The Victorian Court of Appeal has, by majority (Niall J dissenting),

  • granted a taxpayer leave to appeal;
  • but then dismissed its appeal, concerning land tax assessments, in respect of Crown lands, within the alpine resorts, at Falls Creek and Mount Hotham, which were used and occupied by wholly-owned subsidiaries of the taxpayer.

The background was this.

  1. The Appellant Taxpayer had 2 subsidiaries (the Tow Operators), each of which had an agreement with the Crown, to operate ski tows in the Australian ski fields at Falls Creek and Mt. Hotham. The agreements were expressed as leases and were granted under s28 of the Alpine Resorts Act 1983 (Vic).
  2. The 2 Tow Operators and the Appellant Taxpayer were ‘related corporations’, for the purposes of s50 of the Land Tax Act 2005and the Taxpayer could, therefore, be assessed, as if all the ‘related corporations’ were a single company.
  3. The issue was whether these ‘agreements’ were ‘crown leases’, which in turn depended on whether they granted the Tow Operators ‘exclusive possession’. The reasons for this, are set out below.
  4. Section 8 of the Land Tax Act makes ‘owners’ of taxable land liable to land tax and s10(1)(b) makes a person who is “entitled to land under a lease of Crown land” an ‘owner’.
  5. The term ‘lease’ is not defined in a way that assists determine what it’s core meaning is, and the parties agreed that this turns on the general law, which makes the grant of ‘exclusive possession’ the key criterion.
  6. The the ski tows were on Crown land and each agreement, was drawn as a lease, and gave each of the Tow Operators exclusive possession, subject to a ‘reservation’ to allow the public to use and enjoy the land (cl.2.1(k)) with a matching obligation on the Tow Operators to allow the public to have that access. Of course, this was necessary to allow the Tow Operators to make money out of their ski tows.
  7. The Commissioner had issued land tax assessments for the 2010 to 2015 years on the basis that each of the Tow Operator’s agreements were a “lease of Crown land”.
  8. At first instance, Croft J, in Living and Leisure Australia Ltd v Comr of State Revenue [2017] VSC 675, held that the Agreements did give the Tow Operators ‘exclusive possession’ and were, relevantly, a “lease of Crown land” (see related Tax Technical – Tax Month article).
  9. The Taxpayer appealed to the Supreme Court of Victoria, Court of Appeal.

The Court of Appeal decided, by majority (Niall JA, dissenting) that the Agreements did give the Tow Operators ‘exclusive possession’ and they were “lease[s] of Crown Land”.

  • Niall JA, set out the law and facts (paras 25 and following). He gave the Taxpayer leave to appeal and allowed the appeal, on the basis that the Agreements did NOT give the Tow Operators ‘exclusive possession’.
  • The majority (Ferguson CJ and Whelan JA) acknowledged that the matter was ‘finely balanced’ but reached the opposite conclusion on ‘exclusive possession’ and disallowed the appeal, for the following reasons.
    • First, access, though wide, is limited. It is only available to ‘members of the public’ or the ‘public’ – which impliedly confines this to people entering in a private capacity. Also, the areas, to which the public may have access, are restricted by the requirements that there be no interference with the ski lift operators’ activities. [para 15]
    • Second, the instruments require the ski lift operators to control the conduct of members of the public on the land.[para 16]
    • Third, the High Court decision in Radaich v Smith [1959] HCA 45 gives supports this conclusion, where, only a licence ‘to supply refreshments, to the public, in a shop, and to carry on the business of a milk bar, in that shop’. Notwithstanding the terminology employed, the High Court found that exclusive possession had been granted (and that a leasehold interest had been created) because exclusive possession was necessary in order to carry on the licenced business. [para 17]
    • Finally, this conclusion is supported, also by the Goldsworthy case [1973] HCA 7, where a lease of the sea bed, in a delineated area, was found to grant  exclusive possession  (and to conclude it was a ‘lease’ for tax related matters) despite required ‘to permit the Crown and any vessel to use any part of the demised premises for navigation, anchorage or other purposes incidental to shipping’. The joint venturers were also required to consent to the granting of easements or other rights in or over the demised premises as might from time to time be reasonably necessary for ‘the overall development or use of the harbour of Port Hedland’.
      • Mason J found: “Although these provisions restrict the use to which the joint venturers may put the premises and impose obligations of an important kind, in my view they are not inconsistent with the existence of a right of exclusive possession in the joint venturers. Indeed the provisions assume the existence of that right.

(Living and Leisure Australia Ltd (ACN 107 863 445) v Comr of State Revenue [2018] VSCA 237, Victorian Court of Appeal, Ferguson CJ, Whelan and Niall JJA, 17 September 2018.)

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