Haigh Developments Pty Ltd v Commissioner of State Revenue
[2014] QCATA 203
•29 July 2014
| CITATION: | Haigh Developments Pty Ltd v Commissioner of State Revenue [2014] QCATA 203 |
| PARTIES: | Haigh Developments Pty Ltd (Appellant) |
| v | |
| Commissioner of State Revenue (Respondent) |
| APPLICATION NUMBER: | APL551-13 APL019-14 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Barlow, QC |
| DELIVERED ON: | 29 July 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The appellant’s application for leave to appeal be granted. |
| 2. The decision of the Tribunal made on 4 November 2013 be set aside. | |
| 3. Each of the respondent’s decisions dated 22 February 2012 in respect of the objections made by the appellant to an amended land tax assessment for the 2009-2010 financial year, and a land tax assessment for the 2010-2011 financial year, be set aside, and each objection be allowed. |
| CATCHWORDS: | Land tax – “owner” of land – whether buyer in possession – what constitutes possession – whether contractual entitlement to possession necessary Land Tax Act 1915 (Qld), s 3B |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
Douglas and Carmel Haigh are the directors of Haigh Developments Pty Ltd. In 1989, Mr and Mrs Haigh purchased 40.47ha of land in the Samford Valley. Thereafter, they lived there with their children. When their children had grown up, they decided to subdivide and sell the bulk of the land, retaining some for their own use.
For the purpose of selling the land, they incorporated Haigh Developments Pty Ltd. In August 2006, they and Haigh Developments entered into a put and call option deed in respect of all of the land other than those portions which were to be retained by Mr and Mrs Haigh. By that deed, Mr and Mrs Haigh gave Haigh Developments an option to require Mr and Mrs Haigh to enter into a contract for sale of the land and Haigh Developments gave Mr and Mrs Haigh an option to require Haigh Developments to enter into such a contract. In the meantime, under the option deed Mr and Mrs Haigh authorised Haigh Developments and its licensees to enter on the land in order to make enquiries, inspections and investigations in respect of the property for the purpose of making a development application and to erect signs, notices or advertisements required in connection with such an application, provided that 48 hours notice should be given to Mr and Mrs Haigh prior to such entry and entry should be in such manner as to cause as little interference to the occupiers of the property as reasonably practical. Mr and Mrs Haigh also authorised Haigh Developments, at its cost, to make applications for development of the property.
Between August 2006 and May 2009, Haigh Developments took a substantial number of steps in order to obtain subdivision approval and development approval. It entered into contracts for the development of the land, including for earth works and road works, which were at least 50% complete by June 2008.
Haigh Developments became the registered owner of the land the subject of the option deed shortly before 30 June 2009. The Commissioner assessed it for land tax on its holding for both the 2010 and 2011 financial years. Haigh Developments objected unsuccessfully to those assessments, and appealed unsuccessfully to the Tribunal. It now seeks leave to appeal from the Tribunal’s decision. It needs leave to appeal because it is appealing on mixed questions of fact and law: Queensland Civil and Administrative Tribunal Act 2009 (Qld), s142(3)(b).
In my opinion, it is appropriate to give Haigh Developments leave to appeal and, as the Commissioner does not oppose leave, I shall grant it.
Haigh Developments maintains that it is entitled to a substantial discount applied to the value of the land for the calculation of land tax under s 3CA of the Land Tax Act 1915 (Qld) in respect of the 2010 year and s 30 of the Land Tax Act 2010 (Qld) in respect of the later year. This discount is available where a parcel of land has been subdivided, the owner at the time of subdivision is still the owner of some or all of the subdivided parts as at 30 June in each year, and the subdivided parts owned by it are held for sale as at that date each year.
The subdivision of the land occurred in this case upon approval of the plan of subdivision on 7 May 2009. The question is whether Haigh Developments was the owner of the land (for the purposes of the Acts) at that date, or whether Mr and Mrs Haigh remained owners.
Relevantly, s 3B of the Land Tax Act 1915 (Qld) provides that the owner of land includes every person who is entitled to the land for an estate of freehold in possession or who is taken to be the owner under that Act. It goes on to provide that, if an agreement has been made for the sale of land, whether or not the agreement has been completed by conveyance, the buyer is taken to be the owner of the land as soon as the buyer obtains possession of the land.
Section 10 of the 2010 Act provides to similar effect, although in different words. Relevantly, it provides that the owner of land includes a person entitled to a freehold estate in the land who is in possession and, if an agreement has been made for the sale of land, the buyer is taken to be the owner of the land as soon as the buyer is in possession of it.
The questions in this case are therefore whether, by 7 May 2009, Haigh Developments was entitled to a freehold estate in the land and was in possession, or was the buyer under an agreement for sale of the land and was in possession of the land.
Between 1 May 2009 and 16 June 2009, the following material steps occurred:
Date
Event
1/5/09
Email, Mills Oakley (solicitors for Mr & Mrs Haigh and Haigh Developments) to Mr Haigh, setting out steps required in order to transfer the lots in question to Haigh Developments.
1/5/09
Mr and Mrs Haigh execute their put option.
1/5/09
Mr and Mrs Haigh and Haigh Developments execute contract of sale from former to latter. Contract provides for settlement in 60 days.
2/5/09
Haigh Developments and a purchaser from it execute a contract for sale of 1 of the subdivided lots, subject to subdivisional approval and to Haigh Developments becoming registered owner with 7 days, with settlement 50 days after contract date.
5.5.09
Transfer from Mr & Mrs Haigh to Haigh Developments signed by all parties. Accompanying Queensland Land Registry form 24 leaves blank the date of possession and date of settlement.
7.5.09
Plan of subdivision registered.
10.6.09
Notice of exercise of put option and deeds of variation to option deed stamped “no duty payable”.
15.6.09
Haigh to Haigh Developments contract of sale, option deed and transfer stamped.
16.6.09
Transfer of land to Haigh Developments lodged for registration, with form 24 completed showing settlement and date of possession as 16.6.09.
The first thing that I should note is that the email from Mills Oakley to Mr Haigh dated 1 May 2009 was not in evidence either when the Commissioner made the original assessments and decided Haigh Developments’ objection, or when the Tribunal reviewed the Commissioner’s decision on Haigh Developments’ objection. It is an exhibit to an affidavit of Amanda Jane Heard, which Haigh Developments has filed in this appeal. Ms Heard was then the senior associate at Mills Oakley responsible for the transaction on behalf of Mr and Mrs Haigh and Haigh Developments. Haigh Developments has sought leave to rely upon that affidavit and the respondent has not opposed leave being granted. The Respondent rightly notes that some of the evidence is of little weight, but in my view the email of 1 May 2009 in particular is of substantial importance to the outcome of the appeal. I consider it to be in the interests of justice to allow new evidence (s 147 QCAT Act and s 71 Taxation Administration Act 2001). I therefore grant leave to Haigh Developments to rely upon the affidavit.
In the email Ms Heard said:
The option agreement should proceed and the lots in question should be transferred to Haigh Developments Pty Ltd. …
In order to effect this change, the following needs to occur:
1.Execute the attached Deed of Amendment of Option Deed to extend the put option expiry date so that the option can validly be exercised.
2.Execute the attached Notice of Exercise of Put Option;
3.Execute the attached Contract of Sale;
4.Execute the attached Form 1 Transfer and Form 24 and Form 20 Schedule. … It is fine if you wish to attend at our office on Tuesday morning to execute the transfer. …
Once the above documents are executed, Haigh Developments Pty Ltd can then enter into the contract of sale with the Purchaser. …
After we have the documentation, above, we can submit the application for private ruling with the Office of State Revenue and request urgent consideration. Once this is completed, stamp duty will be payable and then the transfer registered with the Department of Natural Resources, Mines and Energy. This needs to be registered prior to settlement of the contract of sale of the Purchaser (I note that the contract currently has a 40 days settlement time frame).
The Commissioner relies substantially, as did the Member below, on the fact that the Form 24 lodged with the transfer was completed to show that the date of settlement and the date on which possession was granted to the purchaser was 16 June 2009. The Commissioner contends that that demonstrates that, until that date, Haigh Developments had no entitlement to possession of the relevant land.
The Commissioner also contends that there is insufficient evidence that, at any time before that date, Haigh Developments was in possession of the land under the contract of sale. Therefore it is not deemed to have been the owner of the land before settlement.
Notwithstanding the limited right of access to the property granted to Haigh Developments under the option deed, it is clear that Haigh Developments took substantial steps to progress the development and subdivision of the land between the date of that deed and May 2009. Again notwithstanding the terms of the option deed, those steps included substantial earthworks and roadworks, for which it engaged and paid contractors.
Haigh Developments argued below and before the Tribunal now that those acts were only consistent with possession of the land having been given to it by Mr and Mrs Haigh. Of course, until the contract of sale to Haigh Developments was executed, it is irrelevant whether or not it was in possession of the land. Possession only becomes important under the sections of the respective Acts which provide that a person is an owner of the land for the purpose of the Act if either it has an entitlement to a freehold estate and is in possession of the land, or an agreement has been made for the sale of the land, and whether or not the agreement has been completed by conveyance, the buyer has obtained possession of the land.
The crucial question, therefore, is whether Haigh Developments was in possession of the land from 1 May 2009 (the date of the contract of sale to it) and by 7 May 2009.
The Commissioner, and the Member below, took the view that the evidence did not disclose that Haigh Developments was in possession of the land because it had no contractual right to possession, either under the option deed or the contract of sale, and the steps which it had taken were not taken under any right of possession referable to either of those contracts.
Haigh Developments relied in particular on passages from Highlands Limited v Deputy Federal Commissioner of Taxes (SA) (1931) 47 CLR 191 for the proposition that a contractual right of possession is unnecessary if the purchaser has de facto possession of land which has been ceded to it, in effect, by the vendor.
The relevant passages are:
The expression ‘so soon as he has obtained possession of the land’ in s37(1)(a) refers to possession in the character of purchaser. … The wider meaning results under our legislation in the liability [to land tax] of the buyer accruing as soon as he secures that control of the land which enables him to enjoy its profitable use or its returns. (Rich J, at 196)
I see no reason to doubt that [the purchasers] were allowed de facto control by the vendor, and intended to exercise it; and this appears to me to amount to obtaining possession within the meaning of s37. (Rich J, at 198)
‘Possession’ here spoken of is a de facto possession referable to the agreement for the sale of land, and not the right to possess, or to have legal possession. … All that a claimant can do is to show that he or someone through whom he claims has been dealing with [the land] as an occupying owner might be expected to deal with it, and that no one else has done so. (Starke J, at 199)
This appears to me to mean possession as a purchaser obtained in intended execution of the agreement of sale … (Dixon J, at 201)
If [the vendor and purchaser] conceived that the contract meant that possession should be given on that date and respectively intended to relinquish and to assume possession accordingly, it appears to follow that the appellant obtained possession as purchaser in execution of the agreement for sale. … The vendor intended to exercise no further control over it and the appellant’s agents conceived themselves as taking possession when the vendor supposed that they were relinquishing it. (Dixon J, at 204, 205)
The Commissioner submitted, and the Tribunal below considered, that that case and others relied upon by Haigh Developments were distinguishable because, under the contracts in question in those cases, the purchaser had a contractual entitlement to obtain possession of the land pending settlement. Neither the option deed nor the contract of sale in this case had such a provision. Therefore, even if Haigh Developments did have effective or de facto possession of the land pending settlement of the contract of sale, that was not referable to the contract of sale or the option deed themselves, but to a separate licence or other arrangement between it and the vendors which was presumably terminable at will by the vendors, Mr and Mrs Haigh. Therefore, it was said, Haigh Developments did not have possession in the capacity of purchaser.
It is clear that, notwithstanding that there was no contractual right in Haigh Developments to have possession of the land, it was given effective possession of the land by Mr and Mrs Haigh for the purposes of undertaking the development pending the contract of sale being entered into and settled. If it were at arm’s length from Mr and Mrs Haigh, then provided that it otherwise complied with the contract, having been allowed by Mr and Mrs Haigh to undertake the substantial works which it did on the land in anticipation of ultimately becoming the owner of the land for the purpose of selling subdivided lots, Mr and Mrs Haigh would be prevented, at least in equity, from terminating the licence which they had, de facto, granted Haigh Developments. It seems to me that Haigh Developments was in de facto possession of the land and had been for a substantial period of time before 7 May 2009, and that it was in possession as intending purchaser of the land. It was not necessary that it have a contractual right to possession when it was granted, and took advantage of, an actual right of possession. Its possession of the land was referable to the option deed and to the anticipated (and later, the actual) contract of sale.
I therefore consider that, as at 7 May 2009, Haigh Developments was in possession of the land as buyer. There is no dispute that, by then, there was a contract of sale on foot between Mr and Mrs Haigh as vendor and Haigh Developments as purchaser.
In my view, therefore, Haigh Developments is taken to be the owner of the land under s 3B(3)(b) of the 1915 Act and s 11(1)(b) of the 2010 Act.
Having regard to that conclusion, it is strictly unnecessary for me to consider the alternative basis upon which Haigh Developments maintains that it was the owner of the land at 7 May. However, given the submissions that have been made and also the prospect of the matter proceeding further, I shall do so.
I am aided in this regard substantially by the email from Ms Heard to Mr Haigh dated 1 May 2009, which was not in evidence before the Commissioner or before the Tribunal below. Notwithstanding that the Form 24 lodged with the transfer on 16 June 2009 was completed to show that the date of settlement and possession was 16 June 2009, that is only one piece of evidence that indicates the date of possession and settlement of the contract of sale. To my mind, the email is another piece of evidence of great importance in this respect.
I accept, as the Commissioner submits, that there was no evidence as to the actual settlement of the contract which, under its terms, required Haigh Developments to pay the balance of the purchase price. But, given that both statutes provide that it is irrelevant whether an agreement for sale has been completed or not, that absence of evidence is not definitive in this case. The question remains whether, there being a contract of sale on foot, possession referable to that contract of sale had been given to Haigh Developments by 7 May 2009.
In this respect, the following passage from the joint judgment of Kitto, Taylor and Owen JJ in Cam & Sons Pty Ltd v Commissioner of Land Tax (1965) 112 CLR 139 at 144 assists:
“When the vendor, himself retaining no vestige of possession, has done all that it is necessary for him to do to enable the purchaser to assume actual possession of the land or receipt of its rents and profits, and when, there being no obstacle in the way such as adverse occupation by a third party, it rests solely with the purchaser to decide whether and when he will do so, … when and whether he chooses to enjoy its profitable use or its returns are matters entirely for him. He has ‘obtained possession’, and the vendor has ‘delivered possession’ to him, in the intended senses of those expressions.”
It is clear from Ms Heard’s email to Mr Haigh that the parties to the option deed intended that the effect of the execution of the documents referred to in that email, including the Form 1 Transfer, would be to complete (as between the parties) the transfer of the lots in question (that is, those the subject of the contract of sale) to Haigh Developments. In other words, the intention was that, once all those documents were executed by Mr and Mrs Haigh and by Haigh Developments Pty Ltd, Mr and Mrs Haigh needed to take no further steps in order to effect the transfer of the lots to Haigh Developments. Mr and Mrs Haigh would then have provided Haigh Developments with all that it required to obtain registration of the transfer of the lots to it. By doing so, they had effectively given possession of those lots to Haigh Developments, even if it had not paid the balance of the purchase price, and even though it had not, at that stage, had the transfer registered.
Absent that email, the steps taken in executing those documents and in authorising Mills Oakley to lodge the transfer for stamping before lodging it for registration would have been ambiguous. As the Commissioner has submitted, it is not unusual for a purchaser to provide an executed transfer to the vendor, and for the vendor to arrange for it to be stamped, before settlement of the contract, and those steps do not usually entail the giving of possession and transferring of the lots the subject of the contract to the purchaser. Indeed, the contract of sale in this matter expressly provided that the purchaser could require the vendors to have the transfer stamped before settlement.
Ms Heard also swore, in the affidavit exhibiting her email to Mr Haigh, that, at the time that the transfer was executed on 5 May 2009, she informed Mr and Mrs Haigh that the documents which they had signed completed the transfer of the land to Haigh Developments so that it could in turn complete its contract for the sale of one of the lots. The only issue that remained outstanding was the calculation of stamp duty and the subsequent payment of stamp duty along with registration of the stamped transfer with the Queensland Land Registry.
Ms Heard went on to depose that she did not complete the dates of settlement and possession in the Form 24 and she recognises the handwriting as that of a paralegal employed by Mills Oakley who would have lodged the transfer with the Queensland Land Registry on 16 June 2009. That evidence is in part opinion of an expert nature (that is, as to the handwriting) and part speculation or supposition (as to what the paralegal may have done), and one might wonder why Ms Heard did not herself complete those dates on 5 May 2009. However, having regard to the contents of the email and Ms Heard’s advice referred to above, I consider it open to me to infer that the dates were inserted, without proper authority, by a person who lodged, or caused the transfer to be lodged, for registration on 16 June. The stronger evidence, in my view, is that of Ms Heard’s email to Mr Haigh and the statement which she made to Mr and Mrs Haigh upon the documents being executed on 5 May. They are clear evidence of the parties’ intention to transfer possession of the lots immediately to Haigh Developments.
Accordingly, in my view at the very latest on 5 May 2009, by the execution and provision to Haigh Developments of the transfer and other documents, Mr and Mrs Haigh effectively gave possession of the lots in question to Haigh Developments and therefore, again, it is deemed to be the owner of the land for the purposes of the Land Tax Acts. Furthermore, when Mr and Mrs Haigh gave those documents to Haigh Developments, Haigh Developments became entitled to a freehold estate in the land in possession.
I therefore conclude that Haigh Developments was the owner of the land as at 7 May 2009, for the purposes of both Land Tax Acts, and therefore it was entitled to the discount provided for under each Act.
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