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Gosford R.S.L. Club Co-operative Limited v. Commissioner of Land Tax (N.S.W.).

Judges:
Lee J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 22 April 1981.

Lee J.

This is an appeal by the plaintiff hereinafter called ``the club'' against assessments of land tax under the Land Tax Management Act 1956, in respect of land owned by it at Gosford. The assessments cover the years from 1973 to 1976 and relate to an area of land owned by the plaintiff being Lot 1 D.P. 209569 and being the whole of the land comprised in Certificate of Title vol. 9317 folio 198. The land, which is shaped like a triangle, comprises an area of 3.669 ha. It is bounded on the north by The Pacific Highway, on the west by Yalambee Street (the main entrance) and on the east by a reservation along Narara Creek.

The matter comes to this Court pursuant to sec. 35 of the Act, the plaintiff being dissatisfied with the decision of the Commissioner on the objections lodged by the plaintiff in respect of the Commissioner's assessments. The objections claim exemption of the whole of the land in accordance with sec. 10(1)(g)(iii) of the Act.

The evidence shows that the plaintiff at first conducted a club at 237 Mann Street, Gosford, but these premises were burnt down. It then bought the subject premises on the corner of Yalambee Street and Pacific Highway on which a motel was being conducted, and whilst retaining the motel units and facilities and itself conducting the motel, it made alterations which enabled the club to operate as a club on the land. The club was a registered club under the Liquor Act 1912 - and later has been registered under the Registered Clubs Act 1976.

At the time of the purchase, the following improvements were on the land:

  • (a) A building containing motel office and reception area, with a covered area extending over the entrance driveway.
  • (b) Adjacent thereto and connected by a common roof a building containing kitchen, dining room and associated storerooms.
  • (c) Fifteen separate buildings containing motel units arranged in a circle to the south-west of the above buildings.
  • (d) A swimming pool adjacent to the office, kitchen and dining room.
  • (e) A driveway serving the buildings referred to above.

The balance of the land was grassed with scattered trees and in one section heavy timber.

ATC 4205

The club constructed a large car park to serve club members and visitors. It carried out substantial alterations which had the result of converting (a) and (b) supra into premises upon which the ordinary activities of an R.S.L. club could take place - there was a members lounge, bar, poker machines, toilets, dining room, kitchen, storage and coolrooms, auditorium, billiard room, boardroom and offices.

From the evidence it appears that the entirety of the land owned by the plaintiff was used as follows:

1. There was firstly the main club premises facing Yalambee Street with the associated car parking areas and loading dock. There was a swimming pool alongside the main building. This area, according to a plan supplied by the plaintiff to the Commissioner comprised the following: 

                                       sq. metres
      Club building                       1036
      Parking and loading dock            2096
      Swimming pool                        113
                                          ----
                                          3245
                                          ----

2. There was an area of cleared land and lawn at the rear of the main building the dimensions of which are not given. The evidence is that up till 1978 this area was frequently, at weekends and on holidays, used for outdoor functions such as barbecues. The various clubs within the main club would frequently hold functions outdoors.

3. The rest of the area (apart from the motel area) was in its natural state. Children of members played in an area along the creek and sometimes members brought their own barbecue equipment and had barbecues there. The fishing club launched its boats from a ramp leading on to Narara Creek. An archery club practised and had contests on a portion of the natural area.

4. The motel area extended from the main building, where the motel office was, in a series of separate buildings forming a rough oval. Within the oval was a circular roadway leading to the main entrance and within the area confined by the roadway was lawn and garden. The evidence is that the roadway, which enabled motel guests to drive directly to their motel units, was frequently used by members and visitors to the club at weekends when the other car parks were full. On some occasions when functions were held outside two of the motel units would be brought into service for the provision of toilet facilities. A helicopter, during two summers, provided a service in connection with the Central Coast Surf Sea Rescue and it used the area within the circular roadway as a pad from which to operate.

The motel was conducted by a manager, appointed by the club, from what had been the motel office in the original building. There were 15 buildings making up the motel and these contained 33 motel units capable of housing approximately 100 persons. The motel was open to the travelling public as well as to members of the club, their visitors and members of other R.S.L. clubs.

A large sign on the highway advertised the presence of the club and another large sign the presence of the motel. In order to attract business to the motel, brochures were sent to bus companies and advertisements were placed in the newspapers. The evidence shows that about 10 per cent of the guests occupying the motel units between 1973 and 1976 were members of the club or other R.S.L. clubs but otherwise the motel relied upon the general travelling public as any other motel would do. The evidence is that only ``a very small number of club members'' used the motel rooms.

Guests in the motel used the dining room of the club for meals if they wished. A swimming pool which had originally been located near the main club building frontage was relocated at the end of 1977 in the circular area surrounded by the motel buildings and this was used almost entirely by the motel guests.

The motel proved a very valuable asset in bringing in income to the club, as the accounts of the plaintiff show. The evidence shows that at the time of the purchase of the property it was intended that the profit from the motel should go towards paying off the moneys borrowed for the purchase and the motel profit appears to have been a significant factor in this regard. Separate accounts were kept in respect of the club's ordinary activities and the carrying on of the motel section of the club's business, and the net profit from the trading by the motel was

ATC 4206

shown as a separate item in the income and expenditure account of the club in each particular year.

The profits made in the carrying on of the motel set out below indicate the extent of the business of the motel in relation to what might be called the ordinary sources of revenue of the club, viz. bar trading, poker machines and subscriptions: 

                      Gross Profit                                Total Net
        Net Profit       on Bar     Gross Profit                    Profit
Year     on Motel       Trading      on Machines   Subscriptions   of Club
            $              $              $              $             $
1973    24,389.98      48,562.60     153,765.57      15,338.50
1974    30,183.50      90,086.80     283,477.65      15,898.00     80,456.91
1975    33,796.94     111,841.54     332,597.54      16,217.40     63,071.43
1976    30,619.81     130,346.05     335,127.05      14,685.00     40,948.62
1977    33,779.21     146,489.09     406,778.37      14,562.75     73,396.63

The conclusion to be drawn from the evidence is that, although the motel was used by the members of the club for purposes of residence from time to time and on occasions, in a limited way, for toilet facilities, and for purposes of residence by members of other R.S.L. clubs and sporting groups which came to the plaintiff's club, it was conducted by the plaintiff in all respects as a commercial proposition or business in the same way as any other motel is conducted. Ninety per cent of its clients came from the public and the plaintiff looked to the public as the source of the revenue for the motel. The conduct and operation of the motel was clearly identifiable as a business of the plaintiff and no difficulty is encountered in distinguishing the motel side of the plaintiff's activities from the other general club activities.

In assessing the land for land tax, the Commissioner treated as exempt from land tax only 3,245 sq m, being the area of the club building, parking areas, loading dock and pool as previously referred to; and he assessed duty on the residue of the land, namely, 3.3445 ha. The motel area forms a considerable part of this residue. The Commissioner considered that the area upon which the motel was being constructed was not exempt, and the correctness of this conclusion is the substantial matter to be considered in the case.

Section 10(1)(g)(iii) is in the following terms:

``10(1) Except where otherwise expressly provided in this Act the following land shall, subject to sections 10B, 10C, 10D, 10E, be exempt from taxation under this Act:

  • ...
  • (g) 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 -
  • ...
    • (iii) a building owned and solely occupied by a society, club or association not carried on for pecuniary profit.''

The substantial submission made on behalf of the plaintiff is that the buildings on the land - that is the main club building and the motel buildings - are all owned and occupied by the plaintiff, that only the plaintiff uses the land and the buildings and that the whole of the land is to be regarded as the site for the buildings thereon: accordingly, as the plaintiff is a society not carried on for pecuniary profit, the exemption attaches to the whole of the land.

It is not in dispute that the land is owned by the plaintiff and that the plaintiff is a society within the meaning of the paragraph. The plaintiff was incorporated under the Co-operation Act 1923 as amended (sec. 38 and 39) and is registered as a Community Advancement Society under that Act. It is a body corporate (sec. 60). The carrying on of the club by the plaintiff in its premises is permitted under sec. 15(e) of the Act and, as stated earlier, the club was registered under the Liquor Act 1912 and is now registered

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under the Registration of Clubs Act 1976. The plaintiff is thus also a ``club'' within the meaning of para. (g)(iii).

The expression ``not being carried on for pecuniary profit'' means not carried on for the pecuniary profit of its members;
New South Wales Cricket Association v. F.C. of T. (1930) 1 A.T.D. 8;
Royal Sydney Golf Club v. F.C. of T. (1942) 6 A.T.D. 235 at 240;
Theosophical Foundation Pty. Ltd. v. Commr. of Land Tax (1965) 82 W.N. Pt. 1 545. A club cannot be registered as a club under the Liquor Act 1912 or the Registration of Clubs Act 1976 unless its rules have the effect that it is not carried on for the pecuniary benefit of its members; Liquor Act sec. 135(2) and 134(h); Registered Clubs Act 1976 sec. 30(1)(i). Section 62(4) of the Co-operation Act refers to a club, ``not carried on for the pecuniary profit of its members''. In the present case it is not disputed that rr. 59 and 63 of the club have the effect that the plaintiff is to be regarded as a society or a club not carried on for pecuniary profit. I mention at this point that the club would not cease to be a club not carried on for pecuniary profit merely because it acted outside its objects. (cf.
Cabramatta Golf Club v. Commr. of Land Tax (1977) 7 A.T.R. at p. 659.)

Does the evidence show that the land is ``used or occupied by... a society solely as a site for a building owned and solely occupied by a society, club or association''? Paragraph (g)(iii) uses ``building'' in the singular but there is nothing in the context to prevent the paragraph applying where a number of buildings are erected on the land (Interpretation Act sec. 21(b)), as in the present case.

The paragraph requires the land to be ``used or occupied'' and the building for which the land is a site to be ``occupied''. There is a distinction between ``used'' and ``occupied'' although in many of the cases, the words are used interchangeably. (See the observations of Kitto J. in
Council of the City of Newcastle v. Royal Newcastle Hospital (1956-57) 96 C.L.R. 493 at p. 507.) The meaning of the word ``occupied'' in regard to land was explained by the Privy Council when it dealt with the appeal in the case just mentioned. ((1959) 1 All E.R. 734 at p. 736.) Their Lordships said:

``But legal possession is not the same as occupation. Occupation is a matter of fact and only exists where there is sufficient measure of control to prevent strangers from interfering: see Pollock and Wright on Possession, pp. 12, 13. There must be something actually done on the land, not necessarily on the whole but on part in respect of the whole. No one would describe a bombed site or an empty unlocked house as `occupied' by anyone; but everyone would say that a farmer `occupies' the whole of his farm even though he does not set foot on the woodlands within it from one year's end to another.''

See also
Commr. of Land Tax v. Christie (1973) 2 N.S.W.L.R. 526;
Buckley v. Commr. of Land Tax (1975) 1 N.S.W.L.R. 191.

``Occupied'' thus contemplates a physical presence and control. Occupation, one might say, requires some form of user but is more than mere user. All buildings which are ``occupied'' are used for some purpose or purposes. (Per Latham C.J. in
F.C. of T. v. Royal Sydney Golf Club (1943) 67 C.L.R. 599 at p. 605 in regard to sec. 13(g)(3) of the Land Tax Assessment Act 1910-1937 (Cth.) which is in substance the same as sec. 10(1)(g)(iii) of the New South Wales Act.) Paragraph (g)(iii) uses the word ``occupied'' on two occasions and I see no reason why the word would not bear the same meaning in each case.

In the present case nothing turns on any distinction between ``used'' or ``occupied'' for the land is undoubtedly solely used and occupied by the society (at least to some extent) as the site for the buildings on the land and the buildings on the land are also used, and ``occupied'' by the plaintiff in the relevant sense. Nor is it necessary to examine the full implications that arise from the fact that the paragraph contemplates that a person or society will be using or occupying the land as a site, but that a society, club or association will be occupying the building on the site, for in the present case the plaintiff is plainly using and occupying all the buildings on the land and therefore using or occupying all the land which forms a site for the buildings. In occupying the buildings, it is both ``a society'' and ``a club'' within the paragraph, the conduct of a club being one of its objects and it itself being registered as,

ATC 4208

and in fact conducting, a club on the land. No problem arises under sec. 10(3) in the present case.

Is the land which forms the site for the motel buildings as well as the land which forms the site for ``the club building'' (this latter area has been conceded by the Commissioner to be exempt) exempt from land tax under para. (g)(iii)?

The case, I should point out, has proceeded upon the footing that an exemption under sec. 10 can attach to land which is part only of one entire area of land: Royal Sydney Golf Club v. F.C. of T. (1942) 6 A.T.D. 235 at p. 240;
Commr. of Land Tax v. Joyce & Ors. (1973-74) 132 C.L.R. 22; and the assessments made by the Commissioner in this case were made upon that footing.

If the only matter that needed to be shown to entitle the plaintiff to exemption in respect of whatever area ought to be regarded as the site for all the buildings on the land was an occupation of the buildings giving ``control'' in the way explained by the Privy Council in the passage above quoted, then it must be held that the plaintiff is in occupation of all the buildings on the land and thus of the actual area of the land which forms the site for those buildings. The area upon which the motel is conducted is, on this view, thus exempt along with (at least) that area conceded by the Commissioner to be exempt. But in this case it is claimed on behalf of the Commissioner that the carrying on of the motel by the plaintiff is ultra vires the powers of the plaintiff and it is submitted that the exemption set out in sec. 10(1)(g)(iii) does not therefore attach to the part of the land on which the motel is carried on.

The submission made by the Commissioner to which I have just referred requires an examination firstly of the objects of the plaintiff society and, secondly, of the meaning to be given to words ``solely occupied by a society club or association'' in para. (g)(iii) of sec. 10(1).

Let me deal firstly with the question whether the carrying on of the motel by the plaintiff is ultra vires the rules of the club. The plaintiff society is established and incorporated under the Co-operation Act, 1924, as amended as a Community Advancement Society.

Section 14 provides:

``A community advancement society may be formed for the object of providing any community service or benefit.''

Section 15 provides:

``The society may do all or any of the following things, if specified in or authorised by its rules, as incidental to its objects, that is to say, the society may -

  • (a) provide and carry on any community service, including transport and the supply of water gas and electricity, provide and instal plant fittings and requisites in connection with any community service, and do anything necessary or convenient therefor;
  • (b) provide maintain and operate factories, mills, ginneries, silos, drying and packing sheds, cold stores, abattoirs, saleyards, drafting yards, motor garages, smithies, and machinery repair shops;
  • (c) undertake farming operations and purchase or otherwise acquire agricultural machinery implements and requisites on behalf of its members;
  • (d) erect dwellings and buildings either on behalf of or for sale or letting to its members;
  • (di) acquire land on which dwellings or buildings are being or have been erected and sell or let the same to its members;
  • (dii) sell or let land to its members or to any other society;
  • (diii) subdivide land, make and maintain private ways, bridges, culverts, and drains, and make, open, and dedicate roads;
  • (e) provide and maintain buildings and grounds for education, recreation, or other community purpose, or operate, maintain or carry on any club, or promote or assist clubs, for any such purpose;
  • (f) promote and carry out any charitable undertaking;
  • (g) raise money on loan for any objects of the society;

    ATC 4209

  • (gi) receive money on deposit;
  • (h) acquire by purchase or otherwise shares in any other society;
  • (i) do anything calculated to improve the conditions of urban or rural life in relation to the objects mentioned in [section 14], as may be prescribed by regulation.''

It will be observed that para. (e) permits the society to operate, maintain or carry on any club, and the plaintiff society is conducting a club as earlier stated. It will also be observed that nowhere does the section expressly permit the carrying on of a motel.

Section 39(7) provides that if the Registrar is satisfied, inter alia, that proposed rules of the society are not contrary to the Act or the regulations and that there are reasonable grounds for believing that the society if registered will be able to carry out its objects successfully, the Registrar may register it.

Section 64 provides:

``(1) Subject to this Division, a society may acquire by lease purchase donation devise bequest or otherwise any real and personal property for any objects of the society and may sell or lease any such real or personal property.

The acquisition by a society of real or personal property primarily or mainly required for business or office accommodation of the society or of the society and other societies shall be and shall be deemed always to have been an acquisition of real or personal property for the objects of the society.''

Section 82(1) requires the rules of the society to set out inter alia the objects of the society and whether the society intends to avail itself of any powers authorised by the Act as incidental to its objects and in the case of borrowing powers within what limits it proposes to exercise those powers. Section 84 provides for the business and operations of the society to be managed and controlled by a Board of Directors and states ``The powers of the Board shall be subject to any restrictions imposed thereon by this Act or by the rules of the society''.

The provisions of the Act do not, in my view, lead to a conclusion that a community advancement society could not lawfully have as its object or one of its objects, the carrying on of a motel (although registration as a trading society under sec. 9 might seem to be more appropriate), but the sections of the Act which have been set out make plain that such a society must act within its rules and that the Act itself does not operate to supplement or add to the objects of the society as stated in the rules. Nor is there any provision in the Liquor Act 1912 or the Registration of Clubs Act 1976 which would authorise a club to carry on a motel unless the rules themselves so permitted. Let me then go to the rules of the plaintiff.

The objects of the plaintiff are as stated in its rules as follows:

OBJECTS

``5. The objects of the society shall be to provide the following community services -

  • (a) the provision and maintenance of buildings and grounds for recreation
  • (b) the operation, maintenance and carrying on of a club to be known as the Gosford R.S.L. Club Co-operative Limited.

SOCIETY

(Objects)

  • (c) The objects for which the society is established are -
  • To hold a hotel or club or other licence for the sale of spirituous or other liquors and to carry on the business of restaurant keepers, wine and spirit merchants and licensed victuallers and also sellers of tobacco and cigarettes and cigars and to hold a licence to keep, use and operate poker machines.
  • (d) In pursuance of the objects of the society to promote, assist or encourage entertainments, competitions, displays, public and other meetings and to take or hire any public hall or other buildings for any such purpose and to procure or authorise the delivery of lectures or addresses calculated to benefit the club or any branch of its work and to distribute gratuitously or otherwise literature of any kind connected with or calculated to assist any of the objects of the society.

    ATC 4210

  • (e) To engage or appoint with or without remuneration such managers, superintendents, organisers, secretaries, organising secretaries, accountants, solicitors, employees of all kinds and others, as may be required or found necessary for the proper working administration or carrying on of the club and any one or more at pleasure or otherwise to discharge.
  • (f) To do all such other lawful acts, deeds, matters and things and to enter into and make such arrangements as may be incidental or conductive to the attainment of the above objects or any of them.
  • (g) To promote any of the objects of the said Returned Services League of Australia, to affiliate with any other organisation and pay any fees or monies to anybody having objects similar to those of the society.
  • (h) To create and operate a Benefit Fund in accordance with Rule 10A.''

The powers of the club are enumerated in cl. 6 but this clause need not be set out as it nowhere gives power to carry on a business. It includes some of the powers referred to in sec. 15 of the Act. Rule 6(d) and r. 8 make plain that real property can only be acquired for the purposes of the club as sec. 64 of the Act requires. It is clear from a perusal of the objects of the society that the carrying on of the motel is quite unrelated to any of the objects of the club.

Counsel for the plaintiff sought to contend that para. 5(f) could be regarded as the source of power in the club to conduct the motel, the contention being that the motel brought in income and that the conduct of the business could be regarded as conducive to the attainment of the objects of the society in that the moneys obtained were always intended to be used, and were used, for the benefit of the members. Such a clause, however, does not enlarge the powers which would be exercisable in its absence.
A.-G. v. Great Eastern Railway (1880) 5 App. Case 473 at p. 478.
Deucher v. Gas Light Co. (1925) A.C. 691 at p. 695.
City of Winnipeg v. Canadian Pacific Railway (1953) 2 All E.R. 988 at p. 993. The test to be applied in determining whether an act is ultra vires was stated by Eve J. in
Evans v. Bunner Mond & Co. (1921) 1 Ch. 359 at p. 369, as follows:

``When the act of the company is challenged on the ground that it is beyond the powers of the company the challenge is not disposed of by proving that the act is beneficial to the company: it must be established that it is an act the doing of which is authorised by the company's constitution.''

In my view it is unnecessary to consider the matter further as it seems to me plain that the objects of the plaintiff cannot possibly be construed to include, as incidental thereto, the use of the plaintiff's land and buildings for a motel catering for members of the public as in any other motel business. It follows then that in carrying on the motel business, the plaintiff was acting ultra vires its rules and was conducting the motel not for the purposes of the club but simply as a motel proprietor.

Was the Commissioner correct in excluding from the exemption the area of the land upon which the motel is conducted? In my view he was, for I am of the opinion that para. (g)(iii) in referring to the ``building'' being ``occupied'' is referring to occupation by a society, club or organisation for their respective purposes.

Section 9 of the Land Tax Management Act provides that the owner of land shall be taxed upon all land owned by him and not exempt from taxation under the Act. Section 10 specifies a number of cases in which exemption applies. Paragraphs (a), (b), (c), (f), (k), (l), (m), (n), (o), (p) and (q) provide for exemption based solely upon the land being in the ownership of the persons to which the paragraphs refer. The remaining paragraphs specify a requirement additional to mere ownership. In para. (g) that requirement is that the land shall be used or occupied solely as a site for the various purposes set out in subpara. (i) to (ix). Now it is true, as counsel for the plaintiff has stressed, that para. (g)(iii) states only that the ``building'' to which it refers shall be ``a building occupied by a society, club or association not carried on for pecuniary profit'' (emphasis added) but in my view that does not mean that the paragraph is to be construed without any reference at all to the fact that it is concerned with societies, clubs,

ATC 4211

and associations. One must assume that Parliament, in granting the exemption to land used as sites for buildings occupied by societies, clubs and associations not carried on for pecuniary profit, was aware that such bodies operate within the framework of a constitution or rules and that it is the constitution or rules which determine or determine the extent of the permissible activities of such bodies. Parliament has not sought to limit the exemption to bodies carried on for any particular purpose but it has specified three kinds of organisation which must, to be identifiable as such, have a constitution or rules defining their powers.

In considering the construction to be put on the paragraph, it is appropriate to have regard to the purpose of or reason for the exemption and to bear in mind that one is concerned with a taxing Act. The construction which counsel for the plaintiff puts upon the paragraph merely takes the words of the paragraph and places emphasis on the word ``occupied'' - in the expression ``solely occupied by a club'' - so that it is taken to be the substantial criterion expressed. Exemption, he submits, is available provided only that the club occupies the building, the legislature not being concerned with how the club occupies the land or building. The other view places emphasis on the fact that the exemption is being given to a club and claims that the exemption can only be related to a club acting as a club - and likewise can only be related to a society or association acting within its objects.

In my view the latter approach is to be preferred. It appears to me to be wholly consistent with the remaining paragraphs of sec. 10 to approach the matter upon the footing that Parliament's essential purpose is to grant a concession to societies, clubs and associations and such organisations can only sensibly be considered as such in terms of their objects. It seems to me unlikely that the legislature, in requiring that the lands be used or occupied as a site for a building occupied by a club, would intend that the occupation by that club would be other than in accordance with its objects and what is incidental thereto. Such an organisation as is referred to in the paragraph does not, it is true, necessarily act unlawfully in carrying on an activity ultra vires its constitution: but in so doing, it acts without power to do what it is doing and I find it difficult to accept that Parliament can have intended to legislate for that situation so as to confer the exemption whether the organisation occupies within or without its objects. ``Words are prima facie to be taken in their lawful and rightful sense.'' Maxwell on The Interpretation of Statutes 12th ed. p. 274. If one were dealing with a statute intended to confer on others, rights exercisable against such an organisation as is referred to in the paragraph and arising out of the organisation ``occupying'' a building or buildings, it would not be difficult to hold that mere occupation would be sufficient to attract the liability with which the statute was concerned and that it was irrelevant to consider whether a particular occupation was or was not ultra vires the rules of the organisation. But I am concerned with the exemption given by a taxing Act and that exemption is given in a context whose essential components are only on the one hand land with buildings thereon and ownership and occupation by a society club or association on the other. (In the present case, of course, I am dealing with both a society and a club.) It seems to me that that being the context, the exemption should be understood to be referring to a club carried on as a club and that means in this case the plaintiff society acting within its objects.

As the carrying on of the motel was in no way incidental to the objects of the club as I have held, the area of the land upon which the motel was being carried on would thus in my view, not attract the exemption provided by the paragraph. But the running of the motel by the club does to the very limited extent I have mentioned earlier - use of the motel by members of the club and for the purpose of accommodating members of other clubs and groups when they come to the club and use of toilet facilities - constitute occupation of the buildings for the purposes of the club. Does this preclude the Commissioner from treating the motel area as not exempt? Paragraph (g)(iii) uses the word ``solely'', and if I am correct in taking the view that the occupation to which it refers is occupation for the purposes of the club, then it follows that the word ``solely'' expresses both the simple concept of a sole occupant and the concept of exclusive

ATC 4212

occupation by that occupant, where it is a club, for the purposes of that club. Where the facts show that the building, although occupied for the purposes of the club is not being exclusively so occupied then the exemption in my view does not apply. In
Shire of Nunawading v. Adult Deaf and Dumb Society of Vic. (1921) 29 C.L.R. 98 and in
Salvation Army (Vic.) Property Trust v. Fern Tree Gully Corporation (1951-52) 85 C.L.R. 159 the High Court considered the expression ``land used exclusively for charitable purposes'' and in the latter case Dixon, Williams and Webb JJ. at p. 172 explained the decision in the former. ``As we understand this judgment (that is Shire of Nunawading v. Adult Deaf and Dumb Society of Victoria, supra) the Court decided that the land was not being used exclusively for charitable purposes because it was also being used for another collateral purpose.'' Their Honours had considered at p. 169 rating cases relating to societies which failed in a claim for exemption from rates because they had purposes other than those for which they were founded and ``those other purposes ceased to be a means to an end and became collateral and additional purposes''. In
Lloyd & Anor. v. F.C. of T. (1955) 93 C.L.R. 645 the Court considered sec. 8(5) of the Estate Duty Assessment Act 1914-1947 which exempted from duty an estate devised ``for public educational purposes''. At p. 671 Kitto J. said:

``In the case of a gift to an individual or individuals it is necessary to find that by the terms of the gift he or they are effectively restricted in the application of the property given so that the gift satisfies the description in s. 8(5). In the case of a gift to a body, incorporated or unincorporated, it is necessary to find that the constitution of the body prescribes a similarly restricted scope of application. In neither case is the restriction as precise as it would be if the word `exclusively' or `only' were found in s. 8(5) after `public educational purposes', for then no gift could attract the exemption if any part of the corpus or income of the property given could be applied, consistently with the gift, for any purpose, however minor in importance, which was collateral or independent as distinguished from being a purpose of or incidental to public education: cf.
I.R. Commrs. v. City of Glasgow Police Athletic Association (1953) A.C. 380; Metropolitan Borough of Battersea v. British Iron & Steel Research Association (1949) 1 K.B. 434. But even without any such word having been `anxiously introduced' (1890) 15 App. Cas. 334, at p. 352, the exemption extends only to cases in which purposes of public education characterize the gift; and that cannot be the case unless the gift so deals with the property that it is devoted to such purposes if not exclusively, at least chiefly:
I.R. Commrs. v. Forrest (1890) 15 App. Cas. 334;
Public Trustee (N.S.W.) v. F.C. of T. (1934) 51 C.L.R. 75, at p 100;
Royal Australasian College of Surgeons v. F.C. of T. (1943) 68 C.L.R. 436;
Salvation Army (Vic.) Property Trust v. Fern Tree Gully Corporation (1952) 85 C.L.R. 159, at p. 172;
Royal College of Surgeons of England v. National Provincial Bank Ltd. (1952) A.C. 631, at pp. 655-659, 661;
Minahan v. Commr. of Stamp Duties (1926) 26 S.R. (N.S.W.) 480; 43 W.N. 157.''

If one applies the reasoning of the cases just mentioned to the present case, an occupation of a building by a club, society or association for purposes ultra vires the rules of the society, club or association is indistinguishable from the ``collateral'' or ``independent'' purposes referred to in these cases and the consequence is, in the present case, that the buildings comprising the motel and occupied by the club cannot be regarded as exempt under the paragraph - they are occupied in a minor way for the purposes of the club but otherwise are occupied not for the purposes of the club.

``Even without such words [i.e. `solely' or `exclusively'], an exemption from rating based upon use or occupation for particular purpose or in a particular manner can only apply when the property is so used that it can properly be described as used for that purpose or in that manner, any other user being merely incidental, or at least not inconsistent with such main user.''


Randwick Corporation v. Rutledge (1959) 102 C.L.R. 54 at p. 94 per Windeyer J.
Municipal Council of Mosman v. Spain (1929) 29 S.R. 492.

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That is not the case here.

In the result then, in my opinion, the fact that the club occupies the area upon which the motel is conducted ultra vires its rules precludes the plaintiff from the benefit of the exemption set out in the paragraph so far as that area is concerned.

There remains the question whether it has been shown that the Commissioner was in error in exempting what might be called ``the club premises'' only to the extent which he did. He appears to have exempted only the land on which the main club building was erected, the adjoining car park area, loading dock and the swimming pool. It would seem that this came about because he acted upon a plan (which has been tendered in evidence as Exhibit E) which was submitted to him by the plaintiff. It shows the dimensions of the buildings, parking area, swimming pool and the outside boundaries of the land. He does not appear to have had before him a detailed description of the land or any of the material that has been placed before me in regard to the use of the land for purposes ancillary to the use of the buildings.

It is now established that in determining the extent of the exemption given by para. (g) the ``site'' therein referred to is not to be taken as necessarily restricted to the area of land occupied by the building on the site. As was said by Hardie J.A. in relation to para. (g)(i) in
Joyce & Ors. v. Commr. of Land Tax (1973) 1 N.S.W.L.R. at p. 411 (his Honour's remarks were cited with approval by Stephen J. (1973-74) 132 C.L.R. 22 at p. 35):

``... surrounding land used for purposes ancillary to those of the church building, is within the description contained in the exempting provision.''

A very wide application was given to the word ``site'' in the expression ``used and occupied solely as the site of a single dwelling house'' in
Commr. of Land Tax v. Christie (1973) 2 N.S.W.L.R. 526.

The manner in which the notice of objection was framed and the manner in which the case has been conducted before me by counsel for the plaintiff, makes it impossible for me to specify any precise area which ought to be regarded as part of the site. The case has been presented before me by counsel for the plaintiff upon the footing that the Commissioner should have exempted the whole of the land owned by the club and no attention has been given to the precise area adjacent to the club which could, once the motel area is excluded, be claimed to be part of the site of the club building. As counsel for the plaintiff said in argument, ``the evidence does not really fit'' a decision as to what precise area should be exempted, if the whole is not to be.

Counsel for the Commissioner himself acknowledged that no consideration appeared to have been given by the Commissioner to the allowance of a proper curtilage around the main club building.

``In my opinion the provision exempts the actual site of the structure and some land around it. If there are no other buildings or facilities provided, then the surrounding land would be what is commonly understood and treated as the curtilage.''

Per Hardie J., Joyce & Ors. v. Commr. of Land Tax (supra) at p. 411. This observation made in relation to para. (g)(i) is, in my view, of general application when one is considering the site of a building. Under para. (g) Counsel for the Commissioner further acknowledged that the evidence as to the cleared lawn area upon which outdoor activities were carried on required consideration. I am given no measurements upon which I could determine with precision what additional area, beyond that already allowed by the Commissioner, should be regarded as exempt. It would be my view, however, on the evidence that the area to the northern side of the building where the swimming pool was located should be included out to a little beyond the northern-most part of the pool. The lawn area to the east of the club should be included to a reasonable extent commensurate to the size of the building and taking into account the regular use of that area as incidental to the use of the building during the years in question. The executive parking area, if it has not been included, should be included. The club staff parking area, sewerage pump and pump house should be included. None of the natural or timbered area, shown on Exhibit E, in my view, should be regarded as exempt.

In the circumstances it seems to me that the parties should be given the opportunity to

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agree upon the precise dimensions of the area to which I have referred and in the event that agreement is not forthcoming, each party will be entitled to put evidence before me as to the precise area claimed by each to be exempt. I propose, therefore, to publish my reasons to this point and make final orders in accordance with sec. 37 when the position is clarified.

When that aspect of the matter has been resolved a final order in accordance with sec. 37 of the Land Tax Management Act may be made as well as an order in regard to costs.


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