Posted on July 27, 2015 by Sue Puckeridge
When is land proposed to be used for ‘residential’ purposes, ‘residential’ for rating purposes?
The Land and Environment Court has recently rejected an argument by a landowner of land intended to be used for residential subdivisions that the proper categorisation of land, for rating purposes, was ‘residential’ and not ‘business’.
In SH Camden Valley Pty Ltd v Camden Council  NSWLEC 104, five appeals were brought in relation to five parcels of land pursuant to s526(1)(a) of the Local Government Act 1993 (‘LG Act’), challenging a decision of Council.
The 5 parcels of land can be described as follows:
- The El Caballo Blanco Land (‘ECB Land’), which had been used as an equestrian entertainment facility but vacant since May 2014. The applicant sought the declaration to be effective from 6 May 2014.
- The Non- ECB Land which consisted of four parcels of land, namely:
- Land on which a sales office for the residential subdivision was located (‘Sales Office Land’);
- Land on which a golf course is located (‘Golf Course Land’);
- Land which is to be used for residential subdivisions (‘Subdivision Land’);
- Land in which a riparian corridor was to be located (‘Riparian Land’).
In relation to the Non ECB Land, the applicant sought the re-categorisation declaration to be effective from 1 July 2010.
Pursuant to s516 of the LGA, land must be categorised as residential if it is a ‘parcel of rateable land valued as one assessment‘ and:
- its dominant use is for residential accommodation; or
- if it is vacant land, it is zoned or otherwise designated for use under an environmental planning instrument for residential purposes.
The ECB Land
The ECB Land, was vacant land for the purposes of s516(1)(b) of the LGA. 35 per cent of the ECB Land was zoned for residential purposes. The remaining 65 percent was zoned for private recreation.
After reviewing the relevant authorities, the Court found that the ECB Land was not designated for residential purposes chiefly because:
- even though s516 of the LGA does not require the whole of the land to be zoned for residential purposes, the extent of the residential zone is a ‘relevant and important consideration’ . Although the test of ‘dominant’ use does not apply to vacant land, to be designated for residential purposes, at least 50% of the land must be zoned for that purpose,
- the private recreation zoning did not permit residential accommodation,
- the future use of the land the subject of the private recreation zoning was to be golf course, and
- although the ECB Land had been purchased for residential development associated with the South West Growth Centre, no building work evidencing the intention to use the land for residential purposes had commenced (see Meriton Apartments Limited v Parramatta City Council  NSWLEC 182 ).
The Non-ECB Land
Because the applicant sought a re-categorisation of this land from 1 July 2010, the key issue in determining the correct categorisation of the Non ECB Land was the relevant time at which to identify the parcel of rateable land.
As at 1 July 2010, none of the allotments comprised in a parcel of Non ECB Land existed and there was no ‘parcel of rateable land valued as one assessment’ as required under s516 corresponding with a parcel of Non-ECB Land. Instead there were two parcels of rateable land valued as one assessment. One included, but went beyond the Golf Course land, and the other included but went beyond the Sales Office Land, the Riparian Land and the Subdivision Land. In other words, the Non ECB Land had not actually been valued as one assessment in 2010.
The Court found that, even though it was possible for the Valuer-General to retrospectively alter the parcels of land valued as one assessment and backdate a valuation (ss14B and 20(3)(b) 0f the Valuation of Land Act 1916) it was not open to Council to retrospectively categorise land based upon parcels which came into existence after the date of categorisation (in this case post 2010), as to do so would be ‘antithetical to a ”fair”, “transparent” and “equitable” rating regime’ and would not promote the objects of the LGA. 
Consequently, the correct approach to determining the dominant use was to look at the dominant use of the two parcels that existed as at 2010 and not each of the five parcels which now exist. In doing so, based upon the facts of the case, the Court found that the dominant use of each of the two parcels that existed in 2010 (based upon the “main” or “principal” use test as set out in McKenzie v Randwick City Council  NSWLEC 41) was not residential accommodation.
This case reiterates that prospective nature of the rating regime in NSW and confirms that seeking to retrospectively alter rates once they have been made and levied will not generally fall within the objectives of that regime.