Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Ferella & Anor v Chief Commissioner of State Revenue [2014] NSWCA 378 Hearing dates: 17 October 2014 Decision date: 10 November 2014 Before: Barrett JA at [1]; Leeming JA at [2]; White J at [8] Decision: 1.Appeal dismissed. 2.Appellants pay the respondent's costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: TAXES AND DUTIES - land tax - exemptions - where appeal lay from Appeal Panel of Administrative Decisions Tribunal on a question of law - whether rural land exempt from taxation as land the dominant use of which was for primary production - Land Tax Management Act 1956 (NSW) s 10AA(1) - where land subject to different uses - whether appropriate to treat portions of land used for different uses separately and apart - whether Tribunal required to have regard to subjective purpose and intention of users of land in determining whether dominant use of land was for primary production Legislation Cited: Administrative Decisions Tribunal Act 1997 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Crown Lands Consolidation Act 1913 (NSW) Interpretation Act 1987 (NSW) Land and Valuation Court Act 1921 (NSW) Land Tax Management Act 1956 (NSW) Supreme Court Act 1970 (NSW) Valuation of Land Act 1916 (NSW) Cases Cited: Attorney-General (NSW) v X [2000] NSWCA 199; 49 NSWLR 653 B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; (2008) 74 NSWLR 481 Brown v Commissioner of Land Tax (NSW) (1977) 7 ATR 642 Brown v Repatriation Commission [1985] FCA 194; 7 FCR 302 Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 Colby Corporation Pty Ltd v Commissioner of Taxation [2008] FCAFC 10; (2008) 165 FCR 133 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 Da Costa v The Queen (1968) 118 CLR 186 Ferella v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 45 Ferella v Chief Commissioner of State Revenue [2013] NSWADT 46 Greenville Pty Ltd v Commissioner of Land Tax NSW (1977) 7 ATR 278 Hoe v Manningham City Council [2011] VSC 37 Hope v Bathurst City Council (1980) 144 CLR 1 Hope v Bathurst City Council (No. 2) (1984) 52 LGRA 79 Hope v Bathurst City Council (No. 2) (1986) 7 NSWLR 669 Jones v First Tier Tribunal [2013] UKSC 19; [2013] 2 AC 48 Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2010] NSWSC 867; (2010) 79 NSWLR 724 Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366; (2011) 85 ATR 775 Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 Osland v Secretary to the Department of Justice (No. 2) [2010] HCA 24; (2010) 241 CLR 320 Saville v Commissioner of Land Tax (1980) 12 ATR 7 Smalley v Secretary, Department of Health and Ageing [2011] FCA 302 Thomason v Chief Executive, Department of Lands (1994-1995) 15 QLCR 286 TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175; 19 ATR 1067 Texts Cited: C Stebbings, Legal Foundations of Tribunals in Nineteenth-Century England, Cambridge University Press, 2006 Category: Principal judgment Parties: Gustavo Ferella (1st Appellant) Nida Ferella (2nd Appellant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: A E Maroya with M R Davis (Appellants) E A Bishop (Respondent) Solicitors: Zali Burrows Lawyers (Appellants) Crown Solicitor (Respondent) File Number(s): 2013/327888 Decision under appeal Citation: Ferella v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 45 Date of Decision: 2013-10-03 00:00:00 Before: R L Seiden, Deputy President A Verick, Judicial Member J Schwager, Non Judicial Member File Number(s): 139014 HEADNOTE The appellants are owners of rural land who were assessed for land tax by the Chief Commissioner of State Revenue ("the Chief Commissioner") for the years 2007 to 2011. Subsequently, they lodged a land tax objection claiming that the dominant use of the land was for primary production (specifically, thoroughbred horse breeding) and that it was therefore exempt from land tax under s 10AA of the Land Tax Management Act 1956 (NSW). A small portion of the land (approximately 5%) was fenced off from the remainder and contained a residence which was let out to a tenant by the appellants ("the rental property use"). The remainder of the land was said to be used for primary production. The Chief Commissioner rejected the appellants' objection and they applied to the Administrative Decisions Tribunal for a review of the Chief Commissioner's decision. At first instance the Tribunal (Block JM) found that only a small number of horses were ever present on the appellants' land and that any primary production activity was altogether minimal. The Chief Commissioner's decision was affirmed. The appellants then appealed to the Appeal Panel of the Tribunal, which dismissed the appeal. Subsequently, the appellants appealed to this Court pursuant to s 119(1) of the Administrative Decisions Tribunal Act 1997 (NSW). The appeal lay only on a question of law. At the commencement of the hearing, the appellants contended that the questions of law raised by the appeal were: (1) Whether the Appeal Panel erred in upholding Block JM's conclusion that, as a matter of law, it was not appropriate to treat the rental property use as separate and apart from the balance of the land available for the purpose of the primary production activity; (2) Whether the Appeal Panel erred in upholding Block JM's conclusion that the intensity of the use of the land available for the primary production activity was determinative of the dominant use of the land; and (3) Whether the Appeal Panel erred in failing to have regard to the subjective intention of the taxpayers to conduct the horse-breeding enterprise where the Chief Commissioner contended there was only a slight use of the land for primary production. The Court held, unanimously dismissing the appeal, that: (White J, Barrett JA and Leeming JA agreeing) 1. The Tribunal was correct in weighing the use of the land for rental purposes against the other uses of the land in determining which use was dominant, and in considering the parcel of the land as a whole and not as separate parcels: [37]-[41]. Thomason v Chief Executive, Department of Lands (1994-1995) 15 QLCR 286; Leda Manorstead v Chief Commissioner of State Revenue [2010] NSWSC 867; (2010) 79 NSWLR 724; Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366; (2011) 85 ATR 775; Hope v Bathurst City Council (No. 2) (1986) 7 NSWLR 669. 2. Neither Block JM nor the Appeal Panel concluded that the intensity of the use of the land available for primary production activity was determinative of the dominant use of the land, hence they committed no such error: [44]-[45]. 3. Neither Block JM nor the Appeal Panel erred in deciding objectively whether the asserted use of the land for primary production was the dominant use. Nor did they fail to consider the subjective intention of the users of the land: [52]-[56]. Saville v Commissioner of Land Tax (1980) 12 ATR 7; Greenville Pty Ltd v Commissioner of Land Tax NSW (1977) 7 ATR 278. Judgment 1BARRETT JA: For the reasons stated by White J, with which I agree, no question of law arises on this appeal and the appeal must be dismissed with costs. 2LEEMING JA: I agree with White J that this appeal must be dismissed because no error of law has been shown in the reasons of the Appeal Panel. I would add only the following, on the threshold question of this Court's jurisdiction. 3The appeal created by s 119 of the Administrative Decisions Tribunal Act 1997 (NSW) is an appeal "on a question of law". The subject matter of any such appeal is one or more questions of law. That is the natural meaning of the statutory language. It accords with authority: see for example Brown v Repatriation Commission [1985] FCA 194; 7 FCR 302 at 304 ("[the question of law is] the subject matter of the appeal, and the ambit of the appeal is confined to it"). And it accords with its historical context, for s 119 is but the modern counterpart of provisions which authorised a party to request the (former) Land Appeal Court and (former) Land and Valuation Court to state a case to the Supreme Court for decision on a question of law: Crown Lands Consolidation Act 1913 (NSW), s 22(5); Land and Valuation Court Act 1921 (NSW), s 17 (the latter was the provision applicable in Hope v Bathurst City Council (1980) 144 CLR 1). That in turn reflected, in part, the formulations of limited appeals from tribunals which proliferated with the growth of the nineteenth century English administrative state: see C Stebbings, Legal Foundations of Tribunals in Nineteenth-Century England, Cambridge University Press, 2006, Ch 6. 4There is no satisfactory test of universal application to define a question of law: Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 394. One reason is that the meaning of "question of law" is dependent upon context: see eg Attorney-General (NSW) v X [2000] NSWCA 199; 49 NSWLR 653 at [25]-[44] especially at [37]. Even in a familiar context, where the term "question of law" delineates the scope of an appeal, there is no clear test. This is no new thing, as Windeyer J explained in Da Costa v The Queen (1968) 118 CLR 186 at 194-195. 5Recent decisions in the United Kingdom have emphasised the pragmatic nature of the distinction in a context very similar to that arising in the present case - where a (further) appeal on a question of law lies to a court from an internal "appellate" decision on a question of law made by a tribunal. For example, in Jones v First Tier Tribunal [2013] UKSC 19; [2013] 2 AC 48 at [16], Lord Hope of Craigshead DPSC said (with the agreement of the other members of the Supreme Court) that: "A pragmatic approach should be taken to the dividing line between law and fact, so that the expertise of tribunals at the first tier and that of the Upper Tribunal can be used to best effect." See also per Lord Carnwath JSC at [43]-[47], where earlier decisions of the House of Lords (illustrating in particular the influence of Lord Hoffmann in this area) are referred to. Whether and the extent to which the same approach applies in Australia are large questions, and outside the scope of this appeal. 6There is no occasion in this appeal to say anything more of what amounts to a "question of law". On any view, it is necessary for an appellant who invokes s 119 or an equivalent provision to frame one or more questions which, so it is claimed, amount to "questions of law". The procedural history of this appeal (which is described in more detail by White J) emphasises the importance, at the outset, of squarely facing up to this requirement. The approach taken by the appellants, when reminded by the Court of the limited scope of the appeal they had brought, was to frame questions in the form "Did the Appeal Panel err at law in" making, or failing to make, some finding, or in upholding the decision at first instance. Obviously, it is not possible, merely by the device of asking whether the Tribunal erred in law in doing something or failing to do something, to circumvent the statutory limitation on the scope of the appeal. 7As White J has demonstrated, the matters raised by the appellants in their reformulated questions amount in substance to challenges to evaluative fact-finding which on no view could amount to a question of law. 8WHITE J: This appeal concerns the liability of the appellants ("Mr and Mrs Ferella") to land tax in respect of rural land owned by them in Box Hill. Mr and Mrs Ferella sought review by the Administrative Decisions Tribunal of a decision by the respondent ("the Chief Commissioner") to disallow an objection against an assessment of land tax for the years 2007 to 2011. The exemption was sought pursuant to s 10AA(1) of the Land Tax Management Act 1956 (NSW). Section 10AA relevantly provides: "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. ... (3) For the purposes of this section, land used for primary production means land the dominant use of which is for: ... (b) the maintenance of animals ... for the purpose of selling them or their natural increase ... ..." 9The application to the Tribunal was unsuccessful (Ferella v Chief Commissioner of State Revenue [2013] NSWADT 46 (J Block JM)). The Tribunal's decision was that "the objection decision under review is affirmed". 10The Chief Commissioner's decision that should have been the subject of the application for review by the Tribunal was the decision the subject of the objection, that is, the decision to make the assessment of land tax, not the decision on the objection (Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [28] and [53]). Nothing turns on this. 11An appeal lay to the Tribunal constituted by an Appeal Panel on any question of law. Such an appeal could, with leave of the Appeal Panel, extend to a review of the merits of the decision under appeal (Administrative Decisions Tribunal Act 1997 (NSW), s 113(1) and (2)). Mr and Mrs Ferella filed a notice of appeal purportedly on questions of law. They sought that if and to the extent the appeal was not on a question of law, there be leave to review the decision on the merits. The Appeal Panel dismissed the appeal (Ferella v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 45). The Appeal Panel noted that the application for leave to review the decision on the merits was not pressed (at [3]). 12An appeal lay to the Supreme Court against the decision of the Appeal Panel on a question of law (Administrative Decisions Tribunal Act, s 119(1) and cl 10 of Schedule 1 to the Civil and Administrative Tribunal Act 2013 (NSW)). 13The notice of appeal as filed did not identify any question of law. Counsel for Mr and Mrs Ferella sought to address that at the commencement of the hearing of the appeal. Background 14The land in question is the whole of the land in lot 121 of DP 10157. The area of the land is approximately 1.324 hectares. A cottage is erected on the land. During the land tax years in question the cottage and its curtilage were rented. The area rented was fenced off from the balance of the land. The cottage and curtilage rented comprised approximately 700 square metres or about five per cent of the entire parcel. 15Mr and Mrs Ferella contended that the balance of the land was used for thoroughbred horse breeding, that is, for maintaining thoroughbred horses for the purpose of selling them or their progeny. 16The Tribunal (Mr Block JM) recorded (at [73]) that cross-examination of the applicants' son, Mr Angelo Ferella, revealed a third use of the property, namely for the maintenance of stocks of construction materials. 17The questions for the Tribunal were whether the land was used for horse breeding as claimed, and if so whether that was the dominant use. 18Mr Angelo Ferella deposed that Mr and Mrs Ferella leased the land (excluding the cottage and its fence surrounds) to Mrs Nida Ferella and to the trustee of a family trust and that they conducted business activities of thoroughbred horse breeding on the remainder of the land. Tribunal findings 19The Tribunal found that at the commencement of the relevant years (that is, as at 31 December 2006) there were only two horses on the land, namely a mare and a colt, that those horses were disposed of to a knackery in 2007 for $360, that there were no horses on the property until the end of 2008 when a yearling mare was acquired, and that the mare was acquired for breeding purposes but could not be covered until she was three years old, that is, in two years' time. The Tribunal found (at [23]) that activity of any relevant kind was altogether minimal and there was virtually no breeding activity during the relevant years. The Tribunal (Mr Block JM) found: "[25] On the evidence before me it is not possible to conclude that the Property during the relevant years was used for the dominant purpose of thoroughbred horse breeding. On the contrary and as contended by Ms Bishop [counsel for the Chief Commissioner], a conclusion that horses constituted nothing more than a hobby is inescapable." 20After reviewing relevant authorities, the Judicial Member said: "[36] It is not appropriate as a matter of law to treat the rental property use as separate and apart. That use must then be weighed against the alleged thoroughbred horse breeding use to decide which use is 'dominant' or prevailing during the relevant years. The Tribunal accepts the contention of the Respondent that the Applicant has failed to establish a competing and dominant primary production use. (See also in this context Romano v Chief Commissioner of State Revenue [2011] NSWADT 7). [37] The only conclusion which can properly be drawn on an objective basis is that the land's dominant use in the relevant years was as an investment property earning income from the letting. [38] The only evidence as to the breeding of thoroughbred horses relates to the yearling acquired in 2008 and where attempts to inseminate her (made either at the end of the relevant years or after the relevant years) have failed. [39] ... The information provided in the tax returns in respect of primary production is quite clearly not indicative of a business activity. ... ... [40] Regarded on an objective basis it is clearly not possible to conclude that the Property was during the relevant years utilised for the purpose of conducting a thoroughbred horse breeding activity. Having regard to all of the evidence before me a conclusion that the Applicant has not discharged the onus is mandatory and in the circumstances the objection decision under review must be affirmed." 21These were findings of fact. Appeal to the Appeal Panel 22As the notice of appeal to the Appeal Panel purported to be an appeal on questions of law, it was necessary for the notice of appeal to identify precisely the particular question or questions of law. It was those questions, if there were any, that should have formed the subject matter of the appeal to the Appeal Panel unless leave were sought and obtained for a merits review (TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175 at 178; 19 ATR 1067 at 1070; B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; (2008) 74 NSWLR 481; Colby Corporation Pty Ltd v Commissioner of Taxation [2008] FCAFC 10; (2008) 165 FCR 133 at [13]; Osland v Secretary to the Department of Justice (No. 2) [2010] HCA 24; (2010) 241 CLR 320 at 333, [21]; Hoe v Manningham City Council [2011] VSC 37 at [4]-[5]; Smalley v Secretary, Department of Health and Ageing [2011] FCA 302 at [10] ff). 23The notice of appeal to the Appeal Panel did not do this. It contained challenges to the findings of fact. The only arguable question of law raised in the notice of appeal was that the Judicial Member allegedly erred in impliedly finding that because the vast majority of the land had stables, a tack room and other structures for use by horses, in most of the land tax years had one or two thoroughbred horses, and steps had been taken to bear progeny, "that use precluded the Property from being 'land used for primary production' within the meaning of s 10AA(1) and (3) of the Land Tax Management Act." The Judicial Member made no such finding. 24The Appeal Panel proceeded on the basis that the Judicial Member had found that the land outside the residence and curtilage that had been fenced off was not only available for use for a primary production activity of thoroughbred horse breeding, but such an activity was conducted by Mr Angelo Ferella on behalf of the trustee of the Augusta Trust (paras [13] and [14]). 25The principal attack on the Judicial Member's reasoning was that he erred in finding that "horses constitute nothing more than a hobby". Mr and Mrs Ferella argued that such a finding could not be made without finding that the trustee was in breach of trust. That raised no question of law. In any event the Appeal Panel rejected the argument for sound reasons. 26Mr and Mrs Ferella submitted before the Appeal Panel that the Judicial Member committed an error of law in directing himself to whether or not a business of horse breeding was carried on. In the case of rural land the exemption in s 10AA is available if the dominant use of the land is for a primary production activity specified in s 10AA(3), irrespective of whether that activity amounts to the carrying on of a business. (The case is otherwise if the land is not rural land (s 10AA(2)).) The Appeal Panel found that the Judicial Member did not make the alleged error. Mr Angelo Ferella had deposed in his affidavit that the horse breeding activity amounted to a business. This was relevant to assessing the intensity of the alleged horse breeding use which in turn was relevant to weighing the alleged use against other competing uses (viz. using part of the land for investment by renting out the cottage and using part of the land for the storage of construction materials). 27Ground 3 of the notice of appeal asserted that the Judicial Member had failed to take into account, or had failed to give sufficient weight to twelve "relevant considerations". The notice of appeal did not assert that those were mandatory considerations. 28The Appeal Panel found that the Tribunal did not ignore any of the matters the subject of this purported ground of appeal, but rather took them into account (at [56]-[59]). The Appeal Panel also concluded that the matters in question were not mandatory considerations that the Tribunal was required to take into account so that any failure to take any of the considerations into account would not have been an error of law, citing Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 39-41. 29The Appeal Panel rejected other challenges to the findings of fact. Appeal to the Supreme Court 30The appeal to this Court only lay on a question of law. The notice of appeal asserted that it was brought under s 101(1)(a) of the Supreme Court Act 1970 (NSW). That was wrong. That section refers to appeals from a judgment or order of the Court in a Division. The purported grounds of appeal were that: "1. The Appeal Panel erred in affirming the decision below of the Administrative Decisions Tribunal. 2. The Appeal Panel ought to have found that the dominant use of the land was the primary production activities for the 2006-2007 land tax years." 31Whether the dominant use of the land was for primary production activities for the relevant years was a question of fact. The notice of appeal merely challenged the finding of fact without specifying any grounds for such a challenge. 32Before the hearing of the appeal counsel for Mr and Mrs Ferella was informed that the Court wished to be informed of the statutory provision which founded the appeal and, if that statutory provision allowed an appeal only on a question of law, precisely how the relevant question of law was formulated. 33At the hearing of the appeal counsel for Mr and Mrs Ferella accepted that the appeal was brought under s 119 of the Administrative Decisions Tribunal Act (the continued applicability of which derived from clause 10 of Schedule 1 to the Civil and Administrative Tribunal Act 2013 (NSW)) and lay only on a question of law. Counsel formulated what he said were questions of law. Leave was given for the notice of appeal to be amended to incorporate the questions. The questions of law as formulated were as follows: "1. In circumstances where the Appeal Panel held (see Red, p 23D-F) that: a.a residence and curtilage were on approximately 700 square metres (approximately 5% of the land) and were fenced-off from the remainder of the land, with their own entrance; and that, b.the land available for the primary production activity represented approximately 95% of the Land, did the Appeal Panel err at law in upholding (see Red, p 31V) Judicial Member Block's conclusion (see Red, p 11B) that, as a matter of law, it was not appropriate to treat the rental property use as separate and apart from the balance of the land available for the purposes of the primary production activity? 2.Did the Appeal Panel: a.err at law in upholding (see Red, p 28L-S) Judicial Member Block's conclusion (see Red, p 9J) that the intensity of the use of the land available for the primary production activity was determinative of the dominant use of the land? b.err at law in failing to have regard to: i.the intention and purpose of the taxpayers to conduct a horse-breeding enterprise on the land (available for the primary production activity); and, ii.the question of whether a slight actual use of the land available for the primary production activity was sufficient to give that land the required character, in circumstances where no other use of the land was being carried-out on the land available for the primary production activity?" General principles 34Land tax is levied on the taxable value of all land in New South Wales owned by the taxpayer at midnight on 31 December immediately preceding the year for which the land tax is levied which is not exempt from taxation (Land Tax Management Act 1956 (NSW), s 9(1)). The taxable value of the land on which land tax is payable is calculated by reference to an average of land values entered in the Register of Land Values kept under s 14CC of the Valuation of Land Act 1916 (NSW) (Land Tax Management Act, ss 9(2), (3) and (4), 9AA and 3). Section 14A of the Valuation of Land Act requires the Valuer-General to ascertain each year the land value of each parcel of land in New South Wales other than Crown lands and land in the Western Division that is not within the area of a rating or taxing authority (s 14A(1)). Section 14A(4) provides that the Valuer-General may separately value different parts of the same parcel of land. Land values are to be entered in the Register of Land Values. If different parts of the same parcel of land were valued differently, separate land values for the different parts would be required to be entered in the Register. That did not happen in this case. A single land value for the entire parcel of land was entered in the Register. For the purposes of the Land Tax Management Act, the land value of the parcel was determined by the average of the land values for the land tax years in question and the two preceding years. 35For the purpose of determining whether Mr and Mrs Ferella were entitled to the benefit of the primary production exemption in s 10AA, the question was whether the dominant use of the entire parcel of the Box Hill land was the maintenance of horses for the purpose of selling them or their progeny. If that was a use for which part of the land was used, the issue for the Tribunal was whether that use was the dominant use of the whole of the land, having regard to the competing uses. If it were the fact that a primary production activity (as defined) was carried on on 95 per cent of the land that would not by itself mean that primary production was the dominant use; (Brown v Commissioner of Land Tax (NSW) (1977) 7 ATR 642 at 647-648; Hope v Bathurst City Council (No. 2) (1984) 52 LGRA 79 at 84; Hope v Bathurst City Council (No. 2) (1986) 7 NSWLR 669 at 673, 675; Thomason v Chief Executive, Department of Lands (1994-1995) 15 QLCR 286 at 303; Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2010] NSWSC 867; (2010) 79 NSWLR 724 at [69]-[76]; and on appeal Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366; (2011) 85 ATR 775 at [43]). First question of law 36The first question of law necessarily asserts that the rental property use ought to have been treated separately and apart from the balance of the land available for the purposes of the primary production activity, that is, separately and apart from the use of the balance of the land available for the purposes of the primary production activity. The question raised is whether the Judicial Member erred in concluding that it was not appropriate to treat the rental property use separately and apart from the use of the balance of the land and whether the Appeal Panel erred in upholding that conclusion. 37The Judicial Member's conclusion referred to in the first question was expressed in para [36] of the Tribunal's reasons quoted at para [20] above. The Tribunal weighed the use of part of the land for rental purposes against the other uses of the land in determining which use was dominant. In doing so the Judicial Member considered the parcel of the land as a whole notwithstanding that different parts of the land were used for different purposes. 38That approach was entirely orthodox and in accordance with binding authority which was not challenged in this Court. 39In Leda Manorstead v Chief Commissioner of State Revenue [2010] NSWSC 867; (2010) 79 NSWLR 724, Gzell J (at [76]) adopted the following passage from the judgment of the Land Appeal Court of Queensland in Thomason v Chief Executive, Department of Lands (1994-1995) 15 QLCR 286 at 303: "[76] The court, helpfully, gave its approach to the determination of dominant use of land at 303: In our view, the proper approach to be taken when ascertaining the dominant use of land is to 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 activities which are incidental to a common business or industry of a type specified in section 17(2), 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 from viewing the land as a whole." 40This was approved in the Court of Appeal (Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366; (2011) 85 ATR 775 at [43]). The approach in Thomason is consistent with earlier decisions including the decision of this Court in Hope v Bathurst City Council (No. 2) at 673, 675. 41The Judicial Member cited the relevant authorities before reaching his conclusion (at [36]) that it was not appropriate to treat the rental property use as separate and apart but that that use must be weighed against the alleged thoroughbred horse breeding use to decide which use was dominant or prevailing during the relevant years. That approach was correct. 42In the course of oral submissions counsel for Mr and Mrs Ferella sought to explain the formulation of the first question by saying (T4-5): "What is meant by the submission that the judicial member erred in concluding that it was not appropriate as a matter of law to treat the rental property use as separate and apart, is that the judicial member appeared to pay very little, if any, regard to the fact that in terms of the disparity of scale between the size of the land, or the area of the land upon which the rental activity was being conducted vis à vis the much larger portion of the land upon which the equine activities were being conducted, he erred by failing, in a notional or other sense, to segregate from one activity on this hand and the horse breeding activity on the other hand, the fact that there was a more intense use taking place on a much larger portion of the land." 43That is a submission that the Tribunal made erroneous findings of fact by not giving sufficient weight to the area of land on which the alleged primary production activity was carried on in comparison to the area of the rented property and in not giving sufficient weight to the time spent by Mr Angelo Ferella on the alleged primary production activity compared with other activities. It raises no question of law. Second question of law: ground 2(a) 44The question of law raised in ground 2(a) asserted that the Judicial Member and the Appeal Panel had concluded that the intensity of the use of the land available for primary production activity was determinative of the dominant use of the land. If such a conclusion had been reached it would be arguable that the Tribunal made an error, depending upon what the Tribunal might have meant by "intensity". In accordance with Thomason, intensity of each competing use is one of the relevant matters to consider in deciding which use is dominant, along with other matters such as the extent of the land subject to the different uses, the nature of the different uses, and the time and labour devoted to each. If the Tribunal had found that the intensity of use was determinative of the question of which use was dominant, and had used that expression in a sense that treated such other matters as irrelevant, then it would have committed an error. It need not be decided whether such an error would be of law or fact. 45Neither the Judicial Member nor the Appeal Panel committed any such error. Instead the Appeal Panel said (at [43]): "As intensity of use is a relevant inquiry, the question of whether the horse breeding activity was conducted in a hobby-like manner was not an irrelevant inquiry." The Appeal Panel did not say that intensity of use was determinative. Nor did the Judicial Member. Second question of law: ground 2(b) 46Counsel for Mr and Mrs Ferella submitted that the Tribunal was required to take into account the subjective purpose and intention of the taxpayers and the relevant users of the land to conduct a horse breeding activity on 95 per cent of the land available for that purpose. 47Counsel relied on the decision of Roden J in Saville v Commissioner of Land Tax (1980) 12 ATR 7. That case concerned ss 10(1)(p) and 3(1) of the Land Tax Management Act 1956 (NSW). The question was whether the land at the relevant time was used primarily for the maintenance of animals on the land for the purposes of selling them or their natural increase or bodily produce (at 10). The land was largely unused. The taxpayers hoped that it could be used for residential development. In the tax years in question, some cattle had been depastured on the land, but that use was very slight. The taxpayers intended to restock the land but little or no activity to that end was undertaken because it would have been uneconomic for them to do so themselves and they were unable to find others who required the land for agistment purposes (at 12). Roden J held (at 10) that: "... For any use of the land to justify the statement that the land is used primarily for that purpose [viz. primary production], it is necessary not only that that 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." 48It was in this context that his Honour said in the passage relied upon by counsel for Mr and Mrs Ferella (at 12): "Plaintiffs' counsel submitted that where there was an hiatus period, a lesser degree of activity would be sufficient to satisfy the requirement that the land was used primarily for the relevant purpose. It was further submitted that when a particular use is competing only with non-use, less activity need be shown than when there is a competing use. As a general proposition I am of the view that each of those statements is valid, but they are only another way of saying that in determining this question of 'fact and degree' all relevant matters must be taken into account, and that where there is a considerable degree of non-use, intention can and should be looked at as one of the matters capable of assisting in determining whether the slight actual use is sufficient, in all the circumstances, to give the land the required 'character'." (emphasis added) 49Roden J did not refer to, and presumably was not referred to, the judgment of Helsham CJ in Eq in Greenville Pty Ltd v Commissioner of Land Tax NSW (1977) 7 ATR 278 at 280 where his Honour said that: "Whether land is being used for primary production within the meaning of the definition must be decided by an objective test - the inquiry is an inquiry into actual land use; it is not to be tested by the intention of the owner ..." 50Greenville was also concerned with ss 10(1)(p) and 3(1) of the Land Tax Management Act 1956. In Greenville, the question was whether land was used primarily for the cultivation of it for the purpose of selling the produce of that cultivation where only a small part of the land was under cultivation and most of the land was not being used at all. Both cases concerned the application of a section that has since been repealed. Section 10AA(3) uses the different expression of "dominant use". It is unnecessary to decide which approach to the application of ss 10(1)(p) and 3(1) of the former Land Tax Management Act is to be preferred. 51Counsel for Mr and Mrs Ferella submitted that in the present case the Chief Commissioner had contended that use of 95 per cent of the land for horse breeding activities was only slight, and in accordance with the reasoning of Roden J in Saville v Commissioner of Land Tax the Tribunal was required as a matter of law to consider intention as one of the matters capable of assisting in determining whether the slight use was sufficient to establish that the land was primarily used for primary production, as defined, that is, that that use was the dominant use. Counsel emphasised the words "can and should" in the passage quoted above at [48]. 52In my view, in Saville v Commissioner of Land Tax Roden J was saying no more than that when determining a question of "fact and degree" in respect of which all relevant matters were to be considered, the user's intention could be relevant in determining whether a slight use could be sufficiently substantial that the land should not primarily be regarded as unused land. That is not this case. Even though the horse breeding activity was regarded by the Tribunal as a slight use, there was no question of characterising the land as being unused. 53Saville v Commissioner of Land Tax is not authority for the proposition that the subjective purpose or intention of the user of land is a mandatory consideration in determining whether a use of land for the purposes of primary production (as defined) is the dominant use where there are competing uses. Roden J did not so decide. In any event, his Honour was dealing with a different provision. 54It is not necessary to decide whether the assessment of which competing use is dominant must be wholly objective, or whether, as the Land Appeal Court of Queensland said in Thomason, in the passage quoted at [39] above, the conclusion of an objective observer cannot be ignored; or, as Gzell J said in Leda Manorstead at [70], that dominant use is a question of fact and degree that may be determined as an objective matter of impression on the facts. There was no error in the Judicial Member's and the Appeal Panel's deciding objectively whether the asserted use of the land for primary production was the dominant use of the land considered as a whole. 55In any event, the Judicial Member did consider the evidence of Mr Angelo Ferella as to his purpose and intention in using the land. The Judicial Member recorded (at [4]) Mr and Mrs Ferella's contention that primary production was conducted by Mr Ferella and then the trustee of the family trust, that the primary production was thoroughbred horse breeding, and that Mr Angelo Ferella had sole responsibility for the primary production of thoroughbred horse breeding on the land (at [4]). He recited the applicants' submissions as to the physical structures on the part of the land that was said to be used for thoroughbred horse breeding, that almost all of the land was used for thoroughbred horses, and that the applicants' time and human effort was spent on the Thoroughbred Area (at [5]). The Judicial Member summarised Mr Angelo Ferella's evidence concerning the sale of the mare and colt to a knackery in 2007, his asserted reason (which the Judicial Member did not accept) that the delay in acquiring the yearling was attributable to the outbreak of equine flu, the purchase of the yearling mare and the necessary delay before she could be covered. He summarised Mr Angelo Ferella's evidence as to the extent of his attendances on the property. Having done so, the Judicial Member concluded that the horses constituted nothing more than a hobby. 56If any question of law arose from the Judicial Member's decision it might have been that in expressing his conclusion in para 40 quoted at para [20] above, he concluded that the property was not used for the purpose of conducting a thoroughbred horse breeding activity, but did so by considering the question on an objective basis. For the purpose of deciding whether any primary production activity was carried on, the question was whether the land was used to maintain horses, (and arguably one horse (Interpretation Act 1987 (NSW), s 8(c)), for the purpose of selling them or her, or their or her progeny. That enquiry required an assessment of Mr Angelo Ferella's subjective purpose (he being the individual whose mind was relevant) in keeping the three horses that were on the property from time to time. The Judicial Member did not expressly say that Mr Ferella did not have the requisite purpose. I think, fairly read, his reasons should be understood as expressing that conclusion on the basis that the objective facts indicated that the property was not used for the relevant purpose and therefore Mr Angelo Ferella's statement as to his own purpose should not be accepted. 57However, this is academic. It is not a question of law raised on the appeal. The Appeal Panel proceeded on the basis that a primary production activity was conducted on the land. The attack on the Judicial Member's reasons before the Appeal Panel was directed to his conclusion that such a use (described by the Judicial Member as an alleged use (at [36])) was not the dominant use, because the dominant use was use of the land as an investment property earning income from the letting. That was a conclusion of fact. 58In my view the Appeal Panel could have dismissed the appeal to it on narrower grounds than it did. In substance, the Appeal Panel reviewed the Judicial Member's decision on the merits although leave to do so was not pressed. In so far as the questions raised on the appeal to this Court are questions of law, no error has been shown. 59For these reasons, in my opinion, the appeal should be dismissed with costs. I certify that this and the 23 preceding pages is a true copy of the reasons for judgment herein of the Honourable Justice R W White and of the Court. Date: 10 November 2014 Associate 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: 11 November 2014