Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Jamsapi Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADT 202 Hearing dates: 29 April 2013 Decision date: 12 September 2013 Jurisdiction: Revenue Division Before: M Hole, Judicial Member Decision: 1. The decision of the Respondent dated 15 June 2009 is confirmed. 2.The applicant is to pay the Respondent's costs associated with matter number 096095 only, on the ordinary basis Catchwords: 'dominant use' as defined in s10AA Land Tax Management Act 1956 Legislation Cited: Land Tax Management Act 1956 Cases Cited: Ferella v Chief Commissioner of State Revenue [2013] NSWADT 46 Greenville Pty Ltd v Commissioner of Land Tax (NSW) (1977) 7ATR 278 Hoxede Pty Ltd as trustee of the Starr Family Trust v The Commissioner of State Revenue [2011] NSWADT 251 Saville v Commissioner of Land Tax (NSW) 1981 81 ATC 4373 Leda Manostead v Chief Commissioner [2010] NSWSC 867 Category: Principal judgment Parties: Jamsapi Pty Ltd (applicant) Chief Commissioner of State Revenue (respondent) Representation: Mr Barry Francis Anstee - Appointed representative for the applicant Ms Kylie Day - for the respondent File Number(s): 096095 REasons for decision 1The applicant filed this application in respect of a decision made by the respondent as set out in the letter dated 15 June 2009. The respondent forwarded a letter dated 15 June 2009 assessing land tax for the 2008 Tax Year. The application is made relying on Section 10AA(3) of the Land Tax Management Act 1956 ("LTMA"). 2Mr Barry Francis Anstee appeared on behalf of the applicant pursuant to a Notice of Representation dated 15 September 2009. 3The application is in respect of the land tax year 2008 in relation to the subject land. 4The documents pursuant to Section 58 Administrative Decisions Tribunal Act 1997 were provided by the Respondent. The matter came before the Tribunal on 16 occasions, then the matter was heard on 29 April 2013 Facts 5On 19 June 2007 the applicant purchased land known as "Edenbrae" Kells Creek Road Woodlands ("the subject land") with an area of 49.875 hectares, which is zoned rural and environmental protection. The subject land was described as "vacant farm land" and there were two dams on the subject land. There were no dwelling houses on the subject land. 6On 29 September 2008 the respondent issued a Notice of Assessment for the 2008 Tax Year. This Notice of Assessment assessed the land for land tax. 7On 27 November 2008 the applicant forwarded an objection to the respondent on the basis that "the property is zoned rural and used for primary production" as it was used for cattle grazing. The applicant provided some figures for capital expenditure, income, expenses and net profit from the business of primary production for the 2007/2008 year. 8On 3 February 2009 the respondent requested the applicant provide information and documentary evidence by 4 March 2009 to substantiate the objection and enable consideration of its claim for exemption. The applicant did not provide further information by 4 March 2009. The respondent extended the time for compliance to 9 April 2009. The applicant did not provide material to the respondent. 9By letter dated 15 June 2009 the respondent advised that the objection had been disallowed. The subject land 10The representative for the applicant provided a copy of the Council zoning map showing the properties and copies of the deposited plans showing the properties. The subject land comprises 49.875 hectares with the only improvements on purchase being boundary and paddock fencing, two dams and cattle yards. 11A copy of the s149 certificate indicates the land is zoned 'Rural' and 'Environmental protection'. In anticipation of building a tourist retreat the applicant sought advice from Wingecarribee Shire Council and Hawkesbury-Nepean Catchment Management Authority (CMA) on removal of trees and development of the subject land. Upon inspection by Wingecarribee Shire Council on 21 February 2008 it was noted "that substantial works [had] been carried out... including removal of vegetation, slashing, excavation and filling." Evidence 12The applicant's representative Mr Barry Francis Anstee provided two affidavits to the Tribunal dated 31 March 2010 and 28 July 2010, he also gave evidence and was cross-examined under oath. He attested to: (a) the director/secretary of the applicant as at 9 January 2013 was his wife and Harold Thomas Lewis Berry ("Harry") his then 84 year old father in law was the sole shareholder (b) the purpose of purchasing the subject property in October 2006 was to develop the land in a manner which would be suitable for an equestrian centre and horse breeding (particularly harness ponies) (c) because of the outbreak of equine influenza, the need for tree clearing and of dead wood, and wombat holes the development couldn't proceed (d) the proposed development was for the applicant's land and his wife's adjoining land (e) the agistment agreement with Phil Hazzard was because the horses could not be moved there (f) part of the applicant's land was cleared in preparation for the proposed development. (g) Harry was concerned as to what was happening on the land. 13The Applicant provided to the Tribunal (a) copy of an agistment agreement dated 19 June 2007 expressed to be between the applicant and Phil Hazzard for a period of 6 months of the subject land. The agreement is expressed to commence on the day the stock arrives on the subject land being 19 June 2007. There was a fee disclosed at a rate per cow and per cow and calve (sic). The copy provided does not disclose any signatures. The fee referred to was $3.50 per cow and $3.50 per cow calve (sic) payable monthly for a period of 6 months. The agreement indicated that the agistor must maintain and repair all property on the subject land. The agistment agreement describes the property as "Edenbrae" Kell's Creek Road Kells Creek. (b) an affidavit by Barry Francis Anstee dated 31 March 2010 which includes correspondence between Phil Hazzard and the applicant, including notes by Phil Hazzard dated 24.07.07, 17.07.07, 02.08.07, 03.09.07, 07.10.07, 11.11.07, 14.12.07, 30.01.08 and 25.11.09. (c) an affidavit by Barry Francis Anstee which includes copy of cheque butts under cover of a copy of a letter dated 26 April 2010 from Philip Hazzard to the respondent for the agistment of cattle on the subject land. A copy of bank statements of the applicant's bank account from 31 May 2007 to 29 February 2008 is attached to the affidavit. Some payments into that account said to be by Phil Hazzard have been highlighted. The applicant did not provide an affidavit by Phil Hazzard. 14The author of the reports commissioned by the respondent dated 12 April 2011 and 5 October 2011, Mr Andrew Glover, gave evidence under oath and was cross-examined under oath. Mr Glover is a managing Ranger with Cumberland Livestock Health and Pest Authority ("CLHPA"). He attested to the 'notional carrying capacity' of the subject land as 9.25 units/ha. He provided an analysis of the notional carrying capacity (ncc) for the subject land. This was calculated as a desk top calculation with the assistance of spatial maps and a Land Classification Atlas which categorises land as to suitability for agriculture. The calculation took into account the various matters required including the impact of droughts, the suitability of the land for agriculture and the provisions of section 69 of the Rural Lands Protection Act 1969. The final ncc for the subject property that Mr Glover calculated was 6 units per hectare thus a total figure being 304 DSE (being the carrying capacity expressed as a number of units per hectare using a standardised measurement called Dry Sheep Equivalent) or 30 steers. He attested that the figure arrived at was without consideration of any other livestock on the land and that Kangaroos grazing would not impact on the ncc. He attested that he had visited the subject land, that the land cannot be seen from one position and that if cattle could be seen then the cattle could be counted. 15The respondent filed an affidavit dated 5 May 2012 by Ms Sharon Gordon to which was annexed the various items of correspondence and copies of documentation between the Respondent. 16The respondent provided supporting evidence in respect of the use of the land which included: (a) an agistment agreement dated 19 June 2007 expressed to be between the applicant and Phil Hazzard for a period of 6 months of the subject land. The agreement is expressed to commence on the day the stock arrive on the subject land being 19 June 2007. There was a fee disclosed at a rate per cow and per cow and calve (sic). The copy provided does not disclose any signatures. The fee referred to was $3.50 per cow and $3.50 per cow calve (sic) payable monthly for a period of 6 months. The agreement indicated that the agistor must maintain and repair all property on the subject land. The agistment agreement describes the property as "Edenbrae" Kell's Creek Road Kells Creek. (b) an affidavit by Barry Francis Anstee dated 31 March 2010 which includes correspondence between Phil Hazzard and the applicant, including notes by Phil Hazzard dated 24.07.07, 17.07.07, 02.08.07, 03.09.07, 07.10.07, 11.11.07, 14.12.07, 30.01.08 and 25.11.09. (c) an affidavit by Barry Francis Anstee which includes copy of cheque butts under cover of a copy of a letter dated 26 April 2010 from Philip Hazzard to the respondent for the agistment of cattle on the subject land. A copy of bank statements of the applicant from 31 May 2007 to 29 February 2008 are attached to the affidavit and payments into that account have been highlighted. The applicant did not provide an affidavit by Phil Hazzard. 17Taking into account the notes referred to that were supplied by Phil Hazzard for the period in which Phil Hazzard was agisting cattle on the subject land there appeared to have been a maximum of 13 head of cattle comprised of 11 cows and 2 calves. Legislation 18Exemption for land used for primary production (f) the propagation for sale of 10AA Exemption for land used for primary production (1) Land that is rural land is exempt from taxation if it is land used for primary production. (2) Land that is not rural land is exempt from taxation if it is land used for primary production and that use of the land: (a) has a significant and substantial commercial purpose or character, and (b) is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made). (3) For the purposes of this section, "land used for primary production" means land the dominant use of which is for: (a) cultivation, for the purpose of selling the produce of the cultivation, or (b) the maintenance of animals (including birds), whether wild or domesticated, for the purpose of selling them or their natural increase or bodily produce, or (c) commercial fishing (including preparation for that fishing and the storage or preparation of fish or fishing gear) or the commercial farming of fish, molluscs, crustaceans or other aquatic animals, or (d) the keeping of bees, for the purpose of selling their honey, or (e) a commercial plant nursery, but not a nursery at which the principal cultivation is the maintenance of plants pending their sale to the general public, or mushrooms, orchids or flowers. (4) For the purposes of this section, land is "rural land" if: (a) the land is zoned "rural", "rural residential" or "non-urban" under a planning instrument or (b) the land is not within a zone under a planning instrument but the Chief Commissioner is satisfied the land is rural land. Applicant's Submissions 19The applicant's representative provided voluminous material in relation to the activity of the applicant on the subject land and provided submissions in respect of the use of the land. This evidence included photographs disclosing at least four cattle on pasture land; the photographs are not identified in terms of place, date or photographer. 20The applicant supported the application with copies of material provided to the local council for the purposes of developing the property as an 'integrated residential resort'. The applicant's representative submitted that the section 149 certificate relating to the subject land disclosed a zoning which was sufficient for the purposes of being 'rural land' within the provisions of s10AA(4) of the Act. 21The applicant's representative submitted that the use of the land for the purposes of maintaining 11 cows and their calves as at 1 December 2007 and continuing to 27 January 2008 was sufficient for the purposes of satisfying the requirements of s10AA(3)(a). 22The applicant's representative submitted that as at 31 December 2007 the dominant and sole use of the land was for primary production. Reliance was placed on the comment by Helsham CJ in Greenville Pty Ltd v Commissioner of Land Tax (NSW) 1977, 7 ATR 278 at paragraph 280: "To claim an exemption under the Act the owner must be able to point to an activity being conducted on the land which will give the land a character of being mainly used for that activity, or that will enable a person having to decide the matter to say that the land is, in substance and looked at as a whole, being used for an activity that gives rise to an exemption." 23The applicant's representative further submitted that sufficient evidence had been provided to the tribunal in relation to the requirements of s10AA of the Act. Respondent's Submissions 24The respondent submitted that the applicant bears the onus to satisfy the requirements of s10AA of the Act. The respondent's representative submitted that the applicant had not discharged this onus and had not provided evidence to satisfy requirements as to the dominant use of the subject property. 25The respondent's representative drew attention to the delivery of the cattle of Phil Hazzard to a property other than the subject property. It was submitted that this raised doubt as to whether the cattle had been on the subject property. The respondent's representative also drew attention to the lack of supporting evidence provided by the applicant in relation to the part of the subject land used for the agistment activity, the activity undertaken in relation to the maintenance of the cattle, the lack of supporting information in respect of financial statements, income tax returns or BAS statements and that the cattle grazing activity was significantly less than the notional carrying capacity of the property. 26The respondent's representative submitted that there was insufficient material, notwithstanding the volume of material, for the tribunal to properly assess the actual use or uses of the land, and to undertake the necessary comparison to assess which of them was the dominant use. Notwithstanding directions from the tribunal there remains insufficient material to conclude that the subject land was used for the dominant purpose of cattle grazing and breeding. Reference was made to Ferella v Chief Commissioner of State Revenue [2013] NSWADT 46 particularly at paragraphs [25] and [39]. 27The respondent's representative has submitted that the respondent does not wish to rely on submissions, which related to the agistment of cattle. The respondent concedes in this matter that the agistment of cattle on the land of a person other than their owner, for the purpose of their maintenance and sale (ie, the sale of them, or of their natural increase or produce) may attract the exemption in s10AA(3)(b). 28The respondent's representative drew attention to Hoxede Pty Ltd as trustee of the Starr Family Trust v The Commissioner of State Revenue [2011] NSWADT 251 Reasons for Decision 29The applicant's representative evidence given on oath to the Tribunal disclosed a confusion as to the 'dominant use' test. He described the intention of the Applicant to develop the land and his central involvement in the proposal to develop. 30The applicant provided voluminous information by way of photocopies of various documents, photographs of cattle, bank statements and other documentation. 31The evidence furnished by the applicant as described discloses that there was an arrangement between the applicant and Phil Hazzard in relation to cattle. The applicant has not supplied evidence to disclose that the cattle, which were agisted by Phil Hazzard, were in fact agisted on the subject property. The note dated 25 November 2009 provided by Phil Hazzard addressed 'to whom it may concern' refers explicitly to the subject property by lot definition. Other than the notes provided by Phil Hazzard and the letter forwarded to the respondent dated 26 April 2010 and the note referred to in this paragraph he did not provide any further evidence. The applicant did not provide sworn evidence from Phil Hazzard and did not subpoena him to appear. Little weight can be placed on the 'notes' from Phil Hazzard or the unsigned purported agistment agreement. 32The sole director and shareholder of the applicant did not supply any sworn evidence to the Tribunal. Unfortunately he died shortly before the hearing date. 33Consideration of the concession made by the respondent in relation to the cattle being agisted by another person on the subject land removes the necessity to consider this issue. 34The applicant bears the onus of proving that the exemption provided in s10AA of the Act is available to the applicant. 35The zoning of the subject land discloses that if the subject land was used in accordance with the zoning then it would be considered to be 'rural land'. The intentions of the applicant to develop the subject land as an integrated residential resort as referred to in the applicant's material by way of applications to the local council would not be apparent from an objective view of the subject land. 36The Applicant did not provide financial statements, BAS returns or income returns. The Applicant provided material as referred to in paragraph 7, this material was insufficient to support the application made. The Applicant relied on the agistment of cattle by Phil Hazzard. The financial material provided by Phil Hazzard was insufficient to conclude that the dominant use test requirement in s10AA(3) of the Act had been satisfied. 37In Hoxede Pty Ltd as trustee of the Starr Family Trust v Chief Commissioner of State Revenue [2011]NSWADT251 J Block Judicial Member considered the dominant use of a Property. He commented at 44-49: 44. "Dominant use" connotes ruling, prevailing, or most influential. The reference in the Act to a dominant use presupposes that land may be used for more than one purpose and requires a determination of which use of the land is the main, chief or paramount use: Leda, at [69]; FCT v Spotless Services Pty Ltd [1996] HCA 34; (1996) 186 CLR 404, at 416. See also McClelland v Goulburn City Council (1976) 35 LGRA 1 in relation to "mainly used"; 45. What constitutes "dominant use" is a question of fact and degree. It is to be determined as an objective matter of impression: Leda, at [70]; Sonter v Commissioner of Land Tax (NSW) (1976) 7 ATR 30, at 35; Hope v Bathurst City Council (No 2) (1983) 52 LGRA 79 ("Hope"), at 84, Romano , at [40]; 46. Generally, a court will consider such matters as the amount of land actually used for any purpose, the nature and extent and intensity of the various uses of the land, the extent to which land is used for purposes which are unrelated to each other, and the time and labour and resources spent in using the land for each purpose. When undertaking this exercise, one cannot ignore the conclusion that an objective observer would reach in viewing the land as a whole: A R Thomason, at 303; Greenville Pty Limited v Commissioner of Land Tax NSW (1977) 7 ATR 278 at 280; 47. In order for a use of the land to constitute the "dominant use", it is necessary not only that the use prevail over any competing use but also that it be sufficiently substantial to prevail over the proposition that the land is primarily to be regarded as unused land: Saville v Commissioner of Land Tax (1980) 12 ATR 7, at 10; 48. It is generally not sufficient to inquire whether some difference can be discerned between the uses to justify classing one as the main use or predominant use. The predominance must be of such a degree as to impart a character to the parcel as a whole: Abbott v Commissioner of Land Tax [1979] VicRp 31; (1978) 38 LGRA 417, at 422-423 49. Income is a relevant consideration in determining the question of "dominant use". However, it should not be relied on as the primary determinant: A R Thomason , at 304. The reference to Leda is to Leda Manorstead v Chief Commissioner [2010] NSWSC 867 38The applicant has not provided evidence to the Tribunal that discloses that the use is sufficiently substantial that it prevails over the view that the land is primarily unused land. Mr Glover has visited the subject property and came to the conclusion that the subject property could be used as suitable for agriculture and that a carrying capacity could be calculated to permit a ncc of 30 steers. The evidence provided by the applicant was based on unsupported documentation and relied on the untested material provided by Phil Hazzard. 39The applicant has not discharged the onus to provide evidence to the Tribunal to satisfy the significant and substantial purpose test to permit the exemption pursuant to s10AA of the Act to apply. At best the evidence provided disclosed that a small number of cattle were on the subject property from time to time and including 31 December 2007. 40The decision under review must be confirmed. Costs 41The respondent. Both parties supplied considerable material to the Tribunal. The matter was before the Tribunal 16 times prior to the hearing date on 29 April 2013. The Respondent sought and obtained an expert report. 42The Applicant has had difficulty complying with the directions made on various occasions and there has been a history of material being lost while being forwarded to the Respondent. 43The Respondent submitted that the lack of cooperation from Mr Anstee and the Applicant had increased the work required to investigate the Applicant's claim and the response necessary to the Application. Orders 44The decision of the Respondent dated 15 June 2009 is confirmed. 45The applicant is to pay the Respondent's costs associated with matter number 096095 only, on the ordinary basis. ********** 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. Decision last updated: 12 September 2013