Ryde Municipal Council v Macquarie University
139 CLR 633(Judgment by: Gibbs ACJ)
Ryde Municipal Council v Macquarie University
Court:
Judges:
Gibbs ACJStephen J
Jacobs J
Murphy J
Aicken J
Judgment date: 19 December 1978
Sydney
Judgment by:
Gibbs ACJ
GIBBS ACJ The respondent, Macquarie University, obtained from Waddell J. in the Supreme Court of New South Wales a declaration that certain land, which forms part of the land owned by the University and on which the University is situated, is not ratable under the Local Government Act, 1919 (NSW), as amended ("the Act"). An appeal to the Court of Appeal was dismissed by a majority. The appellant, Ryde Municipal Council, now appeals to this Court by special leave.
The grounds of the University extend over an area of some 336 acres. The land in question, known as the market, is more or less at the centre of that larger area and has a frontage to the north-western corner of the University court of approximately 202 ft. by a depth of about 72 ft. From the time when the University was first planned, it was intended that there should be a section of the University devoted to commercial and shopping facilities, and in order to achieve this object the land was made available to the Macquarie University Union, an association of members of the council, staff, graduates and students of the University. The objects of the Union include the promotion of the welfare of the University and the provision and maintenance for its members of a common meeting ground and social centre and such other facilities as may be necessary to secure the further objects of the Union. A two-level building was constructed on the subject land; this was done by the Union with the authority of the council of the University, and the construction was financed by a loan to the union which the University guaranteed. Thereafter, parts of the building were leased to various tenants. The leases were not put in evidence, but it appears that they were granted by the Union with the approval of the council. In the circumstances, it is not material whether the University itself let the premises or consented to the Union doing so. The tenants carry on business in the leased areas for various commercial purposes - there is a co-operative bookshop, a retail shop, a chemist shop, an office leased to the Australian Union of Students for the purposes of a travel centre, branches of two banks, a handicrafts and gift shop and an area occupied by the University Sports Association which also includes a shop. The shops operate with a view to profit but primarily serve the students and staff of the University. The banks provide a general banking service, and lend money for housing and other purposes. The shops and the banks are open to the general public but it is unlikely that many members of the public patronize them. It is common for universities nowadays to arrange for shopping and commercial facilities to be available within their grounds. The nearest similar facilities outside Macquarie University are about two miles away. The commercial centre in the market building was intended to provide a convenience to staff and students, and to save their time, but it is also a valuable source of income for the Union.
The land in question does not constitute a separate parcel; it forms part of a larger parcel or parcels, the balance of which is admittedly not ratable. Under s. 139 (3) of the Act, every rate is to be levied in respect of a separate parcel of land, but by s. 134 (3) any parcel separately valued under the Valuation of Land Act, 1916 (NSW) is to be a separate parcel for the purposes of the Act. In the present case it appears to be doubtful, to say the least, whether a valuation was properly made in conformity with the provisions of the Valuation of Land Act, particularly those of s. 27 (4). This question was not the subject of consideration in the courts below and I therefore express no opinion upon it. However, both parties have requested that the question whether the subject land is ratable should be determined, leaving for possible further consideration elsewhere the question whether the rate notice was otherwise properly issued, and in all the circumstances it appears convenient to adopt that course.
By s. 132 (1) of the Act all land in a municipality or shire is declared to be ratable but the section contains a number of exceptions including the following:
"(d) Land which belongs to any . . . public charity, and is used or occupied by the . . . charity . . . for the purposes thereof
. . .
(fii) Land which is vested in the Macquarie University, or in a college thereof, and is used or occupied by the University or college, as the case may be, solely for the purposes thereof."
It was held by Waddell J. and by the majority of the Court of Appeal that the land comes within the description contained in par. (fii). In the alternative, however, the respondent contends that it comes within par. (d).
The land in question is vested in the University. To come within par. (fii) it must also be used or occupied by the University solely for the purposes thereof. The word "solely" in this paragraph does not in my opinion govern the phrase "by the University"; its position in the paragraph, and the interposition of the commas, and of the words "as the case may be", show that it relates to "the purposes". In other words, the paragraph does not refer to land used or occupied solely by the University, but to land used or occupied by the University solely for its purposes. There thus arise in the present case three questions, which are, of course, interrelated, viz. (1) was the land used or occupied by the University; (2) if so, was the use or occupation for the purposes of the University; and (3) was it solely for those purposes?
It was not argued by the respondent in the present case that the areas leased to the various tenants were occupied by the University. Although the leases were not put in evidence, it may be assumed that the tenants were given exclusive possession of the areas leased to them, exercised control over those areas and were in occupation of them. The question is whether those areas were nevertheless used by the University. The submission on behalf of the appellant was that the University has, by granting or approving of the leases, yielded up the exclusive use and occupation of the areas to the tenants, and that it was the tenants, and not the University, who actually used those areas.
No-one can doubt that "used" is a word of wide import, and that its meaning in any particular case depends to a great extent on the context in which it is employed. It is hardly necessary to cite the observations of Taylor J. in Newcastle City Council v. Royal Newcastle Hospital (1957) 96 CLR 493 , at p 515 to support those propositions. One thing that the context provided by s. 132 (1) of the Act does make clear is that "used" is not meant to be synonymous with "occupied". In some of the paragraphs of that sub-section the word "used" appears alone, i.e., without any reference to occupation: see pars (a), (b), (c), (e). In other paragraphs, the expression employed is "used or occupied": see pars (cl), (d), (d1), (f), (fi), (fii), (fiii), (fiv), (fv). In all these paragraphs the land is to be "used and occupied" by a named body, or in the case of par. (d) by a hospital, institution or charity, "for the purposes thereof" (or "solely for the purposes thereof"). Five of these paragraphs refer to land used or occupied by a named university or a college thereof. In a third group of paragraphs, the phrase is "occupied and used": pars (g), (h), (j), (1). It is quite apparent that where the expression "used or occupied" appears, "used" refers to some form of use other than actual occupancy, and Isaacs J. recognized that this was so in an early case in which the section was considered: Knowles v. Newcastle Corporation (1909) 9 CLR 534 , at p 545 . In Commissioner of Valuation for Northern Ireland v. Fermanagh Protestant Board of Education [1969] 1 WLR 1708 , at p 1728; [1969] 3 All ER 352 , at pp 364-365 , Lord Diplock referred to authority which constrained the English courts to hold that in the context of a rating statute "the only relevant use is that of the person who in English law is in 'occupation' of the hereditament". That authority is not applicable in New South Wales, where the primary obligation to pay rates is on the owner (s. 144 of the Act) and where the context of s. 132 shows that use other than by an occupier is relevant.
A person who owns land may be said to use it for his own purposes notwithstanding that he permits someone else to occupy it, even under a lease. That is almost beyond argument when the owner's purpose is to acquire income. In the ordinarily accepted meaning of the word a building is "used" for the purpose of acquiring income if rents are derived from it, and an owner of premises who leases them is making use of those premises by employing or applying them for the purpose of letting: Commissioner of Income Tax v. Hanover Agencies Ltd. (1967) 1 AC 681 , at p 689 . But that is not the only way in which an owner of land may use it by letting it to someone else. An employer who provides premises in which he requires an employee to live so that the employee may perform more efficiently the duties of his position is in my opinion himself using those premises. That this is so is clear when the employee occupies them under a licence rather than under a lease. In Glasgow Corporation v. Johnstone (1965) AC 609 , it was held by the House of Lords that a house occupied rent free as a residence by a church officer, who was bound to occupy the house during his employment by the church, was "wholly or mainly used for charitable purposes" within a rating statute. Lord Reid said (1965) AC, at p 622 :
"They (the congregational board of the church) "use the house to have a servant on the spot to assist them in the more efficient performance of their charitable activities. I think that it is much too narrow a view simply to see whether any charitable activity is carried on in the house . . . If the use which the charity makes of the premises is directly to facilitate the carrying out of its main charitable purposes, that is, in my view, sufficient to satisfy the requirement that the premises are used for charitable purposes."
Lord Evershed (1965) AC, at p 624 and Lord Hodson (1965) AC, at p 628 both adopted the statement of Lord Wheatley in the Court of Session, that "the use to which they are putting the premises is to have a resident church officer for the proper and more efficient carrying out of those church affairs which are the responsibility of that officer." This decision is quite inconsistent with the view that the questions by whom, and for what purposes, premises are used must be answered by considering only what is done on the premises. In this Court, in Knowles v. Newcastle Corporation (1909) 9 CLR 534 it was held that a house vested in the Chief Commissioner for Railways, and occupied rent free by a station-master, who was required as a condition of his employment to reside there so that he might be available in case of emergency, was "actually used for the purposes of the Government railways or tramways, or purposes connected therewith", within s. 132 of the Act as then in force. It was not necessary to decide whether the house was so used by the Commissioners, but O'Connor J. said (1909) 9 CLR at p 543 :
"It is said that the actual use is by the station-master, not by the Commissioners, but if the station-master actually does use the house under the direction of the Commissioners, I find it difficult to see how it can be said that it is the station-master and not the Commissioners who uses the house."
In cases such as these it does not seem to me to be material whether the employer has given a lease or only a licence to the employee required to occupy the house. If the only relevant use is that of the person in "occupation" (as is the case under the English rating law mentioned by Lord Diplock in Commissioner of Valuation for Northern Ireland v. Fermanagh Protestant Board of Education [1969] 1 WLR 1708 ; [1969] 3 All ER 352 ) the fact that a lease had been granted might show that the employer was not the occupier of the demised house, but, as I have pointed out, the position is different in New South Wales. Where use, and not occupation, is in question, I can see no reason to disregard the indirect use which an employer makes of a house by providing it as a residence for the use of his employees. If, for example, a university considered it desirable in its own interests that the vice-chancellor should live in particular premises which the university owned, the university would, in my opinion, use those premises if it made them available as a residence for the vice-chancellor, and this would be so whether the premises were let or occupied under licence.
In my opinion, therefore, land may be "used" by a university, in the ordinary and natural meaning of that word, if the university grants a lease of the land for the purposes of the university. I can see no reason why a restrictive meaning should be given to the word where it appears in s. 132 (1) (fii). Paragraph (fii) was inserted in the Act by an amendment effected by the Macquarie University Act, 1964 (NSW). By s. 7 (b) of that Act the University may, for the purpose of discharging its functions, provide such facilities for its undergraduates as it deems desirable. Long before 1964 it had become customary for universities to permit some commercial enterprises to be carried on within their grounds. It had become recognized as convenient that students and staff should be able to do some shopping and banking business within the university precincts. The framers of par. (fii) must have contemplated that there would probably be, on the land vested in Macquarie University, small commercial establishments to provide for the needs of the students and staff. It was not perhaps necessary that members of the University should be enabled to do their shopping and banking within the University precincts, but it was normal and desirable. The provisions of both s. 7 (b) and par. (fii) should be construed in the light of these circumstances. If the University thought that its activities would proceed more efficiently and harmoniously if some parts of its land were used to set up commercial establishments for the use of students and staff, it would be entitled to provide such facilities, under s. 7 (b), and it can hardly be supposed that it was the intention of the legislature that it would lose its exemption from rating under par. (fii) if it did so. But the University might provide facilities of this kind in various ways. It might provide them itself. It might engage an independent contractor. It might grant the person supplying the goods or services a licence to occupy part of the University land for that purpose. It might grant a lease to the persons conducting the shop or other business. There is nothing in par. (fii) to suggest that if the University adopts one of these expedients, rather than another, it loses its exemption. Naturally construed, par. (fii) extends to any use of the land, direct or indirect, including such use of it as is made by granting a lease.
I need not review the multitudinous authorities in which the courts have explained the meaning of "use" or "used" in particular contexts. There are however some decisions upon which particular reliance was placed and to which I should refer. In Commissioners of Taxation v. Trustees of St. Mark's Glebe (1902) AC 416 the question for decision was whether glebe lands, vested in trustees for church purposes, but let on building leases, were exempt from land tax as being lands "occupied or used exclusively for or in connection with" public charitable purposes or a church. The statutory provision there considered did not make it necessary to decide by whom the use was made; the question was for what purposes the lands were used. The decision is of more importance in relation to the second question which arises in the present case than to the first, but there are some words in the judgment which Lord Davey delivered on behalf of the Judicial Committee which do touch upon the first question. Lord Davey said (1902) AC, at pp 420-421 :
"But, reading the whole of s. 11, sub-s. 5, of the taxing Act, their Lordships think that the words point rather to the use and occupation of the land itself, and do not prima facie apply to the use or purpose to which the rents and profits derived from the land may be applied. A private dwelling house is used and occupied by the owner or lessee of it as a residence for himself and his family, and it would, in the opinion of their Lordships, be a forced construction to say that it was used by the lessors for their own purposes because they apply the rent which they receive in a particular way.
If it be said that the land is used by the trustees, though not by the lessees, for the charitable purpose, the answer would seem to be that the land is, strictly speaking, not used by the trustees at all. They have parted with the use and occupation of it during the term of the lease. It is the money derived from the rents and profits which they use and not the land."
The decision is authority that church lands, let for the purpose of creating income for the church, are not used for the purposes of the church within a taxing or rating statute. The penultimate and antepenultimate sentences of the passage cited do, it is true, suggest that in such a case the church does not use the lands at all, and thus support the appellant's argument. However, Lord Davey's words must be read in the light of the facts of the case and the question in issue. Their Lordships were not called on to decide whether the land was used or occupied by the trustees; the question was for what purpose were they used.
The next case is Stephen v. Federal Commissioner of Land Tax (1930) 45 CLR 122 . One of the questions that there arose was whether land at Randwick, vested in trustees and leased by them to the Australian Jockey Club, which used it as a racecourse, was exempt from taxation by reason of s. 13 (g) (7) of the Land Tax Assessment Act 1910 (Cth), as amended which exempted "all land owned by or in trust for any person or society and used or occupied by that person or society solely as a site for . . . a . . . public recreation ground". The whole court held that the racecourse was not used as a public recreation ground and that for that reason the claim to exemption failed. In that respect the case has no bearing on the present question. However Isaacs J. stated briefly an additional reason for his conclusion. He said (1930) 45 CLR, at p 132 : "As to the leased property, there is the further answer that it is not used or occupied by the owner of the land at all." That observation is of course entitled to the weight that attaches to any statement by that learned judge, but he gave no reasons in support of it. Even if it may be regarded as one of the grounds of his decision, it was not part of the ratio decidendi of the Court, for no other member dealt with that aspect of the matter. Dixon J. (1930) 45 CLR, at p 140 , said that s. 13 (g) (7) "looks to the actual use or occupation of the land". This statement also was relied on in argument before us, but it appears to me to have nothing to do with the present question. What Dixon J. was saying was that what had to be considered was the actual use to which the land was put, rather than the use to which it theoretically ought to be put, for example, having regard to the recital in the Crown grant, which, as Dixon J. mentioned (1936) 45 CLR, at p 139 , was to the effect that it was desirable that the land should be dedicated for the purposes of public recreation. When the question is whether land is used as a public reserve, it seems clearly necessary to have regard to what is actually done on the land itself. However, Dixon J. did not discuss whether, in some circumstances, land can be used by a person who lets it.
Reliance was also placed on Randwick Corporation v. Rutledge (1959) 102 CLR 54 , which also concerned the land on which Randwick racecourse was situated. The question for decision was whether that land was exempt from rating under s. 132 (1) (c) of the Act, as land "used for a public reserve". It was not necessary to decide whether the use was that of any particular person. However Windeyer J. said (1959) 102 CLR, at p 88 :
"But is the land used for a public reserve? 'This provision', as Dixon J., as he then was, said in a similar matter, 'looks to the actual use . . . of the land' (Stephen v. Federal Commissioner of Land Tax (1930) 45 CLR, at p 140 ). The only way in which the trustees use the land is by leasing it to the club, to be used by it as a racecourse . . . Indeed the land is not really used by the trustees at all, for they have parted with the use and occupation of it for the term of the lease (Commissioners of Taxation v. Trustees of St. Mark's Glebe (1902) AC 416 ). When the Act speaks of land used for a public reserve it is referring to the actual use to which the land is put by the persons who in law control it for the time being."
In that passage Windeyer J., himself speaking obiter, repeated the dictum of Lord Davey in Commissioners of Taxation v. Trustees of St. Mark's Glebe (1902) AC 416 . His statement is of course entitled to the highest respect, but it was not directed to the question that arises in the present case.
I do not understand any of the learned judges whose words I have cited to have been purporting to lay down an inflexible rule of construction that land can never be "used" (within the meaning of a rating statute) by an owner who has leased it. The decisions to which I have referred do not bind me to give a narrow construction to "used" in the context of par. (fii). In my opinion land vested in the University may be "used . . . solely for the purposes thereof" within that paragraph, notwithstanding that it is occupied by a tenant holding under a lease.
The next question is whether the land in question was used for the purposes of the University. According to the Macquarie University Act, 1964 (NSW), s. 6, the functions of the University (as one might expect) include the provision of educational facilities, the dissemination of knowledge and the promotion of scholarship. The purpose of the University was to perform those functions. Ordinarily speaking, one would not say that the purpose of the University was to provide shops or other commercial establishments for the use of staff or students. However, it is now well settled that when an exemption from rates or taxes is given in respect of land used for the purposes of a charity, the exemption is not confined to land used for those purposes the pursuit of which make the body a charity, i.e., which give it its character as such. If the land is used for purposes which are "merely a means to the fulfilment" of the charitable purposes and "incidental thereto" it is within the exemption: Salvation Army (Victoria) Property Trust v. Fern Tree Gully Corporation (1952) 85 CLR 159 , at pp 169, 171 . In other words, if the use which the charity makes of the land is "wholly ancillary to", or "directly facilitates", the carrying out of its charitable objects, that is sufficient to satisfy the requirements that the premises are used for charitable purposes: Glasgow Corporation v. Johnstone (1965) AC, at p 622 ; Oxfam v. Birmingham City Council (1976) AC 126, at p 139 . If, on the other hand, the use is only "collateral" or "additional" to the purposes which give the charity its character as such, the land will not be used for the purposes of the charity: Salvation Army (Victoria) Property Trust v. Fern Tree Gully Corporation (1952) 85 CLR, at p 169 . The same tests are applicable under par. (fii).
If the land in question had been let simply to raise money for the purposes of the University, the decision in Commissioners of Taxation v. Trustees of St. Mark's Glebe (1902) AC 416 would have been directly applicable, and it would not have been possible to say that the land was "used" for the purposes of the University within par. (fii): see also Oxfam v. Birmingham City Council (1976) AC, at pp 140-141 . However, it is proper to conclude from the evidence that the University arranged for the building to be erected on the market because the commercial enterprises which it was to contain were regarded as necessary or desirable for the functioning of a university under modern conditions. Although it is no doubt right to concentrate attention upon the use to which the particular parcel of land the subject of an appeal is put, that does not mean that the land is to be regarded in isolation from its surroundings. It is in my opinion relevant and important that the subject land in the present case is a small area near the very heart of the University, and that the construction of the building on the market, and its use for commercial purposes, were intended from the time when the University was first planned. The use of the land was wholly ancillary to, and directly facilitated, the carrying out of the principal objects of the University; it was not collateral or additional to those purposes. The land in question was rightly held to be used for the purposes of the University.
Was it used "solely" for those purposes? The question must be considered from the point of view of the University - was the use, by the University, solely for its purposes? The fact that the University derives some subsidiary and incidental benefit from using the land for its purposes does not mean that the land is not used exclusively for University purposes: Salvation Army (Victoria) Property Trust v. Fern Tree Gully Corporation (1952) 85 CLR 54 , at p 170 . In Randwick Corporation v. Rutledge (1959) 102 CLR, at p 94 , Windeyer J. said:
"When such words" (as 'exclusively' or 'solely') "are present, it is a question of fact whether the land is being used for any purpose outside the stipulated purpose . . . As Kitto J. said in Lloyd v. Federal Commissioner of Taxation (1955) 93 CLR 645 , at p 671 , such words confine the use of the property to the purpose stipulated and prevent any use of it for any purpose, however minor in importance, which is collateral or independent, as distinguished from incidental to the stipulated use."
The word "solely" may do no more than add emphasis, or perhaps precision. The present is not one of those cases in which part of the land in question was used for one purpose, and part for another. The question is whether in letting the land, or in approving of the grant of the leases by the Union (whichever was technically the position), the University was pursuing the independent object of obtaining revenue from the rents. It was put in argument before us that the learned primary judge did not expressly find that the purpose of gaining revenue was only incidental, but that is, I consider, implicit in his findings. He found that the council of the University was "fully entitled to come to the conclusion that the establishment of the facilities in question was calculated to promote the objects and interests of the University by avoiding the necessity of students and staff seeking such facilities having to spend time travelling to other shopping centres". He further found that the land "should be regarded as used by the University for its purposes because, although leased to various tenants for commercial purposes, they provide facilities which the University considers to be necessary or incidental to achieving its purposes". It cannot be inferred from his findings, and the evidence does not suggest, that the University, in letting the land, was pursuing the independent purpose of raising money. The receipt of the rent by the Union was a subsidiary and incidental (although, no doubt, by no means a negligible) benefit from the use of the land for the purposes of the University.
For the reasons I have given I have reached the conclusion that Waddell J. and the majority of the Court of Appeal were correct in holding that the land was used by the University solely for the purposes thereof within par. (fii) of s. 132 (1) of the Act. It is therefore unnecessary to consider whether the land also fell within the description contained in par. (d) of that sub-section.
I am of the opinion that the appeal should be dismissed.