Commissioner of State Revenue v Lend Lease Development Pty Ltd; Commissioner of State Revenue v Lend Lease IMT 2 (HP) Pty Ltd; Commissioner of State Revenue v Lend Lease Real Estate Investments Limited

[2014] HCATrans 242

[2014] HCATrans 242

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M74 ‑ M79 of 2014

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Appellant

and

LEND LEASE DEVELOPMENT PTY LTD

Respondent

Office of the Registry
  Melbourne  No M80 of 2014

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Appellant

and

LEND LEASE IMT 2 (HP) PTY LTD

Respondent

Office of the Registry
  Melbourne  No M81 of 2014

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Appellant

and

LEND LEASE REAL ESTATE INVESTMENTS LIMITED

Respondent

FRENCH CJ
HAYNE J
KIEFEL J
BELL J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 4 NOVEMBER 2014, AT 2.15 PM

Copyright in the High Court of Australia

____________________

MR P.H. SOLOMON, QC:   If your Honours please, with MR D.C MORGAN and MS C.G. BUTTON I appear for the appellant.  (instructed by Solicitor for the Commissioner of State Revenue)

MR N.J. YOUNG, QC:   If the Court pleases, I appear for the respondent in each matter with MR C.J. HORAN.  (instructed by Herbert Smith Freehills)

FRENCH CJ:   Yes, Mr Solomon.

MR SOLOMON:   Do your Honours have the short outline of propositions?

FRENCH CJ:   Yes, Mr Solomon.

MR SOLOMON:   Thank you, your Honours.  Your Honours, the important issue raised by these appeals involves the approach to identifying consideration for the transfer of land in a complex development project under a transaction‑based duties regime, and I want to begin by taking your Honours to some of the terms of the contractual arrangement embodied in the 2001 Development Agreement.  It is in appeal book 1 commencing at page 93.  Would your Honours turn, please, to page 102 of the appeal book?  As your Honours will there see, the agreement was made in May 2001.  Recital C records that:

The Developer has submitted a Bid Proposal to the Authority for the development of the Land.

In recital D:

The Authority has agreed to sell the Developer the Land -

In recital E:

The Authority and the Developer have agreed to the terms and conditions which will regulate the use and development of the Land.

If your Honours would then turn to appeal book 124, your Honours will there notice the objectives acknowledged and agreed between the Authority and the developer and your Honours will in particular see at clause 2(d) the objectives for the development of the precinct and the matters there set out relating to the development.  Your Honours will see a definition of the term “Developer’s Project” used in the objectives at page 107. 

Developer’s Project means the planning, design, development, construction and commissioning of all Stages and the Works and all off‑site facilities as described in the Bid Proposal -

The bid proposal is defined at page 104.  It is not produced as part of the case and so your Honours are not assisted on whether it would or might have assisted on understanding the commercial arrangements.  It is referred to in the schedules to this agreement.  If your Honours would next go, please, to clause ‑ ‑ ‑

KIEFEL J:   Sorry, where does “Developer’s Project” appear in the ‑ ‑ ‑

MR SOLOMON:   I am sorry, your Honour, it is at page 107.

KIEFEL J:   Yes, I saw that but ‑ ‑ ‑

MR SOLOMON:   I am sorry, in 2(c).

KIEFEL J:   Yes, 2(c).  Yes, thank you.

MR SOLOMON:   Clause 13.1 is at page 165.  It is the general construction obligation.  Your Honours will see that the developer – I will call it Lend Lease going forward – must construct and develop the developer’s project and it must do so in accordance with the agreement to ensure it accords with the objectives in a timely manner so as to achieve each milestone date - and I will come back to that – the various other matters connected with the construction and the development of the substantial project envisaged by this document.  Then if your Honours would turn, please, to 126.  Clause 4.1, as your Honours will see, provides that:

the Authority and the Developer must enter into and settle a Land Sale Contract for the purchase by the Developer of each Stage for the Stage Land Payment on or before the Stage Release Date -

I need to show your Honours some of these defined terms.  Could I first of all show your Honours “Land Sale Contract” which is at 113?  It is defined to mean:

any contract of sale between the Authority and the Developer for a Stage . . . substantially in the form set out in Schedule S -

In a little while I will take your Honours to one of the land sale contracts.  As your Honours will have seen, the case of our learned friends is that the price specified in the respective land sale contracts – where that is greater than the valuation – is the consideration, the subject of section 20(1)(a) of the Duties Act.  I will come back to that. 

Stage release dates at 119 - I need to show your Honours that.  It is in relation to each stage the dates specified in the staging plan as the date for the release of the stage pursuant to clause 4.1 and so if your Honours would go back just for a moment to clause 4.1 ‑ ‑ ‑

HAYNE J:   What page?

MR SOLOMON:   I am sorry, your Honour, 126.  Clause 4.1 is the clause by which Lend Lease obtained the contractual right to call on VicUrban to transfer title.  I will come back to that in due course.  Can I next take your Honours to clause ‑ ‑ ‑

HAYNE J:   A title to what - title to a stage, title to it all, title to what?

MR SOLOMON:   Title to each stage, your Honour.

HAYNE J:   Which, in effect, means title to it all, does it not, by successive arrangements subject to various conditions and the like, but as recital D has it, there is an agreement to sell the whole.

MR SOLOMON:   There is, and, as your Honour said, successively.  There are reasons for that, which I will develop over the afternoon.  Could your Honours next turn to 130?  Clause 4.7 sets out the payment mechanism.  Your Honours will see in (a) that Lend Lease must, on or before each actual stage release date – let me pause there and show your Honours that definition, which is important.  It is at 102.  As your Honours will see at 102, it is the date the developer takes title to the stage.  So that on or before taking title, Lend Lease must pay VicUrban in respect of each stage these sums:

(A)the Stage Land Payment;

(B)on account of the Project External Infrastructure Contribution, the Minimum External Infrastructure Contribution;

(C)on account of the Project Gasworks Site Remediation Contribution, the Minimum Gasworks Site Remediation Contribution;

(D)the Stage Integrated Public Art Contribution; and

(E)any other amounts due and payable by the Developer to the Authority under this Agreement.

I want to explain that a little further to your Honours.  Would your Honours go please to 218, to Schedule C.  Your Honours will see these things in the table at 218, first of all that for each stage, and as Justice Hayne observed, in combination for all of the stages, there are three payments to be made before title is transferred:  the stage land payment, the external infrastructure contribution and the minimum gasworks site remediation contribution. 

Secondly, your Honours will notice that at the time of this agreement the projected gross revenue on sale for all of the stages was a little over $1.8 billion, and your Honours will further see that the stage land payment in total was expected to be $49.7 million, that the infrastructure contribution was $23.6 million and the gasworks remediation contribution was $27 million and they are in proportion to each other, by which I mean the stage land payment in total and for each stage is 2.74 per cent of the projected gross revenue for that stage.

So if your Honours are keen enough, $1.811 billion divided by 49.7 - I am sure I have got my maths wrong there is – I know, I should not have started, your Honour Justice Hayne.

HAYNE J:   Never let counsel anywhere near a calculator, Mr Solomon.

MR SOLOMON:   I have told my team I am good at maths, your Honour.  So 2.74 per cent for the stage land payment, 1.35 per cent for the infrastructure contribution and 1.55 per cent for the remediation contribution and that is the same for all of the stages and for each stage.  So I want to stay with these figures for a moment and show your Honours some other things. 

If your Honours would, just for the moment, focus on column C – that is the infrastructure contribution - the term there used – and your Honours will have seen it in clause 4.7 – is “Minimum External Infrastructure Contribution”.  If your Honours go to page 115, your Honours will see “Minimum External Infrastructure Contribution”.  It is:

the Developer’s minimum contribution to the cost of the External Infrastructure for each Stage specified in Column C. . . varied and escalated in accordance with clauses 1.3 and 1.4 –

So if I could take your Honours back to 218, your Honours will see the total is $23.6 million and there is a variation clause in 1.3 at page 219 – I will come back to in 30 seconds – and there is an escalation clause at 1.4.  Let me come back to the variation clause, 1.3 – top of 219:

If the project gross revenue on sale for a Stage –

project gross revenue -

differs from the base amount set out in Column E for that Stage . . . each of the base amounts set out in Columns B, C and D of clause 1.2 for all Future Stages . . . will be adjusted . . . 

So your Honours will see – and this will be a pattern your Honours will notice - the linking between the amounts in columns B, C and D respectively insofar as the variation clause is concerned.  Returning for a moment to column C on page 218, that sum by clause 4.7 is paid on account of the project external infrastructure contribution.  Let me show your Honours that definition.  It is at 116:

the Developer’s contribution to the cost of the External Infrastructure to a maximum of $23.6 million as varied and escalated from time to time –

So there is a cap and our learned friends rely on that feature of it.  I will show you in a moment there is an equivalent cap for the remediation contribution.  It is plain reading this document that VicUrban would incur or had incurred substantial Schedule U infrastructure costs, but there is no material to identify, at this time, what they were expected to be.  There is no evidence on how the cap was set and, in any event, it was not reached for any of the seven parcels of land, the subject of these appeals. 

I will show your Honours, for completeness, the infrastructure clause.  It is at 153.  As far as we can tell, the obligation is comprised in clause 11.1 and at subparagraph (a):

The Authority –

VicUrban ‑

warrants that certain elements of External Infrastructure are installed and completed substantially as set out in Schedule U.

Briefly, next turning to Column D, back at 218, and I will do this more quickly, there was a need in the Docklands area to remediate an historic gasworks site.  There is an equivalent definition for the “Minimum Gasworks Site Remediation Contribution” and again it is set out in clause 4.7.  The payment to be made before title is transferred is said to be:

on account of the Project Gasworks Site Remediation Contribution –

and again it is a capped amount and there is no material on what VicUrban’s expected remediation expenditure would be and there was no evidence either for external infrastructure or remediation on what sum was necessary for it to spend to discharge its statutory obligations.  More generally, just finishing with appeal book 218, there is no material on the method of calculation of any of the total base amounts.  No material on $49.7 million or $23.6 million or $27 million. 

Finally, on this issue, would your Honours go to appeal book 214.  Your Honours will see that this is a recitation of milestone events and your Honours will notice at each of event 3, event 7 and event 9, the co‑joining, the linking of these three items of expenditure.  Five per cent expected in the first two and a half years, nearly half within 66 months and about two thirds within 90 months.

I want to then return to clause 4.7, page 130.  As I told your Honours a little while ago, before title was to pass the developer was obliged to pay the Authority a stage land payment, the proportionate subject to a cap, project external infrastructure contribution, the proportionate gasworks site remediation contribution, also proportionate but I have not taken your Honours to it, the integrated public art contribution and other amounts due and payable.

The next feature of the payment clause is what happens next.  Your Honours will see in (a)(ii) that - this is page 131 - “on or before the Initial Reconciliation Date” the developer needs to “distribute the amount the Actual Gross Proceeds of Sale”.  So let me first of all show your Honours what the initial reconciliation date is.  It is at page 111, right at the foot of the page.  It is “the date 28 days after the first receipt of any of the Actual Gross Proceeds of Sale”, and if your Honours go to 102, the “Actual Gross Proceeds of Sale” is defined to mean:

the total of all monies and the market value of non‑monetary consideration received in respect of the sale or other Dealing –

So that is like a sale - it is at 106 –

with a stage –

So 28 days after that clause 4.7(a)(ii) kicks in.  Returning to 131 - at that time, as your Honours will see at (A), the developer must pay to the Authority:

the sum by which 2.74% of Actual Gross Proceeds of Sale –

the actual sale price on the realised development –

exceeds the Stage Land Payment –

and -

on account of Project External Infrastructure Contribution, the sum by which 1.35% of Actual Gross Proceeds of Sale exceeds the Minimum External Infrastructure Contribution –

previously paid and similarly for the remediation contribution.  Three points follow we submit.  The first is that reasonably analysed the payments under 4.7(a)(i) are really on account.  The substance is that subject to two caps, here not reached, 5.64 per cent of the actual gross proceeds of sale are paid by the developer to the Authority within 28 days of receipt of actual moneys on sale or other dealings. 

Second, and it is not especially important, it is unconnected, at least formally, to any notion of profit.  The true deal is that 5.64 per cent of proceeds, subject to two caps, are paid to the statutory authority.  Thirdly, further to the stage land payment, that is, the first payment in 4.7(a)(i) – that is our learned friend’s case – further to that, there are possible ongoing payments under 4.7(b), (c) and (d) at subsequent points in time as the actuality of sales becomes more and more known for each stage.

Can I immediately notice two features in the judgment of the Court of Appeal?  That is appeal book 7, 2883.  If your Honours go to paragraph 75 of the judgment of Justice Tate and turn the page, your Honours will see that her Honour records – I am near the top of 2884:

Thus, the agreed price for the land included a component for the development potential of the land adjusted by reference to revised estimates of the projected gross revenue on sale for that land.  That is, the parties fixed the price of the land by reference to its development potential but only within the confines of the extent to which they agreed.  This point was emphasised by LLD on the appeals.

That is true, but our point is that there was similarity in treatment of three amounts – the stage land payment, the external infrastructure contribution and the gasworks remediation contribution, and that linking, that equivalence, is not adverted to in paragraph 75.  So, as your Honours have now seen, the treatment of those amounts was conjoined by this agreement; they were yoked together by this agreement.  They rose and fell together by the agreement.

Secondly, while your Honours have the judgment, could I briefly notice in 250 one further point to deal with it now?  It is page 2970, 250:

Thus, as emphasised by LLD, contrary to the understanding of the judge and the Commissioner, the Stage Land Payment was not calculated as a percentage share of the actual proceeds of sale.  The Final Land Payment was thus not the delivery of those proceeds to VicUrban viewed as the discharge of the obligation implicit in the Stage Land Payment, or a ‘top up’.

Again, that is true and it is still relied upon by our learned friends in this Court, but as a point it is unreasonably narrow.  Our learned friends are correct that the “Stage Land Payment” is a defined term.  It is the clause 4.7(a)(i) first payment.  But, as your Honours have seen, once sales commence there is a further payment and ongoing further payments to reflect the actuality of sale and the reference by her Honour here to the stage land payment reflects more generally the acceptance by the Court of Appeal of the case of our learned friends, which was to conclude that it was the consideration for each transfer, and I will come back to that when I deal with the judgment later this afternoon.

HAYNE J:   The distinctions that are identified in paragraph 250 find their roots where?  Are they distinctions finding a root in the agreement?  Are they distinctions finding their root in some understanding of what is consideration for the transfer?  Yes, it is referable to the way in which the case was argued; that I understand, but what deeper root does it have?

MR SOLOMON:   It is the necessary consequence of the case at all times pursued by the developer that the consideration for the transfer is and is precisely the stage land payment and it therefore must follow that every other payment referred to in clause 4.7 is not consideration for the transfer.

HAYNE J:   Now, if that is the argument with which we are to deal ultimately, what relevance, let alone ultimate significance, does an understanding of the method of computation of the various payments have?

MR SOLOMON:   It is a place we will invite your Honours to turn to identify on the part of the vendor what in substance – and I use that term cautiously – was the consideration for the transfer for each stage.  That is, in order to answer that question, your Honours need to look somewhere, and our learned friends invite your Honours to look at each land sale contract and we invite your Honours to look at the collocation of agreements, the totality of them, not as agreements, but as the substratum within which the evaluation of consideration for the transfer is to occur.

HAYNE J:   But the transfer takes place pursuant to an agreement between the parties.  The question becomes, at least in part, where do I find the agreement which yields the transfer and payments connected with the transfer, if that is a sufficiently neutral term, does it not?

MR SOLOMON:   We do not cavil that one needs to look to agreements because no one is pointing to anything else, but as I will seek to demonstrate shortly, the legislative requirement is to identify something else, and in fact in this case your Honours, we submit, will need to look at each of the agreements and by doing so conclude where best to source on the part of the vendor the consideration for the transfer, and we are inviting your Honours to pay specific regard to the way in which the payment arrangements were identified in clause 4.7 in this initial agreement which we say embodies the transaction entered into.

FRENCH CJ:   So you direct our attention to the obligations rather than to the matters to which the payments related?

MR SOLOMON:   Well, yes, because clause 4.7, as I am submitting to your Honour, is relied upon by us as the developer’s obligation to make the series of payments set out therein.

FRENCH CJ:   The obligation is enough to fit into the notion of “for” - in consideration for the dutiable transaction.

MR SOLOMON:   We do not want to wed ourselves only to the word “for”, but lifting your Honour’s point to the totality of the phrase, yes.

BELL J:   When we go through that exercise, is it to come to a conclusion that is different to the conclusion that Justice Pagone arrived at when he went through the exercise?

MR SOLOMON:   No.

BELL J:   Thank you.

MR SOLOMON:   Although we do ask your Honours to focus not only on what the learned trial judge said, but on the further way in which we put the argument in this Court to your Honours, not resiling from what Justice Pagone did.  Justice Pagone’s judgment is the judgment that carefully and cautiously analyses each of the payments in controversy and the submission we make to your Honours is that your Honours will be singularly assisted by appreciating the mechanism within which payments were to occur, established in clause 4.7, which is why I have taken your Honours to it in some detail to start off this afternoon.

KIEFEL J:   Well, do you depart in any substantial way from his Honour’s findings as to the operation of the agreement, or is it just the emphasis that you are putting upon it?

MR SOLOMON:   Well, I think the answer to your Honour is that some of the matters detailed by Justice Tate, with respect, are criticisms that might have been open and so I want to reflect on what your Honour might connote by what his Honour did in respect of the agreement.  It is certainly the case that his Honour recognised as a feature of the agreement the circumstance in Schedule C, read with clause 4.7, of the conjoining of the series of payments to be made, and the circumstance that ultimately the payments were to come to a percentage of the actual gross proceeds of sale. 

In all of those important regards we rely upon Justice Pagone, but evaluating it or looking at it differently, we have taken your Honours to the relevant clause and the way it operates, and we invite your Honours to consider that to be relevant to the statutory inquiry.  Can I briefly turn to the 2006 development agreement?  Your Honours will need to go to appeal book 2.

HAYNE J:   Just before you do, is there any substantial difference in principle in the way in which the successive iterations of the development agreement operates?

MR SOLOMON:   No.  Indeed, I am going to spend 10 minutes developing some of the clauses to lead to that conclusion.  I will try to do it in five, your Honour.

BELL J:   It seemed to me – I may be wrong – that both Justice Pagone and Justice Tate approached the matter upon a view that for all relevant purposes one could view the agreement, the development agreement signed in May 2001 as informing the answers to the questions, in other words, that the variations did not materially affect the reasoning that each adopted.

MR SOLOMON:   We embrace that proposition.  In fact, Justice Tate is decidedly quiet on the subsequent agreements.  But I have noticed which way the wind is blowing on this.  I will stay with my submission that there is no structural ‑ ‑ ‑

HAYNE J:   You have not felt the wind yet, Mr Solomon, you have not felt the wind.

MR SOLOMON:   I have felt the wind on this issue, your Honour.  As a submission, there is no structural difference between the agreements that I need to make good.  Can I, as a reference – if your Honours want - no, I do need to do one thing.  Sorry, your Honour Justice Hayne.  Would your Honours go to appeal book 503.

FRENCH CJ:   Sorry, what page was that?

MR SOLOMON:   Page 503.

FRENCH CJ:   Thank you.

MR SOLOMON:   Your Honours are all no doubt agile at statistics.  These are complex clauses, probably to resolve the dispute.  Your Honours will not need to work through them with specificity.  For our part, your Honours will see that the co‑joining of what here is the “Base Land Payment”, the “Base External Infrastructure Contribution” and the “Base Gasworks Site Remediate Contribution” are linked in proportion.  Your Honours will see that in (A)(1), (11) and (111).  You will see it in (C)(1), (11) and (111).  You will see it in (B).  If your Honours want a way to cheat to see this described in appeal book 1, at page 75 and page 78 the deponent summarises the operation of the clause.

FRENCH CJ:   What does the developer have to pay before he gets the land?

MR SOLOMON:   The developer has to pay the stage land payment, the sum on account of the external infrastructure contribution, the sum on account of the remediation contribution, the sum in respect of the art works and, where relevant, other sums as specified in advance of the transfer of title to it.

KEANE J:   Upon making those payments it becomes entitled to demand a transfer?

MR SOLOMON:   Yes.  That follows from the sequencing of terms in 4.1 and 4.7 to which I have previously taken your Honour, but the answer to your Honour’s question is yes.

FRENCH CJ:   And payments it has to make after transfer?

MR SOLOMON:   It has to make what we call, but our learned friends and Justice Tate criticise us, as top‑up payments, but further payments specified in clause 4.7(a)(ii), to ensure that for each of those three components a particular proportion of the gross proceeds of sale now informed by the sales is known and there are ongoing obligations as more sales occur, set out in 4.7(b), (c) and (d), so that as the actual picture becomes better and better known, there can be precision of payments for respectively 2.74 per cent, 1.35 per cent and 1.55 per cent of the three components I have been discussing with your Honours.

KEANE J:   Is the obligation to make those payments, or is the performance of the obligation to make those payments something that is required before further stages are required to be transferred?

MR SOLOMON:   No, I do not think so.  It is an obligation imposed by clause 4.7 on parties who have an ongoing and dynamic relationship of the type described in the agreement.  I do not think there is a clause anywhere that links them to a further stage.  If I am wrong, someone overnight will tell me I am wrong, but I think that is the right answer.

HAYNE J:   I am surprised that there is not a default clause.  Anyway, we can come back to that unusual commercial agreement that did not have a default clause.

MR SOLOMON:   Yes, it would be odd if they could keep demanding further land having not paid for earlier land, but I cannot bring to mind the clause.  I will rustle it up for your Honour Justice Keane.  I want to now, as I said I would, take your Honours to one of the land sale contracts.  Would your Honours go to appeal book 3, 1232?  I am sorry - I want to do something before doing that.  Would your Honours keep that ‑ ‑ ‑

HAYNE J:   Good luck.

MR SOLOMON:   Would your Honours choose whether or not to keep that and get appeal book 6?

FRENCH CJ:   We do not have electronic fingers.

HAYNE J:   Some of us are relying on one screen, Mr Solomon.

MR SOLOMON:   If your Honours please.  Your Honour’s associate will show your Honour how to do a split screen.

HAYNE J:   Good luck.

MR SOLOMON:   If not this one, the immediately next one, your Honour.  There are three or four stage deeds relevant to – using the term at a high level of generality – the transaction, and I will need to say something more about them in a little while.  But for the moment I want to show you the last stage deed, that is, the seventh parcel of land which is chronologically the last one for the subject of these appeals.  I call it V5 Convesso.

I want to show your Honours this.  Would your Honours go to appeal book 2479?  As I said, for three of the parcels there are stage deeds with clauses like this.  Your Honours will see in clause 2.1 first of all that there is an agreed amount for public art.  This is all in advance of title passing.  Putting that point more accurately, this agreement is entered into before title passes. 

Then your Honours will see at 2.2(a) that for this stage only - but as I have said there are two other agreements that do similar things – the clauses of the development agreement at (a)(ii), (a)(iii), that is, all of the ones after title passes, do not apply.  There is a projected gross revenue identified and there are sums certain for each of the stage land payment, the external infrastructure contribution, the gasworks site remediation contribution, and the payment obligations in terms of timing are set out in 2.3. 

There is no evidence on this – and it is not a finding we ask your Honours to make – but the way in which the agreement is structured does sequence payments as a whole and in respect of each stage, and for V5 Convesso that is reflected in clause 2.3.  If your Honours then go – and this is really what I want to show your Honours – to 2.3(f) on 2480, 4.7(d) is the last payment clause.  It is when everything that can be known is known.  So it is the last reconciliation payment reflecting actualities. 

Would your Honours notice (i)(E).  There is a formula for what the final payment is, and it is digestible.  It is the well‑recognised percentages of 2.74, 1.35 and 1.55 multiplied by the actual proceeds plus the market value determined in accord with clause 2.3(g) and then subtracting each of the stage land payment, the base external infrastructure contribution and the base gasworks site remediation contribution.

As your Honours know, it is SLP in that equation which is the case of our learned friends as to the consideration for the transfer.  For those who kept appeal book 3 I now want to go back to 1232.  This is the first parcel, Dock 5, and this contract of sale - this is the relevant contract of sale.  Your Honours will notice the price on page 1233, and if you could relevantly highlight that I will show you how that was quantified in a few moments.  Your Honours will see encumbrances at 1234, and notwithstanding a diversion below, no one contends that these contributions are encumbrances now.  Your Honours will see at 1240 clause 8.2.  This starts to answer Justice Keane’s question, too:

The Purchaser acknowledges that a Material Default by the Purchaser under the Development Agreement will constitute a default under this contract.

So that in that respect and other respects they are knitted together.  If your Honours go to 1244 your Honours will see at 19(a), “On the Day of Sale”, that is the date of this contract, not the date of transfer, Lend Lease must pay some sums.  Then on the due date, which if you track through the definitions is when title passes, must pay the further sums there set out.  For completeness, in the 2006 development agreement, clause 4.7(A) recorded or acknowledged that the payments I have just shown your Honours as recorded replaced the development agreement payments.

HAYNE J:   Well, so much appears from 1245, subparagraph (d), does it not, as well?

MR SOLOMON:   Yes, and it is plain without either of the clauses saying that these being the last in time of the governing obligations I suppose.  I just want to show your Honours for completeness, although this does not repeat for other parcels, 1273.  If your Honours go to 1281 clause 10 there is really the final word on payments for Dock 5, but I do not need to take your Honours to the detail of it.

I said I would show your Honours how the price was calculated.  Would your Honours go to appeal book 4, page 1352.  This is a letter passing from Lend Lease’s solicitors to the Commissioner in the assessment process and your Honours will see halfway down that the contract price is described as being:

90% of 2.74% of the anticipated gross proceeds of sale of the Dock 5 development.

For completeness on showing your Honours how this all looks in the many appeal books you have, can I take you to one assessment and one objection.  I thought I would go to Mosaic which is the second parcel because Dock 5 is complicated in the assessment process.  So the Mosaic assessment is in appeal book 4, page 1455 and if your Honours turn to 1458, your Honours will see that there was an assessment referable to the stage land payment and then in proportion to the external infrastructure, to the gasworks and to the art contributions and then GST, some penalty and some interest.  The taxpayer has paid duty referable, depending on which was greater to the land sale price or the various valuations and by reason of the orders made in the Court of Appeal the Commissioner has lost on every other payment.

If, very quickly, I can show you the relevant parts of the objection, it is at 1461, they are summarised near the foot of page 1 as being threefold, not relating to the land, not relating to construction done on the land, not in respect of dutiable property and relating to obligations under the development agreement.  Each of those matters is then developed over the next two pages.  Some of the matters there set out plainly enough are no longer pressed, but I do not want to stay and deal with the objection this afternoon.

Can I take your Honours next to the relevant legislation?  Duties levied under the Duties Act, section 11(1) provides that a liability for duty arises when a dutiable transaction occurs.  Section 7(1) records, in subparagraph (a), that the chapter charges duty on a transfer of dutiable property, and then to round that off, in section 7(2) such a transfer is a dutiable transaction - 11, 7(1)(a) and 7(2).

Next, under section 10, dutiable property includes an interest in land which is an estate in fee simple.  So, uncontroversially, the transfer of each stage was a dutiable transaction attracting a liability to pay duty.  The relevant matter on what is uncontroversial is that the identified property is the estate in fee simple.

Section 18 provides that duty is charged on the dutiable value of the dutiable property.  This case concerns that statutory definition.  It is in section 20, as your Honours know.  Although I will come back and say some things in a little while about subparagraph (b), we are only concerned in these appeals, unless our learned friends can derive context or other assistance from (b), with (a):

the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non‑monetary consideration) –

There is, relevantly for that, a carve‑out in section 21(3).  Our learned friends say you should be cautious about that, so let me merely note it.  Two more matters.  Would your Honours turn to section 25:

If a dutiable transaction relates to dutiable property and property that is not dutiable property –

there needs to be a relevant allocation.  But that is not us.  All of the property transferred, the subject of all of these appeals, involves dutiable property.  We all acknowledge that there are some residual instruments‑based provisions.  Your Honours will see some sections at 261 and 265 and 267 and scattered throughout the Act which in the main deal with carryover provisions still applicable and, in any event, on our submission, do not usefully inform any of the matters in controversy before your Honours.  Can I go next to Dick Smith?  There is a majority; there is a dissent.  I will focus on the majority.  Would your Honours go to paragraph 54, please?

FRENCH CJ:   What page?

MR SOLOMON:   Page 513.  The majority, plainly enough, took care in construing the operation of the agreement and we rely in particular on the last sentence in 54 where, having set out what would be a misstatement, the majority exhorted that:

It is necessary to look further into the provisions of the Agreement.

Then, in doing that, at 57 noticed that:

One effect of cl 7.8 was that the Vendors were obliged to complete . . . only if the Purchaser had performed or was ready, willing and able to perform the funding obligation imposed by cl 7.7.

At 59 on the facts concluded that the purchaser paid a little over $114 million comprising the two payments there set out.  Would your Honours next go to paragraph 71?  As your Honours know, Justice Dixon in Archibald Howie either derived from earlier authority or, on one view, just presented as a proposition, that consideration has the wider conveyancing meaning in this form of legislation. 

We submit to your Honours that your Honours will not get much assistance from the facts or any longer the doctrine in Archibald Howie or in Davis Investments and that for our purposes the relevant test and the way in which to apply it can be seen, and conveniently, in Dick Smith.  At 72, the majority said that:

The criterion in the Act of consideration “for” the transaction . . . looks to what was received by the Vendors so as to move the transfers to the Purchaser as stipulated in the Agreement.

Then, there is application in the particular case at 73 and 74 and reading 75:

The consideration which moved the transfer by the Vendors to the Purchaser of the Shares . . . was the performance by the Purchaser of the several promises recorded in the Agreement in consequence of which the Vendors received the sum of $114,139,649.  It was only in return for that total sum . . . that the Vendors were willing to transfer to the Purchaser the bundle of rights which their shareholding in the Company represented.

I want to notice just three or four things while we are looking at Dick Smith.  If your Honours could go to our learned friend’s outline ‑ ‑ ‑

FRENCH CJ:   Their outline or their submissions?

MR SOLOMON:   Their submissions, I am sorry, your Honour.  Page 12, paragraph 28(b) – our learned friends say that in Dick Smith:

The critical fact was that there was a direct and rational link between the amount of the dividend and its funding by the purchaser, and the purchase price for the shares.  

That may be correct as far as it goes.  We are not suggesting there was not but that, reasonably analysing it, is not the way in which the majority identified how to determine what the consideration for the transfer was.  The majority do that in 71, 72 and 75 and apply it in 78.  There is a cleavage – a real distinction between the majority and the dissent on this issue.  The dissent does these things.  I want to take your Honours to three passages.  First of all, paragraph 14:

The Vendors caused the Company to declare a dividend –

I am paraphrasing a little -

The declaration of dividend created a debt . . . That liability existed at completion –

and then reading from the fourth sentence in at 14 - 

The respondent paid to the Vendors, by way of purchase price, the agreed price of the shares . . . minus the dividend . . . There is no reason to doubt that this reflected the value of the shares at completion.

That is one matter I want to notice.  Secondly, I want to notice at paragraph 26, in the dissent, the second sentence in 26:

The consideration for the dividend distributed by the Company to the First Vendor . . . was the amount subscribed for the share capital.  The First Vendor provided full consideration for that dividend in exactly the same way as the shareholders in Archibald Howie provided full consideration for the distribution in specie.

Thirdly, finally, paragraph 30:

The declaration and payment of the dividend by the Company to the Vendors was not the dutiable transaction.  It was a transaction that was envisaged, and permitted, by the agreement . . . but it was a transaction between the Vendors and the Company.

Then, without reading it, if your Honours would look at the remainder of the paragraph.  We want to propose by way of submission that a distinguishing feature between the majority on the one part and the dissent on the other is the manner in which the dissent, but not the majority, was minded to segment or carve up or divide up, in ways that we respectfully submit were artificial, the transaction in asking what the vendor received for the dutiable transaction or for the sale. 

I want, in that respect, next and immediately to turn to Bambro, which is very important for the purposes of evaluating where we join issue with Justice Tate in the Court of Appeal.  There are two points we want to make about Bambro, two submissions.  The first is that your Honours will see at the top of the headnote section 41 of the Stamp Duties Act:

“Every agreement for the sale or conveyance of any property –

and if your Honours go to 524, about halfway down, about point 5, Justice Sugerman says, at the end of the first full paragraph:

Everything turns upon the answer to the question:  What was the “property agreed to be sold or conveyed” within the meaning of s. 41(1)?

So that there is to be an identification of the property, and the submission of the taxpayer at about point 8 on the page, “Mr Mahoney”, in the last paragraph at the beginning:

Mr. Mahoney has submitted, on the other hand, that on the true construction of s. 41(1) and its application to the circumstances, the property agreed to be sold was the land and only the land – the land as it stood at the date of the agreement or, alternatively, the land viewed as at the date of the agreement as it would be under the terms of the agreement at the time at which it was thereby contemplated that it would be conveyed.

So, on this feature of the case, the identification of property, if your Honours would go to 528, your Honours will see at about point 8 or point 9 on the page “Secondly” ‑ I am going to go back and do the first in a little while – but:

Secondly, that in cases which fall within s. 41(1) of the Stamp Duties Act, the ascertainment of the ad valorem duty to be charged is to be by reference to the property agreed to be sold or conveyed regarded as that which, viewing the matter as at the date of the agreement, will be, under the terms of the agreement, the subject of conveyance at the time when, under the terms of the agreement, the conveyance is to be executed.

The consequence of that analysis, speaking of property, inevitably was to exclude construction.  Further, the identification of the consideration in Bambro therefore was straightforward.  It was for that property.  That is the first point we want to take from Bambro and rely upon. 

Now, I want to say one more thing.  We want to say that the identification of the property is, we suggest to your Honours, the opposite of this case, because what this case requires is to identify consideration in respect of the parcels of land severally transferred.  Secondly, would your Honours go to 527, point 5, halfway down?  I am going to read some passages from the sentence beginning “But in the classification”.  It is almost precisely halfway:

But in the classification of instruments for the purpose of determining whether they are dutiable or not, and, if dutiable, under what head they fall and whether the duty is ad valorem or fixed and what is its amount, all these questions are dependent upon the characters of the transactions which instruments embody, referred to in the Act as “matters”.  A single instrument –

This is quoting 17(1) –

“containing or relating to several distinct matters is to be separately and distinctly charged with duty in respect of each of such matters, as if each matter were expressed in a separate instrument”.

It is an allocation subsection.  It means that when there is to be relevantly duty at different rates, charged on different things, section 17(1) mandates the necessity to divide up matters and if I could just read to your Honours, I do not think you get it from the judgment, section 17(2):

An instrument made for more than one consideration is to be charged with duty in respect of each such consideration, according to the rate with which each is chargeable, as though each consideration were expressed in a separate instrument.

So, recognising those two features of the case, the conclusion then can be seen at the foot of 528 at the first point, about point 8 on the page:

First, that where there are both an agreement to sell land and an agreement by the vendor to build upon the land sold, the considerations being distinct and the building to commence only after conveyance of the land, these are distinct matters in respect of which duties are separately leviable of the appropriate kinds and amounts.

HAYNE J:   Relevantly what mattered was that sale or conveyance of land was ad valorem; building agreement was fixed amount, was it not?

MR SOLOMON:   Precisely, the application of the allocation point.

HAYNE J:   That is at the foot of 527.

MR SOLOMON:   Thank you, your Honour.  So, before turning to the judgment of Justice Tate, which is what I want to do next, I want to see if I can propose fairly neutrally framing the controversy.  We say that consideration for each of the transfers includes the disputed payments.  We succeed if your Honours are persuaded by any of them, but we say that it includes each and Justice Pagone so found.  Our learned friends propose that the consideration for each transfer is the price specified in each land sale contract and they focus obviously on the land sale contracts and the stage land payments set out therein, and I have taken your Honours to one of the contracts and shown your Honours how the quantification occurred. 

We wish respectfully to contend for five errors in the Court of Appeal and to do that I will need to get appeal book 7.  The first error for which we contend is that the Court of Appeal erred in determining that the trial judge fell into error beginning his analysis under the development agreement, and as a connected matter, undertaking a false instruments‑based approach by erroneously focusing on the land sale contracts affording them primacy, and concluding that the land sale contracts affected the dutiable transaction.

If your Honours want the proposition in writing, it is in the three‑page document handed up.  Would your Honours, as I seek to make that good, go first of all to paragraph 191 in Justice Tate’s judgment?  It is at appeal book 2938.  This is in answer to a submission by the Commissioner, and her Honour says, 2938, halfway down:

It is the Land Sale Contracts that are the instruments that effect the dutiable transaction.  This is not to say that it is only the express promises made in those instruments that necessarily provide the consideration –

If your Honours would note -

although this ought to be the starting point –

I will come back to that -

but, rather, that proper attention must be paid to the specificity they provide in the context of the totality of obligations assumed under the Development Agreement.  It would be wrong to lose sight of the fact that it is not the Development Agreement that brings about the transfer of the land.

So that is 191.  Then if your Honours would go to 218, so this is 2954:

In my view, the judge fell into error because he began his analysis with the obligations under the Development Agreement rather than with each Land Sale Contract and, while he stated that the Development Agreement did not itself effect the dutiable transaction, he gave the Development Agreement such primacy that he came close to treating all the obligations it imposed, with respect to the making of the contribution payments, as of equal force to the promise to pay the Stage Land Payment in identifying the consideration for the transfer for the land.

Again, at 219, which I will not read, and at 228, page 2960, this is the last sentence:

It also ignores the significance of the fact that it was the Land Sale Contract with a fixed Stage Land Payment that effected the dutiable transaction.

BELL J:   I am sorry, what paragraph was that?

MR SOLOMON:   I am sorry, your Honour, 228.

BELL J:   Thank you.

MR SOLOMON:    At 2960.  At the risk of simplifying our position, we just say that that is an error.  I have taken your Honours to the development agreement.  I have taken your Honours to the Dock 5 land sale contract.  It is not correct for her Honour to conclude that it was the land sale contract that effected the dutiable transaction and, in any event, it is reasonable, respectfully we submit, to urge on your Honours that her Honour looks to be seeking to identify one instrument for the purposes of identifying what the consideration for the transfer is in the sort of way that once occurred in Bullfinch or in Davis or perhaps either in the dissent in Dick Smith or in the Court of Appeal in Dick Smith. 

But, in any event, we submit that what her Honour has done in this regard is erroneous and it is central because the contention put against us is, and is only, that the relevant payments to be the subject of the statutory test are the payments set out in the land sale contracts.  Indeed, it is still pressed in our learned friend’s outline.  If your Honours would go back to that just for a moment and go to page 20, our learned friends, in 52(b), the second sentence, contend, and we join issue that it:

remains accurate to describe the land sale contracts as having effected the dutiable transaction –

That barely seems, with respect, reasonable as a matter of form and a long way removed from the substance of the arrangements which I have identified to your Honours already.  Secondly – I said there were five errors for which we would seek to contend – the Court of Appeal should have asked, but we submit did not, whether the totality of the promises contained in clause 4 of the development agreement comprised the consideration for which VicUrban was prepared to transfer each parcel of land to the respondents. 

As your Honours have just seen, contrastingly, the Court of Appeal focused on the land sale contracts, describing as erroneous the primary judge’s reference to the development agreement as – summarising the language – being the suitable starting point.  The third of five errors for which we contend, is that the Court of Appeal added conditions or restrictions on the statutory test.  I want to tell your Honours what they are and then I want to develop briefly each. 

We say that her Honour erroneously treated as relevant an evaluation of the condition of the dutiable property at the time of the transfer; second of four, that her Honour erroneously treated as relevant the value of the land at the time of the transfer; thirdly, erroneously treated as relevant, the time when work was performed in the precinct; fourthly, erroneously treated as relevant whether or not the works which occurred took place on, or not on, the parcels of land transferred.

Let me show your Honours where those four matters were treated as relevant.  Would your Honours please go first to page 2912, paragraph 145.  I am going to come back and say things about 145 shortly but, for the moment, your Honours will see at subparagraph (7) – foot of 2912:

Much depends on the condition of the land at the time of the conveyance –

145, subparagraph (7).  At 148 – just to make it clear – it follows from the seventh – this is at 2913 – it follows from the seventh principle that to determine what consideration moved the transfer requires close scrutiny of the condition of the dutiable property at the time of the transfer.  At 208, page 2950:

the condition of the land, as at the time of the transfer was in a pre‑conversion state –

which may not be accurate but we are not having a factual appeal in this Court.  So that in those three passages her Honour treated as relevant the condition of the dutiable property.  Her Honour treated as relevant the value of the land at 216, which is page 2953.  If your Honours go to the top of 2954 – no, we had better start at the bottom of 2953.  This is the external infrastructure:

However, the entries in Schedule U, which identified the external infrastructure, do not support that view.  The external infrastructure included pedestrian crossings at the harbour esplanade; ticket booths; tree planting in the Bourke Street extension: the Bourke Street pedestrian bridge and stadium access; and platform access to ticket booth services.  These were not matters designed or constructed to enhance the value of the land at the time of transfer.  They were matters that were intended to enhance the value of the land to be realisable upon sale.  I agree with LLD that, until that time, there was no more than a nominal or inchoate connection between the external infrastructure and the land acquired.

So her Honour looks to value.  Thirdly, her Honour looks to the time at which work was performed.  Your Honours will see that in paragraph 211 at the top of 2952, so this is the first sentence at 2952:

By taking into account the totality of the contribution payments, regardless of when the works were performed . . . the judge looked to the enhanced value the land was to achieve by reason of the development as though the development was complete and the enhanced value had been realised.

Then if I could just give you the references to where her Honour pays regard as relevant to whether or not works were undertaken on or not on the parcels of land, her Honour does that at paragraphs 214, 216, 225 and 230, and none of these matters usefully assist in answering the question that the majority in Dick Smith has confirmed for Australia is the relevant question to ask for section 20(1)(a) of the Duties Act. 

As your Honours review the judgment, your Honours will see the way that weaving these matters in, some of which as we will demonstrate were the subject of Lend Lease’s submissions, her Honour’s focus was directed away from the relevant statutory question and to each of these matters which we submit are not relevant to that question.

Fourth – I said there were five errors for which we were contending – we submit that the Court of Appeal misunderstood Bambro in two critical respects.  It misunderstood – and I have already made my submissions on Bambro – the relevance of the identification of property under section 41 in Bambro and the identification whether the instrument in question in Bambro dealt with one matter or several matters for the purposes of section 17 of the New South Wales Act.  So I want to seek to make that good at a few places.  Would your Honours go first to paragraph 142, so that is 2910:

In determining the duty to be assessed, the Court –

that is in Bambro –

concluded that the focus must lie with identifying what it is that is transferred by force of the conveyance.

In 143, which is the point on which we rely – 2911:

In turn, to determine what is transferred by a conveyance in an agreement relating to both the transfer of land and the development of that land, much will depend on whether the conveyance has been completed before construction has begun –

That is accurate enough in terms of Bambro, but I will show your Honours in a moment the erroneous way in which it is deployed in the reasons in this case.  Can I next show your Honours 145, subparagraph (2), 2912 ‑ in our submission, this is very important.  Her Honour set out these principles at paragraph 145.  Her Honour described them as derived from Bambro – and they are – but, respectfully, they fail to recognise the two features of the statutory context in which Bambro was decided.  At (2), her Honour sets out this proposition:

The single, integrated and indivisible character of a transaction does not preclude the transaction from containing or relating to several distinct ‘matters’, only one of which may attract duty -

If your Honours go – so that is the proposition from Bambro.  It is correct as a proposition from Bambro, but designed to lead to error if thought to be analogous or able to be adapted in this case ‑ ‑ ‑

HAYNE J:   Well does the Duties Act have a matters provision equivalent to section 17?

MR SOLOMON:   Yes.

HAYNE J:   Where do we find that?

MR SOLOMON:   At 261 – my learned junior tells me it is different, so I had better find it.  So if your Honours have section 261, that is the equivalent allocation section, and I have already explained to your Honours the holdover nature of it and we have collected the relevant features in one of the footnotes in our reply – footnote 6.  At 204 ‑ ‑ ‑

HAYNE J:   Sorry, just a moment.

MR SOLOMON:   Sorry, your Honour.

HAYNE J:   Section 261 takes its part in Chapter 12, Part 1 about stamping instruments.

MR SOLOMON:   Yes.

HAYNE J:   So, apart from 261, is there any provision dealing with separate matters that applies to the transaction elements of the Duties Act?

MR SOLOMON:   No, no.  Section 25 fulfils that role in a different circumstance, but not in the circumstance your Honour asked as to.

HAYNE J:   Simply, the proposition put by Justice Tate in this passage from her Honour’s reasons is ultimately, in Bambro, a proposition about the particular statutory provision.

MR SOLOMON:   That is our submission, your Honour.  Section 17.

HAYNE J:   It is not – I am banging on about it, but just to be sure about this, Mr Solomon – you say, do you, that it is a proposition that finds no statutory root relevant to the assessment of this transaction?

MR SOLOMON:   Yes.  In paragraph 204, at page 2949 - this is the crux of her Honour’s judgment on the first of the six numerous errors that are ascribed to the trial judge and at 204, 2949, near the end of the paragraph:

As Sugerman J in Bambro made plain, for each promise made under a composite arrangement, one must ask:  What was obtained for that promise?  Was it for an exchange that is separate and distinct from the transfer of the land?  Were there separate ‘matters’ dealt with by the transaction?

That looks like Bambro.  It looks like paragraph 145(2).  It has a passing resemblance to the passages in the dissent in Dick Smith, to which I took your Honours earlier, and it is not the law in relation to this Act that her Honour was obliged to be applying.  I want to notice that at paragraph 235, 2964, her Honour concluded that in respect of the Commissioner’s submissions below - “thirdly”, I am reading from, near the end of the paragraph:

it fails to reflect the need to identify, within a composite transaction, the pro tanto aspect of an exchange.

We submit to your Honours that the only sensible reading of “pro tanto” is as an analogy to separate and distinct matters because the use of “pro tanto” by Justice Dixon in Archibald Howie, the subject of the footnote, does not connect, with respect, with the proposition her Honour sets out in 235.  I next want to show your Honours that adopting this proposition was adopting the argument of our learned friends below.  Would your Honours please go to ‑ ‑ ‑ 

HAYNE J:   What do we get out of that fact?  That your ‑ ‑ ‑

MR SOLOMON:   I thought that was brilliant forensic advocacy, your Honours.

HAYNE J:   ‑ ‑ ‑ opponent is more persuasive than the other side.  What do we get out of the fact that it was adopting their argument, Mr Solomon?

MR SOLOMON:   No, as your Honour pulls me up and points it out, I cannot think of a satisfactory answer so I will move on.  Who would have guessed that would be the moment I would be pulled up this afternoon, your Honour.  Your Honours will, in this Court, notice that very feature in the issues section of the respondent’s outline at paragraph 2.  So I can probably link that with the appeals and take your Honours quickly to it.  Here we are in the issues.  At the end of paragraph 2 – sorry it was 3 that I wanted to take your Honours to, but while I am here, the last sentence in 2:

Each transfer of land was effected by a separate Land Sale Contract and instrument of transfer.

Then my point, paragraph 3, the last phrase:

and that the various contribution payments under the Development Agreement were for matters other than the transfer of the land?

My learned friend comments to me that that was the finding of the Court of Appeal.  So let me go to the Court of Appeal:  258, page 2973 in the appeal book.  One of the features of the judgment – and we say this respectfully – is that there are a lot of paragraphs, about 40, dealing with what are said to be the six errors in the primary judgment.  That having occurred, with respect, there is less analysis as to why the arguments of our learned friends below found favour.  But, in summary form at 258, her Honour says:

the judge was wrong to conclude that each of the contribution payments was consideration for the transfer of the land.

The case there presented, there accepted and here presented –

He should have held that the consideration for the transfer of the Land was the Stage Land Payment, being the price specified in Land Sale Contract.

We rely on this passage –

I consider that the judge was wrong in failing to recognise that the contribution payments were for matters that were separate and distinct from the transfer of the land.

That was the premise –

He ought to have held that each of the contribution payments was ‘for’ something other than the transfer of the land and that the consideration ‘for’ the dutiable transaction was solely that which moved the part of the composite whole comprising the transfer of the land.

We submit to your Honours that an important error on which we rely is the misapplication or, respectfully, the misunderstanding by the Court of Appeal of the relevant doctrine identified in Bambro and its source in the legislation there under consideration.

Finally, as the fifth error proposed, characterising the primary obligation as development – that happens everywhere, starting at paragraph 14 – and placing undue focus on the profit‑sharing aspects of the arrangement – that is set out in the 11 paragraphs starting at paragraph 240 – her Honour diverted attention from the relevant question, the issue identified by the majority in Dick Smith, and accordingly, we submit with respect, fell into error.

Next, and it is my penultimate topic, I just want to say a few things about our learned friend’s written outline in this Court.  There is, we suggest, your Honours, a focus on the issue of valuation.  Let me show you it.  If your Honours go to paragraph 23 on page 10, halfway down, or halfway in:

Nevertheless, the presence of s 20(1)(b) –

that is the value limb –

implicitly recognises that the consideration for a dutiable transaction is prima facie determined by the parties ‑

There is no case cited for that contention ‑

The use of unencumbered value as a comparator also shows that the focus is on the nature of the dutiable property in its condition at the time of the transfer.

HAYNE J:   A possible point of view may be that it shows only that the revenue authorities wrote the Act, providing that it shall be the greater of two amounts.

MR SOLOMON:   Our submission is that our learned friends cannot make good either of those propositions.  Returning to paragraph 20, they say, second sentence:

Here, applying s 20(1) to each transfer of land, the sole objective of the provision is to identify the value of the fee simple estate –

pausing for effect –

in undeveloped land that VicUrban transferred to the relevant respondent.

If your Honours would next go to paragraph 11, they set out a table which your Honours will have seen, inviting your Honours no doubt to contrast the “Valuation” column with the “Assessed Dutiable Value”, and we would infer to ask your Honours to notice that disconformity – we want to deal with that.  Would your Honours go to appeal book 3 please?  Would your Honours go please to page 1288?  This is the Dock 5 valuation.  There are seven valuations in the appeal books.  Six of them are organised in an equivalent way.  I am briefly going to take your Honours to this one, and to two features of two others briefly.  If your Honours go to appeal book 1291, your Honours will see near the top that –

This valuation has been prepared in response to a letter of instruction –

If your Honours go to 1306 you will see that.  If your Honours are at 1306 and your Honours go two‑thirds of the way through the email, which was from Lend Lease to the valuer, your Honours will see that part of the instruction was:

Basically the value of the Land for the Dock 5 site is subject to encumbrances for the Development Agreement between VicUrban and Lend Lease.  The DA requires payment of contribution with each parcel of Land as set out below.  Other encumbrances include public works infrastructure such as roads and promenades and remediation requirements.

If then your Honours go back please to 1292, there are three features of the valuation I want to notice, the first on 1292, last paragraph, second sentence:

We understand the base contract price was established in accordance with a Development Agreement executed between VicUrban and Lend Lease Development and was determined by the anticipated gross realisation of the intended development at that time.

But then critically, 1293, the first main paragraph under the quote:

The additional payments to the Vendor –

that is the payments in controversy –

are regarded as a financial encumbrance upon the site in the cumulative sum –

It might be that that is all of the sum or it might be part of the sum –

Although the payments have been concluded in relation to the particular Development Agreement in that they are linked to the anticipated gross realisation and associated land value of the site, we reiterate our instructions have been to provide the unencumbered market value of the site as at the relevant date.

If you move two paragraphs on, second last paragraph, last two sentences –

Accordingly, our method of assessment of the land on an unencumbered basis has been by direct comparison . . . Our assessment on an encumbered basis, and that formally reported herein, having regard [to] financial encumbrances, has from the unencumbered value made appropriate deduction for the known financial encumbrances, to conclude a net market value for the land.

If your Honours turn the page, your Honours will see that there is a valuation of the land in what your Honours would recognise as an orthodox way by each square metre; a subtraction of the “Minimum external infrastructure contribution”, the “Minimum gasworks site remediation contribution”, the “minimum gasworks site remediation” balance and the “Stage integrated public art contribution” and the “Assessed encumbered market value” is 2.575 million.

We do not want to make a point as to whether or not that is accurate or inaccurate as a valuation methodology.  We simply do not want your Honours to read paragraph 11 of our learned friend’s submission as setting out for your Honours the reasonable comparator between valuation and consideration if the inference of including the table which we deduce, infer, is that your Honours should see the consideration against this valuation.  The relevant valuation from the valuer was prepared by an instruction to deduct sums which do not affect the title to the land and which, as I have already shown your Honours, were paid in any event before title was transferred, even if for valuation purposes the relevant date is the date of the sale.

We have set out a comparative table in our reply and merely for the avoidance of doubt – I will not go to the passages, but in our reply the table in the third column “after deducting the costs of the disputed payments”, that is our learned friends’ table.  Our table is the next column.  We have just added it all back.  For completeness I should note to your Honours that many of the deductions are the contributions in issue in this case and there are some other deductions as well.  Ultimately your Honours will not be much assisted by either of these tables.

Can I next show your Honours what our learned friends ask your Honours to do with the doctrine established in Dick Smith?  Would your Honours go to paragraph 34 of our learned friends’ outline?  There is an emphasis by our learned friends and there was an emphasis by Justice Tate on the relatively straightforward nature of the transaction at issue in Dick Smith.  In 34 our learned friends say this in answer to our submission:

It also confuses the governing principle with the way in which the majority of the High Court explained the particular facts which attracted that principle.

There is a reference to the headings in the majority judgment in the footnote.  Then, continuing:

In concluding on the facts of the particular case that what moved the transfer was the ‘performance of all of the various stipulations in the Agreement’, the majority in Dick Smith was addressing a singular transaction, and should not be taken to have established any general principle that must be automatically applied in every case.

If by that our learned friends mean no more than you should not automatically collect together all of the promises and thereby assert that they moved the transfer, not much turns on it ‑ if instead our learned friends, as Justice Tate did, with respect, at paragraph 241 want to narrow what the High Court said in Dick Smith, obviously – not obviously ‑ they do not say that the majority judgment was wrong in any respect, and we ask this Court in this case, importantly, to confirm as a proposition for transactions under a transaction based regime to ask as a question in that regime to look to what was received by the vendors so as to move the transfers to the purchaser, not delineating by separate and distinct matters,

not segmenting, not carving up, not asking us to terminology derived from Bambro, but faithfully and fully applying what this Court has told us to do in Dick Smith.  If that is a convenient point for your Honours, I estimate I will be no more than 30 minutes in the morning.

FRENCH CJ:   The Court will adjourn until 10.15.

AT 4.15 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 5 NOVEMBER 2014