City of Newcastle v Royal Newcastle Hospital
96 CLR 493(1957) 31 ALJ 20
(1957) 4 LGRA 69
[1957] ALR 277
[1957] HCA 15
(Judgment by: Williams J)
City of Newcastle
v Royal Newcastle Hospital
Judges:
Williams JWebb J
Fullagar J
Kitto J
Taylor J
Subject References:
Local government
Rating
Exemption from liability
Land of public hospital
Legislative References:
Local Government Act 1919 (NSW) - 132
Judgment date: 1 January 1957
Sydney
Judgment by:
Williams J
WILLIAMS J. This is an appeal by the plaintiff, the Council of the City of Newcastle, in an action in which the council sued the defendant, the Royal Newcastle Hospital, for rates alleged to be due upon certain land, approximately two hundred and ninety-one acres, situated at New Lambton within the area of the city, in respect of the years 1946 to 1952 inclusive. The appellant derived its power to levy the rates from s. 144 of the Local Government Act 1919 which provides that every rate shall, except where this Act otherwise expressly provides, be paid to the council by the owner of the land in respect of which the rate is levied. It is not in dispute that the two hundred and ninety-one acres were owned by the respondent in the relevant years. But it claims that it was exempt from rates by virtue of s. 132 of that Act which provides so far as is material that all land in a municipality or shire (whether the property of the Crown or not) shall be rateable except inter alia (d) land which belongs to any public hospital ... and is used or occupied by the hospital ... for the purposes thereof. It is admitted that the respondent is a public hospital within the meaning of para. (d). The question at issue is whether the two hundred and ninety-one acres in the relevant years were used or occupied for the purposes of the hospital. Richardson J. who tried the action without a jury held that the land was land used by the hospital for these purposes [F1] . An appeal to the Full Supreme Court of New South Wales was dismissed by a majority (Roper C.J. in Eq. and Maguire J., Owen J. dissenting [F2] ). The two hundred and ninety-one acres form part of a larger area of three hundred and twenty-seven acres. The whole of this area was not acquired by the respondent at the same time. It would seem that about 1926 the respondent wished to set up a branch away from the main hospital which is situated in the heart of the city. In that year it purchased twenty-four acres of land fronting Croudace Street on which were erected the buildings known as the old Croudace home and opened a convalescent home. As this land was clearly used for the purposes of the hospital, it was exempt from rates. In the same year an additional sixty-eight acres of adjoining land and in 1934 a further four acres of adjoining land were purchased. Of this total area of ninety-six acres, thirty-six acres were regarded by the appellant as used for the purposes of the hospital and exempted from rates. The balance of the area was rated. In 1941, during the second world war, the convalescent home was reserved as a Commonwealth emergency hospital. But in 1944 it was no longer required for this purpose and reverted to the respondent. In that year a further ten acres of adjoining land were purchased. Up till this time patients suffering from tuberculosis had been treated at the main hospital but the board of the respondent under the chairmanship of the late Mr. A. Rankin was evidently anxious to set up a separate chest hospital for the reception of patients suffering from this disease and in particular for the reception of patients who with proper rest and treatment were likely to recover in the sense that the disease would be arrested and they would be able to return to their own homes and do light work. The treatment for such patients, apart from chemotherapy, consisted of plenty of rest and fresh air, proper food and attention and later, when the disease appeared to be arrested, a period of up to six months during which time the patients remained under medical observation to be sure that the arrest was permanent and so that they might by means of light exercise and some form of occupational therapy recover their strength and capacity to do such work.
Dr. McCaffrey was the superintendent of the hospital at this time and it is clear from his evidence that rightly or wrongly he and Mr. Rankin thought that for the purposes of such a chest hospital the area of land then owned by the respondent was inadequate. They, therefore, inspected the area of land adjoining the existing area to the west with a view to acquiring what they considered would be a sufficient area for that purpose. They thought that if this land to where it fronted Marshall Street, an unmade road, was added to the existing area the total area would provide the minimum space suitable for the purpose. Finally in April 1946 the area in question which was found to comprise two hundred and twenty acres was acquired so far as it comprised Crown land by appropriation and so far as it comprised private lands by resumption under the provisions of the Public Works Act 1912 "for the purposes of Newcastle hospital". The new buildings required to accommodate the patients and nursing staff were erected in the vicinity of the existing buildings and the new chest hospital was opened for patients in July 1947. Since then there have been on an average about one hundred patients at the hospital. The only land actively used for the purposes of the hospital has been an area of about seventeen and one-half acres of land fronting Croudace Street enclosed with a fence on which the hospital buildings and surrounding paths, lawns and gardens are situated. Immediately behind the seventeen and one-half acres there is a further area of about eighteen and one-half acres now slightly delineated and separated from the remaining two hundred and ninety-one acres by five surveyor's white posts. These two areas of land comprising altogether thirty-six acres have always been regarded by the appellant as used for the purposes of the hospital and exempted from rates. Behind these thirty-six acres there lie the two hundred and ninety-one acres upon which the dispute centres. It would appear that the board of the respondent at the time the two hundred and twenty acres were acquired thought that it might want to set up some industry on part of the total area in which patients on the road to recovery could earn a living doing light work whilst still remaining under medical supervision. This scheme has never been carried out, it may be because about 1948 the treatment of tuberculosis was greatly advanced by the advent of new drugs which facilitated the arrest of the disease and limited the necessity for patients remaining in hospital for as long periods as before. There is a conflict in the medical evidence as to whether for the purposes of a chest hospital more land is required than in the case of a general hospital. But the preponderance of evidence, and this was the evidence accepted by Richardson J., is to the effect that it is necessary or at least very desirable that chest hospitals should be situated in a spacious area carrying a considerable body of natural vegetation so that there will be a plentiful supply of fresh air and an absence of smoke, dust, noise and other irritants or of any feeling of overcrowding. According to this evidence such an area not only assists the physical condition of the patients but also assists their mental outlook, the mentality of patients suffering from tuberculosis being subject to severe stress due to the fact that they have to be absent from their homes and families for at least a year and to the further fact that such a prolonged illness often has a very serious effect on their financial position and future economic prospects.
The defendant has taken no active steps to improve the two hundred and ninety-one acres. It is land in its virgin state comprising ridges and gullies heavily timbered with a good deal of underwood. Richardson J. said: "The gullies are steep and rough, some of them so steep that they are impassable. There is very little flat land. It is described as poor land with insufficient herbage for the pasturing of stock. There are a few bush tracks, one of which is well defined running up to Lookout Road .... The remaining tracks all terminate in bushland" [F3] . It can safely be said that in the relevant years no physical use in any real sense was made of the two hundred and ninety-one acres. The use to which this land has been put, if it can be considered to be a use at all, has been the passive use of leaving the land in its virgin state with the resultant benefits that are derived from the presence of plenty of fresh air and the avoidance of overcrowding. In the argument before Richardson J., the Full Supreme Court and ourselves, this use of the land was described as an intangible use and it was contended that such a use is a use of land for the purposes of the hospital within the meaning of s. 132 (d). This contention found favour with Richardson J. and the majority of the Full Court. Richardson J. said: "I have reached the conclusion, looking at the whole of the evidence, that the subject land is in fact used for the attainment of a desirable result in connection with the treatment of tuberculosis at this hospital and which could not be attained without the use of the subject land, and therefore it is used for a purpose connected with the hospital. There is a connection between the user and the purposes of the hospital. It is not essential to the user of land that it be used physically, it is also used if it is applied to any advantageous purpose" [F4] . Maguire J. with whom Roper C.J. in Eq. concurred said: " 'Rankin Park' can be said, on the evidence, to stand in a different position from the majority of other hospitals. Its purpose is to treat the patients who are required to remain in the hospital for protracted periods and who are suffering from a disease the effective treatment of which requires not merely medical and nursing skill but the provision of surroundings which are conducive to repose and equanimity of mind in an atmosphere as free as possible from dust and other vitiating elements. I think that the preponderance of evidence is in favour of the view that the retention of a large area of undeveloped land attached to the hospital is necessary for the attainment of this purpose. It seems to me that it can truly be said that by retaining the land in question so that the purposes of the hospital might be achieved, the hospital is 'using' that land for its purposes. Ordinarily, the use of land would involve some activity on or in relation to it, but where the question is whether land is used for a particular purpose, an enquiry into how that purpose can best be achieved is necessary. The evidence establishes that the land, the subject of the present action is necessary to the fulfilment of the purposes of the hospital, and, in my view, the hospital, by retaining it in its virgin condition, is using it for those purposes" [F5] .
In these passages the case for the respondent is summed up. There is ample evidence which Richardson J. was entitled to accept that a chest hospital, or perhaps what would be a better description of Rankin Park, a sanatorium for tuberculosis patients, requires a large area of land to achieve the most beneficial results. The whole of the evidence, apart from the evidence of Dr. Morgan which his Honour was unable to accept, is to this effect. In other parts of Australia it has been found to be beneficial for other chest hospitals or sanatoria to be situated in large areas of land much of which is left in its virgin state. The old belief that persons suffering from tuberculosis should be isolated has gone by the board and modern opinion is that such institutions should be located as close as possible to the large cities or in other words to the large centres of population so that the relatives of the patients are able to visit them. If these institutions are situated in a large area of land they derive the double benefit of being as it were as much in the fresh air as if they were in the country and at the same time of being very accessible. It may be that the opinion of Richardson J. and the majority of the Full Court that the whole of such an area of land can be said to be "used" in the special circumstances of the case for the purposes of the hospital is right. But it is unnecessary for the respondent to rely on the word "used". It is sufficient if the land is "used" or "occupied" for the purposes of the hospital. The passages that have been cited from the reasons for judgment of Richardson and Maguire JJ. are quite apt to show that if the two hundred and ninety-one acres in the relevant years were occupied by the respondent they were occupied for the purposes of the hospital. No real examination of the meaning of the word "occupied" was attempted in the courts below, probably because counsel for the respondent there, as he did here, preferred to concentrate his attention on the word "used". Owen J., it is true, did refer to occupation but not with any enthusiasm. He said: "The question is whether the hospital used or occupied this land for a hospital purpose. As to 'occupation' I feel no doubt. It was not 'occupied' as that word is used in rating law. As was pointed out by Isaacs J. in Knowles v Newcastle Corporation [F6] , at p. 544 'occupation' is not synonymous with mere legal possession. It includes possession, but it also includes something more" [F7] . His Honour referred to the well-known passage in the judgment of Lush J. in Reg. v St. Pancras Assessment Committee [F8] :"The owner of a vacant house is in possession, and may maintain trespass against any one who invades it, but as long as he leaves it vacant he is not rateable for it as an occupier. If, however, he furnishes it, and keeps it ready for habitation whenever he pleases to go to it, he is an occupier, though he may not reside in it one day in a year" [F9] . But it must be remembered that Lush J. was there dealing with the meaning of rateable occupation in England where, to be rateable, the occupation must be beneficial, and his Lordship was discussing what constitutes the beneficial occupation of a house and there is a great difference between what constitutes the occupation of a house and the occupation of vacant land. In a case that was not cited to us, Liverpool Corporation v Chorley Union Assessment Committee and Withnell Overseers , this distinction is brought out. It is reported in the Divisional Court [F10] , in the Court of Appeal [F11] and in the House of Lords [F12] . The facts are set out fully in the report in the Divisional Court [F13] . The important facts are those relating to the eight hundred and fifty-nine acres of moorland. One question was whether the Liverpool Corporation who were the owners and occupiers of a system of reservoirs and waterworks known as the Rivington Waterworks were in beneficial ownership of this moorland. It formed part of an area of one thousand one hundred and sixty-five acres which the corporation used and controlled for the purposes of securing a water supply to their reservoirs and waterworks. Of the one thousand one hundred and sixty-five acres three hundred and six acres were planted with trees or used as a nursery for young trees and enclosed in a ring fence. The remainder of the land, the eight hundred and fifty-nine acres of moorland, was already enclosed by a fence when the corporation bought it. In order to reduce the population and cattle on the one thousand one hundred and sixty-five acres and to diminish the risk of pollution of the water flowing therefrom, the corporation demolished or caused to be left unoccupied certain farm houses and buildings and abolished certain rights of pasture and turbary which had previously been enjoyed thereon, and limited the user thereof, except for the afforestation upon the three hundred and six acres already mentioned, to letting sporting rights in respect of which the lessees were rated. Apart from letting these rights, the only use the appellants made of the eight hundred and fifty-nine acres of moorland was to keep them vacant so that the water that flowed over them would be unpolluted and none of it would be used thereby lessening the supply of water to the reservoirs. It was held that the corporation was not merely in occupation but in beneficial occupation of the moorlands. In the judgments in all three courts the rule that the owners of the fee simple of land in possession are prima facie in occupation of that land was relied upon. It was pointed out that this presumption is of course rebuttable first and most directly by proof that someone else is in occupation and by the nature of the case. The case of Reg. v St. Pancras Assessment Committee [F14] was distinguished as a case referring to a particular class of property, that is, a house. In the Divisional Court Hamilton J. (as Lord Sumner then was), after saying that "ownership is in most cases prima facie and useful evidence of occupation, failing proof that some other person is in occupation", said: "Here not only is there prima facie evidence of occupation in the fact that the appellants are owners of the fee simple in possession, and an absence of any rebutting evidence that any one else is in possession, but any doubt that might remain seems amply covered by the conditions under which the ownership was acquired and the objects for which it is held by the appellants .... Here ownership was acquired and is held by the appellants for a specific purpose, and that specific purpose carries and is intended to carry with it-to use an uncontroversial term-control, and the whole object with which the land was acquired was the retention of control and the exercise of it in case of need" [F15] . His Lordship said: "But although it is preserved more or less in a state of nature, the land is anything but derelict and is in fact being used, in pursuance of a highly intelligent policy, in a manner which has involved and still involves continuous control by the appellants over the land and which is deliberately inconsistent with the transfer of occupation to any other person" [F16] . In the Court of Appeal Buckley L.J. said of the corporation: "It was worth their while to pay a large sum of money for the land to ensure the absence of a population which might (a) contaminate or (b) consume. They have put no other person in occupation. They are enjoying the benefit for which they bought the land. Further, by the demise of the sporting rights they are deriving profit from the land left free of population. Their purpose, which is to ensure absence of population, is thus in several ways of value to them. They are persons capable of maintaining trespass: they are enjoying a benefit from the land. In my opinion the conjoint effect of those two facts is to constitute rateable occupation" [F17] . Kennedy L.J. said: "I understand it not to be denied by the appellants that, if the corporation had placed and maintained upon the land works, however simple, for collecting and diverting water, an 'occupation' would have been created. At present the contour of the land renders any such artificial work unnecessary for the purpose of getting and maintaining its beneficial user. If beneficial user exists, and if beneficial user affords good ground for the inference of rateable occupation, it appears to me that the presence of artificial works cannot be essential to proof, but that, when it is proved, it strengthens of course the evidence of such occupation" [F18] . Finally in the House of Lords Lord Atkinson said: "I do not think the cases dealing with the rateability of vacant houses are applicable to such a property as this moor, which, through the operations of nature, unaided by man, produces each year products such as grass, heath, and bracken, useful and valuable to man, and in this case rears and harbours game upon it in addition, thus differing in almost every aspect from a vacant house, which produces nothing, and is used for no purpose whatever. Mr. Balfour Browne has urged that occupation includes possession plus use. He admitted, however, that if the appellants had built an embankment across the mouth of a valley on this moorland and flooded the valley, thereby turning it into a reservoir to supply their lower works, they would properly have been held to be in beneficial occupation of the lands upon which the water rested in the valley. I am quite unable to discover any principle upon which these latter lands can be distinguished on this point from those upon which the rainwater falls and over which it runs on its way to its resting place. The lands of each kind all help to this same end, and serve in different ways to effect the same ultimate purpose, namely, to feed the appellants' works with a supply of pure and unpolluted water for their commercial gain" [F19] .
All these passages would appear to be apposite, mutatis mutandis, to the present case. It would be impossible to describe any portion of the two hundred and ninety-one acres as derelict, that is, as forsaken or abandoned land. The respondent has not abandoned any of its land at New Lambton. On the contrary its board of directors must have been satisfied in 1946 that the land they then held was insufficient for the purposes of a chest hospital or sanatorium and the additional two hundred and twenty acres was acquired so that the defendant would have an area of land which it considered to be the minimum area of land with which it would be safe to open such an institution. There can be no question that the respondent as the owner in fee simple of the two hundred and ninety-one acres is in occupation of the whole of this area. There is no suggestion that anyone else is in occupation of it. There is nothing in the nature of the case to rebut the prima facie presumption. On the contrary, the nature of the case supports the presumption. The land is not fenced but a fence would simply be some evidence of occupation. Artificial works are not necessary to prove occupation. If they exist they are evidence, as Kennedy L.J. said [F20] , in support of it, that is all. The respondent is at present only making any active use in the physical sense of seventeen and one-half acres. But it would be little use commencing operations on an area of seventeen and one-half acres or even thirty-six acres if a sanatorium for tuberculosis requires for its full development a much larger area. The respondent is at least occupying the undeveloped land for the purposes of the hospital in the sense that it is preventing the public from purchasing it and building upon it or from otherwise occupying it. It is land too poor in fertility to be put to any monetary use in its virgin state. Its only benefit to the respondent in that state is derived from its natural therapeutic qualities of providing plenty of fresh air and a suitable environment for a particular class of patients. There is no reason to doubt the medical evidence that these conditions, particularly fresh air, are necessities if a sanatorium for tuberculosis patients is to provide the optimum treatment. Such an institution will no doubt require further buildings and other improvements as time goes on. It will develop with the years. If a large area of land will be required for such development those who are responsible for its start and growth must be entitled to secure an adequate area of land whilst it is still available. But the foundation of the case for the respondent is the medical evidence that such a sanatorium can only operate with full efficiency if it occupies a large area of land. It is spaciousness that counts to whatever extent that area may be developed. But it would seem that it should not be developed to such an extent as to destroy its natural therapeutic qualities. In supplying plenty of fresh air the area in its natural state provides for the sanatorium a corresponding benefit, having regard to their different functions, to that of the moorland in the Liverpool Corporation Case [F21] in providing the reservoirs with plenty of unpolluted water. In that case the attempt was made, as we have seen, to prove that the moorland was not occupied because it was purchased not for the purpose of occupation but for the express purpose that it should not be occupied. But that attempt failed. There can be no suggestion in the present case that the area of two hundred and ninety-one acres was acquired to be left derelict. It was purchased so that it should be occupied by the respondent to the exclusion of anyone else and it is the respondent that is in occupation. In Knowles v Newcastle Corporation [F22] Isaacs J. said: "The first condition of liability is that it must be 'used or occupied for any purpose'. 'Used' is there not necessarily synonymous with 'occupied', and probably points to utilization in some other way than merely actual occupancy" [F23] . On the same page his Honour said that one could not well conceive of the chief commissioner himself occupying railway premises except for railway purposes. How can it be said in the present case that the respondent occupies only a part of the three hundred and twenty-seven acres? It is impossible to say that the respondent occupies the developed but does not occupy the undeveloped part. It occupies the whole. It is all occupied for the same purposes, that is, the purposes of the hospital. The whole of the area need not be put to an active physical use in order to be so occupied. Bare of the hospital and in this case one could not well conceive, in the absence of evidence to the contrary, that the respondent could itself occupy it for any other purposes.
The appeal should be dismissed with costs.