 73 City of Rockingham v Port Kennedy Resorts Pty Ltd (1999) 107 LGERA 296 concerned the development of land at Port Kennedy, some parts of which would be freehold areas, two golf courses, and a town centre. The company was granted an exclusive licence. Wheeler J held that there was a level of public purpose in any making available of Crown land. Holdings of land could be partly for public and partly for private purposes. The majority of uses contemplated by the agreement in this case were, mostly, privately provided. Taken as a whole, the purpose of the agreement was, initially, to get an essentially private development off the ground, and, thereafter, to ensure that the development continued. The purpose of the agreement and the purpose of the occupation of the land was at the relevant time primarily private. Her Honour referred to Haines, Statewide, Garbett, and UTS, and allowed the Council's appeal against the decision of the Land Valuation Tribunal effectively upholding the company's objection to a rate notice. The Tribunal applied Statewide and upheld the contention that it was not rateable as it was Crown land held for a public purpose. 74 Her Honour's decision was upheld by the Full Court: Port Kennedy Resorts Pty Ltd v City of Rockingham (2000) 112 LGERA 296. That court adopted the test of predominant purpose for which land was used or held, and held that the company's predominant purpose was commercial and not public. The intention of the parties was to confer a right of exclusive occupation. Entitlement to occupy the Crown land took the appellant outside of the exemption. A Summary of the Authorities 75 The three-step approach described by Mahoney JA in Haines, and adopted by Priestley JA in Garbett and Clarke JA in Statewide, requires, firstly, an analysis of "whose purpose" the lease is seeking to fulfil. As Mahoney JA said in Haines, one looks at the purpose of the lessee and of the lessor. Clarke JA (who had agreed with Mahoney JA in Haines without comment) refined the test in Statewide by stating (at 118) that "it is also necessary to look at the objective purpose for which the lease is held". 76 In relation to the "purpose" of the lease, Mahoney JA held in Haines (at 284-5), that it was " necessary to determine what was the end or objective to be achieved by the relevant officers by the holding of the land". Clarke JA noted in Statewide (at 118): " It is generally accepted that where the provisions of the lease stipulate the purpose for which the lessee is to hold the land, that will ordinarily be determinative of the issue. However, if the purpose is not specified or that specification is not conclusive, the purpose may be inferred from what has been said by the parties and the context in which the lease has been granted, or by reference to what the lessee is actually doing on the land in question: …" . 77 Mahoney JA's rationale on what is "private purpose" (see [45] above) was approved and adopted by Clarke JA in Statewide, and by Priestley JA in Garbett. See also UTS at 201, per Gleeson CJ. 78 In Garbett, Priestley JA, acknowledging the issue was one which minds may differ, said (at 297 – see more extensive extract at [59] above): "It seems to me a proper presumption that all Crown leases under which land is held for private purposes must have a level of public purpose in them, in that the Crown must be assumed to be granting the lease in the general public interest. Thus in every case involving land held for private purposes under s132(1)(g)(i) there will be a public purpose involved at some level. The exemption is nevertheless denied to land held for private purposes, so by the terms of the section itself the existence of a public purpose is not of itself inconsistent with there being a simultaneous exemption-denying private purpose ." (emphasis added) 79 Priestley JA's consideration in Garbett accords with that of McHugh JA in Equestrian (at 133 – see [38] above): "It is not necessary that the land should be held solely or predominantly for private purposes to lose the benefit which s 132(1)(g)(i) confers ". 80 Clarke JA in Statewide contrasted the tollway situation with that of the hotel in Garbett (see last par quoted in [70] above) – facilitating tollways by leasing land to tollway builders and operators was not a case of "government getting a private sector project off the ground", but "involved the government using the resources of the private sector in order to provide necessary infrastructure to the public which the government did not itself have the financial resources to construct". 81 At the end of the day each claim for exemption will turn on the particular circumstances of the case. As Mahoney JA observed in Haines (at 288): "How these principles operate in particular factual context will, of course, depend on the circumstances. Thus, in granting a lease of land, the Crown may have a public purpose, for example, the introduction of social stability or the like by having men or families live in a particular area: it may grant leases to achieve that public purpose. But, as far as concerns the men or the families, they may have no knowledge or concern with that; the purpose for which they hold the land may be, in the circumstances, merely the private purpose of accommodation and shelter. The public purpose of the Crown may have no part in their holding of the land". 82 Running consistently through the cases is the theme that there are various functions which are "ordinarily" performed by the Crown, in possible contradistinction to "traditional government functions" (Clarke JA in Statewide at 120B – see [68] above). Submissions 83 The court has the benefit of comprehensive written and oral submissions from the parties. The applicant put its case along the lines of Haines and Statewide, but the Council argues that the most appropriate comparison is with Garbett. 84 The applicant submits that the purpose of the "lease", or OL, required the applicant to carry out clear obligations set out in the PDA, and to hold (and use) the land solely for that purpose. 85 Such direct specification of purpose in the terms of the lease is, on the Haines/Statewide principles, determinative of the purpose for which the land is held, and any ancillary, private purpose of holding the land (e.g. the making of a profit) is not relevant to s 555(1)(a). The public purpose of facilitating the development of a regional town centre having all the features expressly prescribed in the tender documents and PDA is the kind of public purpose which the Crown ordinarily performs. 86 The public objectives of the Ministerial Corporation are the "driving force in the development" (Reply subs 12 February 2010, par 2). The applicant is frank about its financial advantage from involvement in the arrangement, but notes that "the private profit will only flow if … public objectives or public ends have been met … [c.f. Garbett]" (T15.2.10, p25, LL31-2, and p45, LL 42-47). 87 The applicant also relies on the following in submitting that the land holding is of a public nature: Functions of the Ministerial Corporation under s 11(4) of the EP&A Act. Involvement of Landcom and the functions and objections of the State owned corporation provided in ss 6 & 7(2) of the Landcom Corporation Act 2001. Financial return to the Ministerial Corporation with the " achievement of an optimal return for the sale/lease of public land " as outlined in the PDA and Invitation to Tender. 88 In relation to the type of activities that the Crown ordinarily performs, the applicant relies on the Ministerial Corporation Annual Report for year ending 30 June 2008 which describes the Rouse Hill development and the development of other significant metropolitan open space precincts and initiatives such as the Metropolitan Greenspace program (Exhibit A2, tab 13, fols 2849-2850). 89 In acknowledging its private purpose in holding the land, the applicant submits that the private purpose was "resultant upon or subsidiary to" (per Mahoney JA in Haines at 285-6), collateral to (per Mahoney at 287, and not as the term is used by Clarke JA in Statewide at 122) or "merely ancillary or incidental to" (per Clarke JA in Statewide at 122) the public purpose for which the OL was granted. The applicant relies upon the significant detail in which the project was described to, and prescribed for, the applicant (as the developer) in both the Invitation to Tender and the PDA (see applicant's subs pars [52]-[53]). 90 The applicant submits, alternatively, that the situation is analogous to "government using the resources of the private sector in order to provide necessary infrastructure to the public which the government did not itself have the financial resources to construct" (per Clarke JA in Statewide at 122). This submission relies on the "series of specific plans for the construction of a Regional Centre on Crown land, formulated by the Government through the planning and tendering process and incorporated into the terms of the PDA and, by reference, the OL". The applicant further relies on the "hands on" (T15.2.10, p13, L3) role, and "ongoing … close and deep involvement" (T p14, LL8-10) of the JMC "in managing significant issues arising in the delivery of the Regional Centre, including by monitoring the progress of the Development and the applicant's performance of its obligations under the PDA" (see applicant's subs par 54). 91 The Council, on the other hand, submits that as a whole the arrangements set out in the PDA were essentially designed to get "a private sector project going with government encouragement provided by the making available of the necessary land" (Garbett at 297). While acknowledging a public purpose in holding the subject land (indeed any Crown land), the Council, relying on the statements of Priestley JA in Garbett (at 297) and McHugh JA in Equestrian (at 133), submits that "the issue is not whether the Development or its facilitation is a public purpose but rather whether the Land is or is not held for a private purpose". The government (and local government) have a public duty to ensure the "beneficial and orderly development of land" in the context of an urban planning system (T15.2.10, p27, LL20-1). 92 The Council draws attention to certain aspects of the development, such as the construction of residential, retail and commercial buildings and submits they are not the classes of activity in which the Crown is "ordinarily involved". The Council distinguishes the present case from others such as Statewide (the construction of a motorway), Haines (provision of accommodation for police officers and their families), and UTS (operation of universities). 93 The Council responds to the applicant's reliance on the role and function of statutory authorities such as Landcom and the Ministerial Corporation by stating that: Read individually or as a whole, the functions accorded under s 11(4) do not indicate that the Minister is to be engaged in the development of regional centres. The Ministerial Corporation report for year ending 30 June 2008 shows the role of the Ministerial Corporation is to acquire land for planning purposes not to develop it. Landcom has the power to do a project like this one, but has opted to do none of it. Its 2007 Annual Report recognises that it is the private sector that primarily delivers the growth of the State's cities, with government retaining the ability to intervene from time to time, particularly where the private sector may be unwilling or unable to become involved. The development of regional centres, such as in the present case, has been traditionally undertaken by the private sector, and is not a function that the Crown ordinarily performs (see [68] above). 94 The Council also submits that the applicant over-emphasises the significance of the JMC, which, the Council says, is just a contractual management device of limited powers and incapable of rendering a private venture public (T15.2.10, p31, LL44-50). 95 The Council, therefore, submits that the land is being held for private purposes. Mr Walker argues (T p29, LL34-40) that the applicant "exists for the purpose of making profits … It's not likely to be supposed that it has as any of its corporate purposes sacrificing its assets or a shareholder's hopes for the purposes of the orderly and rational development of New South Wales… Like any developer it participates in its development activities in the hope of and intending to achieve profits" (see also T p30, LL5-30 and T p42, LL16-17). Consideration 96 I prefer and accept the submissions made on behalf of the Council. 97 As noted by Mr Walker, and the authorities, any grant of Crown lands inevitably has a 'public purpose' element, and the public and a private purpose often overlap. His submissions (par 29) regarding the test under s 555(1)(a) adopted Priestley JA's comment in Garbett (at 297): "the existence of a public purpose is not of itself inconsistent with there being a simultaneous exemption-denying private purpose". As the submission says, "the issue is not whether the Development or its facilitation is a public purpose but rather whether the land is or is not held for a private purpose". See also Mahoney JA in Haines (at 285) and McHugh JA in Equestrian (at 133). 98 The submission of the Council that the applicant's "undertaking of the development for its commercial benefit was fundamental to the holding of the land" is to be preferred to the submission that "[t]he applicant held the Land for the public purpose of delivering the project as prescribed". Firstly, there is no evidence before the court that the applicant was motivated by some sense of public duty in undertaking the development, and it must be assumed that when private enterprise enters into such arrangements it is motivated by the potential for private commercial benefit. Secondly, as a reward for assuming all the risk, the applicant stands to gain substantial revenue from the sale of sites developed, in addition to collecting revenue from tenancies. 99 As Mr Walker put it (in par 22 of his subs): " In this case, the Minister had a public purpose in granting the Occupation Licence, namely the development of a regional centre at Rouse Hill to meet the accommodation needs of a growing city. Nevertheless, even though certain aspects of the development involve functions normally carried out by the government, such as the construction of roads, the actual development of the regional centre, considered as a whole, involving the construction of residential, retail and commercial buildings with the associated infrastructure, include classes of activity in which the Crown is normally not involved, unlike the construction of a motorway (as in Statewide) or the provision of police services (as in Haines) or the operation of universities (as in [UTS])." 100 The private purpose of the applicant predominates over, and cannot be seen as subsidiary to the public purpose of the lessor in promoting orderly urban development and facilitating the development of community infrastructure for the public. Such development is not a function the Crown ordinarily performs, whereas ensuring it occurs, and facilitating and supervising it, may be. 101 The facts and circumstances of Haines and Statewide are, therefore, distinguishable, despite their relevance in stating the principles to be applied. The closest analogy to the present case is to be found in Garbett. Conclusion and Orders 102 Having found that the rating exemption under s 555(1)(a) should not be extended to the land held under the Occupation Licence dated 3 October 2003, the applicant's appeals against the rate notices collected in Exhibit A1 must be dismissed. 103 Accordingly the orders of the court are: 1. The appeals are dismissed. 2. Costs reserved. 3. Exhibits returned. 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.