LAND COURT BRISBANE 14 JANUARY 2000 Re: Appeals
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[2000] QLC 3 LAND COURT BRISBANE 14 JANUARY 2000 Re: Appeals against Assessments of Land Tax (A98-43 and A99-24). Diebold No. 5 Pty Limited v. The Commissioner of Land Tax D E C I S I O N These are two appeals by Diebold No. 5 Pty Limited (Diebold) against the assessment of land tax by the Commissioner of Land Tax (the Commissioner) on land owned by Diebold at midnight on 30 June 1997 (the 1997 assessment) and on land owned by the appellant at midnight on 30 June 1998 (the 1998 assessment). The appeals are against assessments on the same land and were heard together. Background The assessments are in respect of land described as Lots 1-2 on Registered Plan 192633, Parish of Urangan, County of March, in the City of Hervey Bay (the subject land). Diebold is the registered proprietor of an estate in the land of 15 undivided eightieth parts or shares. The appellant holds the land as tenant in common with Archer & Carlson Pty Ltd (24 undivided eightieths), which may have been the original owner of the land, and with a number of people holding the balance of 41 eightieths. Diebold holds a certificate of title for its estate in the subject land so it is assumed that each of the tenants in common in the land holds a separate certificate of title in respect of their individual interests. The only evidence for Diebold was contained in an unsworn statement by Mr John Stirton Kinross, a director of Diebold, together with attachments, which was admitted by consent. Mr Kinross explained that the appellant entered into an agreement with Archer & Carlson Pty Ltd in June 198l to purchase 15 undivided eightieths share of land then described as Portion 36, Parish of Urangan, as tenant in common with others. The Certificate of Title registering Diebold's estate in the land issued on 28 June 1982 and shows the area of Portion 36 as 32.37 ha. According to Mr Kinross' statement, Diebold's purpose in purchasing the land was to hold it as a long-term investment. At all material times it was vacant and not 2 used or occupied by any of the joint owners, nor to Mr Kinross' knowledge, is there any proposal to do anything with the land. It seems that at some time since 1982 there has been some dealing with the land, as its description has changed. However, no evidence was given of this matter. Mr Kinross merely stated that "The land is now part of the land contained in Lots 1 & 2 RP 192633 and known as 43 Amos Road, Booral and 1245 Booral Road, Wondunna…". Mr M Foley, Solicitor, who appeared on behalf of Diebold, informed me that the new description is the result of the land being severed by a highway, creating two parcels. In the absence of any dissent from the Commissioner, I am prepared to accept Mr Foley's explanation. The significance of the severing of the land will be apparent later. The only evidence on behalf of the Commissioner was an affidavit of Mr Michael Moynihan, Solicitor, employed in the Office of the Crown Solicitor, who had caused a search to be made of the database of the Australian Securities Investments Commission. He had ascertained that Archer & Carlson Pty Ltd was deregistered on 1 August 1997. The Assessments On 11 August 1998 the Commissioner assessed Diebold for land tax as at midnight on 30 June 1997, as if it were the owner of the land. At that time the taxable value was $235,000. The appellant objected on the basis that it was registered owner of only 15 eightieths' interest in the land as tenants in common with others. On 2 September 1998 the Commissioner notified the appellant that its objection was not allowed. On 30 September 1998 Diebold appealed to the Land Court. The grounds of appeal are essentially that the Commissioner wrongly assessed Diebold for land tax under the provisions of s.25(2A) of the Land Tax Act 1915. In particular: other than 15 eightieths' interest in the subject land the appellant does not own or have any interest in any other land in Queensland; the value of the appellant's interest in this land is less than the threshold value at which the appellant becomes liable to pay land tax; the appellant holds its interest in this land as "tenants in common with others" or "in severalty with others" rather than "jointly with others"; 3 the appellant does not hold any land in trust for any of the other co-owners of the land; the provisions of s.25 of the Land Tax Act 1915 cannot be applied to create any deemed trust or other arrangement that creates any liability on the appellant's part to pay the assessment; if the provisions of s.25(2B) are read with those of s.25(2A), then no liability attaches to the appellant as the holding of its interest in this land cannot be considered as joint in the terms of s.25(2B) as the appellant is not in a partnership or a firm or in a company as member with any of the other persons who hold an interest in this land as tenants in common with the appellant; the appellant is not in any way associated or connected with any of the other persons who have an interest in this land. Then on 3 December 1998 the Commissioner assessed Diebold for land tax as at midnight on 30 June 1998, as if it were the owner of the land. At that time the taxable value was $195,000. Again the appellant objected on similar grounds to the 1997 assessment, and on 22 February 1999, the Commissioner advised Diebold that its objection was not allowed. On 23 March 1999, the appellant appealed to the Land Court on essentially the same grounds as previously, but adding the following: the Commissioner attached a simplistic and inappropriately narrow interpretation of the operation of s.25(2A) and s.25(2B) of the Act; the Commissioner did not properly exercise his discretion in deciding whether it was "advisable" to proceed pursuant to the provisions of s.25(2A) of the Act; the Commissioner is wrong in attempting to base the exercise of his discretion on the decision in the SK Property Syndication Ltd case; there is another company that holds a greater share of the land than the appellant and it would be more appropriate to levy any land tax properly payable on the land against that other company rather than the appellant. The Land Tax Legislation: The Land Tax Act 1915 is stated to be "An Act to impose a land tax upon relevant unimproved values, and for purposes incidental thereto and consequent thereon". The Act provides that land tax is payable by every owner of land on the taxable value of the land owned by the owner and not exempt from taxation under the Act (s.11(1)). The taxable value of all the land of an owner is the aggregate of the 4 unimproved values of those parcels, less any deductions allowable (s.11(2)). Land tax is charged on land owned at midnight on 30 June immediately preceding the financial year in and for which the tax is levied (s.12). "Owner" is defined to include every person who is entitled to the land for an estate of freehold in possession, or who is entitled to the rents and profits from the land, or who is taken to be the owner under the Act (s.3B). The phrase "joint owners" means persons who own land jointly or in common, whether as partners or otherwise (s.3). Specifically, these cases turn on the interpretation of s.25 of the Act, which provides: "Joint owners 25.(1) Joint owners of land shall be severally assessed and liable in respect of the land (exclusive of the interest of any joint owner exempt under this Act), and the value of each owner's share shall be added to the value of all other land of which he or she is the owner. (2) Each joint owner of land shall be separately assessed and liable in respect of – (a) his or her individual interest in the land (as if he or she were the owner of a part of the land in proportion to his or her interest); together with (b) any other land owned by him or her in severalty; and (c) his or her individual interests in any other land. (2A) However, where the jointly owned land is of a relevant unimproved value of $50,000 of upwards, or where there are 5 or more joint owners of land, the commissioner may, if the commissioner considers it advisable to do so, make 1 assessment as if the land were owned by 1 person, but in such case the proportional assessment of the shares in the land shall not be added to the individual assessments of the joint owners. (2B) For the purposes of subsection (2A) lands which are held in severalty for an estate in fee simple by separate titles in the respective names of 2 or more persons shall be considered to be jointly owned by such persons if the lands are used by a partnership firm or company whereof such persons are members. (3) The commissioner may, for the purposes of this Act, declare any joint owner of land to be the agent or trustee of all other joint owners of the same land." 5 The Issues Despite the ground of appeal in each case, it was not argued on behalf of the appellant that the definition of "joint owners" would not include tenants in common as well as joint tenants.