Antegra Pty Ltd v Chief Commissioner of State Revenue

1. [1]

   PAYNE JA: The plaintiffs, Antegra Pty Ltd (Antegra), Dominico Capitani and Josephine Capitani are the proprietors of land at Leppington. In 2007, the plaintiffs purchased the land, which had been used as a caravan park, subject to development consent which had been granted to construct a manufactured home estate.

2. [2]

   In July 2008, the relevant consent authority approved a community plan subdivision of the plaintiffs’ land to create 225 community development lots and one community property lot under the provisions of the Community Land Development Act 1989 (NSW).

3. [3]

   Over the relevant years 2015 to 2018, the plaintiffs’ land was subdivided, and manufactured homes were gradually placed on each of the separate community development lots. The purchasers of the manufactured homes entered into lease agreements with the plaintiffs for 99 year lease terms, subject to the various rights retained by the plaintiffs to bring the leases to an end if redevelopment for the purposes of the mooted South West growth corridor was permitted by the NSW Government.

4. [4]

   Each of the separate community development lots was assessed as liable for land tax in the 2016, 2017 and 2018 land tax years. The plaintiffs sought, and were refused, an exemption in the 2016, 2017 and 2018 land tax years from land tax under s 10Q of the Land Tax Management Act 1956 (NSW). It is the application of this section which is the subject of this case.

5. [5]

   The plaintiffs initially sought a review of the following assessments issued by the Chief Commissioner (the Commissioner):

   1. (1)

      Land Tax Assessment Notice (ID 1696733375) issued by the defendant to the plaintiffs on 14 October 2019, which reassessed land tax of $76,025.05 on the plaintiffs’ land at Leppington, NSW owned as at 31 December 2015 for the 2016 land tax year (2016 reassessment) (unless the Court found that the 2016 reassessment was invalid under s 9(2) of the Taxation Administration Act 1996 (NSW)); or

   2. (2)

      Land Tax Assessment Notice (ID 1641703689) issued by the defendant to the plaintiffs on 26 October 2016, which reassessed land tax of $47,675.90 on the plaintiffs’ land owned as at 31 December 2015 for the 2016 land tax year (2016 assessment) (if the Court found that the 2016 reassessment was invalid under s 9(2) of the Taxation Administration Act); and

   3. (3)

      Land Tax Assessment Notice (ID 1696733375) issued by the defendant to the plaintiffs on 14 October 2019, which reassessed land tax of $215,270.55 on the plaintiffs’ land owned as at 31 December 2016 for the 2017 land tax year (2017 reassessment) (unless the Court found that the 2017 reassessment was invalid under s 9(2) of the Taxation Administration Act); or

   4. (4)

      Land Tax Assessment Notice (ID 1678299932) issued by the defendant to the plaintiffs on 2 October 2018, which assessed land tax of $179,811.20 on the plaintiffs’ land owned as at 31 December 2016 for the 2017 land tax year (2017 assessment) (if the Court found that the 2017 reassessment was invalid under s 9(2) of the Taxation Administration Act); and

   5. (5)

      Land Tax Assessment Notice (ID 1678299932) issued by the defendant to the plaintiffs on 2 October 2018, which assessed land tax of $295,426.20 on the plaintiffs’ land owned as at 31 December 2017 for the 2018 land tax year (2018 assessment).

6. [6]

   In oral opening at the trial, the plaintiffs abandoned the challenge to the assessments described at (2) and (4) above. Accordingly, the proceedings concern three assessments, being those described at (1), (3) and (5) above.

7. [7]

   The proceedings in this Court are an “appeal” for the purposes of the Supreme Court Act 1970 (NSW): see s 19(2) of the Supreme Court Act and s 97(4) of the Taxation Administration Act. An appeal under s 97 is a de novo review not limited to the materials before the Commissioner: Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue of the State of New South Wales (2011) 245 CLR 446; [2011] HCA 41 at [12]-[22]; Grain Growers Ltd v Chief Commissioner of State Revenue [2015] NSWSC 925 at [7].

8. [8]

   The plaintiffs bear the onus of proving their case on the balance of probabilities: Taxation Administration Act, s 100(3); B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187 at [104].

Relevant facts

1. [9]

   There was no disagreement at the trial about the principal facts. The affidavits read were those of Vanessa Walsh affirmed 26 July 2019 with exhibit VW-1, Bernard McCool affirmed 13 July 2020 with exhibit BM-1 and 6 October 2020 with exhibit BM-2 [1] and Ryan McGowan affirmed 24 August 2020 with exhibit RAJM-1. There was a limited cross-examination of Mr McCool. No credit submission was made about his evidence. Whilst I accept that Mr McCool gave evidence honestly, other than to the extent that his evidence annexed relevant documents, I gave little weight to his subjective views about what he regarded as the relevant issues. Those views were apparently based on assumptions, that were not made out, about the correct operation of the statute. Whilst no doubt sincerely expressed, Mr McCool’s subjective motivations to act as he did and his views about the meaning and operation of the elements contained within s 10Q of the Land Tax Management Act were of little assistance.

2. [10]

   The relevant entities the subject of these proceedings are:

   1. (1)

      Antegra ACN 080 385 011. Antegra has traded under this name since 13 April 2010. From registration on 13 October 1997 to 13 April 2010, Antegra was known as Transition Resort Holdings Pty Ltd (Transition Resort Holdings);

   2. (2)

      Antegra Management Leppington Pty Ltd ACN 146 588 436 (Antegra Management). Antegra Management is the operator of the property known as the Antegra Estate; and

   3. (3)

      Lepcon Pty Ltd ACN 134 411 706 (Lepcon). Lepcon sold manufactured homes to incoming residents at the Antegra Estate as trustee for the Leppington MHE Construction Unit Trust.

3. [11]

   On 8 November 2006, Liverpool City Council (the Council) approved the redevelopment of an existing caravan park at Lot 13 DP 707337, Camden Valley Way, Leppington NSW (the Development Site), for “256 manufactured home sites and associated amenities and recreational facilities, car parking, landscaping, internal roadways, acoustic mound and site works”.

4. [12]

   On 31 July 2007, Antegra, Dominico and Josephine Capitani purchased the Development Site. Antegra owns a two-thirds share of the Development Site as a joint tenant with Dominico and Josephine Capitani, who together own a one-third share as tenants in common.

5. [13]

   On 27 September 2007, the Council approved a modification to the 2006 development consent to reduce the number of approved manufactured home sites from 256 to 225. The application to modify the development consent was made under former s 96 of the Environmental Planning and Assessment Act 1979 (NSW) (since renumbered as s 4.55).

6. [14]

   On 24 July 2008, the Council approved a community plan subdivision of land at the Development Site to create 225 community development lots and one community property lot under the provisions of the Community Land Development Act. I will return to the importance of this issue in detail below. The approval was given in accordance with cl 8 of the State Environmental Planning Policy No 36 – Manufactured Home Estates. Clause 8 relevantly provided:

7. [15]

   On 25 July 2008, the Council approved the operation of a manufactured home estate with up to 225 dwelling sites on the Development Site. The approval was given under s 68 of the Local Government Act 1993 (NSW), subject to conditions which, among other things, modified the operation of the Local Government (Manufactured Home Estates, Caravan Parks, Camping Grounds and Moveable Dwellings) Regulation 2005 (NSW) in relation to the Development Site.

8. [16]

   On 29 June 2010, the Council approved modifications to the 2006 development consent and the 2008 subdivision consent to allow, relevantly, for the staged redevelopment of the Development Site.

9. [17]

   The Development Site was subsequently subdivided in stages to create separate Torrens title lots each owned by Antegra, Dominico and Josephine Capitani in the proportions described above.

10. [18]

    The plan of subdivision for community plan DP 270685 was registered on 16 August 2011 and amended as further subdivisions were effected. The subdivided lots, together with the associated common property, were referred to in various places in the evidence as the “Antegra Estate”. The Development Site was subdivided as follows:

    1. (1)

       on 16 August 2011, the land was subdivided to create a total of 39 Torrens title lots and one community property lot;

    2. (2)

       on 9 September 2015, the land was subdivided to create a total of 41 Torrens title lots and one community property lot (thus there were 41 Torrens title lots as at 31 December 2015 being the relevant date for the 2016 tax year);

    3. (3)

       on 1 April 2016, the land was subdivided to create a total of 101 Torrens title lots and one community property lot;

    4. (4)

       on 21 December 2016, the land was subdivided to create a total of 137 Torrens title lots and one community property lot (thus there were 137 Torrens title lots as at 31 December 2016 being the relevant date for the 2017 tax year);

    5. (5)

       on 8 November 2017, the land was subdivided to create a total of 176 Torrens title lots and one community property lot;

    6. (6)

       on 11 December 2017, the land was subdivided to create a total of 226 Torrens title lots and one community property lot (thus there were 226 Torrens title lots as at 31 December 2017 being the relevant date for the 2018 tax year). [2]

11. [19]

    Construction of the manufactured homes commenced in 2010 and continued in stages until 31 December 2018, the relevant date for the 2019 tax year (which is not the subject of these proceedings), when all 225 dwelling sites on the Development Site had freestanding manufactured homes built on them.

12. [20]

    The stages of construction of manufactured homes available for occupation on the plaintiffs’ land were as follows:

    1. (1)

       as at 31 December 2015, approximately 30 manufactured homes had been built and were available for occupation;

    2. (2)

       as at 31 December 2016, approximately 93 manufactured homes had been built and were available for occupation;

    3. (3)

       as at 31 December 2017, approximately 150 manufactured homes had been built and were available for occupation; and

    4. (4)

       as at 31 December 2018, 225 manufactured homes had been built and were available for occupation.

13. [21]

    On or before 12 December 2011, the plaintiffs’ land was entered on the residential parks register maintained under the Residential Parks Act 1998 (NSW).

14. [22]

    On 1 November 2015, the Residential Parks Act was repealed and the Residential (Land Lease) Communities Act 2013 (NSW) (the RLLC Act) commenced. The plaintiffs’ land was taken to be registered under the register of communities required to be kept under s 14 of the RLLC Act: see cl 4(1) of Sch 2 to that Act. The plaintiffs’ land remains on the register of communities under the name “Antegra Leppington” and with the address “1 Antegra Drive, Leppington NSW”.

15. [23]

    The residents of manufactured homes sited on the community development lots do not own the land on which their manufactured home is situated. Each of the original residents purchased the homes, designed to be movable, from Lepcon as trustee for the Leppington MHE Construction Unit Trust.

16. [24]

    Antegra, Dominico and Josephine Capitani retain ownership of each parcel of land and lease the land to the residents under 99 year lease agreements. In each agreement, Antegra, Dominico and Josephine Capitani are the lessors. Annexure A to the standard lease agreement comprises a “Standard Form Residential Site Agreement” (the site agreement). Antegra, Dominico and Josephine Capitani are parties to the site agreement. Antegra Management is also a party to the site agreement and is identified as the “operator” of the Antegra Estate.

17. [25]

    The leases are registered. Residents agree to pay a site fee, as rent, to Antegra Management on a weekly, fortnightly or monthly basis. The manufactured homes are not subject to stamp duty and the owners receive 100% of the proceeds of sale when they leave or re-sell.

18. [26]

    Under the site agreement, Antegra Management is required to maintain the residential site, common areas, mail facilities and all services and facilities required by the development consent to be available for the life of the community.

19. [27]

    It is apparent that the plaintiffs adopted this structure to maintain ownership of the land against a background of the possible future redevelopment of the entire area as part of the mooted South West growth corridor. For that reason, the plaintiffs needed to assure the Council that the proposed subdivision would not lead to fragmentation of landholdings (other than on paper), potentially impeding development as part of that growth corridor. I also accept that at least part of Mr McCool’s subjective purpose in effecting the community title subdivision was to allow for the creation of leases that extended for greater than 20 years. This would no doubt have increased the value to the plaintiffs of the relevant sales of manufactured homes and attendant lease values, whilst maintaining the option value of the land should the mooted South West growth corridor be approved and redevelopment of the site become viable within that period.

20. [28]

    The plaintiffs’ statement of environmental effects accompanying the 2008 development application for the community plan subdivision noted that:

21. [29]

    The plaintiffs’ statement of environmental effects also gave further details about the proposed development and expressed a reason for seeking the community plan subdivision as being to enable reliance upon a lease to which the Residential Tenancies Act 1987 (NSW) (now repealed) applied, rather than the dealing with tenants being reliant upon the Residential Parks Act which imposed a greater constraint:

22. [30]

    I find that the primary objectives of the community development subdivision were to allow for the creation of leases that extend for greater than 20 years to provide greater control and to permit the plaintiffs to manage the redevelopment of their land should redevelopment not be a viable option within that period.

23. [31]

    Consistently with those objectives, the plaintiffs explained that:

24. [32]

    The following passage then appears under the heading “likely impacts of the development”:

25. [33]

    To give effect to the representations made to the Council about the continued availability of the plaintiffs’ land for redevelopment during the term of the leases entered into, termination provisions were broad.

26. [34]

    The leases entered into with the owners of the manufactured homes were in a common form. All incorporated, as “Annexure A”, a site agreement in the form prescribed by the Residential (Land Lease) Communities Regulation 2015 (NSW). The site agreement relevantly provides, under the heading “Notes – Termination of agreement”, that:

27. [35]

    Similarly, paragraph 4 under the heading “Important information” provides:

28. [36]

    The possible redevelopment of the site as part of the mooted South West growth corridor provides, in part, an explanation for the structure adopted and the references in the contemporaneous documents to the undesirability of “fragmentation” of the site, despite the subdivision. As I will explain, the plaintiffs’ choice to pursue a community plan subdivision of their land under the provisions of the Community Land Development Act is at the heart of the issues in these proceedings.

29. [37]

    The relevant assessments of land tax in this case were based on what the Valuer General had done under the Valuation of Land Act 1916 (NSW).

30. [38]

    The Valuer General valued the separate parcels by reference to the property identification numbers of the individual parcels as they were created by subdivision. Those land values were taken by the Commissioner and applied in issuing an assessment in each of the tax years which was comprised of calculations based on an aggregation of the land tax taxable value of each of those individual parcels of land:

    1. (1)

       In the 2016 reassessment (which is the relevant assessment for the purposes of this case), the supporting information identified 41 separate parcels of land and identified a separate land tax taxable value for each, for the purposes of calculating an aggregated taxable land value, to which land tax was applied in accordance with the formula in the Land Tax Management Act.

    2. (2)

       In the 2017 reassessment (which is the relevant assessment for the purposes of this case), the supporting information identified 137 separate parcels of land and identified a separate land tax taxable value for each, for the purposes of calculating an aggregated taxable land value, to which land tax was applied in accordance with the formula in the Land Tax Management Act.

    3. (3)

       In the 2018 assessment, the supporting information identified 225 separate parcels of land and identified a separate land tax taxable value for each, for the purposes of calculating an aggregated taxable land value, to which land tax was applied in accordance with the formula in the Land Tax Management Act. [3]

Expert evidence

1. [39]

   As I will explain, the expert evidence relied upon by the parties was of little relevance to the issues I must determine. The plaintiffs read the expert report of Michael Dyson dated 10 July 2020, expert report in reply of Michael Dyson dated 23 September 2020 and the joint expert report of Michael Dyson and Gregory Jones dated 30 October 2020. The defendant read the expert report of Gregory Jones dated 24 August 2020.

2. [40]

   Both experts were property valuers. No challenge was made to their expertise to express the opinions they were asked to express. The experts were instructed to provide their expert opinion about whether the manufactured houses sold at the Antegra Estate could be described objectively as “low cost” accommodation during the 2016, 2017 and 2018 land tax years.

3. [41]

   Mr Dyson, who was retained by the plaintiffs, concluded that the manufactured houses at Antegra Estate comprised “low cost” accommodation because:

   1. (1)

      the selling prices of all the dwellings in the calendar years 2016, 2017 and 2018 were significantly below the median price of dwellings (both houses and units) in the Sydney Metropolitan Area; and

   2. (2)

      the rental paid by the lessees of the community development lots was approximately the same as or lower than the rental charged at other mobile housing estates in comparable areas of the Sydney Metropolitan Area.

4. [42]

   Mr Jones, who was retained by the Commissioner, applied a different valuation methodology. [4] For each year, Mr Jones selected a “subject property” within the Antegra Estate (being a home that had been sold that year) and compared its sale price to the sale price of other properties in the local area outside of the Antegra Estate. Mr Jones calculated the freehold equivalent cost of the subject property, based on local sales evidence, for comparison against the adjusted “Antegra price” of the same property.

5. [43]

   Mr Jones concluded that the “Antegra price” was above the adjusted price derived from local sales evidence for the calendar year 2018 by 13%, at or about the price derived in 2017 and below the price derived in 2016 by 10%. Mr Jones did not express an opinion as to whether the accommodation at the Antegra Estate was objectively “low cost” accommodation in 2016 by reason of it being 10% below the adjusted sale price of properties in the local area.

6. [44]

   The joint expert report was dated 30 October 2020. The experts addressed nine substantive issues:

   1. (1)

      Issue one was whether there is a single comparator price data set considered to be the best representation of the market for the accommodation at the Antegra Estate. The experts agreed that sales in the Liverpool Local Government Area provided the best comparable evidence for the sale of dwellings at the Antegra Estate. Whilst Mr Jones considered the “total” category or “all dwelling category” a better representation for the purposes of comparison than either houses or units, Mr Dyson considered that the accommodation at the Antegra Estate was equivalent to a house. I prefer Mr Jones’ conclusion. The issue in assessing comparability always involves value judgments of fact and degree. Using the “all dwelling” category of sales in the Liverpool Local Government Area much better aligns as a relevant comparator with the bundle of rights that purchasers of manufactured homes at the Antegra Estate acquired.

   2. (2)

      Issue two was whether the median price, or lower quartile price, or some other price point, was the most useful price to compare with the accommodation at the Antegra Estate to determine whether the land was used and occupied primarily for “low cost accommodation”. Mr Jones considered that either the median price or the lower quartile price was a useful indicator whilst Mr Dyson considered that the median price was the most useful price. I conclude that the broader approach adopted by Mr Jones provides far more useful information for comparison purposes if I am to determine whether manufactured homes on the plaintiffs’ land were objectively providing “low cost accommodation”.

   3. (3)

      The experts agreed that the date of the contract was the best date to use for the purpose of benchmarking the sales price for each home: issue three. I accept that agreement.

   4. (4)

      The experts agreed that the transfer duty (applied to the data set property prices) and revised adjustments (applied to Antegra sales) as set out by Mr Jones could be applied: issue four. I accept that agreement.

   5. (5)

      The experts agreed that the purchase price of the land (being land and buildings) could be determinative of whether land is used and occupied primarily for low cost accommodation where the ongoing costs and expenses associated with the land, being the subject of the investigation, are generally similar to the ongoing costs and expenses of the prices (transactions) comprising the comparisons: issue five. I accept that agreement.

   6. (6)

      Issue six was whether the direct comparison approach should be preferred to an approach that compared the cost of accommodation at the Antegra Estate to the median price or lower quartile price of a price data set. The experts agreed that, in theory, the direct comparison approach was more reliable than a medial or lower quartile comparison to a price data set. However, the experts agreed that the direct comparison approach could not be preferred over, or considered superior to, the use of medial or lower quartile indicators in the price data sets considered. I accept that agreement.

   7. (7)

      The experts agreed that the direct comparison approach did not require the compared properties to be identical to produce a reliable result: issue seven. This is self-evidently correct, and the agreement of the experts informs my conclusion in relation to issue one.

   8. (8)

      The experts agreed that the small number of sales contracts in 2018 made data analysis and medial prices unreliable: issue eight. I accept that agreement.

   9. (9)

      Issue nine was whether the expansion of the 2018 Antegra sales data by including resales meaningfully assisted the analysis of the data. Mr Jones considered that the inclusion of the resales (five transactions) did not meaningfully assist in the analysis of the data. Mr Dyson considered that the expansion of the database assisted, although the database was still relatively small at eight properties. I find that the small number of resales should not be taken into account as they do not meaningfully assist in the analysis of the data.

7. [45]

   The task I am required to undertake makes it unnecessary to decide whether houses located for the time being on the Antegra Estate comprise “low cost” accommodation by reference to any of the descriptors chosen by these experts. Neither party suggested that I needed to determine this issue, but rather accused their opponents of having raised the issue. The plaintiffs submitted that:

8. [46]

   If, contrary to the view I take of the task fixed for me by the legislation, it was necessary for me to reach a conclusion about the expert evidence, I prefer the evidence of Mr Jones as better reflecting what I regard as realistic assumptions in performing the task the experts were set. Mr Jones’ “Alternate Preferable approach” has advantages that makes it more reliable than any of the approaches suggested by Mr Dyson:

   1. (1)

      the comparison data has been investigated to ensure integrity;

   2. (2)

      the comparison data excludes no comparable transactions in a way Mr Dyson’s approach does not;

   3. (3)

      the physical composition of the sales evidence has been investigated and is known; and

   4. (4)

      specific features of the sales evidence can be compared against specific features of the comparator property.

9. [47]

   On the contingent hypothesis that I am wrong about the relevance of the issues the experts were asked to address to the task I must perform, I conclude that:

   1. (1)

      for the purposes of the 2016 tax year, the “Antegra price” calculated by Mr Jones in his report was below the price derived in 2016 using his alternate methodology by 10%. In Annexure B to the Joint Expert Report, Mr Jones explains the methodology developed to deal with the small number of Antegra transactions in 2018. I accept Mr Jones’ explanation and the application of that methodology to the “Liverpool LGA Total” as providing the most reliable indication of whether manufactured homes at Antegra were, objectively, “low cost accommodation”. In 2016, 98% of the total transactions were less than the median price and 74% were less than the lower quartile price. I am satisfied that manufactured houses on the separate lots comprising the Antegra Estate should properly be described in the 2016 tax year as “low cost accommodation”;

   2. (2)

      for the purposes of the 2017 tax year, in Mr Jones’ report the adjusted price derived from local sales evidence for the calendar year 2017 was about the same price using his alternate methodology. In Annexure B to the Joint Expert Report, whilst 86% of the total transactions were less than the median Liverpool LGA Total price, only 45% were less than the lower quartile price. I am not satisfied that it has been proven that for the 2017 tax year manufactured houses on the separate lots comprising the Antegra Estate should properly be described objectively as “low cost accommodation”; and

   3. (3)

      for the purposes of the 2018 tax year, Mr Jones’ expert report showed that the Antegra price was above the adjusted price derived from local sales evidence for the calendar year 2018 by 13%. In Annexure B to the Joint Expert Report, while 67% of the total transactions were less than the Liverpool LGA Total median price, only 33% were less than the lower quartile price. I am not satisfied that it has been proven that manufactured houses on the separate lots comprising the Antegra Estate should properly be described for the purposes of the 2018 tax year as “low cost accommodation”.

Legislation

1. [48]

   At all relevant times, s 10Q of the Land Tax Management Act provided: [5]

2. [49]

   There are three potentially relevant guidelines in play in this case. The plaintiffs’ primary case is that it is only the first of those guidelines which is relevant. The plaintiffs’ fall-back case is that they are entitled to succeed even if guideline version 2 applies in 2016 and 2017 and guideline version 3 applies in 2018.

3. [50]

   The Commissioner’s case is that guideline version 2 applies in the 2016 and 2017 tax years and guideline version 3 applies in the 2018 tax year. The Commissioner’s fall-back submission is that even if the first guideline applied in the 2016, 2017 and 2018 tax years, the plaintiffs would nevertheless not be entitled to the exemption.

4. [51]

   Revenue Ruling LT 071 (guideline version 1) was issued on 7 March 2003 and was effective to 31 December 2015. I have set out guideline version 1 at Annexure A to these reasons. The critical parts of guideline version 1 for present purposes are:

5. [52]

   An important matter of context is that the Residential Parks Act, which was the subject matter of guideline version 1, was repealed on 1 November 2015 and replaced by the RLLC Act. A second guideline, Revenue Ruling LT 071 v2 (guideline version 2), was issued on 17 December 2015. Guideline version 2 was effective from 1 January 2016. It was specifically addressed to land “which is or includes a ‘community or residential community’ within the meaning of the … RLLC Act”. I have set out guideline version 2 at Annexure B to these reasons. The critical parts of guideline version 2 for present purposes are:

6. [53]

   In turn, guideline version 2 was replaced by Revenue Ruling LT 071 v3 (guideline version 3). It was common ground that there were no relevant differences between guideline versions 2 and 3 for the purposes of this application. In particular, guideline version 3, issued on 7 February 2018, was also addressed to land “which is or includes a ‘community or residential community’ within the meaning of the … RLLC Act”. I have included guideline version 3 at Annexure C to these reasons.

7. [54]

   A critical feature of guideline version 2 and guideline version 3 is that each applies in determining whether land which is or includes a “community or residential community” within the meaning of the RLLC Act, referred to in these guidelines as a “community”, is entitled to a land tax exemption under s 10Q.

8. [55]

   The RLLC Act contains a number of provisions relevant in determining whether any land the subject of the present application is land which is or includes a “community or residential community” within the meaning of the Act. At all relevant times, the RLLC Act provided: [6]

9. [56]

   Section 8 of the RLLC Act provides that the Act does not apply to a place “that is wholly subject to a … community scheme”. A “community scheme” in s 8 of the RLLC Act means “a scheme (other than a strata scheme) within the meaning of the Community Land Management Act 1989.” Community scheme lots and strata scheme lots are treated as parcels for land valuation purposes: ss 27A and 27B of the Valuation of Land Act.

10. [57]

    It will be recalled that the lease over every one of the separate lots contains, as Annexure A to the lease, a site agreement in the form prescribed by the Residential (Land Lease) Communities Regulation 2015. Specific additional terms of Annexure A provide:

11. [58]

    The “community management statement” referred to in the lease is a product of the Community Land Management Act which relevantly provides:

12. [59]

    The “community management statement” to which the plaintiffs were parties was in evidence, as was the “community plan of subdivision”. Each of the plaintiffs’ separate lots was thus a place that is wholly subject to a “community scheme” as defined in the RLLC Act.

13. [60]

    Some important aspects of the features and operation of the RLLC Act, on the one hand, and the Community Land Management Act, on the other, should be noticed.

14. [61]

    The first stated object of the RLLC Act is “to improve the governance of residential communities”: s 3(a). In the Second Reading Speech to the Residential (Land Lease) Communities Bill 2013 (NSW), the then Minister for Fair Trading said that the Government had “totally rewritten the law” following a two-year review of the Residential Parks Act: see New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 18 September 2013 at 23730. A key part of that rewriting was the change to the title and language of the legislation. The Minister said that:

15. [62]

    The Minister described the effect of these changes as follows:

16. [63]

    What is critical in this case is the clear statement effected by the RLLC Act of “who is and who is not meant to be covered by the legislation”. The RLLC Act does not apply to certain residential agreements, for example, the sale or purchase of residential premises or an agreement arising under certain company title schemes. The RLLC Act does not apply to certain premises, for example, any part of a hotel or motel or any premises ordinarily used for holiday purposes (see s 6(2)(b)-(c)) or long-term casual occupation: see s 6A. The RLLC Act does not apply to certain arrangements, including those made for long-term casual occupation or for holiday purposes: see s 7(1)(a)-(b). As set out above, the RLLC Act does not apply to a place “that is wholly subject to a … community scheme”.

17. [64]

    The RLLC Act is concerned with land that is occupied or made available for occupation under an agreement or arrangement in the nature of a tenancy. It regulates a relationship which has a number of features of a landlord and tenant relationship between, relevantly, manufactured homeowners and operators of residential communities. Among other things, it sets out their respective rights and obligations and establishes procedures for resolving disputes. The homeowners do not own the land on which the community is located.

18. [65]

    The Community Land Management Act deals with the management of community, precinct and neighbourhood schemes. Those schemes are created when a community plan, precinct plan or neighbourhood plan is registered pursuant to the Community Land Development Act. As I have found, the plaintiffs’ land was subject to a Community Land Development Act subdivision and each of the lots comprising the plaintiffs’ land is subject to a Community Land Management Act community management statement.

19. [66]

    The object of the Community Land Development Bill 1989 (NSW) was to extend the concept of common property to schemes involving conventional subdivisions. A “community scheme” is created by registration of a “community plan” comprising two or more “community development lots” and one other lot which is “community property” for the use of participants in the community scheme. When a community plan is registered as a deposited plan, a corporation is constituted under the Community Land Development Act (a “community association”) and the community property vests in that corporation.

20. [67]

    The Explanatory Note to the cognate Community Land Management Bill 1989 (NSW) provided:

21. [68]

    The apparent assumption underlying the Bill was that “the proprietors of neighbourhood lots and strata lots” would become the registered proprietors of the lots comprised in subdivisions of the development lots. It was common ground on this application that the plaintiffs’ land that was subdivided pursuant to the Community Land Development Act where approval had been granted by the relevant consent authority would, however, be captured by the definition of “community scheme” in the Community Land Management Act even if legal title to the land did not pass to each owner of a manufactured home occupying the lot under a lease.

22. [69]

    Finally, Division 3B of the Conveyancing Act 1919 (NSW) should be noticed. This provides:

23. [70]

    By reason of Division 3B a lease longer than 20 years was not possible save for the application of a plan of subdivision (within the meaning of s 195) of land within a manufactured home estate (within the meaning of the Local Government Act) that is marked, in accordance with the regulations, so as to indicate that development consent to the subdivision has been granted under the Environmental Planning and Assessment Act subject to the condition that the subdivision is a subdivision for lease purposes. In this case that was effected by a concurrent application by the plaintiffs under the Community Land Development Act.

24. [71]

    As I will explain in greater detail, one of the most important issues in this case arises by reason of the fact that each lot of the plaintiffs’ land is land that was subdivided pursuant to the Community Land Development Act and which is wholly subject to a community scheme. Before 2015, the Residential Parks Act applied to the plaintiffs’ land and created overlapping rights and obligations. Following the repeal of the Residential Parks Act and the commencement of the RLLC Act, however, land wholly subject to the Community Land Management Act was carved out of the RLLC Act by reason of s 8 of that Act.

25. [72]

    At the heart of the plaintiffs’ case is a complaint that s 8 of the RLLC Act creates an unfairness as the plaintiffs’ land before late 2015 was regulated by two complementary legislative regimes, the Community Land Management Act and the Residential Parks Act. It was submitted that the plaintiffs’ land qualified for exemption from land tax under s 10Q of the Land Tax Management Act at that time pursuant to guideline version 1.

26. [73]

    The plaintiffs now find themselves bound by two regulatory regimes (one being different to the former), being the RLLC Act and the Community Land Management Act. The plaintiffs submit that the Court should treat guideline version 1 as continuing to apply to the plaintiffs’ land or, alternatively, the Court should construe guideline versions 2 and 3 as applying only to defined terms in the guidelines themselves and treat as irrelevant the exclusion from the RLLC Act of land wholly subject to a community scheme within the meaning of the Community Land Management Act effected by s 8 of the RLLC Act.

Consideration

1. [74]

   Whilst the plaintiffs in their written submissions raised a number of so-called “preliminary issues” which they asserted needed to be determined first, on the correct construction of s 10Q, most do not arise or arise only peripherally. That is because much of the plaintiffs’ case was predicated upon an operation of guideline version 1 in the 2016, 2017 and 2018 tax years which I do not accept. A number of additional issues tendered by the plaintiffs as raised by this application are, upon analysis, subsumed in consideration of the construction issue concerning s 10Q and in the application of guideline versions 2 and 3.

2. [75]

   The real issues I am required to determine are as follows:

   1. (1)

      the correct construction of s 10Q of the Land Tax Management Act;

   2. (2)

      whether on its correct construction guideline version 1 applied in the 2016, 2017 or 2018 tax years;

   3. (3)

      whether the plaintiffs’ land was a “community or residential community” within the meaning of the RLLC Act in the 2016, 2017 or 2018 or all tax years. This includes consideration of the issue whether each of the lots comprising the plaintiffs’ land qualified for an exemption from land tax under guideline version 2 in the 2016 and 2017 tax years and under guideline version 3 in the 2018 tax year; and

   4. (4)

      whether further remissions of interest should be granted.

3. [76]

   The relevant principles of construction were not controversial on the appeal. The meaning of words and phrases is influenced by the immediate context in which they are used. The meaning of the whole may be different to the sum of the meaning of the parts: Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389; [1996] HCA 36 at 396-397 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ) quoting Lord Hoffmann in R v Brown [1996] 1 AC 543 at 561.

4. [77]

   The modern approach to statutory interpretation uses “context” in its widest sense “to include such things as the existing state of the law and the mischief which, by legitimate means … one may discern the statute was intended to remedy”: CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; [1997] HCA 2 at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).

5. [78]

   Those “legitimate means” include any material that may be considered in the interpretation of a provision of an Act, or a statutory rule made under the Act, including all matters not forming part of the Act that are set out in the document containing the text of the Act as printed by the Government Printer: Interpretation Act 1987 (NSW), s 34(2)(a). A construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object: Interpretation Act, s 33.

6. [79]

   In Taylor v The Owners – Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9 French CJ, Crennan and Bell JJ said at [39]:

7. [80]

   At [65]-[66] in the same case, Gageler and Keane JJ said:

8. [81]

   In SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 Keane, Nettle and Gordon JJ said at [14]:

9. [82]

   Although this question was not squarely addressed in the parties’ written submissions, I granted leave to supply references to cases where the proper interpretation of guidelines such as those here engaged was considered. Both sides took up that opportunity.

10. [83]

    A convenient starting point in considering this issue is Pearce, Statutory Interpretation in Australia (9th ed, 2019, Lexis Nexis), where the observation is made at [1.2] that:

11. [84]

    Herzfeld and Prince, Interpretation (2nd ed, 2020, Thomson Reuters) states on this topic at [16.10]:

12. [85]

    Each party urged me to apply the ordinary principles of statutory interpretation in construing the guidelines. A number of cases from related areas were referred to by the parties in the case references supplied after the hearing. For example:

    1. (1)

       Instruments of delegation must be construed in accordance with ordinary principles of statutory construction, including applicable statutory provisions: Fisk v Chief of the Defence Force (No 2) [2017] FCA 1490 at [29], [32] (Perry J).

    2. (2)

       Commercial tariff concession orders should be considered as a species of delegated legislation. The general principles relating to the interpretation of Acts of Parliament are equally applicable to the interpretation of delegated legislation:

    3. (3)

       Development control plans have been interpreted in accordance with the normal principles of statutory construction, that is, by reference to their text, context and purpose: see CPT Manager Ltd v Broken Hill City Council [2010] NSWLEC 69 at [171]-[173] (Craig J).

13. [86]

    In a related area, in Salvation Army (New South Wales) Property Trust v Chief Commissioner of State Revenue (2018) 96 NSWLR 119; [2018] NSWSC 128, Ward CJ in Eq interpreted the guidelines approved by the Treasurer for the purposes of s 275 of the Duties Act 1997 (NSW) in accordance with the ordinary principles of statutory construction: see at [159]-[166]. I respectfully agree with and adopt her Honour’s approach.

14. [87]

    I conclude that a guideline approved by the Treasurer for the purposes of s 10Q(1)(c) of the Land Tax Management Act is to be construed according to its text and purpose as evident from the document itself in the context of the legislative scheme in which the guidelines are required to be applied.

15. [88]

    The first issue to be determined is the correct construction of s 10Q of the Land Tax Management Act. Some background needs to be sketched. Land tax is levied on the taxable value of all land in NSW 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: see ss 7, 8 and 9(1) of the Land Tax Management Act; Perry Properties Pty Ltd v Chief Commissioner of State Revenue (2013) 85 NSWLR 240; [2013] NSWCA 274 at [5]; Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378; (2014) 96 ATR 875 at [34].

16. [89]

    Land tax is levied on particular “parcels” of land. As Barrett AJA (with whom Macfarlan and Ward JJA agreed) explained in Chief Commissioner of State Revenue v Metricon Qld Pty Ltd [2017] NSWCA 11; (2017) 105 ATR 11 at [11] fn 4:

17. [90]

    White J, as his Honour then was, explained in much more detail why this was so in Ferella. Given the plaintiffs’ complaint in this case about the reference in guideline versions 2 and 3 to “parcels” of land, his Honour’s explanation of the mechanical aspects relating to the assessment of land tax should be set out at length:

18. [91]

    Section 10Q of the Land Tax Management Act exempts land from taxation “leviable or payable” under that Act in respect of the relevant tax year. Land in relation to which land tax is “leviable or payable” is, generally speaking, a parcel of land for which a land value is entered in the Register of Land Values created by the Valuation of Land Act. In the present case, land tax was levied on each separate parcel of land (see at [38] above). What the plaintiffs seek is that each of those parcels of land be treated as exempt from land tax pursuant to s 10Q.

19. [92]

    The relationship between the Land Tax Management Act and the Valuation of Land Act explains and justifies the reference to “parcels” of land in all three versions of the guidelines. Land tax is levied on a “parcel” of land and s 10Q, if it applies, exempts that “parcel” of land from land tax.

20. [93]

    In Leppington Pastoral Co Pty Ltd v Chief Commissioner of State Revenue [2017] NSWSC 9; (2017) 104 ATR 820, White J returned to the interrelationship between the Land Tax Management Act and the Valuation of Land Act. His Honour explained at [10] that the Chief Commissioner is bound by the Valuer General’s determination of what is a relevant parcel of land that is separately valued on the Register of Land Values kept under s 14CC of the Valuation of Land Act both for the determination of what a relevant parcel of land comprises and its land value as entered in the Register. At [11], his Honour remarked:

21. [94]

    White J’s expanded analysis in Leppington Pastoral of the interaction between the Land Tax Management Act and the Valuation of Land Act and the importance of the parcels of land identified by the Valuer General is instructive in the context of the plaintiffs’ case here that in the 2018 tax year the 225 separate parcels of land which have incurred land tax should be regarded as one piece of land for practical purposes:

22. [95]

    Having sketched this background, I turn to the proper construction of s 10Q. Most, if not all, of the essential features of the proper construction of s 10Q of the Land Tax Management Act relevant to the present case were determined by the Court of Appeal in Perry Properties where Meagher JA (with whom McColl JA and Preston CJ of LEC agreed) said:

23. [96]

    Perhaps the critical conclusion in Perry Properties for the purposes of this case is that the guidelines produced pursuant to s 10Q are determinations of policy. Guidelines approved by the Treasurer pursuant to s 10Q enable the Treasurer to describe the circumstances in which land used and occupied primarily for low cost accommodation will be entitled to an exemption from land tax in any tax year.

24. [97]

    A number of things follow from Perry Properties. First, the Commissioner (and the Court standing in the shoes of the Commissioner) is obliged to apply the guidelines as correctly construed. It is not for a taxpayer or the Court on review to seek to rewrite the terms of the guidelines, based on policy arguments particular to an individual taxpayer. Secondly, where guidelines are updated or replaced, as has happened in this case, the updated determination of policy reflected in that updated or replaced guideline must be applied. There is no discretion reposed in the Commissioner, or the Court, to continue to apply guidelines which have been updated or replaced. Thirdly, the guidelines impose a limitation upon the availability of the exemption for what is otherwise, objectively, “low cost accommodation”. Fourthly, the guidelines approved by the Treasurer may contain pre-conditions or requirements which limit the availability of the exemption. In the case of Perry Properties, that structural limitation was a requirement that as a pre-condition to the availability of the exemption a low cost boarding house needed 80% of its residents to have had three months’ continuous or cumulative residence. That finding has a counterpart here with the requirement that low cost accommodation the subject of guideline versions 2 and 3 must first be a “community or residential community” within the meaning of the RLLC Act.

25. [98]

    It follows that I reject the plaintiffs’ central argument that the correct approach to s 10Q is to ask whether:

    1. (1)

       land was used and occupied primarily for low cost accommodation (by which the plaintiffs meant that the land was a “community or residential community” whether or not the RLLC Act applied to the land);

    2. (2)

       application for the exemption was made in accordance with s 10Q; and

    3. (3)

       the Court is satisfied that the land was so used and occupied in accordance with the guidelines by finding that:

26. [99]

    Addressing the first step in that argument, I reject the plaintiffs’ submission that the Court should first address whether “land was used and occupied primarily for low cost accommodation”. Whilst it is true that the land the subject of s 10Q must objectively meet the description of “low cost accommodation”, to determine that issue first and in a vacuum would tend to confuse rather than clarify the analysis of the availability of the exemption. This is because the guidelines are not designed to give guidance to the Commissioner in being satisfied that land is used and occupied primarily for low cost accommodation. To the contrary:

27. [100]

    On the assumption (which for the sake of the analysis I will make here) that the plaintiffs’ land met the description of “low cost accommodation” in s 10Q(1)(a) as a matter of objective fact, the guidelines limit the availability of the exemption and encourage particular types of “low cost accommodation outcomes”. In circumstances where the essence of the parties’ dispute is whether the plaintiffs’ land falls within the requirements of the guidelines, it is neither appropriate nor useful first to delve into the issue of whether the land in question meets the description of “low cost accommodation” in the abstract. It is not helpful to address, as the plaintiffs submitted I should, the subject of whether the land is objectively being used and occupied for “low cost accommodation” under s 10Q if it is a “residential park” or “community or residential community” comprising a “manufactured home estate” primarily used and occupied by “retired persons”, regardless of whether or not the RLLC Act applied to the land. This is because, as Perry Properties establishes, the Court standing in the shoes of the Commissioner is obliged to apply the guidelines as correctly construed.

28. [101]

    As I explained, neither party proposed that I should determine the issue raised in the expert evidence. Strictly speaking, I regard it as unnecessary to do so. If I am wrong in that conclusion, and it is both appropriate and useful first to delve into the issue of whether the land in question meets the description of “low cost accommodation” by reference to the way the question was approached in the expert evidence, for the reasons given in addressing that expert evidence, I am not satisfied that the plaintiffs demonstrated that manufactured homes located at the Antegra Estate comprised “low cost accommodation” in the 2017 and 2018 tax years, but I am so satisfied in respect to the 2016 tax year.

29. [102]

    The second step in the plaintiffs’ argument is uncontroversial. It was common ground that an application had been made by the plaintiffs for exemption from land tax. There is an issue about the content of the form issued for making a claim in each year which I will address below.

30. [103]

    The third step in the plaintiffs’ argument requires greater explanation, but I am unable to accept it as a process of reasoning. Further, I reject the findings sought which are not ones I am satisfied I should make. First, I reject the submission that guideline version 1 applied for the purposes of the 2016, 2017 or 2018 tax years. Secondly, I reject the submission that the plaintiffs’ land was a “residential park” within the meaning of the Residential Parks Act (in the 2016 tax year or in any of the tax years). Thirdly, whilst I find that the plaintiffs’ land was taken to be registered as a “community” under the RLLC Act, I reject the submission that the plaintiffs’ land was a “community or residential community” within the meaning of the RLLC Act (in any or all of the tax years). Fourthly, I reject the submission that the plaintiffs’ land comprised “a parcel of land” used for the purposes of a “community”. Fifthly, I reject the plaintiffs’ submission that more than 50% of the “sites” available for hire or rent were “residential sites” that were occupied or intended for occupation only by retired persons under residential site agreements or more than 50% of the homes on the plaintiffs’ land were used and occupied by at least one qualifying home owner under a site agreement.

31. [104]

    My reasons for reaching each conclusion require some elaboration and commence with an examination of the second issue.

32. [105]

    Guideline version 2 applies in the 2016 and 2017 tax years and guideline version 3 applies in the 2018 tax year. The text, context and purpose of the guidelines demonstrates why this is so.

33. [106]

    So far as the text of guideline version 1 is concerned, it refers to a “residential park to which the Residential Parks Act 1998 applies.” Two critical matters should be noticed. First, the Residential Parks Act which was repealed during 2015 was not in force at midnight on 31 December 2015 being the relevant taxing date for the 2016 tax year. Guideline version 2 was issued on 17 December 2015 and was expressed to apply from 1 January 2016. The text does not support a conclusion that guideline version 1 was to apply for the purposes of the 2016 tax year when a replacement version of the guideline had been issued which addressed the new legislative regime. Secondly, guideline version 1 refers to a residential park to which the Residential Parks Act applies. The use of the present tense is significant.

34. [107]

    So far as context is concerned, the repeal of the Residential Parks Act and the enactment of the RLLC Act is significant. That matter tends strongly in favour of guideline version 2 applying in the 2016 and 2017 tax years. Guideline version 2 refers to land which is or includes a “community or residential community within the meaning of the [RLLC Act]” (emphasis added).

35. [108]

    An additional matter of context is that the guidelines issued to date under s 10Q fall into two broad categories:

    1. (1)

       Guidelines for boarding houses and for low cost rental accommodation. Those guidelines and rulings are replaced annually with a different numbered ruling as maximum tariffs change from year to year. Those rulings specify that the guidelines apply for a particular tax year and provide that they are “effective from” 1 January of that year and “effective to” 31 December of that year.

    2. (2)

       The guidelines for residential parks in guideline versions 1, 2 and 3. Those guidelines do not provide for maximum tariffs and their application is not limited, at least necessarily, to a single land tax year. Guideline version 1 applied for several years.

36. [109]

    So far as purpose is concerned, it is clear on the face of the guidelines, following Perry Properties, that guideline version 2, as approved by the Treasurer, was intended to be a statement of policy binding on the Commissioner and taxpayers. It makes little sense to construe that policy as applying a test by reference to an Act which has been repealed.

37. [110]

    There is no prohibition or limitation in s 10Q(1)(c), (2) or (3) concerning replacing or updating guidelines, other than approval by the Treasurer. The Commissioner is given no power to approve or vary the guidelines: see Perry Properties at [26] (extracted above at [95]).

38. [111]

    Given the purpose of the guidelines, to enable the Treasurer to determine the land used and occupied primarily for low cost accommodation which is entitled to any exemption in any tax year, it is appropriate that the power in s 10Q be understood as permitting the Treasurer to address legislative changes and updated policy considerations.

39. [112]

    I reject the plaintiffs’ submission that the decision of Perry Properties finds or is consistent with guideline version 1 applying in the 2016 tax year (or in any subsequent tax year).

40. [113]

    The guidelines the subject of Perry Properties applied only to the 2007 land tax year and provided for an exemption depending upon actual use and occupation during the calendar year which ended on the relevant taxing date, 31 December 2006. That is clear from [8] of Perry Properties, which sets out the relevant parts of the guideline. At paragraph 3(i) of that guideline, there is a reference to the use of land “during the year ended 31 December 2006, in respect of at least 80% of the accommodation available …”.

41. [114]

    The factual issue in Perry Properties related to a boarding house with many lower income residents. The taxpayer could not prove the residents were sufficiently permanent within the terms of the guideline. The taxpayer was arguing for occupation during a different calendar year to be taken into account. It was the three-month rule that was a feature of the relevant guidelines that was the problem. As noted in addressing the relevant context, the boarding house guidelines are changed every year because the tariffs are updated each year.

42. [115]

    As I have noted in addressing the relevant context, the guidelines for manufactured homes in residential communities can apply for a number of years. So, for example, guideline version 1 was registered in 2003 and applied up to the end of 2015. Guideline version 2 applied for two tax years. Guideline version 3 commenced operation from the beginning of the 2018 tax year and continues to apply.

43. [116]

    I also reject the plaintiffs’ submission that the correct construction of the guidelines is informed by the content of the form that the plaintiffs were required to fill in to make an application for exemption from land tax. The steps in this part of the plaintiffs’ argument were as follows:

    1. (1)

       the plaintiffs were required under s 10Q(1)(b) of the Land Tax Management Act to apply for the exemption in accordance with s 10Q;

    2. (2)

       section 10(5)(a) required the plaintiffs to apply for the exemption in the form approved by the Commissioner, which was the “Application for Exemption – Residential Parks” (OLT 022 – November 2015) Exemption Form;

    3. (3)

       the Exemption Form identified the relevant “criteria for exemption” as being compliance with guideline version 1. The reference is oblique. The Exemption Form referred to “Appendix A” of the guideline but there is no “Appendix A” in guideline versions 2 or 3. The form required applicants to make the following declaration: “We (owner(s) of the land) … have read the criteria for exemption in appendix A of Revenue Ruling LT 71. We meet the exemption criteria”. Applicants were also required to declare that as at 31 December of the relevant year “[a]ll of above land was used as a residential park, which was predominantly occupied by retired people under the guidelines; or [p]art of the land was set aside and primarily occupied by retired people”;

    4. (4)

       section 10(1)(c) of the Land Tax Management Act required the Commissioner (and the Court on review) to be satisfied that the plaintiffs’ land was used and occupied in accordance with guidelines approved by the Treasurer under s 10Q; and

    5. (5)

       the Commissioner so satisfied himself by requiring the plaintiffs to read and declare that they met the exemption criteria in guideline version 1.

44. [117]

    Whilst misleading information in such a form may perhaps form the basis of a claim based on some doctrine of preclusion, no such claim was advanced by the plaintiffs here. In construing the guidelines it would be an error to treat the contents of a form which does not form part of the guidelines approved by the Treasurer as providing a proper basis to construe the meaning of the guidelines or to conclude that guideline version 1 continued to apply notwithstanding the repeal of the Residential Parks Act. The fact that applicants for the exemption were required by a form to make a declaration about an irrelevant matter is also not relevant to the construction of the guidelines approved by the Treasurer. In any event, as I will explain when addressing the remission of interest in issue four below, it is clear that the plaintiffs were not in fact misled by the form or its contents about which guidelines applied in the 2016, 2017 or 2018 tax years.

45. [118]

    Finally, on this issue I reject the plaintiffs’ submission that guideline version 1 applies to the 2016 tax year. It will be recalled that guideline version 2 was expressed to commence on 1 January 2016.

46. [119]

    I reject the plaintiffs’ submission that the “effective dates” of the various versions of the guidelines “are ambiguous, confusing and indeterminate”. There is no ambiguity about the effective dates of the three versions of the guidelines. Midnight on 31 December is simultaneously the last moment in one year and the first moment in the next.

47. [120]

    As set out above, the result of ss 7, 8 and 9(1) of the Land Tax Management Act is that land 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.

48. [121]

    Paragraph 8 of each of guideline versions 2 and 3 provides that the entitlement to an exemption “is to be determined having regard to the relevant facts and circumstances on the taxing date for each tax year (that is, midnight on the 31 December immediately preceding the tax year).”

49. [122]

    The instant of midnight is both the end of one day and the beginning of the next: Prowse v McIntyre (1961) 111 CLR 264; [1961] HCA 79. At 278, Windeyer J said:

50. [123]

    Similarly, Kitto J made the following remarks at 274:

51. [124]

    Midnight on 31 December of the immediately preceding year is the beginning of the “year” (as defined in s 8 of the Land Tax Management Act) commencing on 1 January for which land tax is to be levied. Midnight on 31 December 2015 was the beginning of the 2016 land tax year. It was also the end of the 2015 tax year.

52. [125]

    Having regard to the scheme for the levying of land tax as explained in Ferella and Leppington Pastoral, the appropriate characterisation of the taxing point of midnight on 31 December is that it is the first instant of the tax year which commences at that time. Liability for land tax does not arise at the end of a tax year. Because land tax is levied at the beginning of the year, it is not a tax that arises at the end of the year: ss 7 and 8. Section 8 is expressed in years, starting on 1 January and by referring to the instant of midnight on 31 December.

53. [126]

    The plaintiffs’ suggestion that there is a disconnect between the taxing date for each of the 2016, 2017 and 2018 land tax years and the respective “effective from” dates specified in guideline version 2 (1 January 2016) and guideline version 3 (1 January 2018) is based on a mistaken premise. While the phrase “taxing date” is widely used, the Land Tax Management Act is clear that the taxing point is the instant of midnight on 31 December.

54. [127]

    The decided cases which have considered guidelines issued under s 10Q have proceeded on the assumed basis that the applicable guidelines were those specified for the particular tax year. In Perry Properties the Court of Appeal noted at [5] that the taxing point was midnight on 31 December 2006, and then analysed the operation of guidelines in the rulings stated to apply for the 2007 tax year.

55. [128]

    As a matter of context in the construction of the guidelines I also take into account the fact that guideline version 1 referred to provisions and definitions in the Residential Parks Act, which was repealed with effect from 1 November 2015. The objective intention of the guidelines is that guideline version 2, expressed to commence on 1 January 2016, was intended to apply to the 2016 tax year. It would be a curious conclusion that the superseded guideline, which referred to repealed legislation, continued to apply in circumstances where a replacement version of the guidelines which specifically addressed the new legislative regime had been approved by the Treasurer and issued.

56. [129]

    I conclude that guideline versions 2 and 3 apply according to their terms having regard to their “effective from” dates. Accordingly, guideline version 2 applies to the 2016 and 2017 tax years and guideline version 3 applies to the 2018 tax year. The original guidelines do not apply to these tax years at all.

57. [130]

    As I have said, there were several aspects of the plaintiffs’ submissions raising what were described as “preliminary” issues which tended to confuse rather than illuminate. There were a few respects in which it was said that the guidelines were invalid. That argument fails at the first hurdle. Paragraph 33 of Perry Properties makes clear that the ultra vires argument advanced by the plaintiffs in this case must also fail:

58. [131]

    Essentially the same argument as that described in Perry Properties was made here. It was submitted that if the Court concluded that the guidelines were invalid, it followed that the Court (standing in the shoes of the Commissioner) was free to conclude that the plaintiffs’ land was used and occupied primarily for low cost accommodation. I reject that submission.

59. [132]

    I also reject the plaintiffs’ submission that guideline version 2 or guideline version 3 are invalid in whole or in part in purporting to restrict the exemption available under s 10Q to a “parcel of land”, to the extent that this term means something other than an “area of land” which is or includes a “community or residential community” under the RLLC Act. As I have explained at [89]-[94] above, a central feature of the system of land tax is the identification of parcels of land to which land tax is charged and, if it were available, the exemption would be applied. It is not only permissible but logical and correct that the guidelines binding the Commissioner about the operation of the exemption should do so by referring to parcels of land which is the way the Commissioner is required to tax the land and to which an exemption, if it is available, is to be applied: see Ferella; Metricon; Adams Bidco Pty Ltd v Chief Commissioner of State Revenue [2019] NSWSC 702. There is no inconsistency, let alone an inconsistency going to the validity of the guidelines, between the language of s 10Q (“area of land”) and the language of “parcel of land” used in the guidelines approved by the Treasurer.

60. [133]

    As Perry Properties explained, the Treasurer has determined, as a matter of policy, the extent to which exemption should be available. The guidelines “are able to be used to limit the availability of the exemption so as to encourage particular low-cost accommodation outcomes”. The legal configuration of land is a circumstance which the guidelines may address. Section 10Q(2)(a) permits the inclusion of matters in the guidelines dealing with the circumstances under which accommodation is taken to be low cost accommodation. The plaintiffs’ reliance on King v Commissioner of State Revenue [2019] VCAT 1169 in relation to this topic is misplaced. That case addressed a different legislative scheme. The conclusion in that case has no bearing on the present case.

61. [134]

    For completeness, I reject the plaintiffs’ submission that if the approved guidelines are invalid, the Commissioner’s satisfaction as to whether land is exempt by reason of meeting the requirements in the guidelines must also be invalid. Whilst this issue does not arise on my findings, no satisfactory explanation was offered by the plaintiffs of how this point assisted them. Section 10Q provides an exemption from land tax. Assuming, for the sake of argument, that the Commissioner (or the Court) was not able to be satisfied about compliance with the guidelines, it does not follow that the exemption from land tax springs up and applies.

62. [135]

    The plaintiffs submitted, in the alternative, that all of the separate parcels of their land at Leppington comprised a “parcel of land” for the purposes of guideline versions 2 and 3, because all of the separate parcels of land factually (and physically) comprised “an area of land on which manufactured homes have been, are or are to be placed”.

63. [136]

    I reject the plaintiffs’ submission. It is, factually and legally, incorrect. It is clear from the analysis in the cases that the “parcels of land” referred to in guideline versions 2 and 3 are those upon which land tax is imposed and about which the s 10Q exemption is sought.

64. [137]

    I have set out at [88]-[94] the legal framework for the imposition of land tax. Legally, land tax is imposed on each separate community development lot here engaged. The exemption sought is one applying to each separate community development lot here engaged. The same is true factually. Land tax was imposed on each separate “parcel of land” owned by the plaintiffs and not the aggregated sum of all of the plaintiffs’ separate community development lots: see the factual findings at [38] above.

65. [138]

    A great deal of the written submissions and the evidence was taken up with the plaintiffs’ submission that the question of whether land is used and occupied primarily for “low cost accommodation” under s 10Q(1)(a) is determined by:

    1. (1)

       the type of accommodation provided; and

    2. (2)

       the type of persons who primarily use and occupy the accommodation provided on the land (e.g. persons with low incomes in boarding houses and “retired persons” in a “residential park” or “community or residential community” comprising a “manufactured home estate”).

66. [139]

    I do not agree. Whilst it is correct that objectively the land the subject of exemption under s 10Q must be “low cost accommodation”, Perry Properties establishes that the guidelines approved by the Treasurer are a statement of policy binding on the Commissioner and the plaintiffs on this topic.

67. [140]

    Thus, the plaintiffs’ submission that land will objectively be used and occupied for “low cost accommodation” under s 10Q(1)(a) if it is a “residential park” or “community or residential community” comprising a “manufactured home estate” primarily used and occupied by “retired persons” must be rejected. The plaintiffs submitted that neither the Land Tax Management Act nor the guidelines prescribe a “bright line” dollar amount for determining when “accommodation” in “residential parks” is “low cost”. So much may be accepted. That rather emphasises the point that the plaintiffs, in order to succeed, must establish that they comply with the relevant guidelines approved by the Treasurer for the application of the exemption.

68. [141]

    As I have said, however, I am prepared to proceed on the assumption that the plaintiffs’ land is properly to be considered as “low cost accommodation”. That assumption does not avail the plaintiffs here.

69. [142]

    At the heart of the plaintiffs’ case about the operation of guideline version 2 and guideline version 3 was that proposition that:

70. [143]

    I reject that submission. Paragraph 3 of both guideline version 2 and guideline version 3 refers to land which is or includes a community or residential community within the meaning of the RLLC Act. It is not in dispute that there was a community plan subdivision and accordingly there is a community scheme under the Community Land Management Act as defined in s 3 of that Act.

71. [144]

    I have found that on each lot in each tax year there was sited only a single freestanding home, or the lot was vacant, or a single home was under construction. I conclude that on the correct construction of guideline version 2 and version 3 each relevant parcel of the plaintiffs’ land was not, or did not include, a “community or residential community” within the meaning of the RLLC Act. Each lot was wholly subject to a community scheme for the relevant tax years.

72. [145]

    As to text, each lot of the plaintiffs’ land was not, or did not include, a “community or residential community” within the meaning of the RLLC Act. Section 8 of the RLLC Act has a clear operation in this case. Each lot of the plaintiffs’ land was a “place” to which the RLLC Act does not apply. It is not correct, as the plaintiffs’ submissions tended to do, to treat definitions contained elsewhere in guideline version 2 and guideline version 3 as divorced from the RLLC Act. The text of guideline version 2 and guideline version 3, in requiring the land the subject of the guideline to be a “community or residential community” within the meaning of the RLLC Act, does not support such a reading of the text.

73. [146]

    As to relevant context, guideline version 2 and guideline version 3 plainly requires a “community or residential community” within the meaning of the RLLC Act. The guidelines approved by the Treasurer, used to limit the availability of the exemption, have thus fastened upon a description of land available to attract the exemption with a firm statutory basis. In context, the plaintiffs’ land fell outside that description because the land is not a “community or residential community” within the meaning of the RLLC Act: see s 8 of the RLLC Act.

74. [147]

    As to the purpose of the guidelines, it is tolerably clear that the approved guidelines versions 2 and 3 chose to exclude land from availability for the exemption if that land was not a “place” to which the RLLC Act applied. That is the explanation for the requirement that land be or include a “community or residential community” within the meaning of the RLLC Act. Whilst the plaintiffs’ criticised the unfairness of the selection made by the Treasurer in the guidelines it is not for the Commissioner, or the Court, to make a different judgment about the extent to which the exemption in s 10Q should be made available.

75. [148]

    The text, context and purpose of guideline versions 2 and 3 are inconsistent with the plaintiffs’ suggested construction.

76. [149]

    The plaintiffs complained about the unfairness of this outcome:

77. [150]

    The plaintiffs’ submission provides a gloss on the operation of the guidelines and assumes that if “practical matters of fact and common sense reality” are considered they would be entitled to the exemption. I do not agree. Making every assumption favourable to the plaintiffs, the plaintiffs’ land falls outside guideline versions 2 and 3.

78. [151]

    The circumstances of the Antegra Estate are submitted to be atypical of manufactured home estates. I am prepared to assume that is correct. The non-application of the RLLC Act to the plaintiffs’ land however, is not the product of the repeal of the Residential Parks Act or the terms of the Land Tax Management Act, but rather is the product of the application of the guidelines to the regulatory regimes affecting the plaintiffs’ land since 1 November 2015, when the RLLC Act came into operation.

79. [152]

    It is not to the point that, by reason of the transitional provisions, “Antegra Leppington” is taken to be registered under the RLLC Act. It may be accepted that the guidelines require that the community be registered under the RLLC Act: see paragraph 4 of both guideline version 2 and guideline version 3. The transitional provision in cl 4 of Sch 2 to the RLLC Act has the effect that if it was registered under the Residential Parks Act, it is taken to be on the register for the RLLC Act.

80. [153]

    Whilst “Antegra Leppington” is registered under the RLLC Act, the plaintiffs’ land in not a community to which the RLLC Act applies. Each parcel of the plaintiffs’ land is a “place” to which the RLLC Act does not apply by reason of s 8 of the RLLC Act itself.

81. [154]

    There is an additional reason that the plaintiffs’ land is not entitled to exemption from land tax. It will be recalled that paragraph 5 of guideline version 2 provides:

82. [155]

    Paragraph 5 of guideline version 3 is materially the same.

83. [156]

    Guideline version 2 and guideline version 3 set out definitions which have the meanings given by the RLLC Act. The definition of “community or residential community” refers to an area of land “that comprises or includes sites on which homes are, or can be, placed, installed or erected for use as residences by individuals, being land that is occupied or made available for occupation by those individuals under an agreement or arrangement in the nature of a tenancy, and includes any common areas made available for use by those individuals under that agreement or arrangement.”

84. [157]

    That definition, together with the definition of “home”, has the effect that a “community” (being the term used in the rulings) includes a “manufactured home estate”, which is defined in the Dictionary to the Local Government Act to mean “land on which manufactured homes are, or are to be, erected.”

85. [158]

    I have concluded that it is significant that the definition of “community or residential community” consistently refers to “sites”, “homes”, “residences” and “individuals” in the plural. Similarly, the definition of “manufactured home estate” requires that there be “homes”. The general concepts of a community or an estate also indicate that there are expected to be multiple dwellings on the land.

86. [159]

    Guideline version 2 and guideline version 3 require that there be more than one home on the subject land. In respect of each parcel of land in respect of which an exemption was sought, at the relevant taxing point for each tax year the circumstances were one of the following:

    1. (1)

       only a single freestanding home was located on the parcel. In that case, the single home did not constitute a “manufactured home estate” and a “community” as described in the guidelines; or

    2. (2)

       a single freestanding home was being constructed on the parcel. As a preliminary matter, until there is a completion certificate, a structure is not available for occupation. Paragraph 9 in guideline version 2 and guideline version 3 requires the operator to prove that the site is available for occupation. Without the completion certificate that is not possible. Again, a single home does not constitute a “manufactured home estate” and a “community”. In the absence of a completion certificate, the land was not “occupied or available for occupation” as required by the definition of “community or residential community”. Further, paragraph 9 of guideline version 2 (for the 2016 and 2017 tax years) could not apply as the operator could not permit the site to be used by homeowners in the absence of a completion certificate. For the 2018 tax year paragraph 9 of guideline version 3 would similarly not apply; there also was not an existing home that was temporarily unoccupied; or

    3. (3)

       the land was vacant. That land was not “occupied or available for occupation” as required by the definition of “community or residential community”. Similarly, paragraph 9 of guideline version 2 and guideline version 3 could not apply.

87. [160]

    As a result, I conclude that the parcels owned by the plaintiffs were not used and occupied in accordance with the applicable guidelines for the relevant tax years.

88. [161]

    For this additional reason the plaintiffs’ land does not qualify for exemption under s 10Q of the Land Tax Management Act.

89. [162]

    Even if I had concluded that guideline version 1 applied in the 2016 tax year (or in any later year), that would not avail the plaintiffs. Guideline version 1 refers to a “residential park to which the Residential Parks Act 1998 applies.”

90. [163]

    The Residential Parks Act was repealed on 1 November 2015. Paragraph 1 in Appendix A of guideline version 1 identifies the subject matter of the guideline as being the “residential park to which the Residential Parks Act 1998 applies …” (emphasis added).

91. [164]

    After 1 November 2015, the Residential Parks Act no longer “applies” to any property. Even making all the other assumptions favourable to the plaintiffs, there was no “residential park to which the Residential Parks Act 1998 applies” on 31 December 2015 or on 31 December 2016 or on 31 December 2017.

92. [165]

    The savings provisions in Sch 2 to the RLLC Act do not assist the plaintiffs. The use and occupation of a particular parcel of land was not a circumstance created under the repealed Residential Parks Act immediately before its repeal. There is nothing in the savings provisions of the Residential Parks Act that provides the repealed Act with an application to future events. The transitional provisions preserve rights or even things that existed at the time of the repeal, but do not go beyond that. That outcome is consistent with s 30 of the Interpretation Act, which is designed to preserve rights as they existed at the time of the repeal, but not to provide that the Act should continue to apply beyond that preservation of rights. [9] No submission was advanced by the plaintiffs that an accrued right to rely on guideline version 1 existed.

93. [166]

    Even if, contrary to my earlier conclusions, guideline version 1 continued to apply in any one of the relevant tax years, a “residential park” within the meaning of the Residential Parks Act (which includes a manufactured home estate) requires more than a single manufactured home. Throughout guideline version 1, the references to “retired persons” and “residential site agreements” are in the plural, which reflect the intention that there be more than one manufactured home or other moveable dwelling on the subject land, which, it will be recalled, refers to each separate parcel of land.

94. [167]

    In respect of each separate parcel of the plaintiffs’ land, at the prior 31 December date for each tax year, the circumstances were:

    1. (1)

       only a single freestanding home was located on the parcel of land. In that case, the single home did not constitute a manufactured home estate and a “residential park” as defined in the Residential Parks Act; or

    2. (2)

       a single freestanding home was being constructed on the site which, in the absence of a completion certificate, was not available for rent or occupation. Again, a single home does not constitute a “residential park”. Paragraph 3 of Appendix A to guideline version 1 did not apply as that land was not “available for occupation”; or

    3. (3)

       the land was vacant. Such land also does not constitute a “residential park” and, in any case, is not “available for occupation” within paragraph 3 of Appendix A to guideline version 1.

95. [168]

    The plaintiffs also sought a remission of interest. The position at 14 October 2019 (the date of the 2016 and 2017 reassessments) was as follows:

    1. (1)

       for the 2016 tax year – no interest was charged. Interest of $267.80 was paid to the plaintiffs;

    2. (2)

       for the 2017 tax year – interest of $36,319.57 was charged but remitted in full;

    3. (3)

       for the 2018 tax year – interest of $22,548.41 had accrued to 14 October 2019. No remission was granted.

96. [169]

    Interest has been assessed, and continues to accrue, by operation of Part 5 of the Taxation Administration Act, at the sum of the market rate component and premium component: s 22 of the Taxation Administration Act.

97. [170]

    For the interest to be remitted below that which was imposed, the plaintiffs bear the onus of satisfying the Court that their conduct, considered as a whole, justifies further remission under s 25 of the Taxation Administration Act.

98. [171]

    I have concluded that the market rate component of interest should not be remitted. In Adams Bidco, Ward CJ in Eq accepted at [163] that the purpose of the market rate of interest is to compensate the revenue for the loss of tax. I agree that an important purpose of the market rate component of interest is to compensate the revenue for not having the benefit of tax payment from the time it was due.

99. [172]

    I am not satisfied that the circumstances relating to the assessments justify a remission of the market component of interest pursuant to s 25 of the Taxation Administration Act.

100. [173]

     In particular, I reject the plaintiffs’ submission that they were misled when exemption forms were lodged by what are now suggested to be the references in a form to “Appendix A” and thus, it is submitted, guideline version 1.

101. [174]

     The plaintiffs’ objection lodged against the 2016 and 2017 assessments refers only to guideline version 2 and guideline version 3.

102. [175]

     The plaintiffs’ summons filed on 26 July 2019 referred only to guideline version 2. [10] The plaintiffs’ appeal statement filed on 12 August 2019 was predicated on the use and occupation of the land satisfying guideline version 2. [11]

103. [176]

     I am not satisfied that the plaintiffs were misled when exemption forms were lodged by what are now suggested to be the references in a form to “Appendix A”.

104. [177]

     In Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19; (2004) 56 ATR 82 at [62], four non-cumulative criteria were suggested as being relevant to remission of the premium component:

     1. (1)

        all principal tax that is owing and not in dispute has been fully paid;

     2. (2)

        there has been co-operation by the taxpayer in providing relevant information to the Commissioner so as to enable the Commissioner to issue assessments;

     3. (3)

        such co-operation has occurred prior to any investigation being commenced by the Commissioner, or, at the very least, within a reasonable time after a request for information had been made by the Commissioner; and

     4. (4)

        there has been no wilful default by the taxpayer in not paying tax on time.

105. [178]

     In Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773; (2018) 108 ATR 63, Emmett AJA proceeded on the basis that the four Incise Technologies criteria applied, and measured the conduct of the taxpayer against those criteria in determining that no remission of premium interest was warranted in that case. I propose to do so here.

106. [179]

     I do not suggest that the non-cumulative criteria identified in Incise Technologies and applied in Winston-Smith comprise the only matters which may be taken into account in determining whether to exercise the power of remission in s 25 of the Taxation Administration Act. I note, however, that other than the claim that the plaintiffs were misled, which I have rejected, no other matter was advanced by the plaintiffs here in favour of a further remission, beyond the matters identified in Incise Technologies.

107. [180]

     I have concluded that the remission of interest already granted in respect of the 2016 and 2017 reassessments are sufficient to address the payments under protest made by the plaintiffs and the degree of co-operation provided by them. In respect of the assessment for the 2018 tax year no tax has been paid and there is a default in payment. In that regard, the decision by the plaintiffs to not pay the assessed land tax cannot be anything other than “wilful” in the sense of being intentional. The proper course is for a taxpayer to pay the assessed liability, and if successful on review or objection, seek a refund of tax together with interest under ss 104 and 105 of the Taxation Administration Act. To that end, as was stated by Emmett AJA in Winston-Smith at [85]:

108. [181]

     I am not persuaded that any further remission of interest should be granted in the circumstances of this case.

Conclusion and orders

1. [182]

   For the foregoing reasons I have concluded that the plaintiffs failed to discharge the onus they bore and that the reassessments for the 2016 and 2017 tax years and the assessment for the 2018 tax year should be affirmed. The orders of the Court are:

   1. (1)

      The plaintiffs’ amended summons is dismissed;

   2. (2)

      The reassessment for the 2016 tax year (ID 1696733375), the reassessment for the 2017 tax year (ID 1696733375) and the assessment for the 2018 tax year (ID 1678299932) are each affirmed;

   3. (3)

      The plaintiffs are ordered to pay the Commissioner’s costs.