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

[2014] HCATrans 185

[2014] HCATrans 185

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne       No M114 of 2013
  No M115 of 2013
  No M116 of 2013
  No M117 of 2013
  No M118 of 2013
  No M120 of 2013

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Applicant

and

LEND LEASE DEVELOPMENT PTY LTD

Respondent

Office of the Registry
  Melbourne  No M119 of 2013

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Applicant

and

LEND LEASE REAL ESTATE INVESTMENTS LIMITED

Respondent

Office of the Registry
  Melbourne  No M121 of 2013

B e t w e e n -

COMMISSIONER OF STATE REVENUE

Applicant

and

LEND LEASE IMT 2 (HP) PTY LTD

Respondent

Applications for special leave to appeal

HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 15 AUGUST 2014, AT 11.10 AM

Copyright in the High Court of Australia

____________________

MR S.H.P. STEWARD, QC:   If the Court pleases, I appear with my learned friend, MR D.C. MORGAN, for the applicant. (instructed by the Solicitor to Commissioner of State Revenue)

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

HAYNE J:   Yes, Mr Steward.

MR STEWARD:   If the Court pleases, could I do four things?  Could I firstly describe in a conceptual way what we believe the problem to be?  Can I then identify the two errors of principle that we contend for, identify where they appear in the judgment of the Court of Appeal and then explain in the time available why we think they are errors and why they are important?  Let me begin with the conceptual problem.  In the Court of Appeal, the court said that the payments in dispute purchased the reformation, if you like, or the ‑ ‑ ‑

HAYNE J:   Just a moment, Mr Steward.  Yes.

MR STEWARD:   Yes.  The court said that the payments purchased - and the actual word used is the “transformation” of the Docklands area.  We see it somewhat differently to that.  We say that VicUrban, as the vendor, having paid and worked upon a transformation of the Docklands area, was entitled to be recompensed for that from the consideration of each plot of land.  In that respect VicUrban stood in no different position to that of an ordinary retailer of a housing development who spends money on infrastructure, roads and so on, parks, and then sells individual plots of land to individual purchasers of houses and seeks recompense for that work out of the consideration for each sale.

In our respectful submission, in that example, the whole amount of the consideration would be the dutiable value for the Duties Act and it would not matter if the parties broke the contractual arrangements down into individual promises for individual things.  Here, the total sum by which VicUrban was willing - and “willing” is a word used by this Court in Dick Smith - by which it was willing to move the land, to transfer the land to Lend Lease, was the total sum received by it which recompensed it, amongst other things, for the infrastructure that it built.

Now, that conceptually is the problem as we see it.  The two issues of principle, or the two errors of principle that we contend for are these, in short order.  First, should the identification of the consideration for a transfer of dutiable property commence with, and thereafter be guided by, the search for the particular instrument which effected the dutiable transaction in a case where here what is tax is not an instrument but an underlying transaction, namely, the transfer of land pursuant to section 7(1)(a).

In that respect, section 7(1)(a) has a more direct analogy with capital gains tax than it would with traditional stamp duty and its concern with instruments and that is so even though, of course, for administrative and enforcement purposes, parties must still produce to the revenue office an instrument in writing or where there is another form that may be stamped.  But fundamentally there has been a sea change with the Duties Act.

CRENNAN J:   The Court of Appeal acknowledged that, did they not?

MR STEWARD:   They did acknowledge that, and it is acknowledged in a footnote but the error that we think they made was that notwithstanding that acknowledgment they commenced the search for the right instrument and then they used the search for the right instrument as a means of setting aside the promises made in the development agreement, which was the overarching agreement governing the contractual relations between the parties.  That was the device or thing that enabled them to say that those promises were irrelevant and were to be discarded. 

We say that if they had commenced the search - and I will develop this a bit more in a moment - if they had commenced the search as they should have, with the identification of all that VicUrban received and then asked the question what was that for, if they had started from that perspective they would have, with great respect to them, reached the same conclusion as the trial judge. 

So that, in short order, is the first error of principle, and can I say candidly at this stage, we acknowledge that the judgment below is very comprehensive and it commenced, I must say, with the parties in agreement with how the principles were to be identified.  This is a case where, in applying those principles, there have been introduced two glosses, qualifications, limitations, as it were, which we think are important and the first one is the one I have just mentioned. 

The second is this.  Should the consideration for a transfer of land be limited or confined to the payment of amounts which move the transfer of that land but only in the condition it was in at the time of sale.  Now, that point of principle was used by the Court of Appeal below to exclude those promises to pay that were for infrastructure that would be completed by the time Lend Lease would itself be in a position to sell the land that it itself developed. 

We say that is an error of principle.  It finds no support in the language of section 20, which is the operational provision that we are concerned with, and it would make no sense in a case where a vendor of land says to a purchaser, “I want more money for the land than might be reflected in its current state because I know the land will be developed” or “I know that it is going to be part of an exciting and commercially attractive area.  It is not at the moment, but it will be in 10 years”.

Those sorts of arrangements, and this was one of them here, are, in our respectful submission, ones where the total consideration is the dutiable value, not part of it.

CRENNAN J:   Did not the Court of Appeal take the view that that approach which you are urging was at odds with the approach in Bambro?

MR STEWARD:   That is right, your Honour.  Can I explain Bambro?  Bambro was a case involving the New South Wales Stamps Act, as it then was, taxing instruments.  The particular instrument which was at play in Bambro was an agreement for the transfer of dutiable property in a circumstance where, your Honour, there were two possible exigible instruments of the agreement and then the transfer and because the court was concerned with the pre‑existing agreement and not the actual transfer under the equivalent of the Transfer of Land Act, they focused upon the state of the land at that time and rightly so, being an instruments‑based tax.

But what was critical about Bambro and what the Court of Appeal did not apply is that in Bambro there were two promises, in effect.  The vendor promised to sell the land and then to build a shopping centre later on.  What was critical to the outcome in Bambro was the observation of Mr Justice Sugerman that if the shopping centre had been built before the transfer of land, the value of the shopping centre, or the payment for it, would have been part of the dutiable value that would have been taxed. 

Here, your Honour, the unchallenged finding below was that a majority of the infrastructure was already in place at the time of each transfer, the bridges and the roads and so on, and, moreover, Lend Lease had to pay for it, before each transfer.  That was not true in all cases.  There was some infrastructure that had yet to be completed, most particularly the plaza, but most of it was already done and dusted and in, thus squarely falling within what we contend was the real Bambro principle, namely, if you have to pay for something that is already built, that is part of the dutiable value.  It matters not whether it appears on your land or, in the example I gave at the start, on land that is contiguous around you, if it truly enhances the value of your land.

Could I now, in the short order that we have, take you to where we think the first error most directly appears?  There are other parts where it does but it most directly appears, if I could ask the Court to go to paragraph 218, application book 168.  So we are now dealing with the first error and this impermissible focus upon instruments.  You will see at the bottom of the page, her Honour Justice Tate says:

In my view, the judge fell into error‑

actual 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 of the land.

Now, note the language, because the focus is here upon the right instrument, they are looking at a hierarchy, if you like, of promises, some of which are to be in and some of which are to be out, depending upon whether you picked the right instrument.  They go on to say:

Ultimately, the analysis adopted by the judge, and his emphasis upon the inclusion of the ‘total basket of rights and obligations between the parties’, was almost tantamount to treating the Development Agreement as the instrument that effected the dutiable transaction.

Now, with great respect to the Court of Appeal, asking what was the instrument that effected a dutiable transaction is neither here nor there.  This is a case where what is brought to tax is an event, the transfer of land, not an instrument and this instrument‑based approach has, with great respect, been more than just a starting point.  It has infected their analysis and has become an important reason why they excluded the payments in the development agreement.

Could I now show to the Court where the second error most directly appears?  Could I ask you to go to paragraph 208, application book 164?  You will see they commence by saying:

True it was that the objectives of the Development Agreement were aimed at converting a disused industrial site into a waterfront residential precinct, and true it was that the purchase of the land was an essential step in that conversion, but the condition of the land, as at the time of the transfer was in a pre‑conversion state.  The transfer of the seven parcels of land from VicUrban to LLD did not take place when the precinct was a suitable for people to live, work and find recreation.  LLD accepted the condition of the land as it was at the time of the transfer.  To determine, as the judge did, that the totality of the contribution payments made, in order for the precinct to become a place suitable for people to live, work and find recreation, should be included as part of the consideration for the transfer of the land was inappropriately to treat the land, at the time of the transfer, as though it had already become successfully transformed.  It was to treat the land as developed.

Now, with great respect, again, there is nothing in section 20 or section 7 that requires you to confine your gaze to the state of the land when it was sold.  There is in subparagraph (b) of section 20 - the Court will recall it has two limbs.  The first limb is the “consideration for”; the second limb is “the unencumbered value”.  If you are in (b), quite clearly you are looking and focusing attention upon the state of the land at that time of transfer.

CRENNAN J:   Now, her Honour makes a distinction between the facts of this case and the arrangement under consideration from the point of view of section 20 with the Dick Smith Case and her Honour does that - that can be found at paragraphs 240 and 241, page 180 of the application book, 181.  I wanted to inquire of you whether you are asserting that her Honour is revealing a misconception of the Dick Smith Case or is not following some aspect of that case.

MR STEWARD:   Well, we do say so.  There are two things to note about Dick Smith, well, one important thing to note.  Firstly, Dick Smith is also an instruments case.  Dick Smith concerned a provision in the Duties Act (NSW) which we do not have in Victoria. Again, it is an agreement for the sale of dutiable property. So that is the first thing to remember about Dick Smith.  It is not a case – indeed, this Court has never considered a provision of a Duties Act which is not an instruments‑based provision squarely.  This would be the first case.

The second area where we think, with great respect to her Honour, she may have misapplied Dick Smith, is in the way in which Dick Smith describes the process by which you go about identifying the consideration.  Dick Smith says you focus upon what the vendor receives and the other point of principle you get out of Dick Smith is that you are not tied by what the contract says. 

You will recall in Dick Smith, it said the purchase price was $114 million, less the dividend amount and this Court said that that did not bind or determine the outcome of what the consideration was, if looking at the totality of the arrangement and what was received it would be concluded that the vendor would only have been “willing”, to use that word again, willing to transfer the land only upon receipt of the entire sum.

CRENNAN J:   I suppose what might be said against you is that you are relying on an interdependence of obligations here, and not much more, as it were, in relation to found a dutiable transaction.

MR STEWARD:   With respect, no.  We go way beyond mere interdependence for the reason I adverted to earlier, because the infrastructure was already built, most of it was already built and had to be paid before the transfer of the land.  That is Bambro, the principle in Bambro, that if the shopping centre had been built before the transfer of the land the payment for it would have been part of the dutiable consideration, dutiable value.  So we are much more than that.  There may be an issue, your Honour, candidly, about work done after transfer of the land ‑ ‑ ‑

CRENNAN J:   And stage payments for that.

MR STEWARD:   Yes.  Well, some stage payments are adjustments to take account of actual receipts for the sale of land but, for example - and the evidence about this is very unclear.  We do not know when the artwork was installed.  No evidence was led about that but conceptually, assume for a moment that the big eagle down there was not built and installed until well after the transfer of land.  There may be a real case to be put against my client for trying to include the consideration for that in the transfer for land.  But it is quite different where it takes place beforehand and that is where, with great respect to the Court of Appeal, we think they may have erred.  We do say that these two glosses of qualifications are important for the administration of this Act.

HAYNE J:   Well, can I come at the issue perhaps from a slightly different angle.  The assumption of your argument, I do not think it is essentially challenged, is that there is a series of instruments recording a series of interconnected obligations, one set of which relates to sale and transfer of land, but there are other obligations as well and there are various obligations to pay various sums which are obligations which can be identified as having some connection with particular parts of work or the like.  Is that right?

MR STEWARD:   Yes.

HAYNE J:   The statutory question ultimately becomes which of those payments moved the sale of the land.  Is that right?

MR STEWARD:   Yes.

HAYNE J:   What is the test that is to be applied in determining which of those payments moved sale?  Is it a test of causation?  Is it some more

complex or nuanced test?  What is the test which is to be applied when you ask which of those payments moved sale?

MR STEWARD:   Your Honour, below we conceded that it was not a “but for” causative relationship and we remain of that view.  We would say then if ‑ ‑ ‑

HAYNE J:   Well, “but for” causation would be a necessary but not sufficient condition, would it not?

MR STEWARD:   Correct, absolutely correct.

HAYNE J:   Well, what is it beyond “but for” that then provides the criterion?

MR STEWARD:   We can put it two ways.  We can put it the way the primary judge put it, which is that there must be a substantive, causative relationship or one of attribution or, we would put it the way this Court put it in Dick Smith.

HAYNE J:   Understand that.  What do you say the Court of Appeal did?

MR STEWARD:   What the Court of Appeal did was excluded promises that had that causative relationship which exists because they were focusing on questions of instrument and state of the land at that time, but we say the Court of Appeal did not acknowledge and recognise that that substantive causative relationship did exist.  All the payments were needed before VicUrban was willing to transfer the land.  I see the light, your Honour.

HAYNE J:   Yes.  Thank you, Mr Steward.  Yes, Mr Young.

MR YOUNG:   If the Court pleases.  We submit that the case raises no point of principle.  As conceded, it was simply about the application of established principles and the language of the statute to a complex set of agreements.  The only contest below and on appeal was the application to the factual situation. 

Our learned friend camouflages the position by asserting broadly that the payments purchased a transformation of the precinct.  One needs to analyse, as the Court of Appeal did, the character and purpose of each of the payments and far from it attracting that broad characterisation, the Court of Appeal, after a painstaking analysis, concluded that the various payments were made for separate and distinct matters, aside from the transfer of the land.  What has to be undertaken is a careful analysis ‑ ‑ ‑

HAYNE J:   Well, implicit in that is a distinction being made, is there not, according some criterion?

MR YOUNG:   Of course, your Honour, the ‑ ‑ ‑

HAYNE J:   What is the criterion which the CA has applied, do you say?

MR YOUNG:   Well, could I answer in two steps, your Honour?  The agreed position below and the effect of the cases is that one asks the question, what passing of value, what payment moved the transfer of the land.  Now, to dig down a little bit deeper, your Honour, we say that that question requires an ascertainment of the character and purpose of the various payments in questions.  What were the payments or those obligations that pass value, what were they for?  Now, the only way of it ‑ ‑ ‑

HAYNE J:   Does that presuppose that they are not relevantly connected with the sale of land because if that is the assumption the slide is what is meant by relevantly connected.

MR YOUNG:   No, your Honour, there is no presupposition.  Can I do this, your Honour, by considering the particular payments?  The payments are dealt with in various parts of the judgment but if I do it in this fashion, your Honour.  One payment was for the construction by VicUrban of infrastructure on other land.  That is Court of Appeal paragraph 56.  Another payment was for the remediation of gasworks on land largely external to the land in question and that was again remediation by VicUrban.  The next one was the establishment of public art on land all outside the land that was transferred, again by VicUrban, and there were contributions by the developer to each of these external costs.

HAYNE J:   That is, it was in the nature of a transaction - I will sell you Blackacre if you will, in addition to that, pay me the amount of repairing my motor car.

MR YOUNG:   No, no.  It was ‑ ‑ ‑

HAYNE J:   No?

MR YOUNG:   The other payments were for the performance of works on other land.

HAYNE J:   Yes. 

MR YOUNG:   Yes.  They were a cost contribution to other works ‑ ‑ ‑

HAYNE J:   Yes.

MR YOUNG:   But it goes beyond that, your Honour.  The agreement between the developer and VicUrban concerned the ongoing development of the land over a period of years.  The next category of payments we get to, your Honour, are final or additional land payments by which, on the ultimate sale by Lend Lease of its developed land for a profit VicUrban shares in the proceeds of sale of the developed land.  That has nothing to do with the transfer of the stage 1 land in the sense that this is simply a profit share with Lend Lease on its ultimate development profit. 

HAYNE J:   Why is that unconnected?

MR YOUNG:   Well, it is part of the same development agreement, your Honour, but the question is, having regard to the nature and character of that payment, was it a payment for the undeveloped land or was it a payment for something else.

CRENNAN J:   Construction and development.

MR YOUNG:   Yes, the right to develop.

HAYNE J:   But I will sell you Blackacre, knowing that you are a developer, for $1,000 now plus 10 per cent of your profit.

MR YOUNG:   No, that was not the agreement.

HAYNE J:   No?  What is the difference then?

MR YOUNG:   The agreement was simply that on the final sale of the land, and this was a provision of the development agreement, Lend Lease would pay a certain percentage of the actual sale proceeds.  There was a separate provision which was part of what was assessed, without objection, that the development potential of the land was included in the stage land payment. 

So the payment that has been assessed to duty, the stage land payment that we say was rightly assessed in the first instance, that included the development potential of the land.  So the development potential has already paid for.  This is a quite separate agreement under the provisions of the development agreement, having regard to the whole matrix of interconnected rights and obligations unfolding over several years that a percentage of the proceeds of the final sale would be paid by Lend Lease.

Now, the question is, was that paid for the land, having already paid for the development potential of the land or was it paid for rights and benefits associated with the future development of the land and the court carefully analysed that.  There is no suggestion they applied the wrong principle.  They went through each category of payment.

HAYNE J:   I thought they whole attack was that they did apply the wrong principle, Mr Young.  At least I take it as such.

MR YOUNG:   Well, let me give your Honours another example, the additional authority payment.  Lend Lease found, after the purchase of the land, that it wanted to exceed the build out limits of the land, the coverage - how much of the land could be built on.  They made an additional payment in due course for the right to exceed the original build out limits.  So that payment was for the right to build to a greater density than originally contemplated.

Now, there are other payments associated, not with works that VicUrban did, but with works that Lend Lease did.  It was Lend Lease’s responsibility to develop the Grand Plaza.  The trial judge included in the assessment, first an accounting entry that Lend Lease made, the Grand Plaza retention amount; and, secondly, when much later in 2008, under an amendment to the development agreement, when the building of the Grand Plaza was taken over by VicUrban, Lend Lease agreed to make a payment to VicUrban for the future development of the Grand Plaza.  Again, that was other land.

CRENNAN J:   That is right.  The Grand Plaza was constructed outside the boundaries of the land.

MR YOUNG:   Absolutely.  All of these contributions related to works done on outside the land that was the subject of the assessment; land that was outside the transfer of land that was the dutiable transaction.  Now, this is a case that turns on its particular facts and the Court of Appeal carefully analysed each category of payment and as I have indicated, they were very different payments, for very different purposes.

HAYNE J:   You say it turns on its own facts.  Do you say that the relevant principle to be applied was that in Dick Smith?

MR YOUNG:   Not in the way our learned friends interpret it.  Can I explain?

HAYNE J:   My question was what do you say?

MR YOUNG:   Dick Smith concerned a provision of the New South Wales legislation which was different.  The provision there assessed duty on the agreement as a whole, not on the transfer.  So it was a statutory difference.  It was that consideration, when one goes to the pages of the judgment, that you can see led to the factual conclusion by the High Court that the total sum received by the vendor of the shares, part by way of payment for the shares and part by way of a dividend, brought about by the purchaser of the shares.  That was why that fell to be included.  So it is a very different case.  It was a one‑off transaction. 

HAYNE J:   Well, does that ‑ ‑ ‑

MR YOUNG:   There was no ongoing relationship.  So we do not suggest there is any error in Dick Smith.

HAYNE J:   But is the consequence then that this Court has not previously looked at the application of this kind of duty legislation to interdependent transactions?

MR YOUNG:   No, no, your Honour.  Dick Smith was interdependent transactions.  There was a ‑ ‑ ‑

HAYNE J:   But you say Dick Smith is about different legislation and ‑ ‑ ‑

MR YOUNG:   Yes.

HAYNE J:   ‑ ‑ ‑ yielded different answers.

MR YOUNG:   But, your Honour, the basic test in Dick Smith was the same test as applied here.

HAYNE J:   Right.

MR YOUNG:   What was the consideration for?  What moved the payment of consideration?

CRENNAN J:   What was the nexus between the consideration and the transaction?

MR YOUNG:   Yes, and beyond the posing of that test, which has always been common ground, it is a question of factual application, as our learned friends concede, and here the factual application required a close analysis of each different category of payment to work out what nexus it had with the transfer of the land.

HAYNE J:   Well, this notion of factual question which we see from March v Stramare onwards being applied in causation cases and elsewhere.  I know there is a lot of judicial ink been spilt along that line.  You are simply obscuring the question of what is the criterion.  How is the criterion articulated in Dick Smith to be applied to a set of interdependent transactions?  What is the discrimen?

MR YOUNG:   It is a factual exercise, your Honour.  You undertake ‑ ‑ ‑

HAYNE J:   Well, that is just black box.

MR YOUNG:   ‑ ‑ ‑ a wide and exact scrutiny of the nature of the particular payments in question and their purpose to determine what they were consideration for.

HAYNE J:   In your written submissions you say that the applicant disclaimed the “but for” test.

MR YOUNG:   Yes.

HAYNE J:   I am just trying to turn up where in your written submissions you dealt with it. 

MR YOUNG:   Paragraph 25, your Honour, page 279 of the book.

HAYNE J:   Thank you. 

MR YOUNG:   That is a reference to the appeal judgment at paragraph 193.

HAYNE J:   Do you accept that ‘but for” causation is a necessary but not sufficient connection?

MR YOUNG:   It is certainly not sufficient.

HAYNE J:   It would be a necessary connection to establish that ‑ ‑ ‑

MR YOUNG:   Yes, your Honour.

HAYNE J:   ‑ ‑ ‑ yes.  If “but for” is not a complete test, what then is the causal nexus that must be established.  At the moment, Mr Young, it seems to me that that is unanswered below and is a question that may, may not, arise in this case.

MR YOUNG:   Well, below, your Honour, it was common ground that the mere interdependence of promises does not provide the relevant criterion.  It was common ground below that a “but for” approach causation does not provide the relevant criterion.  It was also common ground and was the effect of the authorities that the question is what was the payment or passing of value for, in the sense of what moved it.

HAYNE J:   Yes.

MR YOUNG:   That question simply requires a close analysis of the character and purpose of the payment to determine what moved it.  It is not an inquiry into motives.  It is an inquiry into character and purpose.  Now, that is exactly the exercise that the Court of Appeal undertook.           Can I deal with what are asserted to be the two errors, your Honour, before time elapses altogether?

CRENNAN J:   Well, just before you do, Mr Steward ventured a test, I think, of a substantive causative relationship.

MR YOUNG:   He ventured a “but for” test by reference to the proposition that you go to Dick Smith and you ask the question what was total receipt?  That does not answer the statutory question of what was the consideration paid for.  Of course, there were numerous receipts by VicUrban.

CRENNAN J:   Well, the Dick Smith question really is the nexus between the consideration and the transaction.

MR YOUNG:   Yes.  In Dick Smith the share purchase price was made up in two steps and paid through two channels.  There was the purchase price of the shares and then the purchaser of the company caused the company to distribute a dividend.  It was a single, one‑off transaction where the purchase price followed two routes and all the Court said was where the subject of the statute is that this is a duty on the agreement, which was the language there, an agreement for the sale of shares, of course you look to include the two channels of payment.  That is quite remote from the situation here, as the Court of Appeal rightly pointed out.

Now, the proposition about an instrument is a straw man.  There was no search for a particular instrument.  The Court of Appeal quite plainly undertook a careful analysis of the nature and purpose of each category of payment to determine what it was for.  In relation to the whole question of the references by the Court of Appeal to an instrument, they arose by way of correcting a mistake by the Commissioner in the Commissioner’s submissions.

If the Court goes to page 151, paragraphs 190 and 191 of the Court of Appeal’s judgment, your Honours will see in the middle of the page the Commissioner’s submissions are quoted and the last line asserts that the dutiable transaction was the development agreement and of course that in this application of the statute, the dutiable transaction was the transfer of the land.  In paragraph 191, that is where the Court of Appeal went on to say that that was a mistake – last two lines of page 151 of the application book and over the page - and all the Court of Appeal said at the end of that passage, 191, is that:

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.

Of course that is right.  The other passage my learned friend criticised is the passage at the bottom of page 168 to 169.  My learned friend did not go on to point to the passage at 219.  At the end of paragraph 219, Justice Tate says that:

the promise to pay a fixed purchase price in exchange for a specific lot of land is not the end of the inquiry, it ought to at least be the beginning of the inquiry.

There is no error in that because the inquiry went on to consider all of the relevant documents and all of the relevant information before the court as to the nature and purpose of each category of payment.  So this proposition about instruments is a false issue.  It was not decisive below.  It arose simply by way of correction of an obvious error on the part of the Commissioner.

As to the matter concerning the second error which was said to be the fact that reference was made to the state of the land at the time of the transaction of sale, one needs to see the context.  If the Court could please go to 164, in paragraph 206, Justice Tate refers to the judge’s statement that:

As with the other transactions the amounts paid by the purchaser were all ‘for’ the land in the form and state intended to be secured through the development.

That is not the dutiable transaction.  The dutiable transaction is the transfer of the land in its pre‑development state and then the court simply went on to point out at paragraph 210 on the next page, the judge:

included the value of the works that would enhance the saleability of the developed land in the consideration -

and then the court went on to point at the next page, 166, paragraph 212, that there were manifest and obvious errors that that led the judge to at trial and they instanced the Grand Plaza payments and the other payments.  They were payments for the achievement of works elsewhere on other land. 

Now, for those reasons, in our submission, the two errors that are asserted to exist are false issues.  There were no such errors of principle. 

The case does not, in our respectful submission, turn on any issue of principle and the matters now relied upon were not what the case turned on below.  The case turned on an application of established principle that was common ground below, to a complex set of ongoing contractual arrangements.  If the Court pleases, those are our submissions.

HAYNE J:   Thank you, Mr Young.  Yes Mr Steward.

MR STEWARD:   Some points, short points by way of reply.  Could I firstly state this?  The reasons below tell you in many areas what is not sufficient to the relationship, mere interdependence and so on, but the reasons are rather parsimonious in stating what is sufficient.

HAYNE J:   Is that a reflection of the way the case was argued by both sides, Mr Steward, perhaps?

MR STEWARD:   Not from my perspective, your Honour.

HAYNE J:   Yes.

MR STEWARD:   But I will say this, this Court has not considered what the test should be for a transactional duty provision in an area where there are multiple contracts that are interrelated and my client for his part would require authority and precedent to assist him in administering the Act in relation to that issue.

Secondly, my learned friend’s statement that the focus of the instrument was to correct a mistake on our part is not true.  The mistake appeared in the written submissions but it was corrected at the hearing.  We made it abundantly clear that this was a transactional case and we pointed out the sentence in Dick Smith which talked about the changes made to the Duties Act to move away from instruments and one can see that their focus on instruments was more than just an attempt to correct a mistake in the written submissions.

If you go to application book 174 at paragraph 228, you will see here is the reason that the court gives for rejecting the critical provision in the development agreement, 4.7, and in the last sentence they say:

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.

So the error was more than a starting point.  It carried on through the entirety of their reasoning and can I say this as well about the paragraph relied upon by my learned friend on the second error, if you go to application book 164, paragraph 206 and the finding by the learned primary judge which is heavily criticised by the Court of Appeal:

As with the other transactions the amounts paid by the purchaser were all ‘for’ the land in the form and state intended to be secured through the development.

With respect, that was precisely VicUrban’s requirement.  That was the bargain.  VicUrban would not sell the land unless it was fully recompensed, as it perceived it, for both the value of the land in its undeveloped state and its value later on and parties are free to bargain like that and if they do so, all that is paid for that is subject to duty.  Can I next say this?  Your Honour Justice Crennan was making the observation about the fact that the work took place on land outside the land ‑ ‑ ‑

HAYNE J:   Just to go back to that last point you were making, are duties payable on the higher of, in effect, Spencer’s Case market value or ‑ ‑ ‑

MR STEWARD:   Consideration for land.

HAYNE J:   ‑ ‑ ‑ consideration paid?

MR STEWARD:   Yes, exactly.

HAYNE J:   Yes.

MR STEWARD:   So, subparagraph 8 contemplates cases of super premiums, for example.

HAYNE J:   Yes.

MR STEWARD:   Your Honour’s focus upon land being outside the ‑ ‑ ‑

CRENNAN J:   This is at the Grand Plaza, I think?

MR STEWARD:   Yes.  Your Honour, suppose for the moment that you are developing Caroline Springs and you built the Grand Plaza, or call it the Grand Palazzo if you like, before you sold the individual plots to Mr Young and Mr Horan, it cost you money to build that and in selling the plots to Mr Horan and to Mr Young, you want to be recompensed for that.  What they pay you for the plaza as completed, clearly, in our submission, forms part of the consideration for the land.  I accept things start to get harder for the Commissioner if it happens after, but the finding below and accepted by the Court of Appeal, was that the majority of the work had already happened. 

Can I next make the point about profit sharing?  Parties can bargain for a profit share but that is a consideration.  That has been well known by this Court since the Colonial Mutual Case back in the 1950s.  Your Honour, the only other thing I wish to say is that the finding by Justice Tate that the stage land payments included a premium for the future work of the land, there was no evidence heard about that.  There was no expert evidence at all about that.  It was not part of the evidentiary case put my learned friend and with the greatest respect to her Honour, we are at a loss to see how she could have made that finding.  If the Court pleases.

HAYNE J:   Yes, thank you, Mr Steward.  There will be a grant of special leave in this matter.  How long do counsel estimate the case will take?

MR STEWARD:   One day, your Honour.

HAYNE J:   Yes.

MR YOUNG:   We would say…..your Honour, because there are ‑ ‑ ‑

HAYNE J:   You want to get with the strength, do you, Mr Young.

MR YOUNG:   Yes.  Well, I am sure your Honour will ‑ ‑ ‑

HAYNE J:   A day and a half, do you think?

MR YOUNG:   Yes, I think so, your Honour, yes.

HAYNE J:   Because, Mr Young?

MR YOUNG:   Because one will have to consider each of the different categories of payments and there are three iterations of the development agreement over a period of some years.  It may finish inside a day, your Honour, but I am only conscious ‑ ‑ ‑

HAYNE J:   Is it not one where we would end up, if you like, deciding principle and remitting to the Commissioner to reassess in accordance with, that is, I am not saying that we do not have to get into the detail.  Yes, I understand we may have to.  Is it clear that we would have to?

MR YOUNG:   Yes, your Honour, and in our view, it is clear, your Honour. 

HAYNE J:   Yes, I see.

MR YOUNG:   The Court will have to go through the different categories of payments and the various – there are quite complicated contractual provisions applicable to each category of payment.

HAYNE J:   You make it sound so exciting, Mr Young - a day and a half?

MR YOUNG:   A day and a half, your Honour.

HAYNE J:   Yes.  Well, again, counsel will have heard the minatory words uttered about the timetable.  The Registrar will supply the parties with the timetable.  The Court will adjourn to ‑ ‑ ‑

MR STEWARD:   Costs, your Honour?

HAYNE J:   There will be a grant.

MR STEWARD:   Thank you.

HAYNE J:   You may have come expecting another result, Mr Steward.

MR STEWARD:   Never, your Honour.

HAYNE J:   The Court will adjourn to reconstitute.

AT 11.58 AM THE MATTER WAS CONCLUDED