Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Australian Native Landscapes Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 189 Hearing dates: 28 July 2015 Decision date: 10 September 2015 Jurisdiction: Administrative and Equal Opportunity Division Before: A Verick, Senior Member Decision: The land tax assessment for 2010-2014 land tax years is confirmed. Catchwords: STATE REVENUE – Land Tax – Whether land consists of separate 'parcels of land' for purposes of Land Tax Management Act 1956 – Part of the land used for 'compost farming' – Whether used for cultivation – Primary Production Exemption - Land Tax Management Act 1956, s 10AA(3)(a). Legislation Cited: Land Tax Management Act 1956 Administrative Decisions Review Act 1997 Land Tax Act 1956 Valuation of Land Act 1916 Cases Cited: Attard & Anor v Valuer-General [2006] NSWLEC 351 Colonial Sugar Refining Co Ltd v The Valuer General (1939) 5 The Valuer 472 Christies Sands Pty Ltd v City of Tea Tree Gully (1975) 37 LGRA 325 Triguboff v Valuer-General [2009] NSW LEC 9 Safety Beach Estate Pty Limited v Commissioner of Land Tax (NSW) (1979) 79 ATC 4032; (1979) ATR 451 Colusso and Others v Chief Commissioner of State Revenue [2008] NSWADT 79 Favello Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 47 Ashleigh Developments Pty Ltd v Chief Commissioner of State Revenue [2011] NSWADT 250 Paliflex Pty Limited v Chief Commissioner of State Revenue [2003] HCA 65; (2003) 219 CLR 325 McMillan v Commissioner of Land Tax [1972] 1 NSWLR 545; (1972) 3 ATR 191 Ryan v Commissioner of Land Tax (NSW) [1982] 1 NSWLR 305; (1982) 12 ATR 907; 82 ATC 4178 Knowles v Salford Corp [1922] 1 CH 328 Category: Principal judgment Parties: Australian Native Landscapes Pty Ltd (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: AH Rider (Respondent) Solicitors: Robert Richards & Associates (Applicant) Crown Solicitor (Respondent) File Number(s): 1410591 Reasons for decision 1. This is an application for a review of a Land Tax Assessment issued to the Applicant for the 2010 to 2014 land tax years in respect of land situated at Browns Creek Road, Blayney, New South Wales ("the Land"). 2. The Applicant's case is that part of the Land was exempt under s 10AA(3)(a) of the Land Tax Management Act 1956 ("the Act") from land tax in the relevant years because it was used for a primary production activity, being the cultivation of compost. The real substance of the Applicant's complaint is that the Chief Commissioner ought to have treated the Land as consisting of two or three different parcels of land for purposes of the Act and allowed the exemption to the parcel of land where the compost activities were carried on in the relevant land tax years. 3. In the land tax years, s 10AA of the Act relevantly provided: 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. For the purposes of this section, land used for primary production means land the dominant use of which is for: 1. cultivation, for purpose of selling the produce of the cultivation, or 1. For the purposes of this section, land is rural land if: 1. the land is zoned "rural", "rural residential" or "non-urban" under a planning instrument, … Factual Background 1. Before turning to the issues in this matter it is convenient to note the facts of the matter about which there is no dispute: 1. In the relevant years, the Land was categorised by Blayney Shire Council as "Business Limestone Extraction" or "Business other uses". 2. The Land was purchased by way of three contracts and comprises a number of adjoining lots and is about 232 hectares in total. 3. The land has two separate parts each with its own postal address. The first part is known as 653 Browns Creek Road, Blayney, which is used for the compost activities. The second part is known as 755 Browns Creek Road, Blayney. This part is used for limestone quarrying. 4. In the relevant land tax years the Land was treated by the Valuer- General for valuation purposes as one parcel of land. The Chief Commissioner's assessments were based on the average valuation as valued by the Valuer-General. 1. In addition to the documents made available by the Chief Commissioner as required by s 58 of the Administrative Decisions Review Act 1997, the Applicant produced an affidavit sworn by Mr Patrick Noel Soars, the Managing Director of the Applicant and also an affidavit sworn by Mr Simon Walpole Leake, an agricultural scientist and director of SESL Australia Pty Ltd, retained as a consultant by the Applicant. Questions for Determination 1. Mr Richards, acting for the Applicant, identified the following three questions, in his opinion, the Tribunal was required to determine in this matter – 1. First, whether for the purposes of the Act, the Land owned by the Applicant situated at Browns Creek Road, Blayney, New South Wales, consists of two or more separate "parcels of land". 2. Second, whether "compost farming" is a "primary production" activity for purposes of the Act. 3. Third, whether the Applicant used one or more of those parcels for primary production in the land tax years 2010 to 2014. Did the Land comprise two or more parcels of land? 1. The Applicant's case is that 653 and 755 are separate parcels of land by virtue of the following factors – 1. separate legal titles, 2. separate postal identities, 3. occupy separate areas of land, 4. 653 and 755 have separate physical characters, 655 being wooded grazing land and a compost farm, while 755 was used for limestone quarrying and 5. there is no interrelationship between the use of 653 and 755 – the use of 653 is not incidental to the use of 755 (and vice versa). 1. Alternatively, it is claimed that there are three separate parcels of land – "That is that part of 655 which is the fenced compost farm should be distinguished from the other part of 655 (this would mean that there are not two but rather three parcels of lands)." Submissions 1. The Applicant contends that the scheme of the Act is "that land tax is levied on 'parcels of land' rather than land per se". Mr Richards referred to various sections of the Act, in particular sections 7, 9, and 9AA, in support of his contention. The Applicant's contention was essentially that the scheme of the Act requires first, for land tax purposes, a determination whether the land was exempt from land tax. And that "it is only after that determination has been made is it relevant whether the Valuer-General has valued the land or not". It was further argued that "Land has no taxable value if it is exempt" because s 9 of the Act only applies "to land that is not exempt from taxation under the Act". 2. It was further submitted that, "the exemption provisions contained within the Act better evidence the scheme of the Act". "These exemption provisions", it was contended, "do not rely upon the Valuer-General determining the 'identity and taxability of taxable land'" and that it is not the Valuer-General's role "to determine who owns land or its use". And "that land which does not have a taxable value cannot draw its 'identity and taxability from its taxable value'". 3. Mr Richards also relies on s 14A and 14CC of the Valuation of Land Act 1916 and cases dealing with these provisions. He referred the Tribunal to the decision of Jagot J of the New South Wales Land and Environment Court in Attard & Anor v Valuer-General [2006] NSWLEC 351, in particular the following dicta of Jagot J (at paragraphs 41 and 42) when considering s 14A of the Valuation Act which uses the word "parcel" – "…The word 'parcel' is well known to the law. There are a number of decisions which deal with the concept, many of which are conveniently summarised in Alan Hyam, The Law Affecting Valuation of Land in Australia, 3rd edition, at pp 18-20. In Colonial Sugar Refining Co Ltd v The Valuer-General (1939) 5 The Valuer 472 at 473, cited by Hyam, Roper J said that the question of whether land is one or more parcels for the purposes of the Valuation of Land Act is a question of fact. Roper J said that: Unity of title and the purpose of which the land is held, are elements to be considered; but the principal consideration is, I think, the degree of separation effected by the owner in using the land. Where the owner cuts the land into portions and devotes those portions permanently and indefinitely to separate uses each portion is in my opinion a parcel for the purposes of the Act. In Christies Sands Pty Ltd v City of Tea Tree Gully (1975) 37 LGRA 325 at 336 Wells J said: It seems to me, therefore, to be clear beyond argument that the expression 'any parcel of land' means what it says according to common understanding and to the understanding of the conveyance and historian. It means, in my opinion, a specified and reasonably well defined area of land. That area may be defined by general description, by reference to a map or plan, by clearly established usage, or by a combination of all three (or one or two of them) with landmarks, fences, walls, tracks, watercourses or natural boundaries or signs on or in the land of any kind whatsoever. It is essential to the creation of a parcel, in this sense that its limits should be ascertainable with reasonable precision". 1. Mr Richards also cited the more recent decision of Biscoe J in Triguboff v Valuer General [2009] NSW LEC 9 where his Honour relied on both the decisions in Attard and in Christies Sands Pty Ltd in concluding that two adjoining properties were just one parcel of land for valuation purposes. 2. The Applicant accepts that the taxable value of a parcel of land is based on the value as determined by the Valuer-General but submits that under s 29(3A) of the Valuations Act the "objection right is only explicitly against valuations and not against a determination as to what is that parcel of land to be valued". 3. The Applicant seeks an order that the Tribunal, upon finding that there are two or more parcels of land in respect of the Land in issue, should direct "the Applicant to request the Valuer-General to accept an 'out of time' objection, which would cause the Valuer-General to value that non-exempt parcel (or parcels) of land". The Applicant notes in its submission that if "the Applicant made such a request as directed by the Tribunal it would be expected that the Valuer- General would accede to that request". 4. Mr Rider, counsel for the Chief Commissioner, on the other hand contends that "the Tribunal lacks the jurisdiction and/or power to deal with the issue of whether the Land comprises two or more 'parcels'" on the following grounds: "The difficulty with the Applicant's submission is that the scheme of the Act is such that a "parcel" of land draws its identity and taxability from its taxable value (for example, ss 7 and 9 of the Act). Here, the Land as a whole has a single taxable value and has been assessed as liable to land tax based on that value (s.7 of the Act). Further, as the Land is the relevant "land" the subject of the Assessment, the only "land" the Tribunal is empowered to determine the "dominant" use of is that Land (Ashleigh Developments Pty Ltd v Chief Commissioner of State Revenue [2011] NSWADT 250 at [13]) (i.e. as a whole and not particular parts of it). Another way of illustrating the problem with the Applicant's submission is to look at it in the context of the Tribunal's powers on review of the Assessment. In this regard, even if the Tribunal agreed that the Land comprised two or more parcels, it could not make its own assessment in place of the Assessment, because the relevant "parcels" do not have a taxable value. Equally, if the Tribunal revoked the Assessment or remitted the matter, the Respondent could not assess the relevant "parcels" as liable to (or exempt from) land tax as they do not have a taxable value." 1. Mr Rider also notes in his submissions that "in substance, what the Applicant is seeking from the Tribunal is properly the function of the Valuer-General". Consideration 1. I agree with Mr Rider's submissions. The Chief Commissioner does not have the legislative power to "dissect" a parcel of land into two or more parcels of land as contended by the Applicant. 2. As noted by the High Court (Gleeson CJ and McHugh, Gummow, Kirby and Hayne JJ) in Paliflex Pty Ltd v Chief Commissioner of State Revenue [2003] HCA 65; (2003) 219 CLR 325 at [8] – "The scheme of the New South Wales Legislation was that the tax was imposed by the Land Tax Act 1956 ("the Tax Act") in respect of the taxable value of land owned at midnight on a specified date and a detailed regime for assessment and collection was provided by Land Tax Management Act 1956 (NSW) ("the Management Act"). The tax was both imposed and charged upon the land immediately on that date and did not wait upon the issue of an assessment." 1. Land Tax was in this matter imposed, relevantly, under s 3AL(1) of the Land Tax Act 1956 in "respect of the taxable value of all the land owned by any person at midnight on 31 December in any year". The Land Tax Act sets out in Part 1 of Schedule 13 the relevant rates applicable for the years in dispute. Section 1 of the Land Tax Act requires the Land Tax Act to "be read and construed with the Land Tax Management Act 1956". 2. The complimentary provision, s 7 in the Act, provides that – Land Tax at such rates as may be fixed by any Act is to be levied and paid on the taxable value of all land situated in New South Wales which is owned by taxpayers (other than land which is exempt from taxation under this Act). 1. Section 9(1) of the Act, further provides that land tax is payable by the owner of land on the taxable value of all land owned by that owner. The taxable value, is pursuant s 9(2) of the Act, "the total sum of the average value of each parcel of land". Under s 9AA of the Act "the average value of a parcel of land is the average of the land value of the land in relation to the year for which the average value is being ascertained (the current land tax year) and the land value of the land in relation to the 2 preceding land tax years". 2. It is important to note, under s 9(4) of the Act, the "land value of land, in relation to a land tax year, is the value entered in the Register as the land value of the land as at 1 July in the previous year". The Register is "the Register of Land Values kept by the Valuer-General under section 14CC of the Valuation of Land Act 1916". 3. "The fact that there is no land value entered in the Register on 31 December in a year as the land value of the land as at 1 July in that year does not prevent land tax being levied and charged and becoming payable for any following tax year once that land value is entered in the Register and the average value is ascertained": s 9(5) of the Act. 4. These provisions make it clear that land tax is imposed on the taxable value of land. The taxable value is calculated on the basis of the value entered in the Register kept by the Valuer-General. 5. The term "land" is used in various provisions of the Act, for example in s 7. The phrase "a parcel of land" is also used in some provisions, for example in ss. 9 and 9AA. But the term "land" or the phrase "a parcel of land" are not defined in the Act. However, since the decision in McMillan v Commissioner of Land Tax [1972] 1 NSWLR 545; (1972) 3 ATR 191, it has been accepted that the term "land" in the context of the Act is used in the same sense as the phrase "parcel of land". 6. In McMillan, his Honour Isaacs J was required to decide whether two lots in the same ownership with a dwelling on one lot and a garden on the other lot constituted a "parcel of land". His Honour considered this question in the context of s 9(3) of the Act as in force at that time which allowed an exemption in respect of "land owned by a person and used and occupied by that person solely as the site of a single dwelling-house". 7. His Honour held that the principles settled in relation to what constitutes a parcel of land by cases for purposes of rating under local government legislation and valuation under the Valuation of Land Act were highly persuasive because there was "close connection, inter-connection and interrelationship" between these provisions and the Act. His Honour applied these principles and held that the lots were a single dwelling-house because the lots were "not separated by physical severance nor in title nor by use nor by occupation". 8. Subsequently, in Ryan v Commissioner of Land Tax (NSW) [1982] 1 NSWLR 305, Hunt J agreed with his Honour Isaacs J's reasoning in McMillan and held that contiguous blocks of land can comprise a 'parcel of residential land' within the exemption then available under s 10(1)(r)(ii) of the Act for land used as a place of residence "only where they are undivided not only by physical separation but also in use, occupation and title". 9. These decisions do not assist the Applicant. In each case the parcel of land constituted of separate lots as determined and valued by the Valuer-General. The cases, however, make it clear that the term "land" is used in the Act in the same sense as a "parcel of land". These cases highlight the ability of the Chief Commissioner to treat two lots or two parcels of land as a single parcel when considering the use of land for certain purposes, in particular the exemption provisions found in the Act. 10. What the Applicant seeks in this matter is for the Chief Commissioner to create two or more parcels of land form a single parcel of land which has been so constituted and valued by the Valuer-General. The Chief Commissioner's power is in my opinion, confined to deal with land or parcels of land with taxable values, values calculated on the basis of the value entered in the Register kept by the Valuer-General as required by the provisions of the Valuation of Land Act. The Chief Commissioner, can under the powers given to him in s 68 of the Act, request copies of the Register of Land Values and the Valuer-General is obliged to furnish such copies of the Register of Land Values, and any valuation list or supplementary list prepared by the Valuer-General, as the Chief Commissioner may require. 11. But the Chief Commissioner has no power to review the valuations provided nor question any decision to treat lots as a single parcel of land by the Valuer-General. 12. However, there is ample power for owners of land to have valuations reviewed under Part 3 of the Valuation of Land Act on various grounds. For example, under s 34(1)(e) of the Valuation of Land Act an owner can raise an objection on the ground "that lands which should be valued separately have been included in one valuation". The cases cited and relied upon by the Applicant, in particular Attard and Triguboff were against the Valuer-General and sought relief under the provisions of the Valuation of Land Act. They clearly do not assist the Applicant in this matter. 13. The Chief Commissioner was accordingly required to consider the review of the relevant assessment on the basis of a single parcel of land of the various lots included in the valuation by the Valuer-General. The Chief Commissioner is not given any power under the Act to ignore the Valuer-General's determination and create a new set of parcels of land in respect of any parcel of land so constituted by the Valuer-General. 14. As to whether the Applicant should seek a late review of the valuation in respect of the Land with the Valuer-General is entirely a matter for the Applicant and its advisers. Is composting "cultivation"? 1. The next question concerns what was claimed by the Applicant as "compost farming" on part of the land. The real question for determination is whether the composting activity constituted in the relevant land tax years, "cultivation, for purpose of selling the produce of the cultivation" in terms of s 10AA(3)(a) of the Act. 2. Mr Patrick Noel Soars, the Managing Director of the Applicant filed an affidavit and also gave viva voce evidence at the hearing. In his affidavit he explained the activity of cultivation and sale of compost as follows: The applicant uses the compost farm to produce compost from cultivation of organic products which it sells. That waste is exposed to microbes and microflora. The process of propagating microbes and microflora is carried out over a period of 12-20 weeks. The end result of the compost farming is the excrement of the microbes which the Applicant then sells for use in horticulture and agriculture. More specifically the Applicant's compost farming involves: • the collection and receipt of organics (such as green waste, plants, timber off-cuts, biosolids and animal manure); • the placing of that material in windrows (windrows are conical which optimise microbial activity); • the addition of microbes which are contained in manure compost (previously cultivated by the Applicant); • the blending of the organics and the mature compost and the placement of the blend in windrows; • the addition of water (and rewatering); and • cultivation of compost the turning of the blend by windrow turners. The microbe population multiply in vast numbers which heat the organics. The Microbes cause the organics to have lost their individual identities and to have transformed into compost. That compost is then sold, loaded into tip trucks, and delivered in bulk." 1. Mr Leake, the Applicant's consultant "for over 25 years and very familiar with all aspects of their composting activities", explained in his report "What is Composting?" as follows: "While there are nuances of difference between the aims and purposes of composting the different types of organic raw materials used to make composts for different markets the process of composting fundamentally involves the establishment in a pile of biodegradable organic material of conditions that foster the spontaneous growth of a microbial ecosystem. These ecosystems are made up of a wide range of microbial species and are aerobic organisms ie they need oxygen to respire the energy source. These microbes use the energy and nutrients in the raw material to proliferate their own species and in doing so have an effect on the material that is beneficial to its later use in plant growing systems discussed below. Thus the process of composting is in my opinion the deliberate culturing of living organisms, in this case microbial organisms. The product of composting is composed of two components, microbial biomass (microbes themselves) and the breakdown products of microbes." 1. Mr Leake in his report also adds by way of a "summary of opinion" the following: "I am aware of ANL's Blayney composting farm and its production of produce and the sale of compost products to the horticultural and agricultural sectors. Composting is the deliberate cultivation of a degradable organic substrate to enhance the growth of microbiota, in this case to foster aerobic conditions and obtain hyperthermal conditions. It necessitates the careful preparation of the substrate such that it becomes a suitable growth medium of such culture. It requires machinery and in some cases other inputs such as urea, lime and other such ameliorants and fertilisers to stimulate the microbial growth in a manner analogous to the cultivation of soil and addition of fertilisers, to grow plants." Submissions 1. The Applicant places a great deal of reliance on Mr Leake's report, in which Mr Leake refers to the part of the land used for the composting activity as the "composting farm". And on that basis Mr Richards submits – "The purpose of section 10AA of the Act is to exempt from land tax, land used for 'farming purposes' … Composting as undertaken by the Applicant is a 'farming' activity for the purposes of the Act and prima facie should be exempted by section 10AA of the Act from land tax." 1. Mr Richards further submits that the decision in Safety Beach Estate Pty Limited v Commissioner of Land Tax (NSW) (1979) 79 ATC; (1979) 9 ATR 451 where his Honour Rath J held that the term "cultivation" includes "the improvement of the land for the purpose of selling the produce of the improved land" should not be followed. 2. It was submitted that his Honour was considering the old s 10(1)(p) of the Act where the relevant provision was a "composite expression" – "cultivation thereof for the purpose of selling the produce of cultivation" and that the provision subject of this review "is now subtly but importantly different". 3. It was submitted that the "present section 10AA(1) looks to the use of the land – it does not require cultivation of the land". 4. It was further submitted by Mr Richards that "the Safety Beach Estate decision can be factually distinguished" because the case "concerned native trees already grown on land" and "it should be read in that context". And it was submitted that "it cannot be presumed that Rath J would not have concluded that compost cultivation was not primary production as there relevantly defined". 5. Mr Richards further submitted that the decisions in Favello Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 47 and Colusso & Ors v Chief Commissioner of State Revenue [2008] NSWADT 79, which have relied on the Safety Beach Estate decision, also do not apply in this matter. 6. Mr Rider for the Chief Commissioner first noted that the "Applicant submits that making compost on the Land comprised 'cultivation', but does not cite any authority in support of this proposition". 7. Mr Rider further noted that the word "cultivation" is not defined in the Act and that reliance needs to be placed on decided cases. He relies largely on the following passage in the Safety Beach Estate where Rath J said – "In my opinion the expression 'cultivation' thereof for the purpose of selling the produce of such cultivation' should not be limited to annual crops, or crops with periodical production. The idea conveyed by the expression is the improvement of the land for the purpose of selling the produce of the improved land. The land may in the relevant sense be cultivated in some instances by breaking it up, as by ploughing, or in other instances by activities that may or may not be associated with the breaking up of the soil. It is the land, not the soil alone, which is the subject of cultivation. This may be achieved by improvement to the water supply to the plants, by fertilising, by spraying plants with insecticides and fungicides and by the establishment of windbreaks. It is unnecessary to decide whether land can be said to be used for primary production in subsequent years of production where the crop (I am using the word in the widest sense) is planted and not thereafter tended, except to extract the produce. This is not such a case. But however the crop is sown, there is cultivation of the land in a particular year if in that year it is tended, or subject to a programme of tending, in accordance with the practices of husbandry applicable to that crop … In this connection, it must be that when para (a) speaks of the 'the produce of such cultivation' it means the produce of the cultivated land." 1. Mr Rider also referred to the decision in Favello Pty Ltd v Chief Commissioner of State [2014] NSWCATAD 47 where the Tribunal held at [186]: "Cultivation is therefore the activity of caring and raising plants". 2. Based on the above decisions, it was submitted that, "the meaning of 'cultivation' in the context of the PPL exemption is a process applied to improving land for the benefit of plants (such as crops growing in the soil of the land". 3. It was further submitted by Mr Rider that – "Here, the Applicant's evidence is that compost was made on the Land by applying certain processes to organic waste collected by the Applicant. However, as such processes were applied to organic waste, as opposed to the Land, they did not comprise the required 'cultivation' of the Land. Thus, making compost was not 'cultivation' of land for the purposes of s. 10AA(3)(a) of the Act, nor was compost the product of 'cultivation' of the land." Consideration 1. The question raised by this issue is essentially whether "windrow composting" carried on part of the Land can for the purposes of s 10AA(3)(a) qualify as "cultivation, for the purpose of selling the produce of the cultivation". 2. As I understand from Mr Soars' affidavit and evidence and Mr Leake's report, "windrow composting" is the production of compost by piling organic matter or biodegradable waste in long rows (windrows) to compost by adding water (and other materials including urea and lime) and turning of the windrows by use of heavy machinery described as windrow turners over a period of time. As noted by Mr Leake in his report, the compost products are than supplied "to the horticultural and agricultural sectors". 3. Mr Leake described the activity in his report as a "composting farm" and "the deliberate cultivation of a degradable organic substrate to enhance the growth of microbiota". The process of making the compost is, in his opinion, "analogous to the cultivation of soil and addition of fertilisers, to grow plants". The Applicant places a great deal of reliance on Mr Leake's use of the terms "farm" and "cultivation". The argument is that "composting is a 'farming' activity for the purposes of the Act and prima facie should be exempted by s 10AA of the Act from land tax". 4. The Applicant also placed a great deal of reliance on the difference in the language of the old exemption under s 10(1)(p) of the Act and the current exemption under s 10AA(3)(a) of the Act. In particular, the Applicant's case is that the Tribunal should not apply the decision in Safety Beach Estate in this matter because it was decided on the language of the old composite expression, "cultivation thereof". The current provision merely speaks of land the dominant use of which is for cultivation, for the purpose of selling the produce of the cultivation. 5. I cannot identify any "subtle" or "important difference" as suggested by Mr Richards in the language used in the old and new exemption provisions. The word "thereof" used in the old provision was pointed out by Mr Richards as creating the difference between "cultivation thereof" and "cultivation per se". 6. I think the use of the term "thereof" reflects an old style of drafting legislation and was really superfluous. It merely means "that or it". The term added very little to the provision. Hence, when the current s 10AA(3)(a) of the Act was drafted, in a more modern time, the draftsman must have for that reason deleted the word "thereof". The current provision is, in my opinion, no different from the old provision. 7. I agree with the Chief Commissioner's submission that, in the absence of any authority, the Applicant's submission must be rejected on what is clearly the accepted view of the meaning of the term "cultivation" when used in the exemption. 8. Essentially, the exemption under s 10AA(3)(a) only applies if the relevant land is used for cultivation. The expression "cultivation, for the purpose of selling the produce of the cultivation" can, in my opinion, be explained in the similar terms as the old provision was explained in Safety Beach Estate by his Honour Rath J – "The idea conveyed by the expression is the improvement of the land for the purpose of selling the produce of the improved land. The land may in the relevant sense be cultivated in some instances by breaking it up, as by ploughing, or in other instances by activities that may or may not be associated with breaking of the soil. It is land, not soil alone, which is the subject of cultivation. This may be achieved by improvement to the water supply to the plants, by fertilizing, by spraying plants with insecticides and fungicides and by establishment of windbreaks." 1. Of course, in making that statement, his Honour was largely influenced by what was said by Warrington LJ on the cultivation of pasture land in Knowles v Salford Corp [1922] 1 CH 328 at 344-5 (cited by the taxpayer in Safety Beach Estate): "Pasture land, though not of course broken up, may be cultivated in the sense that its power or production may be improved by judicious husbandry, as for example by manuring, harrowing or top-dressing. There are many ways in which it may be improved for the purpose of production, and in that sense cultivated and used for the purposes of husbandry". 1. I do not think any activity on land involving cultivation without sown crops, plants or trees can satisfy the requirement of "cultivation" for the purpose of the exemption provided to primary producers under s 10AA(3)(a). 2. The cultivation of the land must be for the benefit of crops, plants or trees however sown in the soil. Two other provisions in s 10AA(3) of the Act also add support for this view. 3. It was necessary to include in s 10AA(3)(e) of the Act an independent exemption provision for commercial plant nurseries where often the cultivation involves growing plants in pots and not in the soil on the land. There was also the need for an independent exemption provision in s 10AA(3(f) of the Act to exempt land used for the propagation of mushrooms, orchids or flowers, which are not necessarily grown in the soil on the land. They are usually propagated in bags, boxes, racks or in pots. 4. On the evidence of Mr Soars and Mr Leake, in the whole process of making the compost no part of the Land was used in a manner as explained above. On the contrary it could be said, on the evidence, the process used by the Applicant can be done on any base, including a concrete floor. Was any part of the Land used for Primary Production? 1. It becomes unnecessary to consider the third question identified by the Applicant because in his submissions Mr Richards for the Applicant did concede "that if the Respondent is correct and the Land consists of only one parcel of land, and if compost cultivation is not the use of land for the purpose of selling the produce of that cultivation, that the Land would not be exempt from land tax". 2. The assessment for the land tax years 2010 to 2014 is accordingly confirmed. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 10 September 2015