Chief Commissioner of State Revenue v Centro (CPL) Limited

The Chief Commissioner of State Revenue appealed to the Court of Appeal of New South Wales against a decision of Gzell J concerning the assessment of duty payable on a contract for the sale of a freehold interest. The dispute arose from the Chief Commissioner's assessment of duty on the sale of property, where the vendor had granted a concurrent lease for 300 years at a nominal rental. The taxpayer, Centro (CPL) Limited, argued that the grant of this concurrent lease reduced the dutiable value of the property. The Chief Commissioner, however, was not satisfied that the lease was not granted as part of an arrangement or scheme to reduce duty.

The central legal issues before the Court of Appeal were whether the grant of the concurrent lease had the effect of reducing the dutiable value of the property for the purposes of section 24(1) of the Duties Act 1997 (NSW), and whether the Chief Commissioner had correctly concluded that the lease was granted as part of an arrangement or scheme to reduce duty.

The Court of Appeal, comprising Giles JA, Macfarlan JA, and Sackville AJA, allowed the appeal. The Court reasoned that the transaction, viewed as a whole, involved the sale of the freehold interest subject to the concurrent lease. The dutiable value was to be determined by reference to the consideration for the sale of the freehold interest, taking into account the encumbrance of the concurrent lease. The Court found that the Chief Commissioner was correct in his assessment that the concurrent lease was granted as part of an arrangement or scheme to reduce the duty otherwise payable.

Consequently, the Court of Appeal set aside the orders made by Gzell J and dismissed Centro's summons. Centro was ordered to pay the Chief Commissioner's costs of both the proceedings at first instance and the appeal.