NSW Civil and Administrative Tribunal (Tribunal) held that a company was liable, to pay NSW land tax, as an agreement, with the land owner was, in law, a lease.

The facts were as follows.

  1. Australia Avenue Developments Pty Ltd (Developer) entered into a Project Development Agreement (Development Agreement) with the Sydney Olympic Park Authority (Authority) under which it agreed to develop a parcel of land at Sydney Olympic Park.
  2. The Authority was the land owner as well as the statutory body representing the Crown under the Sydney Olympic Park Authority Act 2001.
  3. The Project Development Agreement provided for the entry into a “construction lease” from Authority to Developer. The lease was subsequently entered into and registered and the applicant was assessed to land tax.
  4. The Commissioner assessed the Developer to land tax pursuant to s21C of the Land Tax Management Act 1956 (LTMA) which in broad terms imposes land tax on ‘lessees’ of ‘leases’ of land ‘owned’ by the ‘Crown’ (which included ‘statutory authorities’). It does this by deeming the lessee to be the ‘owner’ (and expressly exempting the Crown from any duty – except in limited circumstances, not relevant here.

Under s21C, the terms ‘lease’, ‘lessee’ were not defined in any terms that altered the application of the general meaning of those terms; ‘Crown’ included ‘statutory authority’ as noted (relevant here) and the term ‘owner’ was defined in a way that caught the Authority, which was ‘entitled to the land for any estate of freehold in possession’.

The applicant/Developer argued it was not liable to land tax as the “construction lease” was not relevantly a ‘lease’ in law [para 20 of the Reasons].

  1. It argued that it did not have ‘exclusive possession’ (which all agreed, was the defining criterion for a ‘lease’) – despite the Construction Lease, referring to itself as a ‘lease’ and expressly granting ‘exclusive possession’.
  2. The Developer submitted, however, that this so called ‘lease’ was subject to the Development Agreement, which reserved so much control and access to the Authority, as to, in substance, be inconsistent with what the case law and texts said was permissible access by a landlord, as to have still given a proprietary right of ‘exclusive possession’. The Developer listed all these alleged incursions [see para 29].
  3. That the so called a ‘Construction Lease’ was really an ancillary arrangement, granting the Developer access to the Land, for purposes of developing the land, as agreed.

In support of this, the Developer cited the text: Gray & Gray, including this portion, citing the limited rights of access which a landlord can reserve, whilst still granting the tenant sufficient possessory rights to have a ‘lease’:

“4-014 It is consistent with the proprietary character of leaseholds that the ‘proper touchstone’ of a lease or tenancy should comprise the legal right to exclusive possession of the land (Radaich v Smith(1959) per Windeyer J). A tenant without exclusive possession is a contradiction in terms: no tenancy can exist unless such a right has been conferred on the occupier. Exclusory power is of the essence of proprietary estates in land (1-127). As Lord Templeman confirmed in Street v Mountford(1985), the tenant is, in reality, owner pro tempore [‘temporary owner’], and is entitled to ‘keep out strangers and keep out the landlord unless the landlord is exercising limited rights reserved to him by the tenancy agreement to to enter and view and repair

The Tribunal, however, disagreed.

  1. It acknowledged that there were a range of reservations a landlord could make which would at some point, cross the line and deprive the arrangement of relevant ‘exclusive possession’ and that this case called for an investigation of this. [paras 33 & 52]
  2. The Respondent Commissioner put reliance on a decision of the Croft J in the Victorian Supreme Court in Living & Leisure Australian Ltd v CSR [2017] VSC 675, which concluded that the Taxpayers were relevantly ‘lessees’ of Crown land, at the ski fields in Mt Hotham and Falls Creek (under equivalent Victorian land tax law). This was despite the “the arrangements were called leases they made substantial provision for supervision, control and entry by the Crown body governing the Victorian alpine snow country, and required the grant of entry to the public to the ski fields provided it did not interfere with the operation of the lessees“.
  3. Ultimately, the Tribunal’s finding was that the objectively determined intention of the documents, was that these sophisticated parties did intend that there be ‘exclusive possession’ – even if conditional in some respects, and that the purpose of the documents was to confirm the reservations whilst also confirming that it was to be a lease. [para 53]

Rather adventurously, the Developer also submitted [paras 22 & 23]:

  • That because the Crown did not own the land, it was not relevantly a lease of land owned by the ‘Crown’. But the Tribunal rejected this because the Act expressly defined the ‘Crown’, as including statutory bodies representing the Crown, such as this Authority, which did own the land.
  • It also argued that the Authority had to pay the land tax (as the owner) and the Developer didn’t – because the Authority only represented the Crown and was not the ‘Crown’ for the purposes of the exemption from land tax in s21C(1). Again, the definition of the ‘Crown’ as including ‘statutory authorities representing the Crown’ precluded that submission succeeding, also.

(Australia Avenue Developments Pty Ltd as trustee for the SOP Site 3 Partner Trust v Chief Comr of State Revenue [2018] NSWCATAD 144, NSW Civil and Administrative Tribunal, Hamilton SM, 11 July 2018).

FJM 10.8.18

[LTN 137, 19/7/18; Tax Month – July 2018]


Comprehension questions (answers available)

  1. Was the Developer liable to land tax as the lessee of land owned by the Crown (albeit, in this case, owned by the Authority as representing the Crown)?
  2. Was there any special definition of lease?
  3. Was the relevant test whether the Authority had relevantly given the Developer ‘exclusive possession’?
  4. Must the landlord give a tenant a possessory right that excludes them, too?
  5. Did the Developer argue that, in this case, the rights the landlord reserved, through the overriding Development Agreement, went beyond the limited rights, accepted at law, and demonstrated that, in substance, it was just being given access to complete the development?
  6. Did the Tribunal accept this?


4.no(butRightsReservedToTheLandlordAreTypicallyLimitedToInspection&Repair); 5.yes;




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