(2001) 114 LGERA 97 Reported Decision : (2001) ATC 4330 (2001) 47 ATR 171 New South Wales Supreme Court CITATION : Chief Commissioner of State Revenue v Darling Harbour Authority & 4 ors. [2001] NSWSC 429 FILE NUMBER(S) : SC 10200/00 HEARING DATE(S) : 10 May 2001 JUDGMENT DATE : 25 May 2001 Chief Commissioner of State Revenue Darling Harbour Authority - 1st Defendant PARTIES : Lend Lease Development Pty Ltd - 2nd Defendant Momura Darling Park Development Pty Ltd, formerly Lenfork Pty Ltd - 3rd Defendant Toyo Real Estate (Australia) Pty Ltd, formerly Fodasa Pty Ltd - 4th Defendant JUDGMENT OF : Sully J at 1 COUNSEL : H. R. Sorensen - Plaintiff SOLICITORS : Land Tax Management Act 1956 (NSW) Taxation Administration Act 1996 (NSW) Darling Harbour Authority Act 1984 (NSW) LEGISLATION CITED : Interpretation Act 1987 (NSW) Transport (Division of Functions) Act 1932-52 (NSW) Landlord and Tenant (Amendment) Act 1948 Local Government Act 1919 Local Government Act 1993 Galibal Pty Ltd v Chief Commissioner of Land Tax CASES CITED : Wynyard Investments Pty Limited v Commissioner for Railways (NSW) (1955) 93 CLR 376 Australian Convention & Exhibition Services Pty Ltd v Sydney City Council (1998) 9 BPR 16,753 Prospect County Council v Blue Mountains City Council (1992) 28 NSWLR 301 DECISION : Questions stated by Commissioner all answered 'no' SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION SULLY J 25 May 2001 10200/00 - Chief Commissioner of State Revenue v Darling Harbour Authority & 4 ors. JUDGMENT 1 HIS HONOUR: By a summons filed on 1 February 2000 the Chief Commissioner of State Revenue, ["the Commissioner"], has propounded for the opinion of the Court a number of questions of law concerning the operation of certain provisions of the Land Tax Management Act 1956 (NSW), ["the LTM Act"]. The Commissioner's entitlement so to approach the Court derives from s 106 of the Taxation Administration Act 1996 (NSW). 2 In connection with the questions thus propounded by the Commissioner, a case in the following form has been stated by the Commissioner: "1. The First Defendant ("DHA") is a corporation constituted by section 6(1) of the Darling Harbour Authority Act 1984 ("the 1984 Act"). By sub-section 6(2) of the 1984 Act, it is provided that DHA, "(a) shall, for the purposes of any Act, be deemed to be a statutory body representing the Crown; and (b) shall, in the exercise of its functions (except in relation to the contents of a report or recommendation made by it to the Minister), be subject to the control and direction of the Minister." 2. Land within the Development Area described in Schedule 1 to the 1984 Act has in accordance with s.12 of the Act vested in DHA for an estate in fee simple ("Vested Land"). Part of the Vested Land ("the Land") was pursuant to registered lease Y539877 leased by DHA to the Second Defendant, Lenfork Pty Ltd and Fodasa Pty Ltd as joint tenants at an agreed rental for a term of 99 years commencing 15 June 1989. Annexed and marked "XX" is a copy of the lease and annexure "A" to the lease. 3. Pursuant to sections 8 and 9 of the Land Tax Management Act 1956 ("the Act"), land tax is charged on land as owned at midnight on the thirty-first day of December immediately preceding the year (the period of 12 months commencing on the first day of January) for which the land tax is levied, and that land tax is payable by the owner of the land. 4. Pursuant to s.21C of the Act and for the land tax years 1989 to 1994 inclusive, the Crown is not liable for land tax in respect of land it owns (except as specifically provided by Part 3 of the Act) and a lessee of land owned by the Crown is for land tax purposes to be considered the owner of that land. 5. Notices of assessment assessing land tax in respect of the Land for each of the tax years 1990 to 1994 inclusive were served on the Second Defendant, Lenfork Pty Ltd and Fodasa Pty Ltd, the Plaintiff having pursuant to s.21C(2) of the Act treated the Second Defendant, Lenfork Pty Ltd and Fodasa Pty Ltd, as the owner of the Land at all relevant times. 6. The Second Defendant, Lenfork Pty Ltd and Fodasa Pty Ltd, paid the land tax assessed as notified for 1990 to 1994 tax years and did not within the period prescribed by s.35 of the Act or at all lodge with the Plaintiff an objection to the assessment relating to any of those tax years. 7. On 15 December 1994 this Honourable Court, in Galibal Pty Ltd v Chief Commissioner of Land Tax (NSW) (1994) 96 ATC 4143 an objection proceeding under the Act, found that the term "the Crown" in section 21C(1) of the Act did not include DHA. 8. In November 1995 the Second Defendant, Lenfork Pty Ltd and Fodasa Pty Ltd, made application to the Plaintiff pursuant to section 16 of the Act to amend the assessments for the 1990 to 1994 tax years and then to refund the land tax paid by the Second Defendant, Lenfork Pty Ltd and Fodasa Pty Ltd, in respect of the Land for those tax years. 9. In November 1995 the Plaintiff served on DHA notices of assessment for land tax in respect of Vested Land, including the Land, for the tax years 1989 to 1994 inclusive. DHA has pursuant to s.35 of the Act lodged objections to the assessments for those tax years. 10. The Plaintiff has not determined DHA's objection or made a decision on the Second Defendant, Lenfork Pty Ltd and Fodasa Pty Ltd's application for the assessment to be amended and a refund. 11. The Plaintiff does not concede that Galibal Pty Ltd v Chief Commissioner of Land Tax was correctly decided." 3 The particular questions which the Commissioner has propounded are: " 1989 to 1994 inclusive - (a) Does DHA come within the term "the Crown" as used in - (1) section 21C(1) of the Act? (2) section 21C(2) of the Act? (b) If the answer to (a)(1) is, no, is DHA otherwise exempt from liability for land tax in respect of Vested Land? (c) Is Vested Land, "land owned by the Crown" within the meaning of section 21C(2) of the Act by virtue of the Crown being an owner within - (1) paragraph (a)(i); (2) paragraph (a)(ii), of the definition of "owner" in s.3(1) of the Act? 1990 to 1994 inclusive - (d) Is the Second Defendant, Lenfork Pty Ltd and Fodasa Pty Ltd, as lessee of the Land, a lessee of the kind to which section 21C(2) of the Act applies?" 4 In order to discuss these questions properly, it is necessary to take account of some of the detailed provisions of the LTM Act and of the Darling Harbour Authority Act 1984 (NSW), ["the DHA Act"]. 5 As paragraph 3 of the Commissioner's stated case points out, the focus of sections 8 and 9 of the LTM Act is ownership of the relevant land. In that connection section 3 of the LTM Act, the definition section of the Act, contains the following relevant definitions: "Owned" and similar expressions have a meaning corresponding with that of owner. "Owner" includes: (a) in relation to land, every person who jointly or severally, whether at law or in equity: (i) is entitled to the land for any estate of freehold in possession; or (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise; (b) * * * * * * * (c) in relation to any leasehold estate in land, whether legal or equitable (other than under any lease to which section 21C applies), a person, or a person who is a member of a class or description of persons, prescribed for the purposes of this paragraph; and (d) a person who, by virtue of this Act, is deemed to be the owner "Person" includes a company." 6 Section 21C of the LTM Act, to which the Commissioner makes reference in paragraph 4 of his Stated Case, provides relevantly: "21C (1) The Crown, ………………..is not liable for land tax in respect of land it owns (except as specifically provided by Part 3). (2) A lessee (other than a sub-lessee) of land or part of land owned by the Crown, …………………………….is for land tax purposes to be considered the owner of a parcel of land ("the notional parcel") consisting of the land or part leased. The Crown, ………………………is then not to be considered owner of the notional parcel." 7 It is necessary to consider, also, certain particular provisions of the DHA Act. Section 6(1) of the DHA Act constitutes as a corporation the Darling Harbour Authority. Section 6(2), which is quoted in paragraph 1 of the Commissioner's Stated Case, deems the Darling Harbour Authority to be, for the purposes of any Act, a statutory body representing the Crown; and provides, essentially, that the Authority is to exercise its functions subject to the control and direction of the relevant Minister of the Crown. 8 The objects of the Authority are defined in section 9 of the DHA Act. They are, broadly speaking, the objectives of promoting, encouraging, facilitating, carrying out and controlling the development of, relevantly, the land described in paragraph 2 of the Commissioner's Stated Case. In aid of the achievement of those statutory objectives, the Authority is given, by various succeeding sections of the DHA Act, sweeping powers of acquisition, management and control of land. 9 Of some importance for present purposes are the provisions of section 63 of the DHA Act, providing: "(1) There shall be established in the Special Deposits Account in the Treasury a Darling Harbour Authority Account into which shall be deposited all money received by the Authority and from which shall be paid all amounts required to meet expenditure incurred in the execution or administration of this Act. (2) The financial year of the Authority shall be the year commencing on 1st July. (3) As soon as practicable after being so directed by the Treasurer (which direction the Treasurer is hereby authorised to give), the Authority shall pay into the Consolidated Fund from the Darling Harbour Authority Account referred to in subsection (1) such sum of money as is specified in the direction." 10 Neither the LTM Act nor the DHA Act contains a particular statutory definition of the expression "the Crown". That being so, the expression is to be understood, in the context of each such Act, as being: "………….a reference to the Crown in right of New South Wales". Interpretation Act 1987 (NSW) s.13(b) 11 The Darling Harbour Authority is deemed for the purposes of any Act to be a statutory body representing the Crown. The Darling Harbour Authority so represents the Crown, therefore, for the purposes of both the DHA Act itself and the LTM Act. 12 In Galibal Pty Ltd v Chief Commissioner of Land Tax, to which the Commissioner refers in paragraph 11 of the Stated Case, Windeyer J, considering the proper construction of section 21C of the LTM Act, reasoned as follows: "It is clear that (the Darling Harbour Authority) holds the land in fee simple and not on trust for the Crown. ………………….. The question is whether in some way s.21C(1) of the LTM Act changes the position. It can only do so if 'the Crown' means or includes (the Darling Harbour Authority) . There is no definition of 'Crown' in the LTM Act. It would have been a simple matter to include as a definition 'Crown includes any statutory body representing the Crown' as is done by the Local Government Act 1919; Local Government Act 1993; and the Metropolitan Water Sewerage & Drainage Act 1924. It is not in question that a statutory body representing the Crown is entitled to the privileges and immunities of the Crown: Skinner v Commissioner for Railways (1937) 37 SR (NSW) 261; Wynyard Investment Pty Limited v Commissioner for Railways (1955) 93 CLR 376; but such a body does not necessarily become 'the Crown' and more significantly does not for the purposes of the section in question make the Crown something which in law it is not, namely the owner. The Crown cannot be deemed to be the owner of land because a statutory body which is the owner is deemed to represent the Crown. The problem if it is one can be overcome by definition not by double deeming." 13 At the hearing of the present Summons, counsel for the Commissioner submitted that Windeyer J's reasoning was incorrect, in that it did not correctly analyse and apply the decision of the High Court of Australia in Wynyard Investments Pty Limited v Commissioner for Railways (NSW) (1955) 93 CLR 376. 14 The relevant ratio decidendi of the Wynyard Investments decision has to be drawn out of the joint majority judgment of Williams, Webb and Taylor JJ. The relevant context was provided by section 4(2) of the Transport (Division of Functions) Act 1932-52 (NSW); that section providing that for the purposes of any Act the Commissioner for Railways (NSW) should be deemed to be a statutory corporation representing the Crown. It was held that, since the Landlord and Tenant (Amendment) Act 1948 did not bind the Crown, it did not bind the Commissioner for Railways. 15 The joint majority judgment expressly rejected a submission that a statutory provision that a named corporate body should be deemed to be a statutory body representing the Crown for the purposes of any Act, should be construed as though it operated only in the case of any Act in which the expression "statutory body representing the Crown" occurred. 16 The judgment proceeded thereupon to speculate why "………….Parliament, having gone thus far, did not go further and make the Commissioner for Railways a representative of the Crown for all purposes………………" The explanation offered by the joint majority judgment was as follows: "………………………. The only bodies upon which the Legislature would be likely to confer the privileges and immunities of the Crown would be, presumably, bodies created by some statute to perform activities which the Legislature considered to be of sufficient public importance to qualify as executive activities of the State. They are called statutory bodies because such bodies are created by statute. It is correct in this sense to describe the Commissioner as a statutory body and it is for the Legislature to decide to what extent he is to enjoy ……………………………. 'the shield of the Crown'. The Legislature has said that he is to do so 'for the purposes of any Act'. Probably it has gone thus far and no further because the duties, powers and functions of the Commissioner are derived so largely from statutes. Common law rights and obligations must often arise during their exercise but the Crown in New South Wales can be sued both in contract and in tort, and the Commissioner would receive little benefit from any wider protection. He would appear to receive substantially all the advantages which would accrue from representing the Crown by being placed in the same position as the Crown for the purposes of any Act and one of the principal advantages would appear to be his immunity from any Act which did not bind the Crown ." (emphasis added) 93 CLR, 387, 388 17 This reasoning entails, in my opinion, that in so far as the Crown is not bound by the LTM Act, that immunity would flow on to the Darling Harbour Authority. In that connection, counsel for the Commissioner submitted in his written submissions, and in my opinion correctly, that: "Given that the scheme of the Act is to impose tax on all land in the State which is not exempted under the Act………………; and given that the Act by s.21C(1) expressly exempts the Crown, but only in respect of land it owns, the clear implication is that the Crown would not otherwise be exempt:……………… . Accordingly, the Act is binding on the Crown and the Darling Harbour Authority would not be entitled to exemption or immunity on any basis other than that prescribed by s.21C(1)." 18 It must then follow that the Darling Harbour Authority will only be exempt from liability under the LTM Act if the Crown immunity pursuant to s.21C flows on to it. That cannot happen unless the Crown owns, in the sense required by the LTM Act, the relevant land. That entails, in turn, a consideration of whether, and if so how, the Crown can be fitted into s.3 definitions earlier herein quoted. 19 Prima facie, the Crown cannot be brought directly within the statutory definitions contained in s.3(a)(i) and (a)(ii). (The definitions in s.3(c) and (d) plainly do not apply in the present particular case, and the Commissioner did not submit to the contrary.) 20 The Darling Harbour Authority, of course, comes plainly and directly within the terms of both (a)(i) and (a)(ii). The Commissioner contends that it follows that the Crown, which is represented for the purposes of any Act including the LTM Act and the DHA Act by the Darling Harbour Authority, is by virtue of that relationship in the same position as the Authority itself. 21 In considering this submission of the Commissioner it is, I think, important to distinguish between two important practical concepts. 22 It is one thing to say that the Authority, being undoubtedly a s.3 owner of the land, represents the Crown for the purposes of the LTM Act and the DHA Act in the sense that when the Authority itself exercises in connection with that land any of its extensive statutory powers of control and management, it does so as, effectively, a servant or agent of the Crown, and is therefore entitled to "the shield of the Crown". Authorities such as Wynyard Investments seem to me to put that proposition beyond present challenge. 23 It is, however, quite a different thing to say that the Authority, being undoubtedly a s.3 owner of the land, represents the Crown for the purposes of the LTM Act and the DHA Act so that the unencumbered statutory fee simple of which the Authority is the sole proprietor in law, becomes thereby transformed into an interest of the Crown of either or both of the kinds defined in s.3(a)(i) and (a)(ii). 24 I take this distinction to be what Windeyer J had in mind in the passage earlier quoted from Galibal. I respectfully agree with Windeyer J that: "The Crown cannot be deemed to be the owner of land because a statutory body which is the owner is deemed to represent the Crown. The problem if it is one can be overcome by definition not by double deeming". 25 At the heart of the Commissioner's present submissions is the simple proposition that the undoubted ownership in the statutory sense of the Darling Harbour Authority translates simply into a corresponding ownership in the Crown by reason simply of the statutory provision making the Authority a representative of the Crown for the purposes of any Act. That simple proposition is, plainly enough I should imagine, inconsistent with the reasoning of Windeyer J in Galibal. Counsel for the Commissioner drew attention to the decision of the Court of Appeal in Australian Convention & Exhibition Services Pty Ltd v Sydney City Council (1998) 9 BPR 16,753. It was submitted that this decision supports the simple proposition for which the Commissioner contends. 26 The Court of Appeal was dealing with the question whether certain land vested in the Darling Harbour Authority was rateable pursuant to the Local Government Act 1993. The central question for the Court of Appeal was whether the land was exempted from rating by the operation of s.555(1)(a) of the Local Government Act, which provided relevantly that there should be a blanket exemption from rates in respect of: "Land owned by the Crown, not being land held under a lease for private purposes". The headnote of the report notes: "The question turned on whether or not the appellant managed the buildings under a lease or licence for private purposes". A reading of the judgment of Handley JA, with whom Powell and Beazley JJA agreed, indicates that the real question argued before, and decided by, the Court of Appeal was indeed that narrow question. 27 Handley JA, at the commencement of his Honour's judgment, noted that the freehold title to the relevant properties was vested in the Darling Harbour Authority; and his Honour noted the particular provisions of s.6(2)(a) and (2)(b) of the DHA Act. His Honour then said: "The Authority is therefore the Crown for the purposes of the Local Government Act 1993"; and his Honour referred to an earlier decision of the Court of Appeal, Prospect County Council v Blue Mountains City Council (1992) 28 NSWLR 301. His Honour adverted to the terms of s.555(1)(a), and then said: "The ………………. (relevant property) …………..is land owned by the Crown". 28 The Prospect County Council case raised for decision the question whether that Council was bound by a congeries of building controls for which provision was made in Part XI of the Local Government Act 1919. It was common ground at the hearing of the appeal that Part XI did not bind the Crown. The decision, (a majority decision of Priestley and Handley JJA, Mahoney JA dissenting), held that the statutory relationship between the Prospect County Council and the relevant responsible Minister of the Crown was such as to constitute the Council a servant or agent of the Crown, so that the Council became entitled to the benefit of the Crown's own statutory immunity from the requirements of Part XI. 29 The real focus of that decision was, however, not whether land owned by the Prospect County Council was properly to be deemed to be land owned by the Crown for the purposes of such a statute as the LTM Act. The real focus of the decision was the extent of the Crown immunity, if any, that the Council might enjoy in the performance of its statutory functions and duties. 30 It is trite that I am bound by any relevant ratio decedendi of a Court of Appeal decision; and I have on that account considered with some care the judgment of Handley JA in the Australian Convention case. Having done that, it seems to me that the observations of Handley JA which I have earlier quoted are properly to be regarded as obiter dicta. I do not believe that they compel a conclusion in the present case contrary to that which I would otherwise have reached. 31 For the whole of the foregoing reasons, I have come to the conclusion that the questions stated by the Commissioner for the opinion of the Court should be answered as follows: (a) (1) No (2) No (b) No (c) (1) No (2) No (d) No ********** Last Modified: 05/25/2001 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.