Sydney Municipal Council v Royal Agricultural Society of NSW [1905] HCA 56; (1905) 3 CLR 298 (13 December 1905)

Municipal Council of Sydney Appellants; and Royal Agricultural Society of New South Wales Respondents.

This is an appeal from a decision of the Supreme Court affirming a decision of the Metropolitan District Court on an appeal by the respondent Society from an assessment by the appellants under the Sydney Corporation Act, in respect of a municipal rate. The learned District Court Judge held that the respondents were not ratable, and in that opinion the Supreme Court concurred.

The question depends upon the proper construction of sec. 110 of the Sydney Corporation Act, No. 35 of 1902, as applied to the facts of the particular case. That Act was a re-enactment of earlier Acts, sec. 110 having been taken from the Act 43 Vict. No. 3. It is contained in Part IX., which deals with General Rates. Sub-sec. 4 of that section provides that: "Every building, whether vested in or occupied by the Crown or not, and all lands, whether occupied or not, within the city, save as hereinafter mentioned, shall be deemed to be ratable property within the meaning of this Act." Sub-sec. 5 provides, inter alia that: "No land vested in trustees for purposes of public recreation, health or enjoyment ... shall be liable to be assessed or rated in respect of any rate under this Act."

The respondents claimed that the land in question, which is vested in them under circumstances to which I will presently refer, is vested in them as trustees for the purposes of public recreation, health or enjoyment, and is therefore exempt from rating.

Now, the first question is what is the meaning of the expression "trustees for purposes of public recreation, health or enjoyment?" Primâ facie, bearing in mind that this is a rating Act, this expression relates to land vested in persons having no beneficial interest in the land, but holding it solely for the purposes of public recreation, health or enjoyment. An implied term in such a trust would be that any money which the trustees received from the use of the land by the general public should be applied for the purposes of the trust, that is, in expenditure upon the land, for the purpose of making it better available for the objects of the trust. Nor could it be said, primâ facie, that persons who have a beneficial use of the land, subject to the condition that they shall allow it to be used for the purposes of public recreation, health, or enjoyment, would properly be called trustees of the land for those purposes. An analogous matter to this was dealt with by the Privy Council in 1877, in the case of The Mayor &c. of Essenden v. Blackwood[1], on appeal from the Supreme Court of Victoria. The question in that case was whether the Flemington Racecourse was exempt from rating, as land the property of the Crown used for public purposes. In order to sustain the exemption, it was necessary, in the view their Lordships took of the matter, to establish both that the land was the property of Her Majesty, and that it was used for public purposes. The Judicial Committee did not decide the first point, whether the land was the property of Her Majesty, but confined its attention to the question whether it was used for public purposes within the meaning of the section conferring the exemption. The land was held by the trustees of the Victorian Racing Club, which was incorporated by a private Act, and the members of the Club had various privileges in respect of the land. After referring to the first point, whether the land was the property of the Crown, and making this observation[2], "Undoubtedly, if a grant were made by the Crown to its own nominee, as a bare trustee for exclusively public purposes, it might properly be held that the land, within the meaning of the exemption, was still the property of the Crown," they went on to say that they would not decide the case on that ground, and said: "Their Lordships, however, do not think it necessary to decide the appeal on this point, being of opinion that in order to bring the case within the exemption the respondent ought to shew that the land was used solely for public purposes, without any beneficial occupation by individuals; and this they are of opinion he has failed to do." Then, after referring to the case of Hanna v. Seymour Road Board[3], in which it had been held that a bridge let for several years to a builder, to enable him to repay himself the cost of building it, was not used for public purposes within the meaning of the exemption, because it was not used solely for those purposes, their Lordships went on to refer to the nature of the holding of the land by the Victorian Racing Club, and came to the conclusion that the members of the club enjoyed privileges of an exclusive character, which constituted a beneficial enjoyment of the land beyond that of the general public. Then, after reviewing the special conditions of the tenure of the club, the judgment concluded, on that point, with these words[4]: "Besides, these provisions, coupled with those already commented upon, afford tests for determining whether or not the land was vested in the respondent as a bare trustee, for a public purpose only." And then it was pointed out that, though in the old cases it was supposed that land used for public purposes, and from which the occupiers derived no individual profit, was exempt from ratability, it was nevertheless always held that all the purposes must be public. The Committee therefore were of opinion that the race-course was not exempt from taxation, on the ground that it was not used for public purposes only, since the members of the club had a beneficial enjoyment of the land beyond that of the general public.

In my opinion the same principles apply to the construction of sec. 110, sub-sec. 5. If land is vested in trustees for the purposes of public recreation, health, or enjoyment under such circumstances that the trustees may themselves, for their own individual benefit or for that of a special and exclusive class, derive from the use of the land a beneficial enjoyment beyond that of the general public, it is not exempt from rating under the provisions of that sub-section.

It is necessary, therefore, to inquire into the nature of the respondents' title to the land. The land has already been the subject of litigation in the case Sydney Municipal Council v. Attorney-General for New South Wales[5]. In the report of that case there is a historical summary to which we have been referred, and to which both parties claimed leave to refer, for any necessary information for the purpose of the construction of the respondents' special Act. The facts are set out in the judgment. By the Crown Lands Alienation Act 1861, sec. 5, the Governor was empowered (with the advice of the Executive Council) by "notice in the Gazette" to "reserve or dedicate in such manner as may seem best for the public interest any Crown Lands for" a number of purposes, including "for any pasturage common, or for public health, recreation, convenience, or enjoyment, or for the interment of the dead, or for any other public purpose." In October, 1866, a large area of land, of which the land now in question forms a part, was dedicated for public purposes, the purposes being a "permanent common."

By the Public Parks Act 1854, which recites that it is "expedient that bodies of trustees with perpetual succession should be created for the purpose of holding, managing, and protecting lands granted for or dedicated to purposes of public recreation, health, convenience, or enjoyment," it was enacted that the Governor might, without any grant by the Crown, appoint trustees of land so dedicated, and that they should be a body corporate. Sec. 5 provided that the trustees so appointed should have certain powers, being in substance the powers of absolute owners, except for the purposes of alienation, in respect of the land placed in trust under them.

In 1871, a notice was published in the Gazette that the Governor approved of the appointment of the present appellants as trustees of the area already mentioned. In September, 1881, they as trustees executed a lease of the area now in question to the respondents for the purposes only of shows or exhibitions, and the respondents undertook to keep the land drained and cleaned and to comply with the Council's regulations as to access by the public.

The question was then raised whether the lease by the Council, who were trustees of the land which was held by the Privy Council to be dedicated for the purposes of public recreation, health or enjoyment under the Public Parks Act, was valid or invalid. The Chief Judge in Equity held that the lease was bad and declared accordingly, but the Privy Council on appeal were of opinion that there was no objection to the lease.

Before that time the present respondents had been incorporated by an Act of 1869, which is not numbered, and I assume, therefore, is to be taken as in one sense a private Act. It recited that a society called the Agricultural Society of New South Wales had been formed with certain rules and by-laws at Sydney for the encouragement and improvement of agriculture, and for promoting the success of pastoral and farming pursuits in the colony, and also for holding exhibitions of live stock, of agricultural, horticultural, and pastoral produce, of minerals, and of arts and manufactures. It then proceeded to declare that the President, Vice-Presidents, Governors, and members of the Society for the time being should be incorporated by the name of the "Agricultural Society of New South Wales," with all the privileges and liabilities of a corporation. It then provided that the then present rules and by-laws should be the rules and by-laws of the corporation, save and except so far as they might be lawfully altered or repealed or might be inconsistent or incompatible with or repugnant to any of the provisions of the Act or the laws of the colony. The sixth section provided that the corporation should have power to purchase, acquire, and hold lands, and any interest therein, and to sell and dispose of them, and that all lands then the property of the Society should become the property of the corporation. There was also a provision that, in the event of the funds and property of the corporation being insufficient to meet its engagements, each member should be liable to contribute, over and above his annual subscription, a sum equal to the subscription, towards liquidating the liabilities of the corporation, and should not be otherwise individually liable. Express power was given to the corporation to borrow money by way of mortgage, subject to certain limitations.

This, therefore, was a corporation established for certain definite purposes. Amongst its powers were the power to hold property, to incur liabilities, and to mortgage property, and involved necessarily in that was the right to expend money on almost any purpose that they might think conducive to the objects of the Society. For all these purposes a revenue was necessary, much larger than was likely to be obtained from the contributions of members. The Society expended in carrying out its objects many thousands of pounds. Those objects, as they are at present set out in the rules of the Society which are attached to the special case, include (rule 2, sub-sec. 3): "To purchase, take on lease, or otherwise acquire, and to lay out and improve, such lands and premises as may be required for carrying on the objects of the Society." The lands so acquired may clearly be anywhere in New South Wales. Sub-sec. 4 mentions the holding of "exhibitions in Sydney or elsewhere for the display of horses, cattle, sheep, and other live stock; wool, agricultural produce of all kinds, and machinery; together with such other subjects of manufacture, produce, or the arts as may be deemed desirable; and to establish in connection therewith a market for the sale of exhibited live stock, machinery," &c. Sub-sec. 5 includes the encouragement of skill in farm labour, and showing new machinery in operation, and so bringing it into notice, and sub-sec. 6 provides for the publication and distribution amongst the members of this and kindred societies, of the transactions of the Society. So much for the objects of the Society. The privileges, amongst other things, include, as appears from rule 7, the right to vote at elections of office bearers, of free admission to the library and reading room, and to the Society's exhibitions and other entertainments held in the grounds, on production of the member's ticket for the current year. It is a matter of common knowledge that in institutions of this kind the privileges of members are sometimes very considerable, and much more comfortable accommodation is provided for them than for other persons. But whether the privileges are small or great, it is clear that the members have a beneficial enjoyment of the property as distinguished from the general public.

This was the Society to which the Municipal Council granted a lease of the land for a period to last during the will of the Council, or until notice given as provided in the lease. The Society had power to determine the tenancy after fourteen days' notice in writing.

After the decision of the Chief Judge in Equity, to the effect that the Council as trustees for public purposes under the Public Parks Act had no right to make this lease, the legislature intervened by passing an Act 56 Vict. No. 8, which declared that the land should vest in the respondents for a short period. This was a temporary Act. In the following year it was continued by the Act 57 Vict. No. 15, and, in 1902, by the Act No. 45 of that year, the land was vested in the respondents for a term of twenty-one years from 30th June, 1894. It is clear that when the Sydney Corporation Act was passed it had no reference to this particular piece of land, although it is within the boundaries of the City of Sydney, for at that time the Corporation were themselves the trustees of the land. Now, the nature of the title of the respondents to the land is to be determined with reference to the Act No. 45 of 1902, having regard to their own constitution and the purposes for which they were established as a Society, and of which the legislature was aware. Sec. 3 of the Act declared that the land in question should be deemed to have vested and to vest in the Agricultural Society of New South Wales for a period of twenty-one years from 30th June, 1894, and that "all rights of common in respect of the said lands" were thereby suspended during that period. These last words taken in connection with the succeeding sections had the effect of exhaustively declaring the purposes for which the land might be used during that term. Whether the Society held the land as tenants of the trustees (the Corporation) or as quasi-trustees themselves, it can hardly be contended that they were trustees of it solely for the purposes of public recreation, health, or enjoyment. The trustees were the Corporation of Sydney. The Society were in the position of lessees for the purposes of their own Society. The effect of the Act No. 45 of 1902 is to declare them statutory lessees, that is, in the sense that the land was vested in them for a time. If there were no more in the Act, they would take the land for the purposes of their Society, that is, for the purpose of furthering the objects of the Society, including such benefits as were conferred upon the members, and clearly they had power to expend the profits derived from the public use of the land in any way consistent with the purposes for which the land was given them, for the improvement of the land itself, or for carrying out the other objects of the Society, such as holding shows in any part of the country, and for any other purposes not inconsistent with the objects of the Society. But the Act of 1902 prescribed, in my opinion exhaustively, the purposes to which the lands of the Society might be put. Sec. 4 provides that the Society may occupy and use the land for the purpose of holding shows and exhibitions of agricultural, horticultural and pastoral produce, implements and machinery, minerals, arts and manufactures, and live stock, "and for such other purposes as the Minister may sanction, and shall admit the public thereto, subject to such charges and conditions as shall be approved by the Minister, provided always that no horse races or pony races shall be held on the said land." The same section requires that they shall keep the land clean and free from offensive matter. Now, that section prescribes the purposes for which the land may be used. Shows and exhibitions are the primary purposes, with such other purposes as the Minister may sanction, and the Society must admit the public on payment of a charge for admission. But it is quite clear that whatever charges are imposed go into the coffers of the Society, and become subject to its obligations, and may be applied in accordance with the Society's rules. The Act contemplates that the Society shall make a revenue from the land, and says nothing about what they are to do with it. The next section confirms the view that they may make profits, which they must devote to the purposes of the Society. It provides that if the Society fails to comply with the provisions of sec. 4, or if the lands are used or occupied for any purpose other than those prescribed by the Act, or if the Society "shall sell, lease, mortgage, assign, charge or otherwise deal with or dispose of the land or any part thereof or attempt to do so or suffer the land or profits to vest in or become payable to any other person," or to be taken in execution, or if the Society shall cease to exist, the lands shall revest in the Crown. That clearly recognizes that they may derive profits from the land. One asks then what is the nature of the interest of the Society in the land? A piece of land is given them by the legislature for certain purposes, with express power to receive money for the admission of the public, and without any control upon the expenditure of these profits except that they are not to do or suffer anything whereby the land should become vested in any other person or persons. I think the cases clearly show that under those circumstances the members of the Society had a beneficial enjoyment of the land beyond that of the general public.

There was a good deal of discussion as to the words "such other purposes as the Minister may sanction," and it was said that they must mean purposes ejusdem generis with those mentioned. But this argument was not very strongly pressed in this Court, though it was favoured in the Supreme Court. If the only other purposes were shows and exhibitions of that kind, there might be some force in the contention. But it cannot be disputed, since the decision in Sydney Municipal Council v. Attorney-General for N.S.W.[6], that the land might be used for any purposes of a quasi public nature as distinguished from private. As a matter of fact the Society derived a very considerable rental from letting a portion of the ground for the use of the mounted police of Sydney for stabling purposes. It was suggested that that might be ultra vires, but it is not necessary to determine in this case, what limit, if any, must be put on the meaning of the words "other purposes." It is sufficient, in the view I take of the case, to say that the members as such had conferred upon them by the legislature a beneficial enjoyment of this land. They are very much in the position of lessees whose lease is subject to restrictive covenants. The restrictions are certainly great, but the lease is a beneficial one notwithstanding.

For these reasons I think that they are not trustees of the land for the purposes of public recreation, health or enjoyment within the meaning of sec. 110 of the Sydney Corporation Act.

The learned Judge who delivered the judgment of the Supreme Court said that he understood that the point that the Society were trustees of the lands for purposes of public recreation, health or enjoyment was conceded. If that were so, of course, they would clearly be within the meaning of the exemption, and the exemption would not be taken away by a mere misuse of the land, and I quite agree with the Supreme Court in that respect. But the question is what was the nature of the title of the Society. If they commit a breach of their trust, the remedy is provided in sec. 5 of the Act, and also by the general law applicable to trustees. But we are assured that this is a misapprehension, because it is really the only point in the case. The whole question of their liability depends on the nature of their tenure, that is, whether they are trustees for such purposes or not. For the reasons I have given I think that this land does not come within the exemption.

Reference was made to the use of the word "solely" in the same section of the Sydney Corporation Act with reference to hospitals and buildings used for public worship. But that is not sufficient to change what is, in my opinion, the clear construction of the words "vested in trustees for the purposes of public recreation health and enjoyment."

For these reasons I think the appeal from the District Court should have been allowed, and that this appeal should be allowed.

I agree that the appeal should be allowed, and for the reasons that the Chief Justice has given.

On one part of the case I should like to add a few words to what has been said by the Chief Justice. I do not think it necessary to consider whether it is within the power of the Minister under the words "for such other purposes as the Minister may sanction," to authorize the use of this land for a purpose which is not one of public recreation, health, or enjoyment, within the meaning of sec. 110 of the Sydney Corporation Act. The consideration of that matter may involve difficult questions which it is not necessary now to enter upon, because on the other ground it appears to me that the appellants have made out a very clear case.

Sec. 110, sub-sec. 4, makes all land, whether occupied or not, within the city of Sydney "ratable property." Sub-sec. 5 is therefore an exception, and the Society must bring themselves within that sub-section before they can escape the taxation imposed generally by the Act.

It may be taken that, since the decision in Sydney Municipal Council v. Attorney-General for N.S.W.[7], commonly known as Milroy's Case, the holding of shows and exhibitions on this land is a purpose of public "recreation, health and enjoyment." But that does not settle the matter, because according to the rule laid down in Mayor &c. of Essenden v. Blackwood[8], for the interpretation of a section of this kind, there is no exemption from taxation unless the lands are vested in trustees solely for these purposes. Dr. Cullen endeavoured to distinguish the words of exemption in that case from those of sub-sec. 5 of sec. 110 in this case. But I find it impossible to see any distinction. The words in that case were "lands the property of Her Majesty occupied or used for public purposes." It was held there that the words must be considered as meaning used solely for public purposes. In the present case the words in sec. 110, "vested in trustees for purposes of public recreation, health, or enjoyment," seem to me to come exactly within the same principle, and must be construed in the same way.

The English decisions on the subject of rating are not, as has been already pointed out, altogether applicable to circumstances similar to those now under consideration. But, according to the principle which was followed by the Privy Council in the case to which I have just referred, one element for consideration always is, to what purposes is the money produced by the use of the land devoted. If it is not devoted altogether to public purposes or trusts, then there is a beneficial interest in the members, which has always been held sufficient to prevent the exemption applying. In the case just referred to Lord Hobhouse, in delivering the judgment of the Privy Council, said[9], quoting from a decision of Lord Campbell in Reg. v. Harrogate[10], "you have to shew that all the purposes to which the money was applied are public."

Now, in applying that test, we must see not only that this land is used for the purposes of the Society, but that it is vested in them for the purposes of public recreation, health and enjoyment, and solely for those purposes, and also that the proceeds which are derived by the Society from the use of the land are to be devoted also to the purposes of public recreation, health and enjoyment. To determine this question it is only necessary to look at the constitution of the Society. It is constituted by its own private Act, for a variety of purposes, which are in one sense public. My learned brother the Chief Justice has explained in detail what those purposes are. It is quite clear that all moneys received by the Society may be devoted to any of those purposes.

The land in question is vested in the Royal Agricultural Society by the Act No. 45 of 1902, (I do not think it necessary at present to refer to the earlier Acts), for a period of twenty-one years subject to certain conditions. These conditions are very definite. One stated in sec. 4, is that the Society may occupy and use the land for the purposes of holding shows of agricultural and pastoral produce, stock, machinery, arts, manufactures, and such other purposes as the Minister may sanction, and make charges for admission, provided that certain race meetings are not to be held there. The next condition is in the next sub-section, that the Society are to keep the land clean and free from offensive matter, that is to say, in a sanitary condition. The next sub-section is a restriction on selling, mortgaging or dealing with or disposing of the land. In the latter part of the same sub-section it is provided that if they shall do anything whereby any part of the land or of the profits thereof shall vest in or become payable to any other person, or if the Society should cease to exist, the land shall upon notification in the Gazette revest in His Majesty. These are the only conditions imposed upon their dealing with the land, and the only conditions which restrict their right to dispose of the profits derived from its occupation in any way they think fit. Clearly they have the right, so long as they do not infringe any of these conditions, to dispose of the profits in any way they please in carrying on the operations of the Society. It is quite true that we have to consider, not what use they made of the land, but for what purposes it is vested in them, taking them to be trustees for the purposes of sec. 110 of the Sydney Corporation Act. The terms on which the land is vested in these trustees are to be ascertained entirely from the Act vesting it in them and from the Act by which the Society itself is incorporated. And, as there is power under the Society's Act to apply any of the profits derived from the occupation of this ground to the purposes mentioned in that Act, it appears to me that there is an obligation imposed to apply these profits to purposes, which, although in themselves public in a sense, are not the public purposes set out in sec. 110 of the Sydney Corporation Act. Inasmuch as this land is to be applied to the purposes of the Society, which are not purposes of public recreation, health or enjoyment, it seems to me impossible, in view of the decision in the case of Mayor &c. of Essenden v. Blackwood[11], to hold that the Society have brought themselves within this exception. When the expression "beneficial interest" is used, it is not intended to mean a personal interest. There may be a beneficial interest, as was pointed out by the Chief Justice, in the sense of a privilege or privileges enjoyed by the members, beyond those enjoyed by the general public. If the Society has such an interest in the land that it may apply the profits derived from it to its own purposes, which though public in one sense, are not enjoyed equally by the public in general, then there is a beneficial interest such as will prevent the application of the exemption in sub-sec. 5 of sec. 110 of the Sydney Corporation Act.

For these reasons I am of opinion that the decision of the Supreme Court was erroneous, and that this appeal should be upheld.

Appeal allowed with costs. Judgments of the District Court and Supreme Court reversed. Case remitted to the District Court.

[1] 2 App. Cas., 574.

[2] 2 App. Cas., 574, at p. 584.

[3] 2 W.W. & a'B. (L.), 93.

[4] 2 App. Cas., 574, at p. 587.

[5] (1894) A.C., 444.

[6] (1894) A.C., 444.

[7] (1894) A.C., 444.

[8] 2 App. Cas., 574.

[9] 2 App. Cas., 574, at p. 588.

[10] 2 E. & B., 184.

[11] 2 App. Cas., 574.

High Court of Australia

Sydney Municipal Council v Royal Agricultural Society of NSW [1905] HCA 56; (1905) 3 CLR 298 (13 December 1905)

HIGH COURT OF AUSTRALIA