CCM Holdings Trust Pty Ltd v Chief Commissioner of State Revenue

[2013] NSWSC 1072

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	CCM Holdings Trust Pty Ltd v Chief Commissioner of State Revenue; CCT Motorway Company Nominees Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 1072
Hearing dates:	8, 9, 10, 11, and 12 April 2013 and 20 May 2013 (written submissions 28 May 2013)
Decision date:	09 August 2013
Before:	Bergin CJ in Eq
Decision:	In each proceeding, the Chief Commissioner's assessments of duty are revoked.
Catchwords:	[TAXES AND DUTIES] - [STAMP DUTY] - where duty assessed pursuant to land rich provisions of the Duties Act 1997 - review/appeal from decision of Chief Commissioner of State Revenue - whether the land holder was land rich at the time of the relevant acquisitions - whether transfers exempt from land rich duty
Legislation Cited:	Corporations Act 2001 (Cth) Duties Act 1997 (NSW) Duties Act 2000 (Vic) Duties Act 2011 (Qld) Income Tax Assessment Act 1936 (Cth) Interpretation Act 1987 (NSW) Real Property Act 1900 (NSW) Road Maintenance (Contribution) Act 1958 (NSW) Roads Act 1993 (NSW) Roads Amendment (Tollways) Regulation 2010 (NSW) Roads (General) Amendment (Tolls) Regulation 2001 (NSW) Roads (General) Regulation 1994 (NSW) Roads (General) Regulation 2000 (NSW) Roads Regulation 2008 (NSW) Road Transport Legislation Amendment Act 2008 (NSW) Stamp Act 1894 (Qld) Stamp Duties Act 1920 (NSW) Stamps Act 1958 (Vic) State Revenue Legislation Amendment Act 2004 (NSW) Supreme Court Act 1970 (NSW) Taxation Administration Act 1996 (NSW) Water Act 1912 (NSW) Water Administration Act 1986 (NSW)
Cases Cited:	Abrahams v Federal Commissioner of Taxation (1944) 70 CLR 23 Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board (1985) 157 CLR 605 Blue Wedges Inc v Minister for Environment, Heritage and the Arts and Others (2008) 165 FCR 211 Commissioner of Main Roads v North Shore Gas Co. Limited (1967) 120 CLR 118 Commissioner of Stamp Duties v Perpetual Trustee Co Ltd (1929) 43 CLR 247 Commissioner of State Revenue v Challenger Property Nominees Pty Limited [2006] VSC 203; (2006) 63 ATR 65 Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437 Commissioner of State Revenue v Serana Pty Ltd (2008) 36 WAR 251 Commissioner of State Revenue v Victoria Gardens Developments Pty Limited [2000] VSCA 233; (2000) 46 ATR 61 Commissioner of State Revenue (Vic) v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 84 ATR 62 Commonwealth Freighters Pty Ltd v Sneddon (1959) 102 CLR 280 Commonwealth of Australia v Arklay (1952) 87 CLR 159 Cowell v Rosehill Racecourse Co Ltd [1937] HCA 17; (1937) 56 CLR 605 CPT Manager Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1286; (2006) 64 ATR 654 Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588 DCC Holdings (UK) Ltd v Revenue and Customs Commissioners [2011] 1 WLR 44 Elazac v Commissioner of Patents (1994) 53 FCR 86; 125 ALR 663 Federal Commissioner of Taxation v United Aircraft Corp (1943) 68 CLR 525 Federal Commissioner of Taxation v Patcorp Investments Limited (1976) 140 CLR 247 Hales v Bolton Leathers Ltd [1950] 1 KB 493 Hales v Bolton Leathers Ltd [1951] AC 531 Hanlon v The Law Society [1981] AC 124 Heap v Hartley (1889) 42 Ch D 461 ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; (2009) 240 CLR 140 Inland Revenue Commissioners v Metrolands (Property Finance) Ltd [1981] 1 WLR 637 Jennings' Trustee v King [1952] Ch 899 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 Kingston v Keprose Pty Limited (1987) 11 NSWLR 404 Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705 Marshall v Kerr (1993) 67 TC 56 Marshall v Kerr [1995] 1 AC 148 Matthews v Chicory Marketing Board (Vic) [1938] HCA 38; (1938) 60 CLR 263 McCaughey v Commissioner of Stamp Duties (1945) 46 SR (NSW) 192 Mehmet v Benson (1965) 113 CLR 295 MIM Holdings Ltd v Commissioner of Stamp Duties [2001] 1 Qd R 294 Minister of State for the Army v Dalziel (1944) 68 CLR 261 MSP Nominees Pty Ltd v Commissioner of Stamps (SA) [1999] HCA 51; (1999) 198 CLR 494 National Provincial Bank Ltd v Ainsworth [1965] AC 1175 Nelson v Housing Commission of New South Wales (1962) 8 LGRA 408 Newcastle-Under-Lyme Corporation v Wolstanton Ltd [1947] Ch 92 Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 North Shore Gas Co Ltd v Commissioner of Stamp Duties (1940) 63 CLR 52 O'Connell v Nixon (2007) 16 VR 440 Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40; (2006) 149 FCR 395 Perpetual Trustee Company Limited v Commissioner of State Revenue [2000] VSC 177; (2000) 44 ATR 273 Purden Pty Ltd v Registrar in Bankruptcy (1982) 64 FLR 306; 43 ALR 512 Re Lehrer and the Real Property Act 1900-1956 [1960] NSWR 570 Reseck v Federal Commissioner of Taxation (1975) 133 CLR 45 Rivkin Financial Services Ltd v Sofcom Ltd (2004) 51 ACSR 486 Roy Morgan Research Pty Limited v Federal Commissioner of Taxation [2011] HCA 35; (2011) 244 CLR 97 Smith Kline French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 In re Harmony and Montague Tin and Copper Mining Company; Spargo's Case (1873) LR 8 Ch App 407 Spencer v The Commonwealth of Australia (1907) 5 CLR 418 Sportscorp Australia Pty Limited v Chief Commissioner of State Revenue [2004] NSWSC 1029; (2004) 58 ATR 1 Tasty Chicks Pty Limited & Ors v Chief Commissioner of State Revenue of New South Wales [2011] HCA 41; (2011) 245 CLR 446 The Great Fingall Consolidation Ltd v Sheehan (1905) 3 CLR 176 The Queen v Toohey; ex parte Meneling Station Pty Ltd [1982] HCA 69; (1982) 158 CLR 327 Trust Company of Australia Ltd v Commissioner of State Revenue [2006] VSC 64; (2006) 15 VR 1 Turner v Minister of Public Instruction (1956) 95 CLR 245 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 Yager v The Queen (1977) 139 CLR 28
Texts Cited:	Frederic Gunning, A Practical Treatise on the Law of Tolls (1833, Saunders and Benning) RP Meagher, JD Heydon and MJ Leeming Meagher, Gummow and Lehane's Equity Doctrines and Remedies (4th ed, 2002) Butterworths LexisNexis New South Wales, Parliamentary Debates, Legislative Assembly, 12 November 1997, 1612 D C Pearce and R S Geddes, Statutory Interpretation in Australia (7th ed, 2011, Butterworths) The Macquarie Dictionary Federation Edition The New Oxford Dictionary of English (1998) GJ Tolhurst, The Assignment of Contractual Rights (2006, Hart Publishing) PW Young, C Croft and ML Smith, On Equity (2009, Lawbook Co)
Category:	Principal judgment
Parties:	2012/119963 CCM Holdings Trust Pty Ltd (Plaintiff) Chief Commissioner of State Revenue (Defendant) 2012/119972 CCT Motorway Company Nominees Pty Limited (Plaintiff) Chief Commissioner of State Revenue (Defendant)
Representation:	Counsel: M Richmond SC/SJ Free/A Hochroth (Plaintiffs) JE Marshall SC/EAJ Hyde/AH Rider (Defendant) Solicitors: Herbert Smith Freehills (Plaintiffs) IV Knight, Crown Solicitor (Defendant)
File Number(s):	2012/119963; 2012/119972
Publication restriction:	Nil

Judgment

Introduction

1. The Cross City Tunnel (the Tunnel) in Sydney consists of two main tunnels underneath the central business district, one for eastbound traffic from Darling Harbour and the other for westbound traffic from Rushcutters Bay. There are connecting tunnels north to the Sydney Harbour Bridge and the Sydney Harbour Tunnel, and south to the Eastern Distributor. The Tunnel was constructed between January 2003 and August 2005. It opened for public use on 28 August 2005.

1. On 16 December 2002 the Minister for Roads declared the proposed Tunnel a tollway in accordance with s 52 of the Roads Act 1993 (NSW). On the same day the Minister directed that the Roads and Traffic Authority of New South Wales (the RTA) (now Roads and Maritime Services (RMS)) act as roads authority for the Tunnel in accordance with s 63 of the Roads Act. A tolling gantry is located at each of the three Toll Collection Points above the Tunnel roadway, from which electronic tolling systems are suspended, and by which tolls are collected.

1. The entities that constructed and operated the Tunnel and collected the tolls (described in more detail below) pursuant to agreements with the RTA, failed to achieve the expected tolling revenue from the use of the Tunnel. In December 2006, receivers and managers were appointed to those entities and in April 2007 the Tunnel was marketed for sale.

1. On 19 June 2007 it was agreed that ownership of the principal private sector parties would be transferred to a new consortium formed by ABN AMRO Australia Limited, ABN AMRO Infrastructure Capital Management Ltd and Leighton Contractors Infrastructure Investments Pty Ltd under contracts that were executed on 19 June 2007 and completed on 27 September 2007. A deposit of $30 million was paid in June 2007. The transactions were rather complex and structured so that $691,715,880 was paid for units in a property trust and $3,405,120 was paid for shares in a company. The total consideration paid was $695,121,000. It is the assessment of duty on those transactions by the Chief Commissioner of State Revenue for the State of New South Wales that gives rise to these proceedings.

The Proceedings

1. Proceedings 2012/119963 are between CCM Holdings Trust Pty Ltd (CCMH), as plaintiff, and the Chief Commissioner of State Revenue, as defendant (the Trust Proceedings). The plaintiff brings an application pursuant to s 97(1)(a) of the Taxation Administration Act 1996 (NSW) for the review of the Chief Commissioner's assessment of duty under the Duties Act 1997 (the Act) of $36,285,490, plus penalty tax of $5,442,823.50 (following partial remission on objection) and interest, on a transfer to it of units in the CrossCity Motorways Property Trust (the Property Trust) (the PT Transfer).

1. Proceedings 2012/119972 are between CCT Motorway Company Nominees Pty Limited, as plaintiff, and the Chief Commissioner of State Revenue, as defendant (the Company proceedings). The plaintiff brings an application pursuant to s 97(1)(a) of the Taxation Administration Act 1996 for the review of the Chief Commissioner's assessment of duty under the Act of $20,431.20, plus interest, on a transfer to it of shares in CrossCity Motorway Pty Limited (CCM) (the CCM Transfer).

1. Both proceedings were heard together on 8 to 12 April 2013 and 20 May 2013. In each case Mr M Richmond SC leading Mr SJ Free, of counsel, and Mr A Hochroth, of counsel, appeared for the plaintiffs. Mr JE Marshall SC leading Mr EAJ Hyde, of counsel, and Mr AH Rider, of counsel, appeared for the Chief Commissioner.

Original Structure

1. In 2002, the RTA invited the private sector to submit proposals to it to, inter alia, finance and construct and to "own, operate, maintain and repair" the Tunnel. The successful tenderer was the CrossCity Motorway Group. That Group included CrossCity Motorway Nominees No 1 Pty Ltd (CCMN1), trustee of the CrossCity Motorway Holdings Trust. The Group also included CrossCity Motorway Nominees No 2 Pty Ltd (CCMN2) trustee of Property Trust and CCM.

1. In December 2002, the RTA entered into a suite of commercial agreements pursuant to which the ownership and operation of the Tunnel and the right to levy, collect and keep tolls were granted to the contracting parties until 2035. In summary, pursuant to a Project Deed and a Deed of Agreement to Lease, the RTA leased the ownership and the operation of the Tunnel to CCMN2 (the Land lease) and the right to levy, collect and keep the tolls from the vehicles using the Tunnel (the Tolling Right). The RTA leased the ownership of that part of the Tunnel on which the gantries were situated, and from which electronic tolling systems were suspended, to CCM (the Company Lease). CCMN2 subleased the Land and the Tolling Right to CCM (the Sublease).

1. It is necessary to refer to some of the detail of those agreements.

Project Deed

1. The Project Deed, executed on 18 December 2002, was between the RTA, CCMN2 as trustee of the Property Trust (referred to in the Deed as "the Trustee"), and CCM (referred to in the Deed as "the Company").

1. CCMN2 agreed to finance, plan, design and construct the main works for the Tunnel and to operate, maintain and repair the Tunnel (cll 2.1(a)(i) and 2.1(a)(ii)). CCM agreed to finance, plan, design, construct and commission the plant and equipment works (cl 2.1(b)(i)). The term of the Project Deed was from the date of the opening of the Tunnel in 2005 to 2035.

1. The Recitals to the Project Deed recorded that the RTA, CCMN2 and CCM had agreed that the RTA would grant to CCMN2 "the right" and "impose on" CCMN2 "the obligation" inter alia to "operate" the Tunnel and to "levy, collect and...keep tolls" (Recital C(ii)). The Recitals also recorded that the RTA, CCMN2 and CCM had agreed that the RTA would "consent to the licensing or otherwise conferring" by CCMN2 to CCM of the "right to levy, collect and keep tolls (Recital C(iv)). The Recitals also recorded that the Project Deed set out the terms and conditions on which the RTA would grant the Land Lease to CCMN2 and the Company Lease to CCM (Recital D(iii)). Recital E recorded that CCMN2 and CCM had agreed to provide "cross-guarantees and cross indemnities in favour of RTA in respect of the performance of their respective obligations".

1. The Project Deed included the following definitions (cl 1.1):

"Agreement to Lease" means the deed of that name between RTA, the Trustee and the Company dated on or about the date of this Deed.

"Agreement to Sublease" means any oral agreement to sublease the Land to the Company, formed on the acceptance, if any, of the offer of agreement to sublease made or to be made by the Trustee to the Company on or about the date of the Agreement to Lease.

...

"Company Land" means the real property (and improvements) to be the subject of the Company Lease as determined in accordance with the Agreement to Lease.

"Company Lease" means the lease of the Company Land to be granted by the RTA to the Company under the Agreement to Lease.

...

"Land" means the real property (and improvements) to be the subject of the Land Lease as determined in accordance with the Agreement to Lease.

"Land Lease" means the lease of the Land to be granted by RTA to the Trustee under the Agreement to Lease.

...

"Sublease" means any oral agreement for sublease of the Land by the Trustee to the Company, if any, formed in accordance with the Agreement to Sublease.

1. "Project Documents" was defined to include the Project Deed, the Agreement to Lease, the Agreement to Sublease, the Land Lease, the Company Lease and the Sublease (cl 1.1). There were certain conditions precedent to which the parties' rights and obligations were subject (cl 3.1). If certain of these conditions were not satisfied or waived, the RTA and/or CCMN2 and CCM had the right to rescind the Project Deed and the Agreement to Lease (cl 3.2).

1. The Project Deed also provided (cl 11.5(b)):

As soon as practicable after the Completion Date of Stage 1, the Trustee must open all traffic lanes of the Tunnel to the public for the safe, efficient and continuous passage of vehicles and may then operate the Toll Collection System and levy, collect and, as against RTA and the Government, keep tolls in relation to each part of the Tunnel which consists of a Tollable Section in accordance with clause 17.

1. The "Completion Date for Stage 1" was the date of certification that all parts of the Project Works and the Temporary Works "to open the Tunnel to the public for the safe, efficient and continuous passage of vehicles" was completed (cl 1.1). The "Project Works" were defined as the "physical works" that CCMN2 and CCM "must design, construct and complete", including "the Tunnel" (cl 1.1). The "Tunnel" was defined as "the tunnel and other physical works, facilities, systems and Services", including "other improvements in the tunnel, or on the Land and any Extra Land" (cl 1.1).

1. The "Toll Collection System" was defined as that described in "section 5.12 of, and Appendix 15 to, the Scope of Works and Technical Criteria" (cl 1.1). Clause 5.12 of that document was entitled "Tolling System" and provides that the "design, testing, installation, operation and maintenance of the electronic toll system "must comply with Appendix 15". Appendix 15 set out, inter alia, the functional requirements of the Electronic Toll Collection System (ETC) including the requisite components of the system, the attributes of the ETC tags and readers, and vehicle detection and classification system (cll 3.1 to 3.4). Clause 2.4 of Appendix 15 provided that the "Company" (being CCM) "must enter into the tollway operators' MOU and abide by the agreements contained in the MOU".

1. CCMN2 and CCM provided cross-guarantees to the RTA in respect of the performance by the other of their respective obligations under the Project Documents (cll 1.9(a) and 1.9 (c)). CCMN2 and CCM also indemnified the RTA in respect of any loss or damage suffered by the RTA by reason of any failure by the other to perform its obligations under the Project Documents (cll 1.9(b) and 1.9(d)).

1. The Project Deed also included the following:

14. Payments to RTA

14.1 Business Consideration Fee

In consideration for RTA granting to the Trustee the right to establish the business and the ongoing right to undertake the Project, including the right to levy, collect and, as against RTA and the Government, keep tolls on the Tunnel in accordance with clause 17.1 and retain those tolls for its own benefit, the Trustee must pay RTA a business consideration fee of $96,859,688.00 within 5 Business Days after the Satisfaction Date.

1. "Project" was defined to include the "ownership, operation, maintenance and repair of the Tunnel" and the "levying, collection and, as against RTA and the Government, keeping of tolls" (cl 1.1). The expression "the business" in clause 14.1 was not defined. However, having regard to its context and to the terms of clause 17.3(a) (referred to below), the parties appear to have intended it to mean the business of the operation of the tollway including the collection of tolls in accordance with the Project Deed. CCMN2 and CCM were obliged to keep all the traffic lanes of the Tunnel open to the public except in certain identified circumstances (cl 15.2). The Project Deed also included the following:

17. Revenue

17.1 Tolls

(a) Subject to clause 17.1(b), the Trustee may levy, collect and, as against RTA and the Government, keep tolls for the use of the Tunnel (or part of it) for the passage of motor vehicles during the Term in accordance with the Toll Calculation Schedule. RTA consents to the Trustee licensing or otherwise conferring that right on the Company (and to that right being licensed or otherwise conferred) and to the encumbering of such rights.

(b) The Trustee and the Company must not levy or impose any charge, toll or fee for use of the Tunnel other than in accordance with the Toll Calculation Schedule.

(c) The Trustee and the Company may only levy tolls by means of the Toll Collection System.

(d) Without limiting any of the Trustee's or the Company's obligations under this Deed, the Trustee and the Company must comply with the Roads (General) Regulation 2000.

17.2 Entitlement to Toll Revenue

The Trustee and the Company will be entitled to all revenue collected by the Toll Collection System during the Term in the manner contemplated by clause 17.1.

17.3 Other revenue

(a) The Trustee and the Company must not (without the prior written approval of RTA) engage in, or permit the Tunnel or the Land to be used for, any business or revenue generating activity, other than the collection of tolls in accordance with this Deed ("Non-toll Business").

(b) If the Trustee or the Company wish to engage in a Non-toll Business (including permitting a telecommunication carrier to have access to the Tunnel or the Land for the purpose of installing and operating telecommunications infrastructure), they must provide written details of the proposal to RTA for its written approval.

If RTA approves the Trustee or the Company conducting a Non-toll Business, the Trustee or the Company (as applicable) must pay RTA 35% of all gross revenue derived from the Non-toll Business in accordance with the Agreement to Lease, the Land Lease or the Company Lease (as applicable).

1. The Project Deed also included the following:

31.1 Entitlement to assign

(a) Except as provided in:

(i) the Debt Financing Documents; and

(ii) the RTA Consent Deed,

the Trustee and the Company may not (except as between each other) sell, transfer, assign, mortgage, charge or otherwise dispose of, deal with, or encumber their respective interests in the Tunnel or in any of the Project Documents or any of the Infrastructure Owner Agreements without the prior written consent of RTA (which after the Completion Date of Stage 1 will not be unreasonably withheld or delayed).

1. The RTA was prohibited from transferring, assigning, selling or otherwise dealing with its rights or obligations under any or all of the Project Documents without the prior written consent of CCMN2 and CCM, which could not be unreasonably withheld or delayed (cl 31.1(b)).

Deed of Agreement to Lease

1. The Deed of Agreement to Lease dated 19 December 2002 was between the RTA, CCMN2 in its capacity as trustee of the Property Trust (referred to as "the Trustee"), and CCM (referred to as "the Company"). The Recitals to the Deed recorded that the RTA had agreed to grant CCM the "Company Lease" and to "then grant the Land Lease" to CCMN2 (Recitals C(a) and C(b)).

1. The RTA, CCMN2 and CCM acknowledged and agreed that the Land would only comprise those areas set out in cl 7.2(b)(i) and which were generally shown in the outlined plans and drawings in Part A of Annexure C to the Deed. The RTA, CCMN2 and CCM also acknowledged and agreed that the "Company Land" would only comprise "those three areas of the Land which is that portion of the Tunnel Structure generally enclosed by a boundary of one metre in every direction beyond the chainage of the centreline at which each of the CCT Tolling Gantries is located" and as generally shown in the plans that appeared in Part B of Annexure C to the Deed (cl 7.2(c)).

1. The Deed included the following:

8. Leases

8.1 Commencement of Leases

(a) In consideration of the Company undertaking the P&E Works, RTA must grant to the Company and the Company must accept from RTA the Company Lease commencing on the Commencement Date and upon and subject to the terms, covenants and conditions set out in the draft deed of lease comprising Annexure "A".

(b) Immediately following the grant of the Company Lease under clause 8.1(a), RTA must grant to the Trustee and the Trustee must accept from RTA the Land Lease (including the right to access and use the Maintenance Site) commencing on the Commencement Date, and upon and subject to the terms, covenants and conditions set out in the draft deed of lease comprising Annexure "B".

(c) RTA, the Trustee and the Company acknowledge and agree that the Term of the Land Lease and the Term of the Company Lease will each be a minimum of 30 years and 2 months and a maximum of 33 years, unless earlier determined in accordance with clause 2.6 of the Land Lease or clause 2.5 of the Company Lease (as applicable).

1. The parties acknowledged that neither the Company Lease nor the Land Lease could be registered under the Real Property Act 1900 in their then present form (cl 8.2(a)(i)). They also acknowledged that the RTA was not required to provide the Company Lease or the Land Lease in registrable form until certain conditions had been satisfied (cl 8.2(a)(ii)). The Deed also included the following:

8.3 Obligations Pending Registrable Leases

(a) Between the Commencement Date and the date on which the Company Lease is registered, the respective rights and obligations of RTA and the Company will be as set out in the draft Company Lease comprising Annexure "A" and each of RTA and the Company will be bound by the provisions of the draft Company Lease comprising Annexure "A" from and including the Commencement Date, even though RTA or the Company may not have executed the Company Lease or it may not have been completed in accordance with clause 8.5(a) or registered in accordance with clause 8.6(a).

(b) Between the Commencement Date and the date on which the Land Lease is registered, the respective rights and obligations of RTA and the Trustee will be as set out in the draft Land Lease comprising Annexure "B" and each of RTA and the Trustee will be bound by the provisions of the draft Land Lease comprising Annexure "B" from and including the Commencement Date, even though RTA or the Trustee may not have executed the Land Lease or it may not have been completed in accordance with clause 8.5(b) or registered in accordance with subclause 8.6(b).

1. The RTA was obliged to ensure that the Company Lease and the Land Lease were in registrable form and was also obliged to insert the Commencement Dates, the Termination Dates and the period of the Terms into those Leases (cl 8.5). The Deed also included the following:

8.7 Land Lease

(a) The Company consents to the grant of the Land Lease to the Trustee. With effect from the commencement of the Land Lease (as contemplated under clause 8.1(b)), the Trustee becomes the landlord of the Company under the Company Lease and the Company attorns to the Trustee accordingly.

(b) Without limiting clause 8.7(a), the parties acknowledge and agree the Land Lease will be a concurrent lease to the extent that it relates to the Company Land and that, with effect from the commencement of the Land Lease (as contemplated under clause 8.1(b)), and subject to clause 8.7(c), the Trustee will be entitled to the benefit of the landlord's rights under the Company Lease and will be bound by the obligations of the landlord under the Company Lease as if it had originally entered into the Company Lease with the Company, and whether or not those rights and obligations touch upon and concern the Company Land.

1. The parties agreed that nothing within the Deed would in any way operate as a bar to the exercise by the parties of their respective rights under the Project Deed or as a waiver or modification of their respective obligations under the Project Deed (cl 10).

1. The Deed also included the following:

11.1 Assignment

Subject to clauses 11.2 and 11.3, no party may deal with its rights or interests in this Deed other than in conjunction with a corresponding dealing with the Project Deed under clause 31 of the Project Deed.

11.2 Sublease

RTA consents to the grant of the Agreement to Sublease and the Sublease.

11.3 Security Interest

The Trustee and the Company must not give any security interest over their interest in this Deed to secure their obligations to any person except as permitted pursuant to, or contemplated by the Debt Financing Documents or clause 31 of the Project Deed, or otherwise with the prior written consent of RTA (such consent not to be unreasonable withheld).

...

12.2 Determination on Termination of the Project Deed

(a) Subject to clause 12.2(b), on the termination of the Project Deed under clause 22.1(d) of the Project Deed and or clause 25 of the Project Deed, this Deed will automatically and simultaneously be determined without the necessity of notice and all interests derived under this Deed will be determined for all time.

(b) Clause 4.1 survives the termination of this Deed to the extent only that the Company is required to comply with its obligations under the Infrastructure Owner Agreements required to be performed by the Company following termination of the Project Deed under clause 22.1(d) of the Project Deed and or clause 25 of the Project Deed.

1. The RTA agreed that it would create easements, including easements which benefited or burdened the Land and/or the Company Land for the purposes of CCMN2 or CCM satisfying any requirements in the Project Deed or the Scope of Works and Technical Criteria (cl 9.3 and Schedule B).

The Company Lease

1. The Company Lease between the RTA and CCM was defined as the lease of the "Company Land". The "Company Land" was defined as those parts of the Land containing the Tolling Gantries (cl 1.1) and was "concurrent with" the Land Lease (cl 2.2). The tenancy under the Company Lease was to "automatically and simultaneously be determined upon the termination of the Project Deed" (cl 2.5(a)). The RTA agreed that it "must not and cannot terminate" the Company Lease unless the Project Deed "has been or is simultaneously terminated" (cl 2.5(c)).

1. The Company Lease was subject to the terms of the Project Deed and the Project Deed was to prevail over the Company Lease in the case of any inconsistency (cl 3). The use of the Company Land was restricted to "a tollway and ancillary uses" unless approved otherwise by the RTA in accordance with cl 17.3 of the Project Deed (cl 5).

1. The Company Lease also included the following:

9.1 Assignment by the Lessee

Subject to clause 9.2 the Lessee must not:

(a) assign or otherwise deal with its interests in or obligations under this Lease; or

(b) sub-lease or licence the Company Land

except in accordance with, or as permitted or contemplated by, clause 31 of the Project Deed.

For the purposes of clause 31 of the Project Deed, it will be reasonable for the Lessor to require, as a condition of its consent to an assignment (other than by way of security) of this Lease, that the assignee enters into a deed with the Lessor on terms reasonably acceptable to the Lessor under which the assignee covenants from the date of the assignment in favour of the Lessor to comply with and be bound by all of the covenants, obligations and liabilities of the Lessee under this Lease and whether or not such covenants, obligations or liabilities run with the Company Land.

9.2 Security Interests

The Lessee must not give any security interest over its interest in this Lease to secure its obligations to any person except as permitted pursuant to, or contemplated by, the Debt Financing Documents, or clause 31 of the Project Deed, or otherwise with the prior written consent of the Lessor (such consent not to be unreasonably withheld).

The Land Lease

1. The Land Lease was between the RTA and CCMN2 and included the following:

1.8 Tolls

(a) Subject to clause 1.8(b), the Lessee may levy, collect and, as against the Lessor and the Government, keep tolls for the use of the Tunnel (or part of it) for the passage of motor vehicles during the Term in accordance with the Toll Calculation Schedule. The Lessor consents to the Lessee licensing or otherwise conferring that right on the Company (and to that right being licensed or otherwise conferred) and to the encumbering of such rights.

(b) The Lessee must not levy or impose any charge, toll or fee for use of the Tunnel other than in accordance with the Toll Calculation Schedule.

...

2 Lease

2.1 Grant of Lease

(a) The Lessor leases the Land together with the benefit and the burden of any Easements to the Lessee for the Term on the terms and conditions set out in this Lease.

(b) This Lease is for the Term. This Lease commences on and binds the Lessor and the Lessee with the effect from and including the Commencement Date and terminates on the Termination Date, unless earlier determined in accordance with clause 2.6.

2.2 Concurrent Lease

The Lessor and the Lessee acknowledge that this Lease is concurrent with the Company Lease to the extent of the Company Land.

...

2.6 Determination on Termination of the Project Deed

(a) Notwithstanding any other provisions of this Lease as to the period of the Term, the tenancy created by this Lease will automatically and simultaneously be determined upon the termination of the Project Deed in accordance with clause 22.1(d) of the Project Deed and/or clause 25 of the Project Deed without the necessity of notice and the tenancy created under this Lease and all estates and interests derived or dependent upon this Lease will be determined for all time with effect from the date the Project Deed is terminated in accordance with clause 22.1(d) of the Project Deed and/or clause 25 of the Project Deed.

...

3. Project Deed

(a) This Lease is subject to the terms and conditions of the Project Deed. If there is any inconsistency between the terms of this Lease and the terms of the Project Deed, the Project Deed will prevail.

...

10.1 Assignment by the Lessee

(a) Subject to paragraph (b) and clause 10.2, the Lessee must not:

(i) assign or otherwise deal with its interest in or obligations under this Lease; or

(ii) sub-lease or licence the Land,

except in accordance with, or as permitted or contemplated by, clause 31 of the Project Deed.

For the purposes of clause 31 of the Project Deed, it will be reasonable for the Lessor to require, as a condition of its consent to an assignment (other than by way of security) of this Lease, that the assignee enters into a deed with the Lessor on terms reasonably acceptable to the Lessor under which the assignee covenants from the date of the assignment in favour of the Lessor to comply with and be bound by all of the covenants, obligations and liabilities of the Lessee under this Lease and whether or not such covenants, obligations or liabilities run with the Land.

(b) The Lessor consents to:

(i) the grant of the Sublease to the Company; and

(ii) the conferring of any right or authority, referred to in clause 2.7, upon the Company and to those rights being conferred upon the Operator.

10.2 Security Interests

The Lessee must not give any security interest over its interest in this Lease to secure its obligations to any person except as permitted pursuant to, or contemplated by, the Debt Financing Documents, or clause 31 of the Project Deed, or otherwise with the prior written consent of the Lessor (such consent not to be unreasonably withheld).

Offer by Deed Poll

1. By Deed Poll dated 19 December 2002, CCMN2 offered to enter into an agreement to sublease the Land to CCM on the terms of the Agreement to Sublease attached to the Deed Poll (cl 2.1). That offer was accepted by CCM. The acceptance of the offer created a binding oral agreement by CCM to sublease the Land from CCMN2 and by CCMN2 to sublease the Land to CCM on the terms in the form of the Agreement to Sublease set out in the Annexure to the Deed Poll (cl. 2.4).

Agreement to Sublease

1. The Agreement to Sublease was between CCMN2 and CCM. It included the following:

6.1 Commencement of Sublease

(a) Immediately following the grant of the Land Lease by RTA to the Trustee in accordance with clause 8.1(b) of the Agreement to Lease, the Trustee will be deemed to have granted to the Company and the Company will be deemed to have accepted from the Trustee the Sublease (including the right to access and use the Maintenance Site) commencing on the Commencement Date, and upon and subject to the terms, covenants and conditions set out in the deed of sublease comprising Annexure A to this Agreement.

(b) Where a provision in the deed of land lease comprising Annexure B to the Agreement to Lease is modified, varied or amended in any way in accordance with the Agreement to Lease, a corresponding amendment will be deemed to have been made to the equivalent provision of the deed of sublease comprising Annexure A to this Agreement (if applicable).

1. If either party elected to register the Sublease, CCMN2 was obliged to insert, or authorise the insertion of, inter alia, the "date being the Commencement Date and the date being the Termination Date, which must be (and which is deemed to be) one day prior to the date of termination of the Land Lease, and the period of the Term" (cl 6.4(a)).

Deed of Sublease

1. The Sublease was between CCMN2, as sublessor, and CCM, as sublessee. It included the following:

1.3 Tolls

(a) Subject to clause 1.3(b), in consideration of a licence fee of $10 per annum payable by the Company to the Trustee (the receipt and sufficiency of which is acknowledged by the Trustee), the Trustee grants to the Company, effective during the Term, a licence to levy, collect and, as against RTA, the Trustee and the Government, keep tolls for the use of the Tunnel (or part of it) for the passage of motor vehicles during the Term in accordance with the Toll Calculation Schedule.

(b) The Company must not levy or impose any charge, toll or fee for use of the Tunnel other than in accordance with the Toll Calculation Schedule.

2. Rent

2.1 Payment of Rent

The Company shall on and from the Rent Commencement Date pay the Rent to the Trustee:

(a) on each date shown and in accordance with the Rent Schedule;

(b) without demand from the Trustee; and

(c) without any deduction or right of set off.

...

2.4 Rent Never to Decrease

Despite any other provision of this clause 2, the Rent as and from a Rent Review Date is to be the greater of:

(a) the Rent immediately before the Rent Review Date; and

(b) the amount agreed under clause 2.2 or determined under clause 2.3.

...

3. Land Lease

3.1 Land Lease incorporated in this Sublease

Subject to clause 3.2, the provisions of the Land Lease are incorporated in this Sublease, except that:

...

(c) the definitions of "Commencement Date", "Lessee's Employees", "Project Deed", "Rent", "Term" and "Termination Date" will be replaced by the definitions of "Commencement Date", "Lessee's Employees", "Project Deed", "Rent", "Term" and "Termination Date" in this Sublease.

...

(m) at the end of clause 10.2 insert the words "The Trustee consents to granting of a security interest over the Company's rights under clause 1.3(a) to secure Project Debt and any Security (as defined in the Security Trust Deed) and to the exercise of all rights under them";

...

3.3 Benefit of rights and authority

(a) In consideration of a licence fee of $10 payable by the Company to the Trustee (the receipt and sufficiency of which is acknowledged), the Trustee grants to the Company, effective from the date of, and to the extent of, any licence, right or authority granted by RTA to the Trustee under the Land Lease, a licence to use and enjoy the benefit of all licences, rights and authority which the Trustee is entitled to enjoy in respect of the Land.

(b) The Trustee shall comply with the terms of any rights or licence granted to it under the Land Lease and enforce such rights or licence for the benefit of the Company.

1. It is not in issue that the rental payable by CCM to CCMN2 was at least $27 million every six months.

Intercompany Loan Agreement

1. The Intercompany Loan Agreement was entered into on 18 December 2002 between CrossCity Motorway Finance Pty Ltd (CCMF) (referred to as "Finance Company"), CCMN2 (referred to as "Property Trustee") and CCM (referred to as "Operating Company"). Where an obligation fell due on CCM to pay either CCMN2 or third parties, CCMF would lend funds to the Property Trust (CCMN2) and those funds would be on-loaned to CCM. The plaintiffs claim that this occurred under Facility B, referred to below. However, there is an issue as to the nature of the loans and the Facility through which the loans were made.

1. The Intercompany Loan Agreement provided relevantly:

1.1Definitions

...

Advance means an advance made or to be made under clause 4 or, as applicable, so much of it as remains outstanding.

...

Facility means:

(a) Facility A;

(b) Facility B; or

(c) Facility C,

or all of them as the context requires.

Facility A means the facility so entitled provided by Finance Company to Property Trustee on the terms of this Agreement.

Facility B means the facility so entitled provided by Property Trustee to Operating Company on the terms of this Agreement.

Facility C means the facility so entitled provided by Property Trustee to Operating Company on the terms of this Agreement.

...

Lender means:

(a) Finance Company in respect of Facility A;

(b) Property Trustee in respect of Facility B; or

(c) Property Trustee in respect of Facility C,

or all of them as the context requires.

...

Termination Date means:

(a) in respect of Facility A, the date which is 7 years from the date of this Agreement unless otherwise agreed between Finance Company and Property Trustee; and

(b) in respect of Facility B and Facility C, the date which is 7 years from the date of this Agreement unless otherwise agreed between Property Trustee and Operating Company.

...

2. Facilities

(a) Finance Company agrees to provide a cash advance facility to Property Trustee on the terms set out in this Agreement in respect of Facility A.

(b) Property Trustee agrees to provide a cash advance facility to Operating Company on the terms set out in this Agreement in respect of Facility B.

(c) Property Trustee agrees to provide a cash advance facility to Operating Company on the terms set out in this Agreement in respect of Facility C.

3. Making of Advances

(a) Subject to this Agreement if a Borrower requests an advance under a Facility, the relevant Lender will make available that advance on the Drawdown Date to the account as specified in the request, which must be a Construction Account or the D&C Escrow Account before the Switch Date and must be an Operating Account after the Switch Date (each as defined in the Senior Loan Note Subscription Agreement).

(b) The Drawdown Date must be a Business Day before the relevant Termination Date.

...

4.2 Facility B

(a) Interest on an Advance under Facility B will accrue from day to day:

(i) at the rate agreed between Property Trustee and Operating Company; or

(ii) failing agreement, at a rate no less than the Property Trustee's cost of borrowing those funds.

(b) Operating Company agrees to pay Property Trustee an arranging fee equal to 25% of the Underwriting Fee payable to the Lead Arrangers in connection with the provision of the following obligations or services to Operating Company:

(i) Finance Company agreeing to obtain funds under the Senior Loan Note Subscription Agreement to enable Property Trustee to make Facility B available to Operating Company; and

(ii) Finance Company agreeing to lend funds to Property Trustee (under Facility A) to enable Property Trustee to on-lend those funds to Operating Company under Facility B.

...

5. Repayment

Each Borrower shall repay (or be taken to have repaid) the Advance under a relevant Facility to the relevant Lender as agreed with the relevant Lender but, in any event, no later than the relevant Termination Date for the relevant Facility.

6. Payments

6.1 Manner

Except as otherwise agreed, each Borrower shall make all payments under this Agreement:

(a) by transfer of immediately available funds to the account specified by the relevant Lender, which must be a Construction Account or the D&C Escrow Account before the Switch Date and must be an Operating Account after the Switch Date (each as defined in the Senior Loan Note Subscription Agreement), by 11am (local time) on the due date; and

(b) without set-off, counterclaim or other deduction, except any compulsory deduction for Tax.

6.2 Payment to be made on Business Day

If any payment is due on a day which is not a Business Day, the due date will be the next Business Day.

7. Subordination

The parties agree that despite any other provision of this Agreement, the parties' rights and obligations under and in connection with this Agreement (including the right to make and receive payments to each other) are subordinated on and otherwise subject to the terms of schedule 19 of the Senior Loan Note Subscription Agreement.

1. The Intercompany Loan Agreement governed the inter-entity financing arrangements between CCMF, the Property Trust and CCM. CCM was only entitled to borrow money from the Property Trust under Facility B or Facility C.

1. The audited financial accounts of the Property Trust and CCM record the loan respectively as a receivable and payable. Management accounts prepared from time to time record the loan in a similar fashion. The balance of the loan as at 27 September 2007 was $298,634,347. The loan was originally made on the basis that it would be repaid by the "Termination Date" which was 18 December 2009, unless it was otherwise agreed by the parties. On 27 September 2007, the Intercompany Loan Agreement was amended, inter alia, to extend the Termination Date for Facility B and Facility C to 18 December 2035, unless otherwise agreed.

Acquisition of the Tunnel - 2007

1. Not long after the Tunnel was advertised for sale in 2007, the ABN AMRO/Leighton Consortium (the Consortium) was chosen as the preferred bidder. The structure of the transaction, although complex, was the transfer of the units in the Property Trust and the transfer of the shares in CCM.

1. The PT Transfer involved CCMN1, as trustee of the CCM Holdings Trust and holder of the units in the Property Trust, transferring the units to a newly established entity, CCM Holdings Trust Pty Ltd, as trustee of a newly established trust, the CCT Motorway Property Trust.

1. The CCM Transfer involved CCMN1, CCMN2 and CrossCity Motorway Holdings Pty Ltd (CCMH), a company in the CrossCity Motorway Group and owner of all the shares in CCM, transferring the shares to the Consortium's entity, CCT Motorway Company Nominees Pty Ltd in its capacity as the trustee of the CCT Motorway Company Trust.

1. The competing claims and submissions make it necessary to refer to some of the detail of the agreements that were executed to effect the transactions.

Implementation Deed

1. On 19 June 2007, CCMH (Administrator Appointed) (Receiver and Manager Appointed), referred to in the Deed as "CCM Holdings", and CCMN1 (Administrator Appointed) (Receiver and Manager Appointed), referred to in the Deed as "CCM Nominees 1", (referred to together as "the Owners") entered into the Implementation Deed with ABN AMRO Australia Pty Limited (referred to in the Deed as "ABN AMRO Australia"), ABN AMRO Infrastructure Capital Management Limited (referred to in the Deed as "ABN AMRO Global"), Leighton Infrastructure Investments Pty Limited, referred to in the Deed as "Leightons" (referred to together as "the Investors").

1. The "Background" section of the Implementation Deed recorded that CCMH was the registered owner of the CCM Shares and the CCM Loan Notes and that CCMN1 was the registered owner of the Property Trust Units. After reference to the appointment of the receivers and managers on 27 December 2006, it was noted that the Owners and the Investors had agreed to implement the transactions set out in the Deed in relation to the "Relevant Securities" and to arrange for the "New Financiers" to re-finance the "Current Financing Facilities". The "Relevant Securities" were identified as the CCM Shares and the Property Trust Units (cl 1.1). The "Current Financing Facilities" were defined as the loan facilities provided to CCM, the Property Trust and CCMF, referred to as "the Subsidiary", under the Senior Loan Notes Subscription Agreement (cl 1.1).

1. The Investors were required to pay the Deposit of $30 million by 5 pm on 21 June 2007 to the Owners (cll 1.1 and 2.1). That amount was paid on 21 June 2007 in two tranches of $28.5 million and $1.5 million.

1. The Implementation Deed included the following:

4. Implementation Steps for Completion

4.1 Completion

Subject to the terms of this deed, on or prior to Completion the Owners and the Investors must implement the steps set out in clause 4.2 to be implemented by them in relation to the Relevant Securities and will in good faith work together to achieve the implementation of such steps.

4.2 Implementation Steps for Relevant Securities

On or prior to Completion and provided the implementation of the steps set out below do not impose any liability on the Owners or the Relevant Entities [defined as CCM and the Property Trust] up to Completion [defined as the completion of the implementation steps in relation to the shares and the Property Trust units and the refinancing by the new financiers]:

(a) CCM Nominees 1 will establish the Property Hold Trust;

(b) CCM Holdings will establish the Company Hold Trust;

(c) the Investors will subscribe or procure subscriptions for units in the Property Hold Trust for the Property Units Subscription Amount and provide, or procure the provision of, the Property Unitholder Loans for the Property Unitholder Loan Amount to the Property Hold Trust;

(d) the Investors will subscribe or procure subscriptions for units in the Company Hold Trust for the Company Shares Subscription Amount and provide, or procure the provision of, the Company Unitholder Loans for the Company Unitholder Loan Amount to the Company Hold Trust;

(dd) the Investors will procure the loan of the Company Hold Loan Amount and the Property Hold Loan Amount to be made to the Company Hold Trust and the Property Hold Trust respectively;

(e) CCM Holdings will enter into the CCM Holdings Acknowledgment;

(f) CCM Nominees 1 will enter into the CCM Nominees 1 Acknowledgment;

(g) each of the Owners will execute the Deed of Resignation and Appointment; and

(h) the Investors will procure that the New Hold Trustee executes the Deed of Resignation and Appointment.

1. The "New Hold Trustee" was defined to include both the new Trustee of the Company Hold Trust and the new Trustee of the Property Hold Trust (cl 1.1).

Sale Agreement

1. On 19 June 2007, CCMH (Administrator Appointed) (Receiver and Manager Appointed), as Vendor, and ABN Amro Australia, ABN Amro Global and Leightons, as the Purchaser, entered into a Sale Agreement for the sale of the "Sale Shares" defined as "the CCM Nominees 2 Shares". The Sale Agreement included the following:

4.1 Sale

(a) Subject to the terms of this document, on Completion the Vendor will sell the Sale Shares to the Purchaser, or at the Purchaser's direction to its nominee, CCM Holdings Trust Pty Limited (to be incorporated), and the Purchaser, or at the Purchaser's direction to its nominee, CCM Holdings Trust Pty Limited (to be incorporated), will purchase the Sale Shares for the Sale Shares Amount on the terms of this document.

(b) If the Sale Shares are sold to CCM Holdings Trust Pty Limited (to be incorporated), the Vendor agrees that the Purchaser automatically assigns to its nominee, CCM Holdings Trust Pty Limited the benefit of, and all rights associated with, the Warranties given by the Vendor under this document but subject to the limitations set out in this document.

4.2 Transfer of rights

The Sale Shares will be transferred to the Purchaser or at the Purchaser's direction, CCM Holdings Trust Pty Limited (to be incorporated), with all the Rights applicable to the Sale Shares, on and from Completion free from Encumbrances except for Permitted Encumbrances.

1. The parties agreed and acknowledged that Completion under the Sale Agreement would not occur unless completion under the Implementation Deed occurred simultaneously with Completion under the Sale Agreement (cl 7.1(b)). CCMH was obliged to deliver to the Purchaser a transfer for the Sale Shares, duly executed by it, and the original share certificate for the Sale Shares (cll 7.2(a) and 7.2(b)). The Sale Agreement also included the following:

7.5 Title, property and risk

The right, title to, and property and risk that the Vendor has in the Sale Shares passes to the Purchaser or CCM Holdings Trust Pty Limited (as the case may be) on Completion.

1. Between June and September 2007, the Consortium's lawyers, Freehills (now Herbert Smith Freehills), arranged for the incorporation of the corporate vehicles by which the Consortium would complete the purchase transactions.

Escrow Agreement

1. On 26 September 2007, an Escrow Agreement was executed. That Agreement required the execution of each document listed in Schedule 2 in the sequence therein set out. It provided that, when each document was executed and delivered to Freehills, Freehills was required to retain custody of each Document in accordance with the Escrow Agreement. Clause 7(a) required Freehills to hold each Document in escrow until the earlier of the satisfaction of the Release Conditions and the Sunset Date as defined in the Agreement. Clause 7(c) of the Escrow Agreement provided that each Document would have full force and effect and become binding on the parties to that Document upon its release pursuant to clause 7(b) and in the sequence that the documents were so deemed to be released.

1. Peter Paradise has been a partner of Freehills since July 2008. At the time of these transactions, Mr Paradise acted for the Consortium. Having prepared the documents for the completion of the transactions, Mr Paradise and others observed the execution of the documents on 26 September 2007 and 27 September 2007 in the sequence as required by the Escrow Agreement.

1. Mr Paradise's affidavit evidence set out that sequence in detail. It is not necessary to repeat the sequence here. However, there was some suggestion to Mr Paradise in cross-examination that he may have been mistaken as to the sequence in which the documents were executed. Mr Paradise gave evidence that there were some three or four hundred documents executed at the time, with some documents having eight counterparts (tr 83). It was suggested to Mr Paradise that, without a note, and given the passage of time between when he swore his affidavits and the events about which he gave his evidence, he really could not be certain about the sequence in which the documents were executed. Mr Paradise was emphatic in his answer that such a suggestion was "incorrect" (tr 83). He gave the following evidence (tr 83):

Q. And just before I ask you anything else, you don't allow of any doubt that you might have got the sequence wrong?

A. I have no doubt at all.

1. I accept Mr Paradise's evidence. I am satisfied that the documents were executed in the sequence provided for in the Escrow Agreement.

1. The "Implementation Steps" in the Implementation Deed for the transfer of the units in the Property Trust were as follows:

(1) CCMN1 established the New Property Hold Trust (CCT Motorway Property Trust) (cl 4.2(a));

(2) The Investors subscribed for units in CCT Motorway Property Trust and provided or procured the Property Unitholder Loans for the CCT Motorway Property Trust (cl 4.2(c));

(3) The Investors made (or procured the making of) the loans to the CCT Motorway Property Trust (cl 4.2(dd));

(4) CCMN1 entered into the "Acknowledgement" by which it settled the Property Unit Trusts on itself (cl 4.2(f));

(5) CCMN1 executed a Deed of Resignation and Appointment by which it retired as Trustee of the CCT Motorway Property Trust (cl 4.2(g)); and

(6) The Consortium procured the New Property Hold Trustee, CCM Holdings Trust Pty Ltd, to execute the Deed of Resignation and Appointment pursuant to which CCMN1 resigned as Trustee of CCT Motorway Property Trust and CCM Holdings Trust Pty Ltd was appointed as Trustee of the Trust (cl 4.2(h)).

1. The "Implementation Steps" in the Implementation Deed for the transfer of the shares in CCM were as follows:

(1) CCMH established the Company Hold Trust CCT Motorway Company Trust (cl 4.2(b));

(2) The Investors subscribed for units in the CCT Motorway Company Trust and procured the Company Unitholder Loans Amount for the Trust (cl 4.2(c));

(3) The Investors made the loan to the CCT Motorway Company Trust (cl 4.2(dd));

(4) CCMH entered into the Acknowledgment by which it settled the shares in CCM on itself (cl 4.2(e));

(5) CCMH executed a Deed of Resignation and Appointment by which it retired as Trustee of the CCT Motorway Company Trust (cl 4.2(g)); and

(6) CCT Motorway Company Nominees Pty Ltd executed the Deed of Resignation and Appointment pursuant to which it was appointed as the new Trustee of the CCT Motorway Company Trust (cl 4.2(h)).

1. The transactions are depicted graphically in the Schedule to this judgment.

Post Transaction Event

1. By written offer (by CCMN2) and acceptance (by CCM) on 14 November 2007, the Sublease was varied by reducing the rent for the two year period from 27 September 2007 to $500,000 for the first quarter and increased by 2% per quarter thereafter (to be reviewed at 2 to 3 year intervals) effective from 27 September 2007. But for this amendment, the rent would have been $33.35 million for the period to 31 December 2007.

The Chief Commissioner's Assessments

1. The plaintiffs' lawyers, Freehills, and the Chief Commissioner's lawyer, the Crown Solicitor, communicated over many months in relation to the duty payable on the transactions.

1. On 6 September 2011, the Chief Commissioner wrote to the plaintiff in the Trust Proceedings, advising that he intended to assess land rich duty on the PT Transfer at $36,285,490. The Chief Commissioner advised that he had obtained a valuation from Lonergan Edwards & Associates Limited (the LEA Valuation) that had valued the Land Lease at an unencumbered value of $660 million as at the acquisition date (27 September 2007). The Chief Commissioner also advised that the LEA Valuation valued the Intercompany Loan at $11 million as at the acquisition date.

1. The Chief Commissioner referred to the history of submissions that had been made by Freehills (which included valuations by the accountancy firm, Deloitte Touché Tohmatsu (Deloitte)) and explained why an exemption was not available to the plaintiff under s 163ZB(1)(i) of the Duties Act. The Chief Commissioner was not satisfied that the PT Transfer was not part of a scheme of the kind referred to in s 54(3)(c) of the Duties Act. The Chief Commissioner concluded that the relevant scheme comprised the steps set out in cl 4.2 of the Implementation Deed. In this regard, he concluded that the relevant trust property was the units in the Property Trust; the relevant persons on whom an interest in the units was conferred were the unit holders of the Property Trust and/or the transferee as the new trustee of the Property Trust; that the relevant persons whose beneficial interest or potential beneficial interest in the units suffered a detriment because they no longer held the beneficial interests in the trust units, or CCMN1, on the basis that prior to the transaction it held all interests in the units and after the transaction, it was left with no interest.

1. The Chief Commissioner advised that the scheme adopted and implemented was a scheme of the kind referred to in s 54(3)(c) of the Duties Act. The letter included the following:

Unencumbered Value of Land Holdings - For Land Rich Duty Purposes

48. Unless the position as to s 163ZB(1)(i) changes, the relevant acquisition resulting from the CCM Trust Units Transfer gives rise to a liability for land rich duty. As the acquirer of all the units in the Trust under the CCM Trust Units Transfer, you are liable to pay land rich duty pursuant to s 163J(1) of the Duties Act (as it then was as at 27 September 2007).

49. The amount of land rich duty payable is calculated by reference to the unencumbered value of all the land holdings of the Trust in New South Wales as at the Acquisition Date (see s 163K of the Duties Act as it then was as at 27 September 2007).

50. The enclosed LEA valuation values the market value of the Land Lease held by the Trust as at the Acquisition Date at $660,000,000.

51. I propose to assess land rich duty on the relevant acquisition resulting from the CCM Trust Units Transfer on the basis that the market value of the land holding of the Trust (being the Land Lease) as at the Acquisition Date was $660,000,000.

52. As stated in paragraph 2 above, that is a primary amount of $36,285,490.

1. The Notice of Assessment was issued on 9 December 2011. The plaintiffs objected on 7 February 2012. The defendant wholly disallowed the plaintiffs' objection on 27 March 2012.

Nature of the applications

1. In each case the plaintiff makes an application under s 97(1)(a) of the Taxation Administration Act 1996 for a "review" of the Chief Commissioner's decision that has been the subject of an objection and in respect of which each plaintiff is dissatisfied. Such a review is "taken to be an appeal" for the purposes of the Supreme Court Act 1970 and the regulations and rules made under that Act: s 97(4).

1. The plaintiffs' cases on review, and that of the Chief Commissioner, are not limited to the grounds of objection: s 100(2). In dealing with the application for review the Court may: (a) confirm or revoke the assessment in question; (b) make an assessment or other decision in place of the assessment; (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid; (d) remit the matter to the Chief Commissioner for determination in accordance with the decision of the Court; and/or (d) make any further order as to costs or otherwise as it sees fit: s 101(1).

1. The plaintiffs are not required to prove that the Chief Commissioner erred on the materials before him or that the Chief Commissioner's exercise of discretion is vitiated by error of a kind justifying judicial review such as failing to address the correct statutory test, making a mistake of law, taking some extraneous reason into account or excluding some relevant factor from consideration. By "dint" of s 97(4) of the Taxation Administration Act, s 75A of the Supreme Court Act 1970 (NSW) is "picked up" and on the review or "appeal" the Court may receive further evidence and may make any assessment that ought to have been made: Tasty Chicks Pty Limited & Ors v Chief Commissioner of State Revenue of New South Wales [2011] HCA 41; (2011) 245 CLR 446 at 453 and 455.

The legislative framework

1. The land rich provisions of the Duties Act in existence at the time of the transaction in 2007 were contained in Chapter 4A. A liability for duty arises "when a relevant acquisition is made": s 163E. A "relevant acquisition" occurs when, inter alia, a person acquires a "significant interest" in a "land rich landholder": s 163F(1)(a)(i). A "landholder" includes a private unit trust scheme: s 163A(1)(a). The Property Trust was a "landholder" as defined.

1. An "interest" in a landholder is defined as "an entitlement (otherwise than as a creditor or other person to whom the landholder is liable) to a distribution of property from the landholder on a winding up of the landholder or otherwise": s 163D(1). A "significant interest", in the case of a private unit trust scheme, means an entitlement to 20% or more of the property distributed: s 163D(2)(a). A person acquires an interest in a land rich landholder if the person obtains an interest in the landholder irrespective of how it is obtained: s 163G(1). Such acquisition may be by purchase, or by issue of a unit or share or through a number of other mechanisms: ss 163G(2) and 163G(3). It is not in issue in the proceedings that a significant interest in the Property Trust was acquired.

1. Section 163B provided:

(1) For the purposes of this Chapter, a landholder is land rich if:

(a) it has land holdings in New South Wales with an unencumbered value of $2,000,000 or more, and

(b) its land holdings in all places, whether within or outside Australia, comprise 60% or more of the unencumbered value of all its property.

(2) In calculating the unencumbered value of the property of a landholder for the purposes of sub-section (1), property of any of the following kinds is not counted:

...

(c) loans that, according to their terms, are to be repaid on demand by the lender or within 12 months after the date of the loan,

(d) if the landholder is a private unit trust scheme or a wholesale unit trust scheme, loans to persons who, in relation to a trustee or beneficiary of the scheme, are associated persons,

...

1. Section 163Y of the Act relevantly provided:

(2) In determining the unencumbered value of land holdings under this Chapter, any arrangement made in respect of the land holdings that has the effect of reducing the unencumbered value is to be disregarded, subject to subsection (3).

(3) An arrangement is not to be disregarded if the Chief Commissioner is satisfied that the arrangement was not made as part of an arrangement or scheme with a collateral purpose of reducing the duty otherwise payable in relation to the relevant acquisition or relevant disposal.

(4) In considering whether or not he or she is satisfied for the purposes of subsection (3), the Chief Commissioner may have regard to:

(a) the duration of the arrangement before the relevant acquisition or relevant disposal, and

(b) whether the arrangement has been made with an associated person, and

(c) whether there is any commercial efficacy to the making of the arrangement other than to reduce duty, and

(d) any other matters the Chief Commissioner considers relevant.

1. Section 163C(1) provided that, for the purposes of Chapter 4A, "a land holding is an interest in land other than the estate or interest of a mortgagee, chargee or other secured creditor or a profit à prendre".

1. Section 163ZB (Exempt transactions) relevantly provided as follows:

(1) An acquisition or disposal by a person of an interest in a landholder is an exempt transaction:

...

(i) if the acquisition or disposal of an interest in a landholder would be chargeable with duty of $10 under section 54 if the property being acquired or disposed of were land in New South Wales.

1. Section 54 relevantly provided:

(3) Duty of $10 is chargeable in respect of a transfer of dutiable property to a person other than a special trustee as a consequence of the retirement of a trustee or the appointment of a new trustee, if the Chief Commissioner is satisfied that, as the case may be

(a) none of the continuing trustees remaining after the retirement of a trustee is or can become a beneficially under the trust, and

(b) none of the trustees of the trust after the appointment of a new trustee is or can become a beneficially under the trust, and

(c) the transfer is not part of a scheme for conferring an interest, in relation to the trust property, on a new trustee or any other person, whether as a beneficiary or otherwise, to the detriment of the beneficial interest or potential beneficial interest of any person.

If the Chief Commissioner is not so satisfied, the transfer is chargeable with the same duty as a transfer to a beneficiary under and in conformity with the trusts subject to which the property is held, unless subsection (3A) applies.

Issues

1. The three main issues in the Trust proceedings are: (1) whether the Property Trust was land rich at the relevant date; (2) if it was, whether the PT Transfer was exempt under s 163ZB(1)(i) of the Duties Act; and (3) if it was land rich and the PT Transfer was not exempted, what was the unencumbered value of the land holdings of the Property Trust at the relevant date?

1. The only issue in the Company proceedings is whether the plaintiff is liable for duty of $10 under s 54(3) of the Duties Act.

1. A landholder (in the Property Trust proceedings, a private unit trust) is "land rich" under the Duties Act if: (1) it has land holdings with an unencumbered value (being a market value free of encumbrances) of at least $2 million (a matter not in issue in these proceedings); and (2) its land holdings are 60% or more of the unencumbered value of all its property: s 163B. Whether a landholder is land rich is determined as at the time of the relevant acquisition of "an interest". In this case, that was at the time when the agreement by which the interest was acquired was "completed", whether or not it was then registered: s 163G(2A). The agreement is "completed" when the "necessary transfer of title documents are delivered to the person acquiring the interest and the purchase price is paid in full": 163G(2B).

1. The plaintiffs propounded two reasons for why the Property Trust was not land rich. The first is that the Property Trust had a separate non-land asset, the right to levy, collect and keep tolls (the Tolling Right), which, it claimed, had a value at least equal to the value of the only land asset, the Land Lease (the Tolling Right Issue). The second reason is that, if the Tolling Right is not a separate non-land asset, the Intercompany Loan was an asset having a market value at least equal to its face value of $298 million (the Loan Issue).

1. The Chief Commissioner contends that the Tolling Right is not a separate item of property and, in any event, it is an interest in land. Even if the Tolling Right is a separate item of non-land property, the Chief Commissioner claims that there is no proper basis for attributing any value to it and certainly not a value equal to the value of the Land Lease, as the plaintiff claims. The Chief Commissioner also contends that the Intercompany Loan is not to be counted as part of the property of the Property Trust because it was excluded under the Act as a loan repayable on demand or within 12 months of the loan being made (s 163B(2)(c)) and/or because it was a loan made to an associated person (s 163B(2)(d)).

1. In relation to the second main issue of whether the PT Transfer was exempt, the plaintiff contends that duty of $10 is chargeable in respect of the transfer of the units in the Property Trust because it was a transfer "as a consequence of" the retirement of a trustee or the appointment of a new trustee and the transfer was not part of a scheme conferring an interest on the new trustee to the detriment of the beneficial interest or potential beneficial interest of any person (s 163ZB(1)(i) and s 54(3)). The Chief Commissioner contends that the transfer was not as a consequence of the retirement of a trustee and, in any event, it was part of a scheme for conferring an interest to the detriment of a beneficial interest or potential beneficial interest of a person (the Exemption Issue).

1. There are also issues in relation to interest and penalty tax (Interest and Penalties Issues). The valuation of each of the assets is in issue (the Valuation Issues).

The Evidence

1. In addition to volumes of documentary material (Exhibits PD1 - PD 21) the plaintiffs relied upon the evidence of a number of witnesses. This evidence included that of Kenneth Ivan Dawson, the current CEO of CCM and other relevant entities in the CCM Group. Mr Dawson's evidence related to the classification of the Intercompany Loan and the manner in which the tollway operated. The evidence also included that of Peter Jeremy Hicks, a director of both plaintiffs, appointed by one of the members of the Consortium. Mr Hicks gave evidence in relation to the bidding process and advice received by the plaintiffs in the course of that process. His evidence was relevant to the interest and penalty issues and for reasons explained later, those matters are not necessary for determination. However, there was one aspect of Mr Hicks' cross-examination upon which the defendant relied. Mr Hicks accepted that the purpose of the structure in the Implementation Deed for the transfer of the units in the Property Trust was to ensure that there would be no stamp duty payable on the transfer of the units in the Property Trust (tr 66).

1. The plaintiff also relied upon the evidence of Sean Victor Ian Miller, a former employee of ABN AMRO, whose evidence was relevant to the issues of interest and penalty. There was also the evidence of Peter Paradise, to which reference has already been made, and Ken Nam, another lawyer at Freehills who gave evidence of his role in ensuring that certain steps in relation to the transaction were effected in accordance with the Escrow Agreement.

1. The plaintiff also relied upon the evidence of John Bastian and Ewan McLean, which is referred to in more detail later in respect of the Intercompany Loan.

1. The plaintiff relied upon the expert valuation opinion and evidence of Terrence Michael Potter, a principal of Axiom Forensics Pty Ltd, a firm specialising in the provision of forensic accounting services. The Chief Commissioner relied upon the expert valuation opinion and evidence of Wayne Richard Lonergan, a director of Lonergan Edwards & Associates Ltd, who provided the LEA valuation upon which the Chief Commissioner relied in making his assessments.

1. The three assets the subject of the valuation evidence are the Land Lease, the Tolling Right and the Intercompany Loan. It will be necessary to analyse the approach adopted by the experts in some detail. However by way of summary, Mr Lonergan considered the Trust to be land rich at the acquisition date. Mr Potter's opinion varied according to the assumptions that he adopted. In summary, his opinion was that one valued the assets as if the Intercompany Loan were to be written off and the Tolling Right had no separate value, the Property Trust would be land rich. If the Tolling Right were valued as a separate, non-land asset and the Intercompany Loan was taken into account, Mr Potter's opinion was that the Property Trust would not be land rich at the acquisition date.

Tolling Right Issue

1. The matters to be determined in respect of the Tolling Right Issue (exclusive of valuation issues) are: (1) is the Tolling right a separate item of property (Question 1); (2) if it is a separate item of property, is it an interest in land (Question 2); and (3) is the Property Trust's title to the Tolling Right qualified by the Sublease, in particular, by cl 1.3 thereof (Question 3).

Question 1: Is the Tolling Right a separate item of property?

1. The plaintiff contends that the Tolling Right is a statutory right granted to the Property Trust by the RTA under the Roads Act, which is separate from any rights granted to the Property Trust by reason of the RTA's ownership of land. It contends that it is property separate from the Land Lease. The Chief Commissioner contends that the Tolling Right is not a right or an item of property separate from the Land Lease.

The Tolling Right

1. It is important to identify the attributes that constitute the Tolling Right as described by the parties. The contractual entitlement of CCMN2 as trustee of the Property Trust (to which I will refer as "the Property Trust") under the Project Deed and the Land Lease was to "levy, collect and... keep tolls" for the use of the Tunnel by motor vehicles in accordance with the Toll Collection Schedule (cl 17.1(a) of the Project Deed; cl 1.8(a) of the Land Lease). The Property Trust was prohibited from levying or imposing any toll "for the use of the Tunnel" other than in accordance with the Toll Collection Schedule (cl 17.1(b) of the Project Deed; cl 1.8(b) of the Land Lease).

1. The RTA consented to the Property Trust "licensing or otherwise conferring that right" on CCM (cl 17.1(a) of the Project Deed; cl 1.8(a) of the Land Lease). CCM was prohibited from levying or imposing any toll "for the use of the Tunnel", other than in accordance with the Toll Collection Schedule (cl 17.1(b) of the Project Deed).

1. The plaintiff contended that the Tolling Right is a sui generis statutory right granted to the Property Trust by the RTA under s 213 of the Roads Act, which provided:

213 Tolls and charges for tollways

(1) The RTA may levy and collect tolls and charges for traffic using a tollway.

(2) The RTA may, on such terms as it may decide:

(a) lease the operation of a tollway, or

(b) lease the collection of tolls and charges on a tollway.

(3) The amount of any toll or charge must not exceed the amount prescribed by or in accordance with the regulations.

1. The parties are at issue on the meaning of the word "lease" in s 213(2). The plaintiff contends that it is not used in the "real property sense", meaning that it is not a lease of real property or land. The Chief Commissioner contends that the provisions of the Roads Act together with the provisions of the Roads (General) Regulation 2000 (with which the Property Trust and CCM were required to comply under cl 17.1(d) of the Project Deed) support the conclusion that the expression is used in the "real property sense" because tolls are to be collected by a toll operator, who must be the RTA or a person to whom the RTA has leased land.

1. It will be necessary to analyse and interpret the relevant statutory and contractual provisions to determine this issue. However, it is appropriate first to deal with the Chief Commissioner's contention that the Property Trust could have levied or imposed tolls for the use of the Tunnel for the passage of motor vehicles, irrespective of the Tolling Right.

Was the Tolling Right essential for the collection of Tolls?

1. The Chief Commissioner submitted that, even without the grant of a statutory lease from the RTA under s 213(2) of the Roads Act, the Property Trust had a right to collect tolls. It was contended that, as a matter of common law, it could have levied and collected tolls in reliance solely on its rights as the lessee of the road comprising the Tunnel under the Land Lease. This contention, if correct, would lead to the conclusion that the Tolling Right was superfluous and would support the Chief Commissioner's contentions that it is not an asset capable of having value independently of the rights otherwise conferred under the Land Lease.

1. In support of this contention the Chief Commissioner referred to the history of tolls on the King's highways in England referred to by Windeyer J in Commonwealth Freighters Pty Ltd v Sneddon (1959) 102 CLR 280. The question for the High Court in that case was whether the Road Maintenance (Contribution) Act 1958 (NSW) validly applied to commercial goods vehicles engaged in inter-State trade. The appellant appealed from a conviction for failing to deliver to the Commissioner for Motor Transport a record that the Act required it to keep. The Act provided that the owner of every commercial goods vehicle was to pay to the Commissioner, as compensation for wear and tear caused thereby to public streets in New South Wales, a charge at the rate prescribed in the schedule to the Act. The issue was whether the charge imposed by the Act could include inter-State journeys without violating s 92 of the Constitution. The appeal was dismissed. Windeyer J said at 303:

The attitude of the common law towards tolls upon the users of highways was that they might properly be authorised by Crown grant if they were for the maintenance of the highway or for the use of some facility provided for travellers on the highway such as a bridge; but if they were mere exemptions from highway users they were inconsistent with the public right of way.

1. His Honour referred (at 303-304) to mediaeval times during which repair to the highways was performed by enforced labour and later by parishioners, so that road tolls for the repair of the highways were rare. However, his Honour also said that "tolls-thorough" (in contrast to "tolls-traverse"), for the maintenance and repair of the highway where it passed through towns, were not unknown. The theme in this historical overview was that unless there was some quid pro quo to the highway user (such as the provision of a bridge or the maintenance of the highway), a toll could not be exacted. After referring to the turnpike trusts in England as part of the system of tolls authorised by Act of Parliament, his Honour observed that the "toll bars" previously existing in New South Wales and Victoria had all been abolished well before 1900 (at 304-305).

1. The Chief Commissioner also relied upon the descriptions of a "toll-thorough" and a "toll-traverse" in Frederic Gunning's Practical Treatise on the Law of Tolls (1833 Saunders and Benning). The "toll-thorough" was described consistently with the theme of the history outlined by Windeyer J in Commonwealth Freighters Pty Ltd v Sneddon, in that there must be some consideration for the imposition of the toll for passing along a highway (p 3). The "toll-traverse" was described as a toll for which a landowner may prescribe "without alleging any consideration" and "the law supposes a reservation of the toll to have been made by the proprietor of the soil at the time when he first allowed the public the privilege of passing over it": at 27.

1. The Chief Commissioner submitted that the Tunnel was constructed pursuant to the Project Deed on land owned by the RTA and leased to the Property Trust. It was never a "public road", and its first use was as a tollway. It was submitted that, in these circumstances, there was no public right to use the land consisting of the Tunnel, and that the ability of the public to use the Tunnel arose from its opening as a "tollway". The situation might have been different if the Tunnel were a public road, because s 5(1) of the Roads Act gives a member of the public a statutory right (equivalent to the common law right to use the King's highway) to use a public road. Section 5(2) provides that the right conferred by the section "does not derogate from any right of passage that is conferred by the common law" but also provides that "those rights are subject to such restrictions as are imposed by or under this or any other Act or law".

1. This passage of Gibson J's judgment was approved on appeal in the House of Lords by Lord Browne-Wilkinson [1995] 1 AC 148 at 164.

1. It is not in issue that, under s 163ZB(1)(i) of the Duties Act, it is necessary to: (a) postulate a hypothetical transaction in which the property acquired is (hypothetical) land in New South Wales, rather than the interest in the Property Trust which was actually acquired; and then (b) determine whether the hypothetical transaction would have been chargeable with duty.

1. The plaintiffs submitted that the ostensible purpose of s 163ZB(1)(i) is to extend the same concessional duty, that applies under s 54(3) to acquisitions of land, to acquisitions of interests in land rich landholders. It was submitted that the ostensible purpose of s 54(3) of the Act is to levy concessional duty on transfers of dutiable property as a consequence of a change of trustee. However, as an acquisition of an interest in a landholder may not involve an acquisition of dutiable property, it was necessary for s 163ZB(1)(i) to state a test for the application of s 54(3) that covered all potential types of acquisition. It was submitted that it is significant that the legislature chose to refer to hypothetical land in New South Wales (which is dutiable property under s 11(1)(a) of the Act) and not the actual land of the landholder.

1. It was submitted that the mischief to which the exception in s 54(3)(c) is directed appears to be where changes of trustee in discretionary trusts are effected to the detriment of existing discretionary objects. The plaintiffs submitted that, if the land to be considered for the purposes of the exemption in s 163ZB(1)(i) is notional land which does not have the ownership history of the actual land holdings of the Property Trust, then it is difficult to see any basis to suggest that there is a scheme of the kind referred to in s 54(3)(c). Accordingly, it was submitted that the PT Transfer will be exempt from duty under s 163ZB(1)(i). Notwithstanding the force of this submission, I am of the view that the analysis is of what, if any, detriment was caused by the transfer of the actual trust property rather than a transfer of notional land.

1. In any event, the plaintiffs submitted that the conferral of the interest referred to in s 54(3)(c) must deprive the person of their beneficial interest or potential beneficial interest, or otherwise impair that interest, in a way that causes detriment. It was submitted that a disposal for market value does not involve "detriment" in the ordinary sense of the word.

1. The Chief Commissioner submitted that there was a scheme within the meaning of s 54(3)(c) and, more relevantly, the plaintiffs could not discharge the onus of demonstrating there was not such a scheme to the satisfaction of the Chief Commissioner and should not be held to have discharged that onus to the satisfaction of the Court.

1. The Chief Commissioner submitted that the scheme included the step of creating a new trust into which the units in the Property Trust were placed. It was submitted that the plaintiffs' argument incorrectly assumes that the detriment needs to result from the transfer on the change of trustee rather than from the scheme as a whole. It was submitted that s 54(3)(c) makes it clear that the transfer must be considered as "part of the scheme". It was contended that the plaintiffs' submissions impermissibly limit the enquiry to the point immediately before and immediately after the transfer of the units in the Property Trust.

1. Although the Chief Commissioner was satisfied the scheme fell within s 54(3)(c) for the reasons outlined above, he considered that, even if the broader "before and after" approach were adopted, the same conclusion could be reached. In that respect the Chief Commissioner said (par 27 of the Letter):

Such an approach would be to conclude that before the first step in the scheme the Transferor was the holder of the Trust Units (and all interests in them) on trust for the unit holders of the CrossCity Motorway Holdings Trust and after the last step in the scheme the Transferee was the holder of the Trust Units on trust for the unit holder of the CCT Motorway Property Trust. Accordingly, the conferring of interests in the Trust Units under the scheme operated to the detriment of the beneficial interest of the Transferor and/or the unit holders of the CrossCity Motorway Holdings Trust in that the Transferor and/or the unit holders of the CrossCity Motorway Holdings Trust lost all its/their prior interest in the Trust Units as a result of the implementation of the scheme and so must have lost a beneficial interest (or potential beneficial interest) in the process.

1. This analysis is indicative of the Chief Commissioner's contention referred to above that, in determining whether there is "detriment" to the beneficial or potential beneficial interest of any person, it is not permissible to consider whether the trust property has been "exchanged" for market value. It is the fact of the transferring away (the loss) of the trust property per se that is said to amount to the detriment.

1. The Chief Commissioner's Supplementary Written Submissions of 24 May 2013 continued in the same vein. They included the following (par 10):

The use of the different terms "dutiable property" and "the trust property" is a function of the purpose of the concession available under s 54(3). In the paradigm situation where the concession would be available, there would be a retirement of a trustee (Trustee1) of a trust and the transfer of trust property to an incoming trustee (Trustee2). If all that happens is that the interest of Trustee1 as trustee is transferred to Trustee2 as trustee and there is no alteration in the beneficial interest (or potential beneficial interest) of anyone in relation to any of the trust property, then the legislative policy is to allow a concession in respect of such of the trust property transferred by that process that would be dutiable property - no concession is needed for such of the trust property that is not liable to duty. The concession is not to be available where there has been a movement of an interest held beneficially: that is dealt with by the words "beneficial interest or potential beneficial interest".

1. In a further submission in the same document the Chief Commissioner identified the two parts to 54(3)(c): the first looking at giving an interest ("conferring"); and the second, taking away ("to the detriment of"). It was submitted that the second part of the subsection is necessarily cast more narrowly so that paragraph (c) "does not catch that which it intended to allow", namely the transfer by Trustee1 (as trustee) to Trustee2 (as trustee) "of an interest (bare legal title) in the trust property".

1. The thrust of the Chief Commissioner's submissions and the content of the Letter is that the beneficiaries and the trust property must remain unchanged. This is evidenced by the further submissions made by the Chief Commissioner that the trust property changed when it was swapped for the purchase monies and the people with interests in the trust property changed because the vendor entity ceased to have any interest in the dutiable property after the transfer. It was submitted that such change was to the detriment of the beneficial interest or the potential beneficial interest in the dutiable property of the vendor entities.

1. The plaintiffs submitted that the Chief Commissioner's submissions are based upon the erroneous assumption that because the units in the Property Trust are held by a trustee (CCMN1), it must follow that some person or persons hold the beneficial interest in those property trust units. It was submitted that what is required is a careful consideration of the terms of the Trust Deed for the CrossCity Motorway Holdings Trust to determine the nature of the interest conferred by a holding of units in that trust. The Trust Deed in question denies the unit holder a beneficial interest in any particular asset of the trust (cl 4.7). The plaintiffs submitted that it follows that the unit holders of the CrossCity Motorway Holdings Trust did not have a beneficial interest in the units in the Property Trust when they were held by CCMN1 as trustee of the CrossCity Motorway Holdings Trust.

1. The word "detriment" should be given its ordinary meaning in the context in which it appears in s 54(3)(c). It is to be understood as "the state of being harmed or damaged" (The New Oxford Dictionary of English (1998)) and includes "loss, damage, or injury" (The Macquarie Dictionary Federation Edition). If an interest is conferred "to the detriment" of the beneficial interest or potential beneficial interest "of any person", it must cause harm, loss or damage to the interest.

1. The plaintiffs submitted that the observations in MSP Nominees Pty Ltd v Commissioner of Stamps (SA) [1999] HCA 51; (1999) 198 CLR 494 are apt in the present circumstances. The question for the Court in that case was whether the redemption of a unit in a unit trust constituted a "transfer" within the meaning of the Stamp Duties Act 1923 (SA), where "transfer" was defined to include "surrender or renounce a beneficial interest or potential beneficial interest in, or in relation to, property". The Court held that to redeem for value was not to "surrender" or "renounce". In relation to the term "surrender", the Court said that the "essential characteristic" of surrendering was "the enlargement of one interest by absorption or 'drowning' of the other. This is of particular significance where the statutory context is directed to transfers and conveyances and, in particular, to the passing of value without reciprocal consideration": at 509 [33].

1. The plaintiffs submitted that neither the PT Transfer nor the CCM Transfer could be characterised as schemes for the conferring of an interest "to the detriment of" the beneficial interest or potential beneficial interest of any person. The plaintiffs made the following points in respect of the PT Transfer:

The beneficiaries of the relevant trust, prior to and after the transfer, were unchanged and so there was no detriment to their beneficial interest;

CCMN1 was granted a release and indemnity in respect of its liabilities as trustee and so suffered no detriment to any beneficial interest it held in the Property Trust as trustee; and

The previous beneficial owner of the Property Trust was CCMH Trust. It no longer had that interest. However, its beneficial interest in the Property Trust was irrelevant, because it was not an interest held under the relevant trust which underwent a change of trustee, and, in any event, CCMH Trust received valuable consideration for the disposal of its ownership interest.

1. Accordingly the plaintiff submitted that the PT Transfer is exempt from duty under s 163ZB(1)(i) of the Duties Act.

1. The plaintiffs made the following points in respect of the CCM Transfer:

The beneficiaries of the relevant trust, prior to and after the transfer, were unchanged. Accordingly, there has been no detriment to their beneficial interest.

CCMH, the retiring trustee, had a beneficial interest in CCM only to the extent of any unsatisfied right of indemnity in respect of its liabilities as trustee. However, it suffered no detriment to that interest because, under the relevant Deed of Resignation and Appointment of Trustee, CCMH was released of its liabilities as trustee and granted an indemnity by the new trustee and the unitholders of the Company Trust.

CCMH also previously had a beneficial ownership interest in CCM. It no longer has that interest. However, its beneficial interest in CCM as owner was irrelevant, because it was not an interest held under the relevant trust that underwent a change of trustee. Indeed, at the time CCMH held the interest, the CCM shares were not trust property of any kind.

In any event, CCMH received valuable consideration for the disposal of its ownership interest.

1. Accordingly, the plaintiff submitted that the CCM Transfer was liable to duty of $10 under s 54(3) of the Duties Act.

1. The plaintiffs accept that, if exempt, the purchaser entities were able to acquire ownership of a land rich landholder without paying land rich duty. It was submitted that, although this may appear anomalous, it is the result of the proper construction of the statutory provisions.

1. The Chief Commissioner submitted that, if one takes the alternative, broader approach, determining "detriment" requires the identification of, and a comparison of, the extent and tangibility of the beneficial interest (or potential beneficial interest) of any person before and after an interest in the trust property is conferred on any other person. It was submitted that one does not look at the value (in commercial or other terms) of the interest, but rather, its existence or otherwise as a matter of fact. It was submitted that an exemption of this kind cannot depend on a calculation exercise to determine whether beneficiaries are sufficiently protected in relation to transactions conducted by their trustees. It was submitted that the statutory exemption for duty is not some form of fiduciary safeguard for beneficiaries. It was also submitted that, if the plaintiffs' approach is correct, it is difficult to conceive of any transfer of dutiable property that could not be fitted into the concession under s 54(3), provided the vendor agreed to structure the sale via a new trust mechanism.

1. The "detriment" identified by the Chief Commissioner was that there had been a "100% loss in the beneficial interest in the units" replaced with an amount of cash "which is entirely different property and not the trust property the Vendor Entity initially held".

1. If the legislature intended that the instrument transferring dutiable property as a consequence of a change in trustee would only be stamped at the concessional rate under s 54(3) if the trust property did not change its character (for instance, from rights to earn revenue from the operation of the tollway to an amount equivalent to the present value of such revenue) then it would have been quite simple for it to prohibit such a change. For one thing, it could have introduced the word "solely" before the expression "as a consequence of the retirement of the trustee". It could have also introduced a provision that any transfer that changed the character of the trust property could not qualify for the concession.

1. I am of the view that the Chief Commissioner's approach should not be accepted. If such an intention is to be reflected in the legislation, it will need amendment. However, as presently enacted, both the Chief Commissioner and the Court must give consideration to all relevant circumstances in deciding whether the relevant transfer is not part of the scheme for conferring an interest to the detriment of the beneficial interest or potential beneficial interest of any person. It is inappropriate to limit that consideration to only part of the scheme.

1. If, notwithstanding the transferring away of the trust property, the scheme were obviously to the enhancement of the beneficial interest or potential beneficial interest of any person, it is difficult to comprehend how one could not be satisfied that the transfer was not part of the scheme for the conferring of an interest to the detriment of the requisite interests of those persons under s 54(3)(c).

1. I am not satisfied that it is correct to assume harm, loss and/or damage has occurred merely because the trust property is transferred away. In assessing whether there is harm, loss or damage, it is necessary to weigh up whether the purpose of the scheme was to confer an interest to the detriment of the beneficial interests or potential beneficial interests in the trust property of any person. That seems to me to require an assessment of the totality of the scheme rather than only part of it. To exclude consideration of the money that was received when the trust property was transferred away is to exclude consideration of an integral part of the scheme.

1. I am of the view that it is permissible to take into account the amount of consideration paid in the transfer.

1. In this regard the Chief Commissioner claimed that the $30 million deposit "creates a problem" for the plaintiffs. It was submitted that the documents created in late September 2007 to give effect to the structure relied upon by the plaintiffs do not properly account for the $30 million. Although the plaintiffs relied upon a "Deposit Direction Letter", the Chief Commissioner claimed that it was "flawed". It was contended that none of the parties to that Letter were parties to the Unit Subscription Deed Poll.

1. In the Supplementary Submission of 24 May 2013, the Chief Commissioner submitted that although valuable consideration may have been received, the transaction was not at "market value" because the $30 million did not go to CCMN1 or the unit holders in the CCMH Trust, but to a different vendor entity. It was contended therefore that the plaintiffs cannot establish that CCMN1 or the unit holders received all the consideration. Thus it was said they cannot prove that they received the market value for the transaction and cannot succeed on their "no commercial detriment argument".

1. The Deposit Direction Letter was a direction from the investors to CCMN1 and CrossCity Motorway Holdings Pty Limited directing that the deposit be applied to the Property Units Subscription Amount, as defined in the Implementation Deed, being a component of the subscription amount. They were the two entities in favour of which the Unit Subscription Deed Poll was made. The release of the deposit was further governed by clause 2.2 of the Implementation Deed. On completion, the deposit was to be released to the owners in accordance with their "Relevant Proportion".

1. The plaintiffs dealt with these submissions in their Supplementary Submissions in response dated 28 May 2013. The plaintiffs submitted that, if the Chief Commissioner is suggesting that the investors lacked the capacity to direct that the deposit be applied as directed in the Deposit Direction Letter, such submission must be rejected, given the terms of the Implementation Deed. By cl 5.1 of the Implementation Deed the Investors agreed to contribute or procure the contribution of the Subscription Amount (less the Deposit) and that the deposit be applied as directed by the Investors. It was submitted that it is therefore apparent from the evidence that, contrary to the Chief Commissioner's submission, CCM Holdings Pty Limited and CCMN1 did receive full market value consideration, including the $30 million deposit. I agree.

1. Detriment may take many forms. It may be a diminution in value of a particular interest. It could be the introduction of obstacles to the beneficiaries' enjoyment or access to their interests in a timely manner. It could be the appointment of a trustee who is perceived to lack support for particular beneficiaries. The only issue raised by the Chief Commissioner in respect of detriment is that the persons with a beneficial interest or potential beneficial interest in the trust property lost the trust property because it was sold. I do not accept that it is appropriate to describe that transaction as a "loss". The receipt of market value for the trust property at a time of uncertainty of commercial viability could in fact be seen as an enhancement rather than a detriment to those interests. Consistently with what I have said above, if one is to assess a "loss", it is necessary to see whether there has been, as the plaintiffs put to the Chief Commissioner, a quid pro quo or a receipt of a benefit to counter or neutralise any loss.

1. I am satisfied that the relevant transfers were not part of a scheme for the conferring of interests in relation to the trust property on a new trustee "to the detriment" of the beneficial interest or potential beneficial interest of any person.

1. I am satisfied that duty of $10 is chargeable under s 54(3) of the Duties Act in respect of the CCM Transfer.

1. I am satisfied that the PT Transfer is exempt under s 163ZB(1)(i) of the Duties Act.

1. Having reached this conclusion, it is unnecessary to consider the remaining issues of penalty and interest.

Conclusion

1. In the Trust Proceedings, the Chief Commissioner's assessment of duty of $36,285,490 plus penalty tax of $5,442,823.50 (following partial remission on objection) and interest on the Property Trust Transfer is revoked.

1. In the Company proceedings, the Chief Commissioner's assessment of duty of $20,431.20 plus interest on the CCM Transfer is revoked.

1. In place of each of the assessments by the Chief Commissioner it is appropriate that the Court make assessments consistently with these findings. I will hear the parties on the appropriate orders in relation to these exemptions.

1. If the parties are unable to agree on a costs order I will hear argument on the next occasion when it is listed for the filing of Short Minutes of Order reflecting these reasons. Such listing should be arranged with my Associate.

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SCHEDULE

Amendments

14 August 2013 - Counsel added

Decision last updated: 14 August 2013