PINESALES PTY LTD and COMMISSIONER OF STATE REVENUE

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: TAXATION ADMINISTRATION ACT 2003 (WA)

CITATION: PINESALES PTY LTD and COMMISSIONER OF STATE REVENUE [2006] WASAT 202

MEMBER: JUSTICE M L BARKER (PRESIDENT)

HEARD: 18 JULY 2006

DELIVERED : 24 JULY 2006

FILE NO/S: CC 3192 of 2005

BETWEEN: PINESALES PTY LTD
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

State Revenue – Stamp Act 1921 – Whether later contract of sale and purchase of proposed strata unit terminated original contract – Whether fact that new contract of sale and purchase of proposed strata unit on substantially the same terms and conditions and price as original terminated contract meant that "matter" included in original contract "has been or will be carried into effect" for the purposes of s 20(1)(a) of the Stamp Act 1921 – Whether taxpayer "has received or will receive a benefit in respect of the matter" for the purposes of s 20(1)(b) and s 20(4) of the Stamp Act 1921 – "Matter included in the instrument" – "Matter has not been, and will not be, carried into effect" – "Taxpayer has not received, and will not receive, a benefit in respect of the matter" – "Taxpayer receives a benefit in respect of the matter included in an instrument if, as a result of the matter not being carried into effect, an amount of money, or a right, property or service is received by the taxpayer"

Legislation:

Administrative Appeals Tribunal Act 1975(Cth),
Planning and Development Act 2005 (WA), s 135, s 140
Stamp Act 1921 (WA), s 12, s 15, s 15A, s 19, s 20, s 20(1), s 20(1)(a), s 20(1)(b), s 20(1)(c), s 20(4), s 20(9)
Stamp Amendment Act 2003 (No 2 of 2003) (WA), s 12
State Administrative Tribunal Act 2004 (WA), s 27(1), s 27(2), s 29(1), s 29(3)(c)(ii)
Strata Titles Act 1985 (WA), s 2, s 4, s 5, s 5(9), s 25, s 25(5)(a) s 25A, s 70(4)
Strata Titles Amendment Act 1995 (WA) (No 58 of 1995), s 4
Town Planning and Development Act 1928 (WA), s 20, s 20(1), s 20(1)(a), s 20B, s 20B(1), s 21

Result:

Review application allowed
Decision of Commissioner of State Revenue set aside and matter sent back to Commissioner for a decision in accordance with declaration of the Tribunal with a view to reduction of duty payable pursuant to s 20 of the Stamp Act 1921 (WA)

Category: A

Representation:

Counsel:

Applicant: Mr PCS Van Hattem and Ms CJ Wallace
Respondent: Mr SJ Wright and Ms JM Jones

Solicitors:

Applicant: Freehills
Respondent: State Solicitor

Case(s) referred to in decision(s):

Berry v Wong [2000] NSWSC 1002
Brambo (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1963] SR(NSW) 522
Casella v Commissioner of State Taxation (WA) [1996] 96 ATC 4145 at 4150; 32 ATR 426
Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Limited (2000) 201 CLR 520
Concut Pty Ltd v Worrell (2000) 176 ALR 693
Dan v Barclays Australia Ltd (1983) 46 ALR 437
Glass v Ralph [1966] WAR 91
Glentham Pty Ltd v City of Perth [1986] WAR 205
Golem v Transport Accident Commission [No 1] [2002] VCAT 319
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110
Landall Construction & Development Co Pty Ltd v Bogaers [1980] WAR 33
Lombardo v Development Underwriting (WA) Pty Ltd [1971] WAR 188
McDonald v Director-General of Social Security (1984) 1 FCR 354
Re Perpetual Trustee Co (Canberra) Ltd and Commissioner for ACT Revenue (1995) 95 ATC 2062
Stone James & Co v Investment Holdings Pty Ltd [1987] WAR 363
Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93
Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32
Wilson International Pty Ltd v International House Pty Ltd [No 2] [1983] WAR 243

Case(s) also cited:

British and Beningtons Ltd v North West Cachar Tea Company Ltd [1923] AC 48
Charles Lodge Pty Ltd v Menahem [1966] VR 161
Commissioner of State Taxation (WA) v Kitchener Mining NL (1994) ATC 4987; 29 ATR 530
Compagnie Noga D'Importation et D'Exportation SA v Abacha (No 2) [2003] 2 All ER (Comm) 915
Creamota Ltd v Rice Equalization Association Ltd (1953) 89 CLR 286
Fitzgerald v Masters (1956) 95 CLR 420
Gange v Sullivan (1966) 116 CLR 418
Government Employees Superannuation Board v Martin (1997) 19 WAR 224
Kirk Contractors Pty Ltd v Lasnom Pty Ltd (Unreported, Supreme Court of Western Australia, 31 May 1995, BC 9503644)
Koikas v Green Park Constructions Pty Ltd [1970] VR 142
Morris v Baron Company [1918] AC 1
Re Piccolo; Ex parte McVeigh [1999] FCA 386
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Suttor v Gundowda (1950) 81 CLR 418
United Dominions Corp (Jamaica) Ltd v Shoucair [1969] 1 AC 340

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

In late 2003 the applicant entered into a contract with a developer to purchase a proposed strata unit in the Allegro residential development at The Peninsula, Burswood, Western Australia. This original contract contained, amongst other terms and conditions, a condition that the developer would apply for strata subdivision approval within three months of the date of the contract. This condition was not complied with.
On 2 August 2004 the developer wrote to the applicant (and other persons who had entered into similar contracts) advising that the application for approval of the strata plan had not been lodged within three months as required and the original contract "is at an end". The developer offered the opportunity to the applicant (and the other persons affected) to enter into "a new contract" by signing a proposed deed which was attached to the letter. The applicant accepted the offer and executed the attached document as a deed on 10 August 2004.
The applicant was liable to pay the Commissioner of State Revenue stamp duty on the original contract under the Stamp Act 1921 (WA) (Stamp Act) and did so. After the applicant had signed the deed following the letter of 2 August 2004 from the developer, solicitors for the applicant (and other parties who had acted in a similar manner to the applicant) requested the Commissioner of State Revenue to reduce the amount of duty payable on the original contract to nil under s 20 of the Stamp Act, and to impose duty at the lower rate that applied when the later deed was signed. In between the date when the applicant's original contract was made with the developer and the date of execution of the deed, the rate of stamp duty payable on such an instrument had been reduced under the Stamp Act.
The Commissioner refused. He decided that the deed did not constitute a separate stand‑alone contract for the purchase of the proposed strata unit and that the original contract continued to apply. The Commissioner took the view that the deed merely reaffirmed the original contract. Accordingly, the Commissioner contended the amount of duty payable was that already paid on the original contract.
The Commissioner later rejected an objection made on behalf of the applicant and other persons to his ruling.
On review by the Tribunal, the Tribunal decided that the factors set out in s 20 of the Stamp Act were satisfied and that the applicant was entitled to a reduction of duty.
In particular, the Tribunal decided that:
•the deed entered into by the applicant with the developer in August 2004 terminated the original contract and was a new, stand‑alone contract;
•the matter of the proposed sale and purchase of the apartment included in the instrument, being the original contract, was a matter that has not been and will not be carried into effect, for the purposes of s 20(1)(a) of the Stamp Act;
•the applicant as taxpayer has not received, and will not receive, a benefit in respect of the matter included in that instrument;
•the reason the matter was not, and will not be, carried into effect is not merely to enable a replacement transaction to be entered into.
The Tribunal declared that the applicant was entitled to a reduction of duty pursuant to s 20 of the Stamp Act and sent the matter back to the Commissioner of State Revenue to be determined in accordance with its declaration to that effect with a view to stamp duty on the original contract being reduced in accordance with the requirements of s 20 of the Stamp Act.

Issue

The issue in these proceedings is whether the applicant, Pinesales Pty Ltd, is entitled to a reduction of duty that was payable, and paid, on a contract of sale and purchase of proposed strata apartment 301 in the Allegro development at The Peninsula, Burswood, entered into between the applicant and BL Developments Pty Ltd (vendor) on 10 December 2003.
The issue turns on the answers to the following questions:
•Did the contract terminate:
(i)automatically, when no application for subdivision was lodged with the Western Australian Planning Commission within three months after the Contract Date in respect of the Contract is contemplated by clauses 13.2(a) of the 2002 General Conditions that form part of the Contract; or
(ii)by agreement between the applicant and the vendor, upon and by virtue of the execution of a further contract entered into by the parties to the original contract?
•Should the Commissioner have been satisfied in respect of a matter included in the contract that:
(i)has not been and will not be, carried into effect; or
(ii)that the applicant has not received, and will not receive, a benefit in respect of the matter?

Facts

By a standard form contract of sale for strata title units (original contract) made on 10 December 2003 between the vendor BL Developments Pty Ltd and the applicant, which incorporated the Joint Form of General Conditions for the Sale of Land 2002 Revision (2002 General Conditions) as well as special conditions of sale, the applicant agreed to purchase proposed strata unit apartment 301 in the Allegro residential development at The Peninsula, Burswood.
When the applicant entered into the original contract with the vendor, approval for the strata subdivision of Allegro had neither been sought by the vendor nor granted by the relevant approval authority, the Western Australian Planning Commission, under the Strata Titles Act1985(WA).
The special conditions of sale contained a number of conditions relevant to the proposed strata plan for the development:
•Clause 3.1(b) gave the vendor the right, by notice in writing to the applicant, to terminate the contract if, at any time up to and including 5pm (WA time) on the Latest Date, if the vendor forms the opinion that the Proposed Strata Plan will not be registered in the form required by [the vendor] by the date specified in cl 4.
•If the vendor terminated the contract under cl 3.2, the vendor "must repay" to the applicant the Deposit together with all approved interest and all other monies, if any, paid under the contract: cl 3.2.
•By cl 4(a), the parties agreed that the applicant may only exercise its rights under s 70(4) of the Strata Titles Act 1985 if the strata plan "has not been registered by the Registration Date". By cl 1, the "Registration Date" means the date which is 36 months after the Contract Date, as that date may be extended under cl 4(b). Section 70(4) of the Strata Titles Act 1985 provides that:
"If the strata/survey-strata plan is not registered -
(a)within such period after the date of the contract as is agreed in writing by the purchaser and the vendor; or
(b)in the absence of any such agreement, within 6 months after that date,
the purchaser may avoid the sale at any time before the plan is registered.
The 2002 General Conditions (in some cases as amended by the special conditions) also generally dealt with the question of subdivision:
•Clause 13.1 provided that the clause "applies only if the Land is not a Lot at the Contract Date".
•Clause 13.2(a) made the contract conditional on the following:
"13.2(a)An application for the subdivision of the Lot from the Original Land being lodged with the Planning Commission within 3 months after the Contract Date."
•Clause 13.2(b) made the contract conditional on the following:
"13.2(b)The Planning Commission granting approval for the subdivision of the Lot from the original Land within 6 months after the Contract Date, or any longer period as specified in:
(1)the Contract; or
(2)a subsequent agreement in writing between Parties."
Clause 12(e) of the special conditions provided that for the purposes of cl 13.2(b), the period of time specified is the period from the Contract Date to the Registration Date in lieu of 6 months after the Contract Date.
•Clause 13.3(a) of the 2002 General Conditions specified a further condition that approval be endorsed on a Subdivision Plan within 6 months after approval for the subdivision. Special condition clause 12(f) altered this to the period from the Contract Date to the Registration Date, in lieu of the 6 months.
•By cl 13.4(a) of the 2002 General Conditions the vendor was obliged, if it had not already done so, to lodge an application with the Planning Commission for the subdivision of the Subdivision Lot from the Original Land within 15 Business Days after the Contract Date.
•By cl 13.6(a) where the Lot is a proposed Strata Lot and approval for the subdivision of the Strata Lot from the Original Land is exempt from the requirement to obtain the approval of the Planning Commission, on the basis that the relevant approval may be granted by a local government, each reference in cl 13.2 to 13.5 and 13.7 to the Planning Commission means a reference to the relevant local government. This clause suggested that notwithstanding the possibility of the inapposite use of the expressions in cl 13.2 to 13.5 and 13.7 for the sale of a proposed strata unit, the 2002 General Conditions were intended to apply to a strata subdivision.
•By cl 13.6(b), without affecting cl 13.4, where the Subdivision Lot is a proposed Lot on a Strata Plan, the vendor must use best endeavours to arrange for the Subdivision Plan, being a Strata Plan to be registered at DOLA within the period specified or referred to in s 70(4) of the Strata Titles Act 1985; that is the period of six months referred to earlier.
•By cl 13.7(a), if (1) any condition specified in cl 13 is not satisfied within the time specified for satisfaction of that condition or (2) a Party withdraws from, and terminates the Contract, following the imposition of a condition by the Planning Commission, subclause (b) will apply. Clause 13.7(b) then provided for the return of the Deposit and other monies.
In the event, as the parties agree, no application for subdivision as contemplated by cl 13.2 of the 2002 General Conditions was lodged with the Planning Commission within three months after the Contract Date – which was defined in a way to mean 10 December 2003 when the applicant signed the original contract ‑ or at all.
On 2 August 2004 the vendor's agent wrote to the applicant (and the other persons affected by contracts apparently in similar terms) advising that the application for approval of the strata plan had not been lodged within three months as required and the original contract "is at an end". The vendor's agent offered the opportunity to the applicant (and the other persons affected) to enter into "a new contract" by signing an attached proposed deed.
The applicant accepted the vendor's offer and executed the attached document as a deed on 10 August 2004.
The applicant was liable to pay the Commissioner of State Revenue stamp duty on the original contract as required under the Stamp Act and did so.
After the applicant had signed the deed following the letter of 2 August 2004 from the vendor's agent, solicitors for the applicant and other parties affected requested the Commissioner of State Revenue to reduce the amount of duty payable on the original contract to nil under s 20 of the Stamp Act, and to impose duty at the lower rate that applied when the later deed was signed.
In between the date when the applicant's original contract was made with the developer and the date of execution of the deed, the rate of stamp duty payable on such a contract had been reduced under the Stamp Act.
The Commissioner refused. He decided that the deed did not constitute a separate stand‑alone contract for the purchase of the proposed strata unit and that the original contract continued to apply. The Commissioner took the view that the later deed merely reaffirmed the original contract. Accordingly, the Commissioner considered the amount of duty payable was that already paid on the original contract.
The Commissioner later rejected an objection made on behalf of the applicant and other persons to his ruling.
This review application was then lodged.

Questions as to whether original contract illegal or void

It seems the terms of the original contract, including the 2002 General Conditions and the special conditions were drafted in light of statutory provisions generally governing the sale of land in Western Australia, including the then applicable Town Planning and Development Act 1928 (WA) (now replicated in the Planning and Development Act 2005 (WA)) and the Strata Titles Act 1985.
The Town Planning and Development Act 1928, as it applied at relevant times, provided:
•By s 20(1)(a), that a person "shall not, without the approval of the Commission… subdivide any lot…; and the Commission may give its approval under this paragraph subject to conditions which shall be carried out before the approval becomes effective."
•By s 20B certain agreements are saved. By s 20B(1), where an agreement "to sell … any portion of a lot has been entered into without the approval of the Commission to the subdivision of the land comprising that lot having been first obtained, as required by section 20(1), the agreement shall be deemed not to have been entered into in contravention of that subsection, if —
(a) the agreement is made after coming into operation of the Town Planning and Development Act Amendment Act 1967;
(b) the agreement is entered into subject to the approval of the Commission to the subdivision of the land being obtained; and
(c) an application for the approval of the Commission to the subdivision is made within a period of 3 months after the date of the agreement,
and nothing in that subsection renders the agreement illegal or void by reason only that the agreement was entered into before the approval of the Commission to the subdivision was obtained."
These provisions of the Town Planning and Development Act 1928 were enacted over the course of many years to respond to a series of decisions of the Supreme Court of Western Australia rendering void contracts dealing with the sale of unsubdivided land or proposed lots: see Glass v Ralph [1966] WAR 91, Lombardo v Development Underwriting (WA) Pty Ltd [1971] WAR 188, Landall Construction & Development Co Pty Ltd v Bogaers [1980] WAR 33, Wilson International Pty Ltd v International House Pty Ltd [No 2] [1983] WAR 243, Glentham Pty Ltd v City of Perth [1986] WAR 205, Stone James & Co v Investment Holdings Pty Ltd [1987] WAR 363.
On the face of it, the proscription on the subdivision of land without Planning Commission approval formerly found in s 20(1) (and now found in s 135 of the Planning and Development Act 2005) applies as much to the strata subdivision land as it does to any other form of subdivision, subject to any other law to the contrary.
The Strata Titles Act 1985 deals specifically with the strata subdivisions of land – that is, the "horizontal and vertical subdivision of land": see long title to Strata Titles Act 1985 as amended by number 58 of 1995, s 4. Section 25 expressly and relevantly provides:
"(1)Subject to this section, every strata plan and every plan of re-subdivision or consolidation for a strata scheme lodged for registration under this Act shall be accompanied by a certificate of approval given by the Commission unless the proposed subdivision, re-subdivision or consolidation is exempt from the requirement of such a certificate by reason of regulations made under this section.
…
(5)(a)Without limiting s 25A, sections 20 and 21 of the Town Planning and Development Act 1928 do not apply to a subdivision effected by the registration of a strata plan."

However, there does not appear to be any express provision in the Strata Titles Act 1985, s 25 or elsewhere, which says that the former s 20B of the Town Planning and Development Act 1928 (now s 140 of the Planning and Development Act 2005) does not apply in the case of an agreement to sell a proposed strata lot.
As noted, in this case the vendor did not make any application for subdivision - strata or otherwise - within three months after the Contract Date specified in the original contract.
On the face of it, this conduct constituted a breach of either or both:
•clause 13.2(a) of the 2002 General Conditions; and
•clause 13.4(a) of the 2002 General Conditions as amended by cl 12(g) of the special conditions.
If s 20B(1) of the Town Planning and Development Act 1928 were to be considered applicable in respect of a contract of the sale of the proposed strata lot under the original contract, then s 20B could not have had the effect of saving the original contract in this case because the requirement that an application for the approval of the Commission to the subdivision be made within a period of three months after the date of the agreement was not satisfied.
However, there is a real question whether s 20B has any relevance to a strata subdivision, as mentioned later in these reasons.
If s 20B does not apply, then, on the face of it, the original contract is governed by the law of private contract as it may be affected by the Strata Titles Act 1985.
If one accepts, as counsel for the Commissioner suggested, that s 25(5)(a) of the Strata Titles Act 1985, should be interpreted as excluding the application of s 20 of the Town Planning and Development Act 1928 to the sale of a "proposed" strata lot as well as the actual strata subdivision by registration of a strata plan, then there was never any requirement, and is not a requirement, for the approval of the Western Australian Planning Commission to be obtained to the sale of a proposed strata lot.
Similarly, it would seem to follow that s 20B of the Town Planning and Development Act 1928, as it then applied, which purports to save certain agreements in respect of the sale of land which does not comprise a "lot" as defined and which would otherwise be considered illegal or void, would have no application to a contract for the sale of a proposed strata lot. This would seem to follow, as counsel for the Commissioner suggested, not the least because s 20B purports to operate in circumstances where an agreement to sell a portion of a lot has been entered into without the approval of the Planning Commission to the subdivision of the land as required by s 20(1) of that Act. If s 20(1) does not apply to the sale of a proposed strata lot, then s 20B presumably can have no application in respect of it either.
If the contentions of counsel for the Commissioner are correct in relation to the non‑application of s 20(1) and s 20B of the Town Planning and Development Act 1928, as it then applied, to a contract of sale of a proposed strata lot, then the system of strata subdivision control in Western Australia when compared with the ordinary "green title" subdivision system that operates under the planning legislation, would seem to be considerably at variance. This is an important legal and public policy issue, but not one the Tribunal need resolve in this case.
In the event, by reason of the determination of some of the main questions in this case, there is no need for the Tribunal to deal with these weighty contract of sale issues concerning proposed strata units.

Contentions and Tribunal's findings

Stamp Act 1921, s 20: Section 20 of the Stamp Act 1921 (WA) provides for a reduction of duty if a matter is not carried into effect. Section 20(1) provides that:
"(1)The amount of duty payable on an instrument is reduced by the amount of the full duty payable in respect of a matter included in the instrument if the Commissioner is satisfied that -
(a)the matter has not been, and will not be, carried into effect;
(b)the taxpayer has not received, and will not receive, a benefit in respect of the matter; and
(c)the reason the matter was not, and will not be, carried into effect is not merely to enable a replacement transaction to be entered into."
In this case, following the execution of the deed on 10 August 2004, the applicant (along with other taxpayers with similar interests) applied to the Commissioner for a reduction of duty in respect of the original contract, being the full amount of the duty earlier paid.
The Commissioner however was not satisfied that the factors identified in s 20(1)(a) and (b) existed and so refused to reduce duty and later dismissed an objection against his ruling in that regard.
The applicant taxpayer now seeks a review of the decision of the Commissioner to refuse to reduce the duty payable.
Nature and purpose of review proceedings and question of "onus of proof": In these proceedings the review of the Commissioner's decision is by way of a hearing de novo and is not confined to matters that were before the decision‑maker but may involve the consideration of new material whether or not it existed at the time the decision was made: State Administrative Tribunal Act 2004 (WA), s 27(1). As a matter of fact, the parties have placed before the Tribunal by way of evidence the matters that were before the Commissioner and there is no need to regard other matters.
The purpose of the review before the Tribunal is to produce the "correct and preferable decision" at the time of the decision upon the review: State Administrative Tribunal Act 2004, s 27(2).
Consequently, in the Tribunal no party expressly bears any "onus" to prove a case one way or the other: see, by reference to Administrative Appeals Tribunal Act 1975 (Cth), McDonald v Director-General of Social Security (1984) 1 FCR 354. Rather, the Tribunal has the functions and discretions corresponding to those exercisable by the decision‑maker in making the reviewable decision: State Administrative Tribunal Act 2004, s 29(1).
It has long been held, however, that the absence of a formal onus to prove a case does not preclude there being a practical onus on one or other party in review proceedings in a tribunal such as this Tribunal; see, for example McDonald v Director‑General of Department of Social Security; Golem v Transport Accident Commission [No 1] [2002] VCAT 319.
Thus it falls to the Tribunal, as it earlier fell to the Commissioner, to determine whether it is satisfied about the matters set out in s 20(1) of the Stamp Act, and in doing so to make the correct and preferable decision in the circumstances.
The s 20(1)(a) factor – whether the matter has not been, and will not be, carried into effect: On the materials before the Tribunal, the factor set out in s 20(1)(c) is not in issue and none of the parties say that it is. Consequently, as before the Commissioner, the question is whether the Tribunal can be satisfied about the matters referred to in s 20(1)(a) and (b) of the Stamp Act.
As counsel for the Commissioner put it, the starting point in this case is that, on the face of it, duty is payable on the original contract regardless of whether or not the contract was terminated. Relief from that liability can only come about through the application of a provision of the Stamp Act 1921: see for example Casella v Commissioner of State Taxation (WA) [1996] 96 ATC 4145 at 4150; 32 ATR 426.
In this regard, the only relevant provision is s 20 of the Stamp Act which, generally speaking, provides for reduction of duty if a matter is not carried into effect. This provision was inserted by Stamp Amendment Act 2003 (WA) (No 2 of 2003) s 12, and replaced former sections 15 and 15A.
The parties agree that to apply s 20 it is necessary to distinguish between an "instrument" and a "matter". Stamp duty is levied on instruments. However in order to determine whether an instrument is dutiable, and the extent and source of the liability for duty, the "matter" the subject of the instrument must be identified: see Brambo (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1963] SR(NSW) 522 at 527.
Further, both s 20 and s 19 of the Stamp Act 1921 comprehend that one instrument can contain two or more distinct matters.
The word "matter" is not defined in the Stamp Act generally or specifically for the purposes of s 20. Nor is the expression "matter included in the instrument".
Counsel for the parties generally agree, however, that the word "matter" in s 20(1)(a) of the Stamp Act has to do with a transaction which has significance for the purposes of stamp duty: see Brambo (No 2) Pty Ltd; see also Re Perpetual Trustee Co (Canberra) Ltd and Commissioner for ACT Revenue (1995) 95 ATC 2062; 31 ATR 1082 at [102]–[103]. This understanding appears to be confirmed by the definition of "replacement transaction" in s 20(9) of the Stamp Act which states that, "in relation to a matter", replacement transaction "means a transaction between the taxpayer and an independent person that is substantially similar in effect to the transaction that was to have been effected by the instrument that includes the matter".
Counsel for the parties also note that the word "matter" is used in various contexts throughout the Stamp Act, but that the word "transaction" is used less often.
The Commissioner's primary position is that the original contract was not terminated automatically upon the failure of the vendor to apply for subdivision approval or by the entry of the parties into the deed dated 10 August 2004. If the Commissioner is correct in saying this, then it would follow that there has only ever been one contract of sale in respect of apartment 301 and, therefore, s 20(1)(a) has not been satisfied; this because the "matter" – the sale and purchase of unit 301 – will be carried into effect.
As to whether the deed terminated the original contract, the parties are again in broad agreement that where the parties to an existing contract enter into a second contract relating to the same subject matter as the first, the question whether the second contract terminates the first depends on the intention of the parties: Dan v Barclays Australia Ltd (1983) 46 ALR 437 at 448; Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Limited (2000) 201 CLR 520; Concut Pty Ltd v Worrell (2000) 176 ALR 693.
Whether the parties intended termination or not can sometimes be inferred from the degree to which their contract has been modified: Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd (1957) 98 CLR 93.
Sometimes courts have exhibited a bias against finding termination in recognition of the fact that parties to a commercial arrangement commonly modify their contractual regime: see, for example, Berry v Wong [2000] NSWSC 1002; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110; Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32.
In this case, on 2 August 2004 the vendor's agent wrote to the applicant enclosing a document entitled "'Off the plan' contract of sale" (the deed). The letter stated, amongst other things:
"Under your contract, an application for approval of the strata plan had to be lodged with the Western Australian Planning Commission within 3 months [of] 19 January 2004. The application was not lodged in that period, which means your contract is at an end. To reinstate your right to buy the apartment, you must enter into a new contract by signing the attached form, which will confirm the original terms and conditions of sale, and you will be in the same position as when you signed the original contract.
If you do this, you will also save stamp duty on your purchase.
….
To reinstate the purchase of your apartment and save stamp duty, please sign the following documents …"
The applicant executed the enclosed document as a deed on 10 August 2004 and returned it to the vendor's agent. While in its introductory parts the deed referred to apartment 301 and "contract of sale dated: 10 December 2003", in its formal, operative parts, the deed provided:
"The Seller agrees to sell and the Buyer agrees to purchase the Apartment on the same terms and conditions of the Original Contract as if they were fully set out in this deed. The Buyer confirms and directs that the Deposit paid under the Original Contract will continue to be held by Mirvac Real Estate (WA) Pty Ltd under the new contract of sale evidenced by this deed."
Counsel for the Commissioner contends that the stated intention of the parties in the deed does not reveal any intention to terminate the original contract but rather an intention to affirm the original contract.
In attempting to make out this contention, counsel for the Commissioner refers to the letter that enclosed the proposed deed and the fact that it speaks of "reinstating" the "right to buy the apartment" and the proposition that the applicant will then be "in the same position" as when it signed the original contract.
In my view, the Commissioner's contentions are not persuasive. The letter of the vendor's agent to the applicant dated 2 August 2004 is, at the very highest, equivocal or ambiguous. It was not, on the face of it, a "lawyer's letter". Rather it was the letter of the developer to the applicant. In any event, it does not speak expressly of a process to reinstate the original contract. Rather, it is in terms of reinstating "your right to buy the apartment". It expressly refers to the need to "enter into a new contract by signing the attached form", although it does say this will "confirm" the original terms and conditions of the sale.
In the end though, in order to understand the intentions of the parties, one must look at the subsequent deed actually signed. By its express terms it constitutes an agreement to sell and purchase: "The Seller agrees to sell and the Buyer agrees to purchase". Additionally, the operative words note that the deposit paid under the original contract is to continue to be held "under the new contract of sale evidenced by this deed".
In my view, there is no doubt that the deed constitutes by itself a stand‑alone agreement between the vendor and the applicant to purchase the apartment. The terms and conditions of the deed are, by reference to the original contract, the same terms and conditions as were set out in the original contract, although with some obvious changes.
For example, and significantly, cl 26 of the 2002 General Conditions that formed part of the original contract defined "Contract Date" to mean the date on which the last Party to sign the contract signs it. In the context of the original contract, the contract date was 10 December 2003, being the date the applicant signed that contract. However in the context of the deed signed on 10 August 2004, the Contract Date obviously is 10 August 2004, the date upon which the applicant signed that deed.
Another way of approaching this question is to ask, as counsel for the applicant suggested, upon what document would the applicant or the vendor take action in the case of breach of contract. In my view, plainly the contract that the party would sue upon is the deed executed 10 August 2004.
In these circumstances, the Tribunal finds that the deed executed on 10 August 2004 constitutes a stand‑alone contract for the sale and purchase of proposed strata lot apartment 301 Allegro, and that by that agreement the parties intended to terminate the original contract between them.
Whether or not the parties had some misapprehension of law as to the effectual nature of the original contract, is neither here nor there. But if, as appears to be the case, both the applicant and the vendor accepted that the original contract was at an end because the vendor had not applied for subdivision approval of the proposed strata development within three months of the making of the original contract, then that is an additional reason to conclude that the parties intended that the deed of 10 August 2004 should terminate and wholly replace the original contract.
Having made this finding, it is not necessary for the Tribunal to enter upon a consideration of the other issues raised or touched upon by the parties in their written submissions and referred to earlier concerning whether the original contract for the sale of the proposed strata unit was affected by s 20(1)(a) and s 20B of the Town Planning and Development Act 1928 as it then applied. As noted earlier, on the face of it, the requirement in s 20(1)(a) that subdivision of land may not be effected without the approval of the Western Australia Planning Commission does not apply in the case of the proposed strata subdivision. This would appear to be so because of the express provision - s 25(5)(a) of the Strata Titles Act 1985 - that provides, without limiting s 25A, that sections 20 and 21 of the Town Planning and Development Act 1928 do not apply to a "subdivision effected by the registration of a strata plan".
For the purposes of the decision that the Tribunal is now called upon to make the Tribunal need not attempt to state finally what it considers to be the legal effect of the statutory provisions of the Strata Titles Act 1985 and the former Town Planning and Development Act 1928 in relation to a contract of sale of a proposed strata unit.
In this case the parties, by private contract in the original contract, agreed that an application for strata subdivision should be made within a certain period of time. By virtue of the deed executed on 10 August 2004, the original contract was terminated and the arrangements between the parties were then wholly governed by the new contract then made.
The question then remains whether the applicant is entitled to a reduction of duty in respect of the duty paid on the original contract in these circumstances.
The Commissioner says that, even if the deed terminated the original contract, the Tribunal, like the Commissioner, should still not be satisfied that the factor spelt out in s 20(1)(a) of the Stamp Act has been met, that is, that "the matter has not been, and will not be, carried into effect". In dealing with this factor, the critical issue is deciding what the "matter" referred to is.
Counsel for the Commissioner submits that the "matter" the subject of the original contract was the contract or agreement for the sale of apartment 301 by the vendor to the applicant for $525 000. By reference to the fact that the deed that replaced the original contract provides for the conveyance of apartment 301 for exactly the same price and largely on the same terms, counsel for the Commissioner says that the relevant "matter" will be carried into effect. The Commissioner contends that, even if it is carried into effect under the deed and not under the original contract, it is still the same "matter". Counsel for the Commissioner argues that this is evident from the terms of the deed which adopts all of the terms and conditions of the original contract, and from the undisputed facts which show that the vendor and the applicant wish to proceed with the transaction notwithstanding a perceived technical legal difficulty with the original contract.
Counsel for the Commissioner says that if a contract of sale is terminated and the parties enter into another contract for the sale of the same land on slightly different terms and conditions then questions of fact to a degree may arise in order to determine whether the original "matter" is still being carried into effect. Terms and conditions that have no significance for stamp duty purposes are likely to be irrelevant to the characterisation of the "matter". However no such issues arise here. Counsel for the Commissioner says it is difficult to conceive of a more clear case of two instruments dealing with the same "matter".
Counsel for the Commissioner also contends that the changed wording from the former s 15 and s 15A of the Stamp Act to the current s 20 of the Stamp Act suggest a "matter" can, in effect, have a life beyond the particular instrument in which it is first identified.

The Tribunal is not persuaded by the contentions made on behalf of the Commissioner to the effect that the "matter included in the instrument" will be carried into effect. Section 20(1)(a) of the Stamp Act is plainly concerned with the "matter included in the instrument" and the question is whether the "matter included in the instrument" has not been, and will not be, carried into effect.
In my view, the "matter included in the instrument" is the sale and purchase of apartment 301 on the terms and conditions set out in the original contract. That matter has not been, and will not be, carried into effect. That is, because the original contract has been terminated by the deed of 10 August 2004. The sale and purchase of apartment 301 will now be carried into effect by the new contract evidenced by the deed.
It is not sufficient to say that the matter included in the deed evidencing the new contract looks a lot like the matter included in the original contract; the fact is that the matter included in the deed is a different matter from the matter included in the original contract.
A way of testing that proposition is to ask in respect of the matter, being the agreement to sell and to purchase apartment 301, on what instrument would one of the parties sue in the event of breach of contract. Undoubtedly, as noted earlier, the aggrieved party would sue on the basis of the terms and conditions contained in the deed made on 10 August 2004.
The correct and preferable decision therefore is that the matter contained in the instrument subject to duty has not and will not be carried into effect.
The s20(1)(b) factor - whether the taxpayer has not received and will not receive a benefit: The Commissioner further contends that the Tribunal, as the Commissioner, cannot be satisfied in terms of the factor set out in s 20(1)(b) of the Stamp Act that the taxpayer has not received, and will not receive, a benefit in respect of the matter.
The Commissioner notes that s 20(4) of the Stamp Act provides that a taxpayer "receives a benefit" in respect of a matter included in an instrument "if, as a result of the matter not being carried into effect" a "right" is received by the taxpayer. The Commissioner contends that upon the termination of the original contract the applicant is entitled to prompt repayment of the deposit under cl 13.7(b)(1) of the 2002 General Conditions and that did not happen. The Commissioner contends that the reason it did not happen is that the vendor and the applicant entered into the deed. Hence, in substitution of receiving simply repayment of the deposit the applicant received something of greater benefit – it received a right to acquire apartment 301. That right was only received because the "matter" – the purchase of the apartment under the original contract – was not being carried into effect. That benefit – the right to acquire the apartment under the deed – was therefore "a result of the matter not being carried into effect".
The Commissioner contends that the benefit referred to in s 20(1)(b) is not limited to a benefit under the instrument which contains the matter. There is nothing in the wording of the provisions that suggests such a limitation; and such an interpretation would render par (b) otiose in circumstances where par (a) applies because, on the applicant's case, par (a) refers to the situation where the instrument is not carried into effect. That is to say, if the instrument is not carried into effect then the taxpayer could not receive a benefit under the instrument.
Again, the Tribunal is not persuaded by the Commissioner's arguments in relation to the benefit issue.
The Tribunal notes that the Commissioner particularly relies on s 20(4) of the Stamp Act to make out the case. By that provision the taxpayer will be treated as receiving the benefit in respect of the matter included in an instrument "if as a result of the matter not being carried into effect, … a right … is received … by the taxpayer".
Counsel for the Commissioner says that "but for" the fact that the original contract could not be carried into effect, the second contract evidenced by the deed, which gave the applicant the right to acquire apartment 301, would not have come into existence. It thus follows that "as a result of the matter [being that the subject of the original contract] not being carried into effect" the "right" – being the right to acquire the apartment – "is received by the taxpayer". In my view, that is not the correct and preferable interpretation or application of the s 20(4) provision. It is necessary to look at the original contract and ask the question whether if, as a result of a matter included in the original contract not being carried into effect, a right is received by the taxpayer. All the evidence shows is that the instrument that was the original contract was terminated. A fresh contract was entered into, as evidenced by the deed. As a result of the matter the subject of the original contract not being carried into effect, no right arose at all. That contract simply came to an end. What happened was that a fresh contract was negotiated by the parties to the original contract. It was not inevitable that a fresh contract would be entered into or would come into existence. The parties further negotiated and agreed to that outcome. The applicant was not obliged to accept the offer of the vendor to enter into the fresh contract.
As counsel for the applicant submitted, if the contentions made on behalf of the Commissioner were correct, then on every occasion a conditional contract for the sale of land were entered into, and the contract later comes to an end because that condition is not satisfied (for example a condition requiring the approval of finance), then when the Commissioner is asked to reduce duty under s 20, the Commissioner would inevitably be obliged to say he must "wait and see" whether the parties to the original contract subsequently enter into a new contract, essentially on the same terms and conditions as the original contract, before deciding to reduce duty. Such a process would be totally unworkable.
While one can imagine circumstances where s 20(4) has application – for example, where a dutiable instrument makes provision for the payment of liquidated damages in the event that the matter included in the instrument is not carried into effect ‑ that is not the sort of case now before the Tribunal.
The Tribunal does not accept that the fact that the parties to the later deed might not have entered into further negotiations and fresh contract had they not been parties to the original contract which each accepted was at an end, means that the taxpayer received a benefit in the form of a right to acquire the proposed strata lot "as a result of the matter [of the original contract] not being carried into effect".
The correct and preferable decision is that the applicant did not receive any relevant benefit as a result of the matter not being carried into effect.

Conclusion and Order

For the reasons set out above, the Tribunal would allow the application for review of the Commissioner's decision to refuse the objection to the Commissioner's decision not to reduce duty payable on the original contract under s 20 of the Stamp Act.
In circumstances where there are a number of other persons affected by this decision of the Tribunal and all concerned have previously agreed that these proceedings will proceed on the basis that a decision in relation to the Pinesales Pty Ltd original contract will apply in respect of 65 other matters, the Tribunal will make the following orders.
The Tribunal orders that:
1.The Tribunal declares that -
(a)no "matter", within the meaning of s 20 of the Stamp Act 1921 (WA) in the original contract between Pinesales Pty Ltd and BL Developments Pty Ltd has been, or will be, carried into effect;
(b)Pinesales Pty Ltd has not received and will not receive any benefit in respect of the matter included in the original contract;
c)the reason that the matter included in the original contract has not been, and will not be, carried into effect is not merely to enable a replacement transaction to be entered into.
2.The Tribunal sets aside the decision the subject of review between the Commissioner of State Revenue and Pinesales Pty Ltd and, pursuant to the State Administrative Tribunal Act 2004 s 29(3)(c)(ii), sends the matter back to the Commissioner for reconsideration so that the amount of duty payable on the original contract is reduced under the requirements of s 20 of the Stamp Act 1921 (WA) and in accordance with the declaration made by the Tribunal in par 1 of this Order.
I certify that this and the preceding [96] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE M L BARKER, PRESIDENT

[2006] WASAT 202

25 July 2006