Expectation Pty Ltd & Birchgate Pty Ltd v The Commissioner of Land Tax [2001] QLC 90

LAND COURT BRISBANE 27 August 2001 Re: Appeals against Land Tax Land Tax Act Assessment Nos: 40438, 163790 Local Government: Cambooya (A2001-0120 and 0121) Expectation Pty Ltd and Birchgate Pty Ltd v. The Commissioner of Land Tax D E C I S I O N (1) These are appeals by Expectation Pty Ltd and Birchgate Pty Ltd against two assessments of land tax on land owned by the companies as at 30 June 2000. There was no dispute between the parties as to the relevant facts. Mr SJ Bowers of Jensen Bowers Group Consultants Pty Ltd appeared for the appellants. Mr FW Redmond of Counsel appeared on behalf of the respondent. (2) Expectation Pty Ltd and Birchgate Pty Ltd are joint venture partners in the development of a large scale master planned multi stage residential development known as Chancellor Park Estate located in the Maroochy Shire. The development is proceeding in stages which has produced in recent times an average of 230 new lots per year. The appeals relate to assessments for land tax on Lot 85 on SP 131931, one of the lots in the development. (3) As at 30 June 1999 the balance lands in the development were contained in two parcels, numbered 66 and 109 in the companies’ land tax assessments for 1999. During the year 30 June 1999 to 30 June 2000, the two parcels were subject to numerous resurveys. Lot 85 was created by registration of SP 131931 on 14 June 2000 which cancelled and amalgamated Lot 84 on SP 124498 and Lots 16-19 on RP 165755. Land tax was assessed on Lot 85 as at 30 June 2000 as follows: Expectation Pty Ltd $3,600,000 (unimproved value) $3,456,000 (land tax value) Birchgate Pty Ltd $1,800,000 (unimproved value) $1,728,000 (land tax value) [2001] QLC 90 -- 1 of 8 -- 2 (4) These land tax values represent a 4% discount on the unimproved value of the land. The appellants argue that they are entitled to a discount of 40% on the unimproved value as provided in Section 3CA of the Land Tax Act 1915 (the “Act”). Essentially, the appellants' argument is that lot 85 constitutes subdivided land within the meaning of that section and that therefore the appellant is entitled to the benefit of the 40% discount referred to in s 3CA(3) of the Act. (5) Section 3CA provides – “References to unimproved value of subdivided land in certain cases (1) This section applies to a parcel of land if – (a) the parcel is one of the parts into which land has been subdivided; and (b) the person who subdivided the land (the “subdivider”) was, when the land was subdivided, the owner of the parcel; and (c) the parcel was not developed land when the land was subdivided; and (d) at midnight on the 30 June immediately preceding the discount year for the parcel – (i) the subdivider is still the owner of the parcel; and (ii) the parcel is still not developed land. (2) Subsection (3) applies to the parcel for levying land tax on the parcel for the discount year for the parcel. (3) A reference to the unimproved value of the parcel that applies for the discount year is a reference to the value that, apart from this subsection, would be the unimproved value of the parcel applying for the discount year, discounted by 40%. (4) Nothing in the section applies for levying land tax on the parcel for a financial year other than the discount year for the parcel. (5) For this section, land is taken to be subdivided when a plan of subdivision under the Land Title Act 1994 is registered under that Act. (6) In this section – “developed land” means land improved by the construction of a building or other facility reasonably capable of being used. -- 2 of 8 -- 3 “discount year”, for a parcel of land that is 1 of the parts into which land has been subdivided, means the financial year immediately following the financial year in which the land was subdivided.” (6) Section 3 of the Act (the definition section) provides that “parcel” means an area of land that is the subject of a separate valuation made by the chief executive under the Valuation of Land Act 1944. The section also provides that “parcel of land” has the same meaning as parcel. (7) The appellants’ agent relied on two main submissions to support his contention that the appellants were entitled to the benefit of a 40% discount under s 3CA of the Act. (8) The first submission was that Lot 85 on SP 131931 falls within s 3CA (1)(a) because the lot/parcel is one of the parts of the subdivision. While it is true that Lot 85 was one of the parts of the whole residential development, that by itself does not mean that Lot 85 falls within s 3CA. The section only applies when, as explained below, the conditions prescribed by sub-section (1) are fulfilled. (9) The appellants also supported their first submission by relying on s 3CA(5) which states that land is taken to be subdivided when a plan of subdivision under the Land Title Act 1994 is registered under that Act. Turning to sections 49 and 49A of the Land Title Act the appellants pointed out that s 49 states that a “plan of subdivision” is a plan of survey providing for 1 or more of the following:- (a) division of 1 or more lots; (b) amalgamation of 2 or more lots to create a smaller number of lots; (c) dedication of land to public use; (d) redefinition of a lot on a resurvey. (10) Section 49A provides that: (1) A plan of subdivision may be registered; (2) a lot defined in the plan is created as a lot when the plan is registered. (11) The appellants submit that SP 131931 is a plan of subdivision under s 49(b) as it amalgamates four smaller lots into one lot, Lot 85. Therefore Lot 85 constitutes subdivided land and, as such, Lot 85 qualifies for the 40 % discount under s 3CA of the Act. (12) If s 3CA(5) is read in isolation, the appellants’ argument appears to have some force. That is, it could be argued that the reference to the “plan of subdivision” in that section imports the definition of “plan of subdivision” to be found in s 49 of the -- 3 of 8 -- 4 Land Title Act 1994, and therefore Lot 85 is subdivided land. However, s 3CA must be read as a whole and, in particular, effect must be given to sub-s (1). (13) Section 3CA does not apply to all subdivided land. It applies, according to the heading, to the unimproved value of subdivided land in certain cases (italics added). The cases to which the section applies are those which meet all the conditions set out in subparagraphs 1(a) to (d). In particular, the section applies to a parcel if the parcel is 1 of the parts into which land has been subdivided (subsection (1)(a)). For the purpose of applying this section, Lot 85 is the parcel. (14) Is Lot 85 one of the parts into which land has been subdivided? (15) There is no express definition in the Act of the word “subdivided”. The effect of the appellants’ submission is that because s 3CA(5) imports the definition of a plan of subdivision contained in the Land Title Act into the Land Tax Act the word “subdivided” as used in s 3CA(1)(a) must have a similar meaning. (16) The respondent submits that to determine the meaning of the word “subdivided”, the language of the Act as a whole should be examined. The only other section which refers to subdivided land is s 26C. That section was considered by the Land Court in SK Property Syndication Ltd v Commissioner of Land Tax (1997) 97 ATC 4742. The case was principally concerned with the application and interpretation of s 25 of the Act and in that respect the case is not directly relevant to this one. However, in the course of his judgment, the learned Member considered a submission that because the land in question was held in co-ownership there had been a subdivision of the land. In rejecting that submission, the learned Member said (at 4748): “That is not so. Subdivision of land involves the issue of separate titles to separate parcels of land carved from a larger block. The only direct reference to subdivision in the Land Tax Act 1915 is found in section 26C, inserted in 1990. It is clear from that section that subdivision refers to the division of the land and the registration of the plan of subdivision, not to the distribution or division of one parcel of land. … This is a case where the ownership of the land, but not the land, is divided in different sized shares.” (17) While, on the face of it, these comments appear to assist the respondent’s case, they are not conclusive as to the meaning of the word “subdivided” in s 3CA. The learned Member was concerned with explaining the difference between the division of land into separate parts and the division of ownership between owners and it was in that context that the statement was made that subdivision of land involves the issue of separate titles to separate parcels of land carved from a larger block. -- 4 of 8 -- 5 (18) The decision in SK Property Syndication was handed down on 8 May 1997. Subsequently the following amendments (relevant to this decision) have been made to the Act and the Land Title Act. Section 3CA was inserted into the Act by s 7 of the Revenue and Other Legislation Amendment Act 1997 which came into operation on 29 June 1998. Section 3CA was subsequently amended by s 17 Schedule of the Valuation of Land and Other Legislation Amendment Act 1998 which came into effect on 18 December 1998. (19) The Land Title Act was amended by s 295 Schedule 3 of the Body Corporate and Community Management Act 1997 which commenced operation on 13 July 1997. A new definition of “plan of subdivision” was inserted in s 49, and s 49A was introduced. (These provisions are set out above.) These amendments now affect the interpretation of s 26C(2)(a) of the Act which provides that land is subdivided when a plan of subdivision of the land is registered under the Land Title Act 1994. (20) The result of the amendments to the Land Tax Act and the Land Title Act is that s 3CA and s 26C of the Act now both contain virtually identical provisions to the effect that, for the purpose of each section, land is taken to be subdivided when a plan of subdivision is registered under the Land Title Act. Given the extended definition of a “plan of subdivision” now contained in s 49 of the Land Title Act, it is considered that the statement in SK Property Syndication that subdivision of land involves the issue of separate titles to separate parcels of land carved from a larger block can not be applied, automatically, to the interpretation of s 3CA of the Act. (21) Counsel for the respondent sought to escape the application of the extended definition of “plan of subdivision” to s 3CA, by submitting that sub-s (5) does no more than fix the point in time at which a subdivision occurs. While the section does, clearly, indicate when land is taken to be subdivided, I have concluded that the reference to the words “plan of subdivision” in s 3CA(5) must be given the meaning attributed to them in the Land Title Act. However, that does not mean that the discount provided by s 3CA is available whenever any type of plan of subdivision under the Land Title Act is registered. As stated above, effect must be given to s 3(1)(a) – (d), as the section only applies where those conditions are fulfilled. (22) The literal meaning of s 3CA(1)(a) must be considered. To this point, the discussion has focussed on the meaning of the word “subdivided”. However, the subparagraph as a whole should be considered. The subparagraph provides that the section applies to a parcel of land if (inter alia) the parcel is one of the parts into which land has been subdivided. Lot 85 is the parcel, for the purposes of applying the -- 5 of 8 -- 6 section. However, Lot 85 is not one of the parts into which land has been subdivided. Lot 85 was created by the amalgamation of various other lots. The ordinary meaning of the words in sub paragraph 1(a) is that they refer to those cases where a block is divided into smaller lots. They do not apply to a case where a number of smaller lots has been amalgamated into a larger one. (23) There is therefore some inconsistency between s 3CA(1)(a), where one specific type of subdivision is referred to and s 3CA(5) where more general words are used. (24) S 14B(1)(a) of the Acts Interpretation Act 1954 provides that where a provision is ambiguous or obscure, consideration may be given to extrinsic material to provide an interpretation of the provision. In the circumstances, therefore, it is appropriate to turn to the Explanatory Notes for the Revenue and Other Legislation Amendment Act 1997 which introduced s 3CA into the Act. (25) It appears that the discount provided by s 3CA was made available to subdividers in order to maintain the land tax concession which subdividers had enjoyed prior to amendments to the Valuation of Land Act 1944 introduced in 1997. (26) The Explanatory Notes say (at page 6): “Prior to recent amendments to the Valuation of Land Act 1944, land which was subdivided was treated as a single parcel for which one valuation was issued. As each subdivided lot was sold by the developer, a separate valuation was issued for that lot and a new valuation issued for the remaining lots. This valuation method conferred a land tax concession on developers because the single value of the subdivided lots was less than the aggregate of each of the lots in the subdivision and any enhancement in the value by reason of works carried out by that owner on the subdivided land was disregarded. Amendments to the Act [i.e. the Valuation of Land Act 1944] made by the Natural Resources Legislation Amendment Act 1997 involved a new system whereby a separate valuation will be issued to approved subdividers for each lot in a plan of subdivision from 1 July 1997 in the case of land subdivided after that date. As a result of the move to a separate valuation for each lot, the concession for subdivision will no longer be provided by way of the reduced valuation The amendment to the Land Tax Act 1915 replaces this arrangement with a system whereby values are discounted for the first financial year following the subdivision of the lot by an approved subdivider. Land is regarded as being subdivided when a plan of subdivision is registered under the Land Title Act 1994. … -- 6 of 8 -- 7 The discount provided by the Land Tax Act 1915 applies in conjunction with the removal of the concession provided to developers by the Valuation of Land Act 1944.” (27) It appears from this extract that the concession referred to was only available when a large lot was divided into smaller lots. It was the intention of the legislature to maintain that concession by applying a discount of 40 % as provided for by s 3CA of the Act. There is no reason to believe that the legislature intended to extend the benefit of that concession to amalgamations, as there is nothing in the Explanatory Notes, which indicates such an intention. Similarly, the Minister’s Second Reading Speech for the Natural Resources Legislation Amendment Bill 1997 (which legislation amended the Valuation of Land Act 1944 as described above) leads to the same conclusion. (28) This interpretation is confirmed by reference to the definition of “subdivide” in s 8(1) of the Valuation of Land Act 1944 which provides that “subdivide” land means divide land into parts. The intention of the legislation in inserting s 3CA into the Act was to replace the concession previously available because of the way in which subdivided land was valued under s 25 of the Valuation of Land Act, prior to that section’s amendment in 1997. That concession was only available where land was subdivided, i.e. divided into parts. My conclusion is therefore, that it was the intention of the legislature that the concession granted by s 3CA of the Act would only be available when land was divided into parts. (29) The appellants also relied on s 32C(b) of the Acts Interpretation Act 1954 in support of their argument. S 32C(b) provides that words in the plural include the singular. The appellants submitted that s 32(C)(b) could be used to interpret s 3CA(1)(a) of the Act with the result that the section could be read to apply to the facts under consideration, that is, to a case where lots are amalgamated into one part (or parcel). It is doubtful whether s 32(C)(b)(a) can be used to support that conclusion, but in any event, this interpretation ignores the plain meaning of the words of s 3CA(1)(a). The section expressly applies to the case where one parcel is divided into a number of parts, not to the case where a number of lots are amalgamated into one parcel. Section 32C(b) must give way to those express words by application of s 4 of the Acts Interpretation Act which provides that application of that Act may be displaced, wholly or partly, by a contrary intention appearing in any Act. (30) The second major submission advanced by the appellants was that it was the intention of the legislature to make the discount available to subdividers in respect of -- 7 of 8 -- 8 their land holdings, which are, in effect, their stock and trade. It was also pointed out that if the timing of the amalgamation had been different, so that the amalgamation and subsequent subdivision of the amalgamated lot had occurred in the same financial year, the appellants would have been entitled to the discount on the resubdivided land. It was anomalous, therefore, that the discount was not available. Similarly, it was anomalous that Lot 84 by itself would have been entitled to the discount, but once it was amalgamated with Lots 16-19 it was not. Further, if there had been no amalgamation and, instead, a continuing series of subdivisions, the discount would have been available. (31) The Explanatory Notes for the Revenue and Other Legislation Amendment Act 1977 do not support the appellants’ argument that the legislature intended that the discount should be available to subdividers in respect of all their land holdings. Similarly the Explanatory Notes do not support the proposition that the current case is anomalous. Indeed, as discussed above, the Explanatory Notes indicate that the legislature intended that the s3CA discount only be available where land is divided into parts. (32) Finally, the appellants said that they had received a discount of 40 % on their annual rates in respect of the subject land. It was submitted that it was anomalous that a 40 % discount was allowed for rating purposes but not for land tax purposes. This argument does not take into account the fact that the discount period for which the land tax discount is granted is calculated under s 3CA of the Act. The discounted valuation period used for discounting rates is calculated under s 25 of the Valuation of Land Act 1944. There is no necessary correlation between the two sections as the discounted valuation period under s 25(7) of the Valuation of Land Act commences on the date of subdivision whereas the discount year under s 3C(6) of the Land Tax Act means the financial year immediately following the financial year in which the land was subdivided. (33) For the reasons set out above the appeals must fail. MEMBER OF THE LAND COURT -- 8 of 8 --