Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Codlea Pty Ltd v Chief Commissioner of State Revenue [2016] NSWCATAP 30 Hearing dates: 20 November 2015, updated appeal books filed 7 December 2015 Date of orders: 08 February 2016 Decision date: 08 February 2016 Jurisdiction: Appeal Panel Before: Dr J Renwick SC, Senior Member Prof G Walker, Senior Member Decision: Leave to appeal is refused and the appeal is otherwise dismissed. Catchwords: CIVIL AND ADMINISTRATIVE TRIBUNAL – STATE TAXES - Appeal Panel – Land Tax Management Act – Land used for purpose of beekeeping – no question of law arising from finding below that land did not qualify for exemption from land tax– appeal dismissed Legislation Cited: Administrative Appeals Tribunal Act 1975 (Cth) Civil and Administrative Tribunal Act 2013 (NSW) Land Tax Management Act 1956 (NSW) Safety, Rehabilitation and Compensation Act 1988 (Cth) Cases Cited: Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 23 Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 408 May v Military Rehabilitation and Compensation Commission [2015] FCAFC 93 Rogers v Vinoly [2016] NSWCATAP 2 Texts Cited: None Category: Principal judgment Parties: Codlea Pty Ltd (Appellant) Chief Commissioner of State Revenue (Respondent) Representation: Ms C Burnett, instructed by Bolster and Co, Solicitors (Appellant) Mr A Gerard, instructed by Crown Solicitor's Office (Respondent) File Number(s): AP 15/45786 Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Administrative and Equal Opportunity Division Citation: [2015] NSWCATAD 136 Date of Decision: 2 July 2015 Before: S Frost, Senior Member File Number(s): 1410173 REASONS FOR Decision Introduction 1. At all relevant times, sub-sections 10AA(2) and (3)(d) of the Land Tax Management Act 1956 (the Act) provided: (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: (d) the keeping of bees, for the purpose of selling their honey…' 1. In the decision below, the Tribunal confirmed assessments made under the Act on the ultimate basis (see, eg. decision [74-76]) of a finding that the appellant's use of the relevant land for beekeeping did not, for any of the land tax years in question (2012-2014), meet the requirements for exemption to be available under s 10AA(2)(a) and (b) of the Act. 2. The Appellant, Codlea Pty Ltd, asserts an appeal as of right on three questions of law, or alternatively, if those questions are of fact, or mixed fact and law, seeks leave to appeal on certain grounds: see Civil And Administrative Tribunal Act 2013, s 80(2)(b). The Respondent, the Chief Commissioner of State Revenue, submits that the appellant has identified no questions of law, and should otherwise be denied leave to appeal. 3. For the reasons which follow, we conclude that there are no questions of law identified in the Notice of Appeal, so that there is no appeal as of right on any ground, nor would we grant leave to appeal. The hearing below 1. As was uncontroversially found below: 1. [4] The land in question is situated in the Brunswick Heads area. Codlea purchased the land in 1994. The land is 31.33 hectares in area, with 23.7 hectares within the 2(a) residential zone and 7.6 hectares within either the 7(a) wetland zone or the 7(b) coastal habitat zone. The keeping of bees within the 2(a) residential zone is permissible with consent. 2. Codlea seeks to subdivide and develop the land and has expended considerable sums on consultants with a view to obtaining the necessary consents. 3. Pending such consents being obtained, Codlea decided to pursue beekeeping and honey production, obtained the necessary consents, and contracted Mr Michael Howes to purchase the hives, maintain and propagate them, and collect, process, harvest and sell the resulting honey. The initial services fee paid to Mr Howes by Codlea was $8,000 per quarter but it was later reduced to $5,000 per quarter. 4. [26] The area that is dedicated to the beehives is an area at the southern end of Codlea's land. [Codlea's Director] Mr [Ian] Fraser established the beehive site by erecting concrete besser block stacks and wooden planks on which the hives were placed, and arranging for the erection of a fence around the hives, with a locked gate and signage displaying the beekeeper registration number obtained under the Apiaries Act. 5. There was never more than about 60 hives on the land, even after the local Council gave permission for 120 hives. 1. Codlea submits that other factual findings are more controversial. They will subsequently be considered as necessary. In the result, Codlea was assessed for land tax for the 2012-2014 land tax years on the basis that it was not entitled to the primary production land tax exemption as s 10AA(2) was inapplicable. Codlea unsuccessfully applied to the Tribunal for those assessments to be set aside. The statutory framework and the issues 1. In substance, the Tribunal below identified at [3] the three determinative questions for determination, and then answered them, as follows. 2. First Question: Whether, in respect of any of the relevant land tax years, the "dominant use" of the land was for "the keeping of bees, for the purpose of selling their honey"? Answer "Yes", the dominant, indeed the only, use of the land was "[43] was for the keeping of bees, for the purpose of selling their honey. The land accordingly answers the statutory definition of 'land used for primary production'". 3. Second Question: Whether the beekeeping use of the land "has a significant and substantial commercial purpose or character". Answer "No". 4. Third Question: Whether the beekeeping use of the land "is engaged in for the purpose of profit on a continuous or repetitive basis (whether or not a profit is actually made)". Answer "No". 5. In relation to the second and third questions, the Tribunal cited what was said in Maraya Holdings Pty Ltd v Chief Commissioner of State Revenue in the Supreme Court at first instance and then in the Court of Appeal. Some relevant passages are extracted here. At first instance, [2013] NSWSC 23, Gzell J said at [59]- [64]: [59] Section 10AA of the Management Act was introduced by the State Revenue Legislation Further Amendment Bill 2005. The second reading speech contained the following (New South Wales, Parliamentary Debates (Hansard), Legislative Council, 29 November 2005, p 20060 (The Hon Michael Costa, Minister for Finance, Infrastructure)): Land currently qualifies for a land tax exemption if it is within a rural or non-urban zone and is used primarily for primary production; or if it is within an urban zone and is used in the course of carrying on a business of primary production. The Local Government Act definition of 'farmland' contains a more precise business test. The bill amends the land tax provisions to be consistent with that definition. [60] The reference was to the Local Government Act 1993, s 515 which provided: 515 Categorisation as farmland (1) Land is to be categorised as farmland if it is a parcel of rateable land valued as one assessment and its dominant use is for farming (that is, the business or industry of grazing, animal feedlots, dairying, pig-farming, poultry farming, viticulture, orcharding, bee-keeping, horticulture, vegetable growing, the growing of crops of any kind, forestry or aquaculture within the meaning of the Fisheries Management Act 1994, or any combination of those businesses or industries) which: (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). (2) Land is not to be categorised as farmland if it is rural residential land. (3) The regulations may prescribe circumstances in which land is or is not to be characterised as farmland. [61] Section 515 of the Local Government Act 1993 replaced a similarly worded s 118 of the Local Government Act 1919. In the second reading speech to the 1988 bill introducing amendments to s 118 it was stated that the purpose of the amendments was to: "weed out persons who have exploited the vagueness of the current rule rating provisions of the Act to obtain rate concessions when in fact they have not been genuine primary producers." (New South Wales, Parliamentary Debates (Hansard), Legislative Assembly, 10 November 1988, 3186). [62] It was Walsh J who coined the phrase "significant commercial purpose or character" when speaking of a business in Thomas v Federal Commissioner of Taxation (1972) 3 ATR 165 at 171. [63] And it was Mason J in Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 8-9 who said of s 118 of the Local Government Act 1919, which then defined rural land to include a parcel of land which exceeded 8,000 square metres in area and was wholly or mainly used for the time being by the occupier for carrying on the business or industry of grazing: I accept, then, that 'business' in the sub-section has the ordinary or popular meaning which it would be given in the expression 'carrying on the business of grazing'. It denotes grazing activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis. [64] In Hope it was held that an occupier of land who used over 80 percent of it for the agistment of other persons' cattle or horses was carrying on a business. It was to overcome this decision that the 1988 amendments to s 118 of the Local Government Act 1919 were made. 1. On appeal, [2013] NSWCA 408, Emmett JA, with whom Meagher and Leeming JJA agreed, said at [64]-[65]: [64] The primary judge observed that s 10AA(2) introduced "a more stringent test" for the availability of the exemption. The Taxpayers complain that the criteria to be found in s 10AA are not more stringent than the earlier language, which simply provided an exemption for land "used for primary production". However, in circumstances where the language of s 10AA(2) appears to be derived from observations made by the High Court, it is significant that the Parliament chose to add the word "substantial" to the phrase used in Thomas. It was not erroneous to suggest that the substitution of s 10AA for the phrase "land used for primary production" involved a more stringent test. [65] The Taxpayers also contended that the language of s 10AA was not intended to alter the effect of its predecessor. They say that the terms of s 10AA(2) are satisfied if it can be concluded that business as a primary producer is clearly being carried on taxable land. Such a contention ignores the clear intention of the parliament in changing the language in question in order to avoid the vagueness of the original provision, which was being exploited by persons who were not genuine primary producers. Further, the primary judge was not asked to consider the contention now advanced by the Taxpayers. His Honour was not asked to make any findings as to whether Maraya was carrying on a business of primary production. The ground is not raised in the notice of appeal. The contention must be rejected as having no substance. 1. In the hearing below, expert evidence was given by Mr Bruce White, a beekeeping expert with over fifty years experience in that industry. His evidence was as follows: 1. He divided beekeepers into four groups. Of these, he could immediately exclude from present consideration the 'amateur/recreational' and the 'specialist queen bee breeder's' groups, leaving the remaining groups of 'sideline' and 'commercial' beekeepers. 2. The distinction between the 'amateur' and the 'sideline' was generally that the former undertook beekeeping as a hobby usually, but not always, on their own land and owned ten to twenty hives with an average annual yield of ten to twenty kilograms per hive. 3. At the other end of the scale, there were commercial beekeepers operating between 400 and 6,000 hives, who migrated their hives up to six times a year, often over large distances, and produced an average honey yield of 100 kilograms per year. 4. In the middle, were what Mr White and what the commercial beekeeping report describe as 'sideline beekeepers', who usually but not always were retired or have another fulltime occupation, and usually operate between 40 and 400 colonies with an average yield of 40 kilograms per hive, per year. 5. When he visited the appellant's property, there were only 65 actual active beehives, and there had been a small number of migrations: between two and four each year, and these factors suggested the beekeeping was sideline in nature. Matters pointing the other way were that the honey yield was 100 kilograms per hive, probably because the colonies were being managed by a professional beekeeper rather than an owner of the hives. 6. He referred to a document entitled 'Commercial Beekeeping in Australia' produced by the Australian Government's Rural Industries Research and Development Corporation. The report suggested that anything up to 200 hives would be part-time rather than commercial. 1. The Tribunal's acceptance of this evidence led to the conclusion in paragraph [75] below that: …the beekeeping operations do not have the 'significant and substantial commercial purpose or character' required for the exemption to be available. I accept the assessment of Mr White, an acknowledged expert, that even at 120 hives, the activities fall into the 'sideline category'. 1. In relation to the 'purpose of profit on a continuous or repetitive basis' issue, there were two pieces of evidence. There was expert evidence from a chartered accountant and insolvency practitioner, Mr Peter Hillig, who analysed the profit and loss for Codlea, leading to the following findings: [63] Mr Hillig prepared a profit/(loss) calculation for several discrete periods and summarised his conclusions at page 6 of his report as follows: 24 November 2011 to 31 December 2011 – $Nil; 24 November 2011 to 30 June 2012 – ($15,156); 1 January 2012 to 31 December 2012 – ($29,475); 1 July 2012 to 30 June 2013 – ($27,365); 1 January 2013 to 31 December 2013 – ($20,965). [64] He arrived at those figures by the standard methodology of deducting from the revenue earned in each period, the expenses incurred in producing that revenue. His calculations were performed on an accruals basis, with revenue and expenses brought to account in the period to which they relate, irrespective of whether cash had been received for sales, or whether actual payment had been made to suppliers. [65] At paragraph 21 of his report Mr Hillig provided a summary of Codlea's overhead expenditure but explained at paragraph 22 that he was unable to identify the incremental costs of those expenses in relation to the beekeeping activities. In cross-examination he explained that by incremental costs he meant those costs that relate to beekeeping that would not have been incurred if the beekeeping activities had not been carried on. Given that inability, he estimated the overhead costs, relating to beekeeping, at $500 per quarter, or $2,000 per annum. 1. In contrast, Mr Fraser, the director of Codlea, gave his own evidence that the relevant costs relating to beekeeping that would not have been incurred if the beekeeping activities had not been carried on were about $1,100 per annum on average. 2. The other significant difference between Mr Fraser and Mr Hillig was that the latter had included council rates on Codlea's land in their entirety in the calculations of profitability on the assumption that "the dominant physical use of the land is for the purpose of beekeeping". In contrast, Mr Fraser had excluded the council rates in their entirety because, he said, those rates were required to be paid regardless of whether the activity was carried on. On that assumption, Mr Fraser came up with a projected profit of about $16,000 per annum. 3. The Tribunal then made the findings set out in paragraphs [69]-[73]: [69] I think Mr Hillig's approach to the treatment of council rates is correct, and Mr Fraser's is wrong. Codlea cannot on the one hand claim that its only relevant use of the land is for beekeeping, and yet on the other hand claim that the expenditure (which has to be paid no matter what) does not relate to any extent to that very activity. Council rates are a necessary incident of land ownership. It is hard to imagine a circumstance where they should not be taken into account, either in whole or in part, in the calculation of profit. [70] Mr Hillig also thought that the review of the arrangement between Codlea and Mr Howes, which led to a reduction in the management fee from $8,000 to $5,000 per quarter, was in recognition of the uncommercial nature of the original arrangement. [71] Mr Hillig also noted that one of the consequences of the reduction in the management fee was that Mr Fraser would undertake some of the activities previously undertaken by Mr Howes. Mr Fraser said in his first affidavit (CB11, paragraph 16) that he had made lids for the hives and performed general repairs on the hives. For practical purposes, in the absence of any allocation of expenditure to those activities, they are now being provided to Codlea free of charge. That is not a commercial arrangement. [72] Mr Hillig concluded at CB614, paragraphs 41-42: Unless Codlea can do one (or all) of the following, there is no prospect of the bee keeping operations generating a profit: Increase the price per kilo paid for its honey; Increase the yield from the hives; Further reduce the Apiarist's fees; and/or Negotiate with Council for a reduction in Council rates to a level sufficient to enable the bee keeping operations to generate a profit. If the bee keeping operations cannot generate a profit, then they are not sustainable (without resorting to capital raising or external funding). [73] I agree with those assessments. 1. That led to the conclusion set out in paragraph 76: I am mindful that during the relevant years the beekeeping activities were in the "start-up" phase but, even on Mr Fraser's own predictions, the best outcome Codlea could hope for was a "modest profit". That has not been achieved, and there is no likelihood that one will be achieved in the near future. On that basis the activities fail to reach the indicators suggested by the ADT Appeal Panel in Ashleigh Developments: a business enterprise of a well structured, long term character, with administrative features (organisation, management, book keeping) which support the conclusion that it is set up with the aim of generating a profit year to year over a succession of years. Grounds of Appeal 1. We now turn to the grounds of appeal. Questions of law and questions of fact 1. Section 80(2)(b) of the Civil and Administrative Tribunal Act 2013 permits an appeal from the decision below "as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds.'" There is much learning in the cases on what is 'a question of law'. In a recent decision of the Appeal Panel in Rogers v Vinoly [2016] NSWCATAP 2, it was said: [12] The Federal Court in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287 ( Pozzolanic ) identified five general propositions in relation to the distinction between questions of law and fact. These were extracted by the High Court in Collector of Customs v Agfa-Gevaert [1996] HCA 36; (1996) 186 CLR 389 at 395 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ) (Agfa-Gevaert): The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law. (22) Jedko Game Co Pty Ltd v Collector or Customs (NSW) (1987) 12 ALD 491; Brutus v Cozens [1972] UKHL 6; [1973] AC 854. The ordinary meaning of a word or its non-legal technical meaning is a question of fact. (23) Life Insurance Co or Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60 at 78; NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner or Taxation [1956] HCA 80; (1956) 94 CLR 509 at 512; Neal v Department or Transport [1980] FCA 45; (1980) 3 ALD 97 at 107-108; Jedko (1987) 12 ALD 491. The meaning of a technical legal term is a question of law. (24) Australian Gas Light Co v Valuer-General [1940] NSWStRp 9; (1940) 40 SR (NSW) 126 at 137-138; Lombardo v Federal Commissioner or Taxation [1979] FCA 66; (1979) 40 FLR 208 at 215. The effect or construction of a term whose meaning or interpretation is established is a question of law. (25) Life Insurance Co of Australia [1925] HCA 18; (1925) 36 CLR 60 at 79. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law." (26) Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 7, per Mason J with whom Gibbs, Stephen, Murphy and Aickin JJ agreed; Australian National Railways Commission v Collector of Customs (SA) [1985] FCA 312; (1985) 8 FCR 264 at 277, per Sheppard and Burchett JJ. In Pozzolanic , the Full Court qualified the fifth proposition. The Court said that, when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or do not is one of fact. (27) Pozzolanic (1993) 43 FCR 280 at 288, citing Hope [1980] HCA 16; (1980) 144 CLR 1 at 8. [13] In relation to the fifth proposition, in Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 1521; (1995) 59 FCR 6 Hill J noted at 16 as follows: The rule that a question of fact is involved in determining whether facts fall within the meaning of a word once that meaning is ascertained, may cause confusion. The confusion comes about because there are actually two related rules, the distinction between which is not always readily apparent. The first of these rules is generally expressed as being that where the facts have been fully found or there is no dispute as to the facts and the question is whether those facts necessarily fall within the description of a word or phrase in a statute, that will be a question of law. This is the sixth proposition enunciated by [Jordan] CJ in the Australian Gas Light Co case. The rationale for this principle is clear enough. If only one meaning is open but a tribunal arrives at a different meaning, underlying the Tribunal's conclusion must be an error of principle, that is to say, an error of law. The second related principle is that where the facts found are capable of falling within or without the description used in the statute, the decision which side of the line they fall on will be a decision of fact and not law. Such a decision will generally involve weight being given to one or other element of the facts and so involve matters of degree. 1. In May v Military Rehabilitation and Compensation Commission [2015] FCAFC 93, a Full Court of the Federal Court was considering whether an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) raised a question of law in the context of whether the appellant had an "injury" for the purposes of s 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth). A bench of five judges said: [194] The … question of whether, on the facts as found by the Tribunal in the present case, it was open to the Tribunal to decide that the appellant had not suffered an "injury" is also a question of law. That is, adopting the correct construction of the statutory concept of injury in s 4(1) of the SRC Act, whether the material before the Tribunal reasonably admitted of different conclusions is a question of law. In contrast, assuming a positive answer to this, the next question – which conclusion should be drawn – is a question of fact: Bell v Commissioner of Taxation [2013] FCAFC 32 at [18] (Jessup, Jagot and Robertson JJ), referring to TNT Skypak International (Aust) Pty Ltd v Federal Commissioner of Taxation [1988] FCA 119; 82 ALR 175 at 182. Thus, where the Tribunal's reasoning discloses no error of construction and the facts as found are capable of "falling within or without the description used in the statute, the decision which side of the line they fall on will be a decision of fact not law": Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 1521; 59 FCR 6 at 16 (Hill J); and see Haritos at [194]-[197]. (emphasis added). 1. Finally, we note that the same five judges who comprised the Full Court in May, on the same day, decided Haritos v Commissioner of Taxation [2015] FCAFC 92. (It may be noted the last cited passage in May cited Haritos.) It concluded that a question of law may include so-called mixed questions of fact and law, as well as 'pure questions of law', but [192] 'the right of appeal does not extend to mere questions of fact'. Haritos also concerned s 44 of the Administrative Appeals Tribunal Act 1975. 2. Applying these principles here: 1. the statutory definitions in s 10AA(2) of the Act uses words in their ordinary meaning; 2. their meaning and proper construction is a question of law; 3. if it is reasonably open to hold that the facts of the case fall within the properly construed definition, the question as to whether they do or do not is one of fact, so that there is no appeal as of right to an Appeal Panel on that particular question alone. Ground One First ground – misconstruction of s 10AA(2)(b) In its reasons for decision, and particularly at [69], the Tribunal misconstrued the phrase "that use of land…is engaged on for the purpose of profit" in s 10AA(2)(a) of the Land Tax Management Act 1956. The Tribunal erroneously construed the words in s 10AA(2) as if they read "the holding of the land" or "land ownership" (see [69]) or referred to activities other than the relevant primary production use. The Tribunal found at [39] that the appellant's "desired outcome with respect to the land is that it will eventually be able to subdivide and develop it." Similar findings were made in [39], [41] and [42]. The Tribunal found at [67] that Mr Fraser gave evidence that the council rates were being incurred by the appellant regardless of whether beekeeping operations were carried out on the land. Mr Fraser gave uncontested oral and affidavit evidence that council rates were not a cost of the beekeeping operations. In addition, the Tribunal found at [65] that Mr Hillig gave evidence that incremental costs are those costs that relate to beekeeping that would not have been incurred if the beekeeping activities had not been carried on. Having made these findings (individually or cumulatively), and the facts having been fully found and not being in dispute, the Tribunal should have properly construed s 10AA(2)(a) as enquiring into whether the beekeeping use of the land ("that use"), as opposed to the holding of the land for future potential development, "is engaged in for the purpose of profit". This would necessarily have led it to find that the council rates referred to at [67] to [69] were a cost of holding the land for the desired purpose of development, not a cost of beekeeping. Accordingly, it would have found that the rates are not properly to be subtracted from beekeeping income for the purposes of s 10AA(2)(a), and that a "significant sum" ([68]) was projected on reasonable grounds as the annual profit from the beekeeping operations, thus satisfying s 10AA(2)(a). 1. We consider that this ground of appeal must fail, essentially for the reasons enunciated by the respondent, namely that while it seeks to enunciate a question of law, it does so on a false premise because the Tribunal did not in fact construe the words in s 10AA(2) in the fashion set out in the second sentence of paragraph one of ground one of the Notice of Appeal. So much is clear because: 1. the Tribunal poses the questions for itself in paragraphs 3(b) and (c) of the decision below as "whether the beekeeping use of the land" fell within relevant statutory definitions. 2. paragraphs 60, 74 and 76 below all make clear that the Tribunal is asking itself the correct question, namely the beekeeping use of the land or the beekeeping activities being the use of the land. 1. As the factual premise for the existence of the question of law in paragraph one does not arise, the ground necessarily fails. 2. The remaining paragraphs in the first ground each concern findings of fact made by the Tribunal below, which do not raise questions of law. Further, the finding in paragraph 69 is plainly one of fact. We reject this ground of appeal. Ground three Third ground on question of law – finding of uncommerciality It is not clear whether the Tribunal's finding at [71] that Mr Fraser's undertaking of some activities in relation to the beekeeping was "not a commercial arrangement" was relied upon by the Tribunal in its conclusion in relation to s 10AA(2)(b). To the extent it was, such reliance was erroneous. The evidence of Mr Howes was that his compensation was appropriate to manage the appellant's beehives professionally. There was no evidence that Mr Fraser's activities would require substantial compensation. The appellant will prepare brief evidence in relation to the value of Mr Fraser's activities for the purposes of the appeal. The Tribunal should have found, and the Appeal Panel should find, that Mr Fraser's activities in relation to the beekeeping operations do not change the conclusion, otherwise compelled, that s 10AA(2) is satisfied. Leave to appeal Ground 3 in the appellant's grounds of appeal raises, inter alia, a question of fact as to the value of Mr Fraser's relevant services. It is appropriate that brief evidence be received by the Appeal Panel in respect of that question because there was no evidence below that Mr Fraser's activities would require substantial compensation, and the evidence was rather that Mr Howes' compensation was appropriate for him to manage the appellant's beehives professionally. Despite this, the Tribunal made a finding of uncommerciality in [71]. It is not clear whether this finding was material to the Tribunal's decision. It is likely that the Appeal Panel would be assisted by brief evidence of the value of Mr Fraser's relevant services. Accordingly, the appellant seeks leave in relation of this ground. 1. The impugned sentence in paragraph 71 is a factual conclusion that when Mr Fraser gave evidence that he had made lids for the hives and performed general repairs which had, in effect, been provided to Codlea free of charge then, "that is not a commercial arrangement". Put in this way, the appellant is clearly mounting an attack on a factual finding, albeit in a tentative way, i.e. "it is not clear". 2. We accept what the respondent says, namely, that a proper reading of the reasons below indicates that the conclusion that s 10AA(2)(b) was not satisfied by the appellant in relation to its beekeeping activity, was based on the matters identified by Mr Hillig, the independent accountant, and the Tribunal at paragraphs 63 to 73, and the conclusion at paragraph 76, which refers particularly back to paragraphs 72 and 73. 3. Even if we were wrong as to this, and we permitted new evidence to be adduced in the form of the statements of Mr Howes and Mr Fraser (we provisionally accepted these into evidence at the hearing of the appeal) the respondent is correct to say such evidence would not alter the conclusion that the loss from the beekeeping activities actually took place. But in any event, we see no reason to permit that evidence to be adduced now when it could have been adduced and tested at the hearing below. We therefore reject that ground. Ground two Second ground – misconstruction of s 10AA(2)(a) and/or failure to discharge duty The Tribunal misconstrued the phrase "significant and substantial commercial purpose or character" in s 10AA(2)(a) in its reasons, and particularly at [75], by eliding it with the question of whether the beekeeping activity fell within the "sideline", or instead the "commercial", categories put forward by Mr White. Alternatively to 6, the Tribunal did not discharge its duty of determining whether the beekeeping activities had a significant and substantial commercial purpose or character within s 10AA(2)(a). Its only finding in this regard was the finding at [75] that the Tribunal accepted Mr White's evidence that the activities fell within his "sideline category". This does not answer the statutory question. The uncontested evidence before the Tribunal was that beekeepers in Mr White's "sideline" category, as opposed to those in his "amateur" and "recreational" categories, have substantial numbers of hives, produce honey for profitable sale, and represent a large portion of the beekeeping industry. The uncontested evidence was also that the "commercial" category defined by Mr White represented only a very small proportion of the industry. Given this evidence, the Tribunal's finding at [75] cannot support the proposition that the appellant's beekeeping operations do not have a significant and substantial commercial purpose or character for the purposes of s 10AA(2)(a) (unless the Tribunal misconstrued that subsection as asking whether the primary production activities came within a particular industry categorisation, being the top fraction of the industry). The Tribunal instead should have found that, based on the uncontested evidence about the nature of the appellant's beekeeping operations, those operations satisfied s 10AA(2)(a). 1. This ground also must fail as we read the reasons below, given that the evidence from the expert Mr White was that the beekeeping fell into the sideline category, or possibly also the part-time category. Plainly enough, paragraphs 74 to 76 refer back, in this context, to Mr White's evidence. 2. The factual conclusions about Mr White's evidence amply support the legal conclusion that the beekeeping operations do not meet the statutory test: that there had been no profit, and there was no likelihood of one in the near future, and therefore it failed to meet the indicators set out in Ashleigh Developments that the business was set up with the aim of generating a profit year-to-year over a succession of years. There is no question of law here, but even if we were wrong about this and were minded to grant leave to appeal, we accept the submissions of the respondent that because the business never made a profit, but always a loss, and because it has no profit making potential, it does not meet the statutory test. 3. There remains a final ground where leave to appeal is sought, as follows: Leave to appeal Grounds 1 and 2 in the appellant's ground of appeal are on questions of law. To the extent there is uncertainty about whether the Full Court of the Federal Court's decision in Haritos v Commissioner of Taxation [2015] FCAFC 92 is persuasive authority in New South Wales, the appellant seeks leave in relation to these grounds to the extent that they may involve any mixed questions of fact and law. 1. We have noted Haritos above to the extent it is relevant. We see no reason to grant leave as we discern no questions of law in grounds 1 and 2, however even if we granted leave it would not alter the result as will be evident from what we have written already, and because we would have come to the same conclusions as the Tribunal below, and for the same reasons, on all grounds argued. 2. For these reasons, leave to appeal is refused and the appeal is otherwise dismissed. ****** 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: 08 February 2016