Parker v Chief Commissioner of State Revenue

[2005] NSWADT 251

CITATION:	Parker and anor v Chief Commissioner of State Revenue [2005] NSWADT 251
DIVISION:	Revenue Division
PARTIES:	APPLICANTS Michael John Parker and Cheryl Rita Parker RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	056043
HEARING DATES:	31/10/2005
SUBMISSIONS CLOSED:	10/31/2005
DATE OF DECISION:	11/04/2005
BEFORE:	Block J - ADCJ (Judicial Member)
APPLICATION:	Duties Act - assessment of vendor duty
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Duties Act 1997 Interpretation Act 1987
CASES CITED:	Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700; BBLT Pty Ltd v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003; Ceedive Pty Ltd v May [20051 NSWSC 222; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
REPRESENTATION:	APPLICANTS M Parker in person RESPONDENT R Seiden, barrister
ORDERS:	The decision under review is affirmed

Part A. Commencement and Documentation.

1 The decision under the review is the disallowance (in part), of an objection against an assessment of vendor duty made against the Applicants arising from their sale of the Land and the Motel Business (both terms as defined hereafter) pursuant to separate but interdependent contracts made on 24 September 2004.

2 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 (referred to in this decision as the “section 58 documents”). The section 58 documents are contained in a folder separated by lettered tabs.

3 This is a matter in which the (voluminous) documentation before the Tribunal proved to be of considerable importance. The documentation in question consisted in particular of the section 58 documents, an affidavit (and annexures thereto) by the Applicants dated 9 August 2005 which was accepted as exhibit A1, and the documents produced in response to a summons issued by the Respondent and which were collectively tendered as exhibit R1. Accordingly the remainder of this Part A will refer in some detail to the documentary evidence and including relevant extracts from parts of it.

4 The starting point is 30 October 2002. On that day Andrew Stanhope Gaunt and Rosemary Anne Gaunt (collectively “the Gaunts”) entered into two separate contracts with the Applicants. Under a contract for the sale of land (“the Gaunt Land Contract) the Gaunts sold and the Applicants purchased Lot 102 in DP 573594, situated at 999 Armidale Road, Tamworth (“the Land”) together with improvements described as Motel, Restaurant, Conference Room, Residence, Double Garage, Swimming Pool, Storage Shed (2) for a purchase consideration of $731,000. Clause 10 of the Gaunt Land Contract made it clear that the Gaunt Land Contract was interdependent with a contract for the sale of business (“the Gaunt Business Contract”) between the same parties and in the same capacities and pursuant to which the Gaunts sold and the Applicants purchased a business (described as to type of business as “Motel” and referred to in this decision as the “Business” or “the Motel Business”); the purchase consideration was $149,000 apportioned as to $120,000 for Goodwill and $29,000 for Equipment. The Gaunt Business Contract refers in this latter context to an apportionment schedule in respect of the Equipment but there was no schedule answering that description. However the Gaunt Business Contract included an inventory entitled “Thunderbird Gardens Motel Tamworth Inventory 2-10-2002” (in 30 pages) which contained a (meticulously) detailed description of the chattel contents of each individual residential Unit in the Motel and also certain other rooms such as e.g. Games Room, Reception and the like. Unit 1 by way of an example which will be utilised again in this decision, commenced with “1 Queensize bed” (and the inventory also contained a definition of the components of the bed) which was followed by “wall-to-wall carpet”. The Gaunt Building Contract contained an interdependence clause in the same terms as that contained in the Gaunt Land Contract. It also contained a clause 8 (referred to henceforth in this decision as the “inventory clause” reading as follows:

“The Purchaser shall accept the plant, fixtures, fittings and chattels set out in the inventory in the state of repair in which they are at the date of completion. The Purchasers rely entirely on their own skill and judgment and no warranty whatsoever is given as to the quality or fitness for any particular purpose of the plant, fixtures fittings and chattels set out in the inventory or that they are of merchantable quality. All such items of purchased with all fault, imperfections or error whether discoverable by inspection will not and whether occurring before or after the date hereof.

5 The Gaunt Land Contract and the Gaunt Business Contract are collectively referred to as the “Gaunt Contracts”.

6 Exhibit R1 also included a contract for the sale of land (“the Parker Land Contract”) dated 24 September 2004 made between the Applicants as vendors and William David Day (“Day”) as trustee of the Day Family Trust as purchaser, for a consideration of $940,000 of the Land and Improvements; in respect of Improvements the box marked “other” was crossed by way of inclusion. The Parker Land Contract was expressed to be interdependent with a contract for the sale of business (the “Parker Business Contract”) between the same parties in the same capacities and pursuant to which the Applicants sold the Business to Day for $192,500 apportioned as to $172,500 for Goodwill and $20,000 for Equipment. Once again there is a reference to an apportionment schedule but no schedule answering that description was attached. There was however an interdependency clause, a detailed inventory and an inventory clause all in much the same terms as were contained in the Gaunt Business Contract, but excepting only that the inventory clause in the first sentence referred to date of contract rather than date of completion. Mr Parker said in evidence that in respect of the Parker Land Contract and the Parker Business Contract (collectively “the Parker Contracts”) the documentation in respect of the Gaunt Contracts was utilised, as he put it, on a back- to- back basis. The Gaunt Contracts and the Parker Contracts are excepting only as to amounts, similar.

7 It may be noted if only for the sake of completeness that each of the Gaunt Business, Contract and the Parker Business Contract dealt with stock but not in any manner which need be dealt with in detail for the purposes of this decision.

8 Exhibit R1 also included detailed accounts of the Applicants as at and in respect of the years ending 30 June 2003 and 30 June 2004 prepared by Warby Kehlet & Noble, accountants of Campbelltown. The profit and loss account for the 2003 year reflected an overall loss of $4973.78 while in respect of the 2004 year an overall profit of $7565.06 was reflected. Mr Parker said, during the course of his evidence that in each case an item in entitled “replacements” ($8536.96 for the 2003 year and $5850.56 for the 2004 year) should be added back on the basis that they related to improvements. He said, that unit 17 was previously a conference room but was converted by the Applicants into a residential unit. Assuming that these amounts may be added back (on a notional basis) the 2003 year loss reflected is notionally converted into a small profit. These two sets of accounts are collectively referred to as the “exhibit R1 accounts”)

9 I use the term “Building” synonymously with the concept of “Improvements” in each of the Gaunt Land Contract and the Parker Land Contract and so as to embrace the actual buildings on the Land in which the Motel Business was conducted. The term “exhibit R1 inventories” refers to the detailed chattel inventories (which did not include apportioned or any values) attached to the Gaunt Business Contract and the Parker Business Contract respectively.

10 The Parker Land Contract included in exhibit R1 is not in all respects identical to the first page of that contract sent by Mrs Parker to Ivan Chua (“Chua”) an employee of the Respondent under cover of a letter dated 11 January 2005 (Tab 5 of the section 58 documents). That first page and in relation to Improvements indicates that the “other" box was crossed but then and in addition and following the box, the words “ motel complex” were inserted in handwritten form. As to why there was this difference was not explained.

11 Tab 6 of the section 58 documents contains a letter dated 13 January 2005 by Mrs Parker to Chua, the first three paragraphs of which read as follows:

As per our telephone conversation today, please find attached inventory list as requested.

Inventory Total : $300825
Land and improvements used for personal use: $30000
Therefore the approximate value of land
and improvements to the business: $339,175
Total: $940,000

At this stage these figures are approximate to the best of our knowledge without going to the expense of engaging a registered valuer

12 The inventory referred to in the letter dated 13 January 2005 (and quoted in part in the preceding clause) lists but in general terms only and not in detail, chattels totalling $300,825 and then includes personal use of a four bedroom house garages sheds etc at $250,000 and personal use of the paddock at $50,000 to arrive at an overall figure of $600,825.

13 It would seem that the Applicants intended in the letter dated 11 January 2005 to suggest that the purchase consideration under the Parker Land Contract should be apportioned in the manner set out and so as to attribute a large amount to Inventory and thus substantially reducing the amount to be attributed to the Land itself. The Parker Land Contract does not in any way justify any such an apportionment.

14 Tab 7 of the section 58 documents contains a valuation by J. V Goodwin & Co dated 18 January 2005 (“the Goodwin valuation”) in the following terms:

Thank you for allowing our company to do a market appraisal on the property located at 999 Armidale Road Nemingha

This valuation is of land and vacant buildings and does not consider the motel room fittings or the annual turnover of the business

Based on recent local sales this property would market around $400,000 for $50,000

Should you require any further assistance please do not hesitate to contact the office for assistance.

15 The valuation referred to in the preceding clause is described by the Tribunal as surprising because it makes no reference to the actual sale of the Land and Building for $940000 only a few months earlier. The Applicants gave confused evidence as to why they obtained the Goodwin valuation. The Tribunal notes that it did not seem to serve any useful purpose.

16 Although exhibit A1 of itself is not a very lengthy document it includes lengthy annexure in tabbed sections; some of the contents of the annexures are referred to in the remaining clauses of this Part A.

17 Annexure G to exhibit A1 is a letter by the Respondent to the Applicant dated 23 March 2005. He dealt in particular with section 162G of the Duties Act 1997 (“the Act”) in the context of the principal place of residence (“PPR”) exemption and bearing in mind that the Applicants used a part of the Land and Building as their PPR; in accordance with that letter, the Respondent calculated that the Applicants were entitled to a PPR exemption to the extent of one third of $748985 amounting to $249 412.

18 Annexure H to exhibit A1 is the most significant written evidence in this matter. It is a document entitled “Thunderbird Gardens Motel Tamworth Inventory 2-10-2002; it is referred to henceforth in this decision as the “Specified Inventory”). It consists of 30 pages, specifying in respect of each Unit or other room all of the chattels in it; it is clearly derived from the exhibit R1 inventories and uses the date referable to the Gaunt inventory, and even though that date occurred approximately 2 years previously. The chattels are in the main set out in typescript. However and in respect of (nearly) every such item, a handwritten monetary amount is specified. Taking Unit 1 as an example the bed is reflected at an amount of $2062.30. No amount is specified in respect of the carpet which is the item which follows immediately thereafter. The last item is a bedhead at $205 where the description of the chattel is in handwriting. The evidence was that the bedhead was not a new chattel but that it had not for some reason been included previously. The inventory in respect of Unit 17 contains a considerable number of handwritten entries in respect of chattels. This arose according to Mr Parker’s evidence when Unit 17 was converted from a conference room into a residential unit, and in consequence new residential chattels were needed. The issue related to the Specified Inventory will be referred to in more detail later in this decision.

19 Annexure J to exhibit A1 contains two profit and loss statements. The first is referable to the Gaunts and shows a net profit for the year ended June 2002 of $70174.23. The second relates to the period 1 December 2002 to 30 November 2003; it is in respect of the Business in the hands of the Applicants and shows a net profit of $148275 for that year. The takings are reflected at $228723.09 in the first mentioned statement and $266434 in the second. These two statements must be considered in the context of the second last and third last paragraphs of exhibit A1 reading as follows:

In our case the reason we made a profit from selling the motel was because of increased turnover in the business. The sale price when we purchased & when we sold at the motel is purely based on net profit figures (Annexure J attached) not on the value of the land & improvements

The reason our turnover increased was due to better business practices, marketing, longer hours better & more services etc. We did not make any gain due to a property profit or an overheated property market.

20 The Applicants claimed in exhibit A1 that they believed that for the purposes of the vendor duty calculation the Land was to be taken into account as if it were vacant land and thus ignoring any improvements on it. As to how they formed that belief is unclear. Nor is it clear why in the circumstances it was thought necessary to obtain the Goodwin valuation on the basis that there was no Business being conducted in the Building.

21 The law in this area is and has for many years been clear. Buildings constructed on land on a permanent basis accede to, form part of and pass with that land. In this case, the Building proper must fall into this category. Ceedive Pty Ltd v May [20051 NSWSC 222; Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700. In accordance with the evidence before me there may have been fixtures which were so affixed to the Land that they fall into the same category but it is not necessary to canvas this aspect further.

Part C. The estoppel issue

22 The Applicant claimed that there were complications and difficulties arising from muddled or incorrect advice given to them by Chua. They said in categoric terms that he did not know sufficient about vendor duty.

23 Whatever the true position may be as regards correspondence between the Applicants and Chua there cannot be an estoppel against the operation of the Act. In BLT Pty Ltd v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003 Gzell J noted:

It should be noted, however, that with few exceptions the courts have concluded that estoppel does not lie against a fiscal authority on the basis that the authority cannot be prevented from carrying out the public duties cast upon it by the legislation (Federal Commissioner of Taxation v Wade (1951) 84 CLR 105; AGC (Investments) Ltd v Federal Commissioner of Taxation 91 ATC 4180 ; Federal Commissioner of Taxation v Australia & New Zealand Savings Bank Ltd (1994) 181 CLR 466 ; Bellinz v Federal Commissioner of Taxation (1998) 84 FCR 154 ; Oamington Pty Ltd (Receiver & Manager Appointed) v Commissioner of Land Tax 98 ATC 5051).

24 Land-related property is defined in s 149 of the Act to include “land in NSW” or an interest in land.

25 Land is defined in the Dictionary to. include a stratum but is otherwise not defined.

26 The Interpretation Act 1987 provides:

"land" includes messuage, tenements and hereditaments, corporeal and incorporeal, of any tenure or description, and whatever may be the estate or interest therein.

27 As indicated previously, the Applicants were allowed a PPR exemption in consequence of the fact that part of the Land and Building and was used by them for that purpose. The exemption was allowed in accordance with section 162G of the Act as follows: --

162G Apportionment for land partly used as a principal place of resident

(1) This section applies in respect of land to which a vendor duty transaction relates if the Chief Commissioner is satisfied that:

(a) the land is used and occupied by the vendor as the principal place of residence of the vendor, and

(b) the principal place of residence exemption under this Act would apply in respect of the land, had the land not been used for purposes other than residential purposes.

(2) For the purpose of charging vendor duty, the dutiable value of land-related property transfer by the vendor duty transaction (being land to which this section applies, a land use entitlement in respect of land to which this section applies or an interest in land to which this section applies) is to be reduced by the exempt proportion for the land.

(3) The "exempt proportion" for the land is:

(a) if the dwelling used and occupied by the vendor as a principal place of residence is a single dwelling—the proportion determined by deducting the apportionment factor from 1, or

(b) if the dwelling used and occupied by the vendor as a principal place of residence is a flat—the proportion determined in accordance with the following formula:

(1- the apportionment factor) x (floor area of the flat divided by total floor area of all flats on the land)

(c) in any other case—such proportion as the Chief Commissioner considers fair and reasonable in the particular case.

(4) For the purpose of subsection (3) (a) and (b), "the apportionment factor"is:

(a) if there is an apportionment factor entered in the Register of Land Values in respect of the land value of the land under Division 5 or 5A of Part 1B of the Valuation of Land Act 1916 —that apportionment factor (expressed as a fraction), or

(b) if paragraph (a) is not applicable—such other apportionment factor as the Chief Commissioner considers fair and reasonable in the circumstances, subject to subsections (5) and (6).

(5) If the land concerned is mixed development land or mixed use land and there is no apportionment factor entered in the Register of Land Values in respect of the land value of the land under the Valuation of Land Act 1916, the Chief Commissioner may request the Valuer-General to determine the apportionment factor in respect of the land concerned.

(6) If a request is made under subsection (5):

(a) the Valuer-General must determine the apportionment factor concerned and enter it in the Register of Land Values under the Valuation of Land Act 1916, and

(b) that apportionment factor is to be applied in respect of the land.

Note: Divisions 5 and 5A of Part 1B of the Valuation of Land Act 1916 allow objections to be made against the amount of an apportionment factor.

(7) For the purpose of applying this section in respect of land on which there is a residential occupancy other than that of the vendor, the use of the land for the purpose of that other residential occupancy may be disregarded if that residential occupancy is an excluded residential occupancy under Schedule 2.

(8) In this section:

"mixed development land"has the same meaning as in Division 5 of Part 1B of the Valuation of Land Act 1916.

"mixed use land" has the same meaning as in Division 5A of Part 1B of the Valuation of Land Act 1916.

28 Section 162T of the Act provided:

162T Sale of business that includes land-related property

An agreement for the sale or transfer, or a transfer, of land-related property is not chargeable with vendor duty if the Chief Commissioner is satisfied that:

(a)the agreement or transfer forms part of an arrangement for the sale of the whole of a business under which both land related property and other dutiable property connected with the business (including business assets) are transferred to a transferee, and

(b) the dutiable value of the land-related property comprises less than 60% of the total dutiable value of the land-related property and other dutiable property.

29 The dutiable value of the property is defined in s 158 of the Act by reference to dutiable values as set out under Chapter 2 (s 21) that is the greater of the unencumbered value or the consideration for the dutiable transaction.

30 The Applicants contended that because they received a PPR exemption in respect of part of the Land, that part should be excluded from the calculation required by section 162T(b). Mr Parker contended that if in relation to any property, it is not liable to duty, it cannot and does not have a dutiable value, and thus for the purposes of that calculation, the Land must be taken into account only to the extent of two thirds (and bearing in mind that one third was allowed as a PPR exemption in accordance with section 162G).

31 When asked why he contended that section 162T to should be read in the manner set out in the preceding clause (and in particular the legal basis for that contention) Mr Parker pointed to the fact that section 162G occurs in the Act prior to section 162T.

32 The Respondent contends that the PPR exemption provided by section 162G does not require a conclusion that land the subject of a PPR exemption has no dutiable value. On the contrary, so the Respondent contends, that land while it has a dutiable value is not chargeable with duty. This being so that land is not excluded from the calculation required by section 162T(b)

33 The Respondent’s contention is correct. There are many instances of property which would otherwise be chargeable to duty but are for a statutory reason exempt. Property may be exempt because it enjoys the PPR exemption; equally by way of further example it might be exempt because the person otherwise liable for duty enjoys a blanket exemption as a charitable body. The fact that the sections appear in the order previously referred to is not relevant.

34 The Applicants contended, also at length, that to include PPR exempt property in the section 162T calculation would not be fair. It is unnecessary for the Tribunal to comment on that contention. Suffice it to say that section 162T is not in any way in its terms subject to or dependent on section 162G, that it operates separately and in its own right, and that there is no legal basis for the Applicants’ contentions.

35 As will be seen, the issue canvassed in this part D may be academic in that it does not matter whether the Land (or part) taken into account for the purposes of section 162T (b) at $940,000 or two thirds of that amount, since in either case the value of the land exceeds 60% of the value of the Land and other dutiable property.

Part E. The inventories issue

36 In oral evidence before the Tribunal Mr Parker said that the exhibit R1 inventories were attached to and formed part of the Gaunt Land Contract and the Parker Land Contract respectively, (and not the Gaunt Business Contract and of the Parker Business Contract respectively). In cross-examination it emerged that when the summons to produce was received Mrs Parker dealt with the matter in that she contacted the solicitors and accountants, obtained copies of the documents required and sent them to the Tribunal. Mr Parker was not in fact able to say specifically how the exhibit R1 inventories were attached.

37 Mrs Barker in her evidence confirmed that on receipt of the summons she contacted the solicitors and accountants, obtained copies of the relevant documents and forward them to the Tribunal. She agreed (if reluctantly) that she did not know how the exhibit R1 inventories were attached.

38 Mr Mark Twohill who was called by the Respondent, and who is a senior officer in the employ of the Respondent, confirmed that the exhibit R1 inventories were attached to the Gaunt Business Contract and the Parker Business Contract respectively. His evidence must be accepted not only because he was a credible witness but more particularly because it is not likely, ex facie the relevant contracts, that they would have been attached to the Gaunt Land Contract and the Parker Land Contract respectively. That this is so arises from a consideration of the contracts themselves. The Land Contracts do not contemplate the inclusion of inventories whereas the Business Contracts do. The. Tribunal again refers to the inventory clause contained in each Business Contract which refers in specific terms to “the inventory” and then goes on to refer in specific terms to refer to “the plant fixtures fittings and chattels set out in the inventory”. Evidence by the Applicants to the contrary effect cannot be accepted as truthful.

Part F The profits issue

39 As set out previously in this decision the Applicant contended in exhibit A1 that the increase in value arose from their efficient management of the Business. In support of that contention they furnished the profit and loss statements contained in Annexure J to exhibit A1. One major difficulty arises from the fact that they did not compare like with like. The Applicants’ profit and loss statement omits important items such as accountancy fees, interest and depreciation the combined effect of which is substantial. As to accountancy fees Mrs Parker said (disingenuously) that they were omitted because “we had not paid them”. That was not to the point; they had been incurred. As to interest, the contention was that it was omitted because as between one owner and another, an interest obligation would depend on whether that owner had or had not borrowed. This may be so, but it ignored the fact that the Gaunt profit and loss statement included all of these items whereas the Applicants’ profit and loss statement omitted them, and on much the same takings, thus throwing up a significantly higher profit figure. The same contention was made by the Applicants in correspondence with the Respondent.

40 The Applicants’ profit and loss statement was in any event open to question for another reason and that is that it is not reconcilable with their exhibit R1 accounts which were audited and which in one year reflected minimal profits and in respect of the other year a small loss. On the basis of those audited accounts the Applicants did not derive the Business profits specified by them.

41 But in any event, evidence of this nature is hardly relevant for the purposes of section 162J of the Act which provided that the vendor duty provisions did not take effect unless the Applicants derived a gain of at least 12%. They bought the Land for $731,000 and sold it for $940,000 and accordingly made a gain in excess of 12%; the result is that the provisions of section 162J of the Act were satisfied.

Part G; The Specified Inventory

42 Each of the Applicants said that they thought that the term “Equipment” referred to boilers and items of a like nature and being in other words items affixed to the Land with a degree of permanence; they were adamant as that the fact that Equipment as referred to in the Parker Business Contract did not relate to all of the numerous chattels listed in the Specified Inventory.

43 Mr Parker said that the Specified Inventory was prepared by his wife who for this purpose contacted all of their suppliers and so as to ascertain what the relevant values were. They started by preparing the Inventory, and for this purpose utilised the form of the exhibit R1 inventories; Mrs Parker then inserted the values so ascertained in her own handwriting. His evidence was that the values ascertained were discounted (although he did not specify a factor or factors) so as to arrive at a second-hand value and given that the chattels were (for the most part) used.

44 Mr Parker said (as I have noted) in respect of Unit 17 that it had been converted from a conference room to a residential unit proper and accordingly contained items which were new. He said that they were running a first-class motel and had to obtain good quality chattels and replace them when necessary to keep up standards.

45 Mr Parker was asked why then the Equipment was sold for $20,000 only. His evidence was the apportionments in the Parker Contracts were made by the solicitors and accountants and the Applicants simply abided by their advice and in particular accepted the Parker Contracts in the form in which they were drawn. He said also that there were never any discussions as to income tax implications. He said moreover that although they had obtained advice as to vendor duty implications from solicitors and accountants prior to entering into the Parker Contracts they did not distort the figures for the purpose of the calculation and with a view to achieving the correct (for the Applicants) balance, in respect of section 162T(b).

46 Mrs Parker gave evidence to much the same effect except that she was much vaguer as to when a chattel was valued at the cost of replacement or at some lesser or in other words discounted amount. She did speak of discount values but was not able to point to any specific chattels for this purpose and moreover did not specify any percentages employed.

47 The fallacy (and it is a fatal fallacy) in the evidence given by the Applicants is demonstrated by the Specified Inventory itself. In respect of unit 17 the bed (on the evidence a new one) was reflected at $2062.30. The same amount is reflected for the bed in respect of the other Units. This is one example and there are many others. On a balance of probabilities, the Applicants did indeed distort the figures in the Specified Infantry in order to achieve the right balance (for them) for the purposes of section 162 T (b).

48 The aggregate amount in respect of all chattels contained in the Specified Inventory is $292,665.84. This amount must be considered in relation to the amount of $300,825 referred to in the letter dated 13 January 2005. It must also be considered in the context of the amount of $20,000 referable to Equipment contained in the Parker Business Contract.

49 The Applicants agree that they sold all of the chattels to Day; they say also that they sold all of the Equipment (but according to them, confined to boilers etc on the basis set out previously) for $20,000. The Applicants seek to contend that the chattels sold to Day had a dutiable value of about $300000. The only relevant reference in the Parker Contracts is to Equipment and to which an amount of $20000 was apportioned. The Applicants received from Day the aggregate of $940000 and $192500 amounting in all to $1132500 and no more. If the chattels had a value of about $300000 the value of the Land (or the Land and the Goodwill in combination would (presumably) have been less by a corresponding amount. The problem for the Applicants is that this contention, although clearly it assists them for the purposes of section 162T and no doubt was designed to do so, is contradicted by the terms of the Parker Contracts themselves.

50 In Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 140 CLR 337, Mason J observed:

"We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract."

51 And in paragraph 42 the High Court said:

42. Consistent with this objective approach to the determination of the rights and liabilities of contracting parties is the significance which the law attaches to the signature (or execution) of a contractual document. In Parker v South Eastern Railway Company [(1877) 2 CPD 416 at 421 ] , Mellish LJ drew a significant distinction as follows:
"In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not read the agreement and does not know its contents.

52 It is not possible to reconstruct the figures (as the Applicants sought to do) in such manner that they contradict the Parker Contracts.

53 The evidence before me on a balance of probabilities, favours the view that the Specified Inventory was prepared only after the vendor duty implications were clear to the Applicants and in an attempt to avoid the vendor duty liability. As I have indicated, they had advice as to vendor duty before they entered into the Parker Contracts.

54 Why if the Equipment was worth much more than $20,000 was it sold for $20,000 only? The Tribunal was told that $20,000 was the depreciated value of the Equipment (restricted according to the Applicants to boilers etc on the basis set out previously). It seems to the Tribunal that it is very likely that there were relevant tax considerations. The Equipment could not be sold above depreciated book value since otherwise there would have been a balancing charge recoupment and tax in consequence.

55 There was never any suggestion that the Parker Contracts did not truly reflect the transaction between the Applicants and Day. They were (as the Applicants accepted) parties who were, and who contracted as parties at arm’s length. This was so (as they also accepted) in respect of the Gaunt Contracts.

Part H. conclusion

56 The Tribunal that some of the evidence given by the Applicants confused as it sometimes was, was not impressive. It is likely that having obtained advice they knew that a vendor duty obligation was likely. By the time of signature of the Parker Contracts vendor duty was in force.

57 I think it likely as set out previously that tax considerations played a significant role. The Tribunal was told that accounting and legal advice was obtained but there was no evidence to this effect by either the accountants or the solicitors and in particular there was no evidence as to the nature of any such advice. The Tribunal repeats that the Parker Contracts were contracts drawn at arm’s length and there is no reason to doubt that they properly and accurately reflected the transaction between the Applicants and Day; indeed there was no suggestion by the Applicants to the contrary.

58 In essence the Applicants in order to succeed must show that the other dutiable property had a value such that the calculation required by section 162T(b) results in a percentage which favours them. As I have noted the Equipment was pursuant to the Parker Business Contract sold for $20000. The term “Equipment” must in the opinion of the Tribunal be construed so as to relate to all of the Equipment and including the chattels listed in the Specified Schedule or for that matter which are listed in the relevant exhibit R1 inventory. There is no doubt that they were all sold to Day pursuant to the Parker Business Contract; in terms of that contract the Equipment was sold for $20000. It is possible that they were worth more than that sum although no evidence to this effect was produced; the evidence as regards the value of the chattels listed in the Specified Schedule was distinctly unimpressive. The Parker Contracts could have been drawn so as apportion a higher value to the Equipment and a lower value to Goodwill and the Land or a lower value the Land alone but at all events so as to have the effect that the aggregate amount payable by Day was the same. From Day’s point of view it would seem that a higher value for the Equipment might have suited him since it would have afforded him a greater amount for depreciation purposes, but then there would have been tax consequences for the Applicants. The fact is, as I have said, that the Parker Contracts were drawn and signed in the manner set out previously as between parties contracting at arms length and there was no suggestion at all that they were not correct in accordance with their terms.

59 I said earlier that the PPR issue was probably academic. That this is so is demonstrated by the fact that $940000 divided by $940000 plus $192500 expressed as a percentage is above 60% and this is so, albeit to a lesser extent, where $620000 is substituted for $940000.

60 In summary and in the Tribunal's view, this application was without merit. The sale of the Land clearly resulted in a liability to vendor duty. The Applicants failed to provide any credible evidence which might have the result that they were not liable for the duty.

61 Accordingly, the decision under review is affirmed.