Amir v Chief Commissioner of State Revenue

Supreme Court of NSW|2010-12-04

CITATION: Amir v Chief Commissioner of State Revenue [2010] NSWADT 93

APPLICANT Roger and Cheryl Amir PARTIES: RESPONDENT Chief Commissioner of State Revenue

BEFORE: Hirschhorn M - Judicial Member

Land Tax Management Act 1956 LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Taxation Administration Act 1996

Commissioner of State Revenue (VIC) v KJRR Pty Ltd (1997) ATC 5079 Commissioner of Land Tax v Manors of Mosman Pty Ltd (1994) 34 NSWLR 94 Lewis v Bell (1985) 1 NSWLR 731Hoysted v FC of T (1921) 29 CLR 537 Aquamere Pty Ltd v Excelman Pty Ltd (1989) CASES CITED: ANZConvR 392Street v Mountford [1985] UKHL 4 Delmege v Chief Commissioner of State Revenue [2009] NSWSC 1052 City of Rockingham v PMR Quarries Pty Ltd (trading as WA Limestone Co) [2001] WASCA 317 BBLT Pty Ltd v Chief Commissioner of State Revenue (2003) ATC 5063 Radaich v Smith (1959) 101 CLR 209

APPLICANT A Blair, solicitor REPRESENTATION: RESPONDENT S Kaur-Bains

The decision of the Respondent to assess the Applicants to land tax in respect of the property at Newport for the 2009 land tax year is set aside ORDERS: 2. The Respondent has leave to file submissions in relation to the Applicants' application for costs thrown away, within 21 days 3. The Applicants have leave to file any submissions in reply in respect of their application for costs thrown away within 14 days of receipt of the Respondent's submissions.

1 The Applicants apply for review of a decision of the Respondent made on 16 January 2009 to issue to them an assessment of land tax in respect of a property at Newport ("the property") for the 2009 land tax year.

2 On 11 March 2009, the Applicants objected to the assessment and claimed that, pursuant to a contract for the sale of the property that was entered into by them as vendors on 28 August 2008, the purchasers of the property were at the taxing date of 31 December 2008, deemed by Section 26(3) of the Land Tax Management Act 1956 (NSW) ("LTMA") to be the "owners" of the property for land tax purposes.

3 As a consequence of this, the Applicants claimed that they, as vendors, were not liable to land tax in respect of the property in respect of the 2009 land tax year.

5 Mrs Amir filed a witness statement for the purposes of the proceedings and was not cross-examined.

6 The Applicants became the registered proprietors of the property in 1998.

7 The property was the principal place of residence of the Applicants for land tax purposes from 1998 to approximately 17 July 2007 at which point the Applicants moved out of the property and moved into their new and current principal place of residence.

8 The property was placed on the market by the Applicants in November 2006 and remained so until about August 2008.

9 A contract for the sale of the property by the Applicants was exchanged with the purchasers on 28 August 2008. The completion date was specified as 22 January 2009. Some of the terms of that contract, relevant for the purposes of the present matter, are reproduced below and referred to in the reasons for decision.

10 On 4 September 2008, the purchasers entered into occupation of the property pursuant to special condition 43 of the contract and paid a licence fee of $850 per week to the Applicants. The purchasers occupied the property continuously from that time until the completion date being 22 January 2009 (i.e. their occupation of the property spanned 31 December 2008).

11 In between the date that the Applicants departed from the property on 17 July 2007 and the date that the purchasers began to occupy the property on 4 September 2008, the property remained vacant. The Applicants did not derive any income from the property during this period.

12 On 12 January 2009, the Office of State Revenue ("the OSR") issued a land tax certificate showing a charge over the property up to and including the 2009 land tax year.

13 On 15 January 2009, the Applicants applied to the OSR for a review of the decision that the property was charged with land tax.

14 On 16 January 2009, the OSR issued two clearance amounts for land tax notices regarding the property. These notices showed, inter alia, that the OSR had calculated the clearance amount for land tax in the amount of $8,720.00 for the 2009 land tax year.

15 On 21 January 2009, the Applicants paid to the OSR the amounts assessed as owing on the property in two separate transactions.

16 On 21 January 2009 the OSR issued a clear land tax clearance certificate showing that there was no land tax owing on the property up to and including the 2009 land tax year.

17 On 22 January 2009 the contract for the sale of the property to the purchasers was settled.

18 On 11 March 2009 the Applicants objected to the assessment of land tax for the 2009 year on the basis that pursuant to Section 26 of the LTMA, the purchasers should be taken to be the owner of the land for land tax purposes on 31 December 2008 (rather than the Applicants).

19 On 17 June 2009, the Applicants received notification that the OSR had disallowed their objection to the assessment of land tax for the 2009 land tax year. The Applicants then filed an application for review of the original decision in the Tribunal.

20 The contract for the sale of land that was entered into by the Applicants and the purchasers was based on the 2005 edition of the standard Contract for the Sale of Land however it contained a number of special conditions. Relevantly for the purposes of the present matter, special condition 43 was in the following terms: 43. Early Occupation Subject to the terms and conditions of clause 18 hereof the vendor will permit the purchasers to enter into occupation of the property seven days after exchange of contracts at a License fee of $850.00 per week until the date of completion.

Subject to the operation of this special condition and despite clause 1, the adjustment date shall be the date of completion of this contract.

The vendors will be responsible for maintaining building insurance on the property and payment of the water and council rates. The purchasers will be responsible for obtaining and maintaining contents insurance and will be liable for payment of their own water usage and utilities such as electricity, gas and telephone. 21 Clause 18 of the contract was as follows: 18 Possession before completion 18.1 This clause applies only if the vendor gives the purchaser possession of the property before completion. 18.2 The purchaser must not before completion- 18.2.1 let or part with possession of any of the property ; 18.2.2 make any change or structural alteration or addition to the property ; or 18.2.3 contravene any agreement between the parties or any direction, document, legislation , notice or order affecting the property . 18.3 The purchaser must until completion- 18.3.1 keep the property in good condition and repair having regard to its condition at the giving of possession; and 18.3.2 allow the vendor or the vendor's authorised representative to enter and inspect it at all reasonable times. 18.4 The risk as to damage of the property passes to the purchaser immediately after the purchaser enters into possession. 18.5 If the purchaser does not comply with this clause, then without affecting any other right of the vendor- 18.5.1…. 18.5.2…. 18.6 If this contract is rescinded or terminated the purchaser must immediately vacate the property . 18.7 If the parties or their solicitors on their behalf do not agree in writing to a fee or rent, none is payable.

22 Pursuant to Section 7 of the LTMA, land tax is levied and paid on the taxable value of all land situated in New South Wales which is owned by taxpayers (other than land which is exempt from taxation under the Act). The relevant date of ownership is midnight on 31 December immediately preceding the relevant land tax year (Section 8).

23 Section 3 of the Act relevantly defines an "owner" as including: Owner includes: (a) in relation to land, every person who jointly or severally, whether at law or in equity: (i) is entitled to the land for any estate of freehold in possession, or (ii) is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise, (b) (Repealed) (c) in relation to any leasehold estate in land, whether legal or equitable (other than under any lease to which section 21C or 21D applies), a person, or a person who is a member of a class or description of persons, prescribed for the purposes of this paragraph, and (d) a person who, by virtue of this Act, is deemed to be the owner. 24 Section 26 of the Act provides that: 26 Purchaser and vendor

(1) If land under the provisions of the Real Property Act 1900 is the subject of an agreement for sale that has not been completed by transfer of the land, the person who is registered as the proprietor of the land under the Real Property Act 1900 is taken, for the purposes of this Act, to be the owner of the land, to the exclusion of the liability of the purchaser.

(2) If land, not being land under the provisions of the Real Property Act 1900 , is the subject of an agreement for sale that has not been completed by conveyance of the land, the vendor of the land is taken, for the purposes of this Act, to be the owner of the land, to the exclusion of the liability of the purchaser.

(3) Despite subsections (1) and (2), the purchaser under the agreement for sale is taken, for the purposes of this Act, to be the owner of the land (to the exclusion of the liability of the registered proprietor or vendor) if: (a) under the terms of the agreement for sale the purchaser is entitled to exclusive possession of the land and is entitled to receive, if the land is let to a tenant, any rents and profits derived from the tenancy, and (b) the purchaser has taken possession of the land.

(4) In this section: agreement for sale means an agreement for sale of land that is in force. Issue

25 The issue before the Tribunal is whether pursuant to Section 26(3) and Section 3(d) of the LTMA, the purchasers of the property were the "owners" of that property for the purposes of the LTMA, as at 31 December 2008?

26 If this was the case, then the Applicants, notwithstanding they were the registered proprietors of the property as at 31 December 2008, would not be liable for land tax in respect of the 2009 land tax year.

27 The Applicants submitted that Section 26 of the LTMA deems the purchasers of the property to be the owners (to the exclusion of the liability of the Applicants) if the three conditions in that section are met.

28 Firstly, under the terms of the agreement for sale, the purchaser must be entitled to exclusive possession of the land. In the present case, the Applicants submitted that the purchasers entered into exclusive possession of the property on 4 September 2008.

29 Secondly, the purchaser must be entitled to receive, if the land is let to a tenant, any rents and profits derived from the tenancy.

30 In this respect, the Applicants said that this condition could not be read as applying to a licence agreement entered into between a vendor and the purchaser(s) where a licence fee was paid by a purchaser to a vendor and retained by the vendor in respect of early occupation. It would not make sense for the section to require that such a purchaser be entitled to its own licence fee and such a result would be manifestly absurd or unreasonable for the purposes of Section 34 of the Interpretation Act (1987) NSW.

31 The Applicants also submitted that the reference to a "tenancy" in Section 26(3)(a) can only refer to tenancies created after the purchaser is entitled to exclusive possession, as a purchaser could not be entitled to exclusive possession as required by Section 26(3)(a) if a tenancy already exists.

32 In the present case, there was no tenancy created after the purchaser went into early occupation of the property and accordingly the "second part" of Section 26(3)(a) is not applicable.

33 Thirdly, Section 26(3)(b) requires that the purchaser must have taken possession of the land. In this case, the Applicants submitted that the purchasers of the Newport property took possession of the land on 4 September 2008.

34 The Applicants also noted that the amendments made to Section 26 in 2001 were designed to simplify the assessment of land tax when a purchaser enters into early occupation. By adding the provision that the purchaser must be entitled to "exclusive possession" to be liable for land tax, Parliament clearly divided liability between a situation where rents and profits from an existing tenancy are retained by the vendor and where rents and profits from a subsequent tenancy are retained by the purchaser.

35 With leave, the Applicants filed additional written submissions after the hearing concerning the proper construction of Section 26(3)(a) and (b) of the LTMA.

36 In respect of Section 26(3)(a), the Applicants maintained that the purchasers in the present case were entitled to exclusive possession pursuant to the terms of the agreement for sale and that this was evidenced by special condition 43 and clauses 18.2.1, 18.3.2 and 18.4 of the contract.

37 The Applicants also noted that the concept of "exclusive possession", as distinct from "possession", was integral to the interpretation of Section 26(3)(a). Exclusive possession of the land may only be enjoyed by one party at a time. Exclusive possession may also exist and can be passed without the existence of a lease. There is no definitive method of ascertaining exclusive possession and this ought to be determined by the facts of the matter before the Tribunal.

38 The matters that the Applicants maintained should be taken into consideration as evidencing the existence of exclusive possession were: (i) provisions permitting the grantor to enter and inspect the premises; (ii) provisions imposing restrictions on the right to assign or grant suboccupancies; and (iii) covenants concerning occupying and using the premises at the purchaser's own risk.

39 In the alternative, if the Tribunal considered that a requirement of exclusive possession is that an interest is capable of being assigned, the Applicants submitted that standard clause 18.2.1 was a strong indicator that such an interest was passed to the purchaser under the contract for sale otherwise there would be no other reason for that clause to exist.

40 The Applicants noted that they and the Respondent were in agreement that there was no need for the Tribunal to decide the meaning of the "second part" of Section 26(3)(a) since there was no lease in the present case.. However in the event that the Tribunal determined that the interpretation of the second part was required, then the Applicants submitted that if the purchasers in these proceedings were permitted to let the property then they would have been entitled to the rent.

41 The Applicants also submitted that the Respondent's interpretation that a purchaser can be entitled to exclusive possession simply by collecting the rents and profits from a pre-existing lease, does not distinguish between "exclusive possession" and "possession". The purchaser cannot be found to be entitled to exclusive possession by collecting rents and profits as the fact the rent is collected means there is a tenant and the tenant is entitled to exclusive possession. If the Respondent's interpretation was accepted then it would amount to a finding that Parliament had erred in including the requirement of exclusive possession in Section 26(3)(a).

42 The Applicants also submitted that if the purchasers were entitled to exclusive possession, then it is clear that they took actual possession of the land on 4 September 2008 when they entered into early possession. As required by Section 26(3)(b) it is simple possession and is not in any way related to or to be read as "exclusive possession".

43 The Applicants also disagreed with the Respondent's further submissions to the effect that the purchasers must have control of the land which enabled them to enjoy its profitable use or returns and that any restriction on letting the property meant that the purchasers did not have possession.

44 The Applicants also made some submissions in relation to the case of Delmege v. Chief Commissioner of State Revenue [2009] NSWSC 1052 and maintained that the Respondent should not be able to completely alter the grounds for determining the Applicant's objection.

45 For the first time, the Applicants in their further written submissions also applied for a costs order for costs thrown away in this matter pursuant to Section 88 of the Administrative Decisions Tribunal Act 1997 (the "ADT Act").

46 At the hearing, the Respondent submitted that for the purchasers of the Newport property to be deemed the owners of the property to the exclusion of the liability of the Applicants as registered proprietors, the purchasers must under the terms of the agreement for sale be entitled to "exclusive possession" of the property. Accordingly the Tribunal must construe the terms of that document to ascertain whether it gives the purchasers the entitlement to exclusive possession.

47 Exclusive possession is not defined in the LTMA and regard must be had to the relevant case law. This expression has been looked at by the Courts in considering whether a lease, tenancy or a mere right to occupy under a licence exists. In this regard the Respondents referred to the following decided cases: City of Rockingham v. PMR Quarries Pty Ltd (trading as WA Limestone Co) [2001] WASCA 317, Lewis v. Bell (1985) 1 NSWLR 731 and Radaich v. Smith (1959) 101 CLR 209.

48 The Respondent submitted that, in light of the authorities, the correct construction of the nature of the interest given to the purchasers under the agreement for sale was a licence (i.e. a right to occupy and use the property). The rights were personal to the purchasers and not transferable and assignable and the parties themselves expressly described the payment to be made by the purchasers as a "licence fee". The agreement for sale did not purport to give the purchasers exclusive possession.

49 If the Tribunal found that the purchasers were however in exclusive possession, then for the purchasers to be deemed to be owners for land tax purposes, the Respondent submitted that the Tribunal must also be satisfied that the purchasers were to be entitled to receive, if the land is let to a tenant, any rents and profits derived from the tenancy.

50 In its original written submissions, the Respondent had submitted that the "second part" of 26(3)(a) effectively referred to a hypothetical lease (that is, if the land was to be let, then the purchaser would be required to be entitled to receive the rents and profits under the agreement for sale). In Hoysted v. FC of T (1921) 29 CLR 537 the High Court when considering the construction of "owner" in Section 3 of the LTMA said that the words "if the land were let to a tenant would be entitled to receive the rents and profits thereof" are concerned with the case of land unlet but which could be let at the relevant time of determining ownership for the purposes of the Act. The Respondent also noted that, in the present case, under clause 14.1 of the agreement for sale, the Applicants as registered proprietors were entitled to the rents and profits from the property (until completion).

51 At the hearing, the Tribunal understood that the Respondent withdrew the abovementioned submission. Further the Respondent orally submitted that, in fact the word "and" that links the first and second part of Section 26(3)(a) might need to be read as "or" (in view of the perceived difficulty in satisfying both requirements simultaneously (i.e. a purchaser being entitled to exclusive possession but at the same time entitled to receive the rents and profits of the property would appear to be inconsistent).

52 With leave, the Respondent filed further written submissions following the hearing. In those submissions, the Respondent essentially submitted the following: 1.Exclusive possession for the purposes of s26(3)(a) is characteristic of a proprietary right to the land which is recognised at law; for example a feature of a lease is that the lessee is entitled to exclusive possession of the land. On the other hand, exclusive possession is not characteristic of contractual rights over land, such as where a licensee occupies the land under the licence (citing CCH commentary at page 6,542). 2.The inclusion of the term "exclusive possession" in the current s26(3)(a) means that situations in which the purchaser occupies the land under a licence agreement with the vendor (as in Manors of Mosman (1994) 34 NSWLR 94) no longer amount to possession in the character of purchaser for land tax purposes). 3.The fact the agreement for sale expressly prevents the purchaser from letting or parting with possession (clause 14.2.1 (sic)) and the use of the word "licence fee" in special condition 43 weighs heavily against there being exclusive possession and points to the purchasers having a mere licence to occupy. 4.It was accepted by the Respondent that the second part of section 26(3)(a) covers a situation where there is an actual letting (that is, a pre-existing lease at the time the agreement for sale is entered into, and the letting of the land is to a third party, as opposed to the purchaser). 5.Section 26(3)(a) refers to an entitlement to rents and profits from a tenancy and a purchaser will have taken possession for the purposes of section 26(3)(b) if the purchaser has a right to exclusive possession (subject to the pre-existing lease)and is in receipt of the rents and profits. 6.Subsection 26(3)(b) provides as a further condition that the purchaser must have taken possession of the land. Based on prior authorities, this requires the purchaser to secure that control of the land which enables him to enjoy its profitable use or its returns. Therefore the purchaser does not need to physically occupy the land. 7.The purchaser must in essence have such rights to the land that are akin to being an owner, before section 26(3)(a) imposes land tax on the purchaser as opposed to the registered owner. Therefore the proprietary rights to the land would be such things as having the right to deal with the land, such as letting it to a third party to receive rents. 8.In relation to the ground of estoppel raised by the Applicants, the Respondent noted that there can be no estoppel against the operation of a statute ( BBLT Pty Ltd -v- Chief Commissioner of State Revenue (2003) ATC 5063). Further, the Respondent did not accept in the objection decision that the purchasers had entered into exclusive possession. Further, the Tribunal has power under section 101 of the Taxation Administration Act 1996 ("TAA") and section 63 Administrative Decisions Tribunal Act 1997 ("ADT Act") to conduct a de novo merits review and to make the correct and preferable decision. In addition, section 100(2) TAA makes it clear that the applicants and respondent's cases on an application for review are not limited to the grounds of the objection, and that this section was not considered in the Delmege case. Discussion and Reasons for Decision

53 The explanatory notes to the bill that was enacted as State Revenue Further Amendment (No. 2) Act 2001 (with effect for the 2003 land tax year onwards) stated the following in relation to the substantive amendments to section 26 LTMA: At present, liability for land tax on land that is the subject of an agreement for sale is determined on the basis of who has possession of the land and the percentage of the purchase price that has been paid.

Under the new arrangements, if land that is subject to the provisions of the Real property Act 1900 is subject to an agreement for sale that has not been completed, the registered proprietor of the land will be taken to be the owner of the land for land tax purposes, and will be liable for land tax in respect of the land, to the exclusion of the liability of the purchaser.

However, the purchaser will be taken to be the owner of the land, and liable for land tax, if the purchaser obtains the right to exclusive possession of the land and takes possession of the land.

54 The term "exclusive possession" is not defined for the purposes of section 26 or for the purposes of the LTMA generally.

55 It is clear, and both parties agreed, that section 26(1)(a) requires that the purchaser be entitled to exclusive possession "under the terms of the agreement for sale". Accordingly this requires the Tribunal to construe the contract for sale in order to ascertain whether the purchasers were entitled to exclusive possession under its terms.

56 In light of authorities such as City of Rockingham v PMR Quarries Pty Ltd (trading as WA Limestone Co) [2001] WASCA 317 and Lewis v Bell (1985) 1 NSWLR 731, the Respondent submitted that the correct construction of the nature of the interest given to the purchasers under the present agreement for sale was that of a "licence", that is, a right to occupy and use the Property. The Respondent said that the rights were in terms stated to be personal to the Purchasers and not transferable or assignable (clause 18.2.1). The parties themselves expressly described the payment to be made by the Purchasers as a "licence fee" (special condition 43). The agreement for sale did not purport to give the Purchasers exclusive possession. The agreement for sale expressly prevented the purchaser from letting or parting with possession (clause 18.2.1).

57 On the other hand, the Applicant drew the Tribunal's attention to the following:

i. The purchaser's rights to exclusive possession arise and are evidenced under the contract by special condition 43 and clauses 18.2.1, 18.3.2 and 18.4. ii. Special condition 43 provides inter alia, for the purchasers to enter into actual possession of the land, the purchasers be responsible for obtaining and maintaining contents insurance and the purchasers be liable for their own water usage and utilities. iii. Clause 18 provides, inter alia, that the purchaser must not let or part with possession which is an indicator of exclusive possession. iv. The purchaser must allow the vendor to inspect the property which shows that the vendor needed permission to enter upon the land which is consistent with the purchasers having exclusive possession of the land; and v. The risk as to damage of the property passed to the purchasers on completion. vi. The purchaser's rights to exclusive possession were not referable to any other agreement. 58 In Radaich v Smith (1959) 101 CLR 209 the High Court considered whether or not the relevant instrument in that case created a lease as opposed to a licence. It was ultimately held in that case by a majority of their Honours that the decisive factor in favour of a lease is whether the right the instrument confers is one as to the "exclusive possession" of the premises for a term (see Taylor J at 218). Accordingly, although the ultimate question before the Court was different from that currently before the Tribunal, nevertheless the case is relevant insofar as it provides guidance in relation to the meaning of the term "exclusive possession".

59 In that case, the learned justices of the High Court examined in detail the clauses of the relevant instrument ("the Deed"). The particular clauses that they examined included, inter alia, those related to "giving up of possession on the expiration or determination of the licence" (per McTiernan J at 215, Tayor J at 216), the preamble of the agreement and the nature of the business to be carried on at the premises (per McTiernan J at 215, Taylor J at 217, Menzies J at 221), that the licensee was to have "control" of the premises and of persons entering them (per Mc Tiernan J at 215), that the licensee was to have control over opening/closing the premises and locking of them (per Taylor J at 216), that the licensee was to have the use of electricity, gas and water service and that stock-in-trade and chattels would be kept on the premises (per Taylor J at 216 & 217), the requirement that the licensee to conduct a café and milk bar in the shop and on the expiration or sooner determination of the license" to give up possession on the building for the said business (per Menzies J at 220 and 221).

60 In other words, the Court looked to the words of the relevant Deed together with its "substance and effect" (per Taylor J at 217) in order to determine whether the Deed conferred exclusive possession on the licensee, which was ultimately concluded to be the case.

61 At 222, Windeyer J said that: A right of exclusive possession is secured by the right of a lessee to maintain ejectment and, after his entry, trespass. A reservation to the landlord, either by contract or statute, of a limited right of entry, as for example, to view or repair, is, of course, not inconsistent with a grant of exclusive possession. Subject to such reservations, a tenant for a term or from year to year or for a life or lives can exclude his landlord as well as strangers from the demised premises. 62 His Honour also considered the subject matter of the Deed at 224 and 225 and in this regard, observed that it was unlikely that the parties would have intended that the licensee would not have the right to exclude persons from her shop and that the licensors would have been entitled, if they wished, to licence other persons to carry on activities at the same premises or enter the shop as they pleased provided only that they did not sell refreshments.

63 In Lewis v Bell (1985) 1 NSWLR 731, the Court of Appeal applied Radaich v Smith (as affirmed by Mason J in Goldsworthy Mining Ltd v Federal Commissioner of Taxation (1973) 128 CLR 199 at 212). At 734, Mahoney JA (with whom Kirby P and Samuels JA agreed) said the following: It is not necessary to analyse the precise nature of the right to exclusive possession which is here in question. It is, for present purposes, sufficient to say that it involves that the lessee have the general right to exclude others, including the lessor, from the premises, subject at least to such specific provisions for entry as may be particularly provided for in the document: cf the rights reserved in the Glenwood Lumber case (at 408).

Whether a particular document grants such rights to the grantee depends of course, upon the construction of the document. Regard is to be had, in the normal process of construction, to all the terms of the document considered in their context….

First, if the right to exclusive possession is the test, then, in determining whether the grantee has been given the right of exclusive possession, the court must go initially to the terms of the grant: see Radaich v Smith (at 223) per Windeyer J. The grant of a right to exclusive possession, in terms, is of course prima facie sufficient….Conversely if what is granted is not in terms exclusive possession or if the words used in the grant are not words understood to convey the right of exclusive possession, then (subject to what I shall say) the transaction is prima facie not one of lease. Thus, if that which is granted is not of its nature the right to possession or exclusive possession but, eg the right to use the premises only for a defined and particular purpose, there will prima facie be no lease.

But there are cases in which it is not clear from the terms of the grant, construed in the light of the whole agreement and its context, what it is that is being granted by them. In such cases, it is necessary to determine what is being granted by looking at other aspects of the transaction. Thus a grant may not be in terms of "possession" but of something else. It may be a grant of a right to occupy premises: O'Keefe v Malone [1903] AC 365 at 377; Landale v Menzies (1909) 9 CLR 89 at 91, 100, 101; the right to "carry on a business on" the premises: cf Radaich v Smith (at 210); or, as in the present case, the right "to use" the premises either generally or in a particular way. In such cases, the court must, by the process of construction, determine whether what is granted is mere occupation or use, or is possession in the relevant sense. And where what is granted is possession, it still, in principle, may remain to be decided whether what is granted is exclusive possession.

Section 26(3)(a) - Exclusive possession -consideration of the terms of the agreement for sale

64 In the present case, special condition 43 allows the vendor to permit the purchasers to enter into "occupation" of the property from a date (seven days after exchange of contracts) until a defined date being the completion of the contract. In other words, there is clearly a "defined term" agreed by the parties for the "occupation" of the property.

65 Special condition 43 is specifically stated to be subject to the terms and conditions of clause 18 and accordingly these provisions must also be taken into account.

66 Clause 18.1 indicates that the clause applies only "if the vendor gives the purchaser possession of the property before completion". By deliberately making special condition 43 subject to the "terms and conditions" of clause 18, the contract appears to indicate that the parties did intend that "possession" of the property would be given to the purchasers by the Applicants before completion and for the term as defined in special condition 43.

67 Clause 18.2.1 provides that the purchaser "must not let or part with possession of any of the property". The existence of this clause also infers that the intention of the parties was that "possession" of the property would pass from the Applicants to the purchasers, otherwise this clause would be redundant. This clause also appears to practically exclude the possibility of any other person (including the vendors) from entering into possession of the property during the defined term.

68 The Respondent claims that the existence of clause 18.2.1 is inconsistent with the purchasers being entitled to "exclusive possession" under the contract because it indicates that they do not have one of the normal indicia of an interest or estate in land. In this case, the purchasers are not entitled to let or part with possession. They referred to City of Rockingham v PMR Quarries Pty Ltd (trading as WA Limestone Co) [2001] WASCA 317 in this regard.

69 However, in the present case, it appears to the Tribunal that clause 18.2.1 is instead in the nature of an absolute covenant against either the letting of the property by the purchasers or the parting of possession by the purchasers. In other words, it is similar to covenants that appear reasonably often in leases preventing a sub-lease or an assignment. 70 The existence of such a clause infers that, in its absence, the purchasers would have been entitled to let the property and did have the necessary estate or interest to do so. It displaces the implication that what was intended by the parties was a mere personal licence to occupy by the purchasers (Aquamere v Excelman (1989) ANZConvR 392).

71 The learned Professor Butt makes much the same point at page 273 of the fifth edition of Land Law, Thomson LawBook Company where he says: Likewise, provisions imposing restrictions on the right to assign or to grant sub-occupancies point to a lease, since they cut down rights normally enjoyed by tenants. 72 Of course, in the present case, the question before the Tribunal is not whether the purchasers had a lease or licence but instead whether or not they were entitled to exclusive possession under the contract. Nevertheless, it seems to the Tribunal that the existence of clause 18.2.1 seems to indicate that the parties intended, under special condition 43, that the purchasers would receive the grant of an estate or interest in land sufficient for the purchaser to have been able to let the property but for the prohibition in clause 18.2.1.

73 In Radaich v Smith, it is noteworthy that only his Honour, McTiernan J, appears to have referred, in passing, to a clause of the relevant licence agreement that contained a covenant to the effect that the "licensors" shall not unreasonably disallow assignment of the licence. In the remaining judgements of the majority, this clause was not referred to in the context of determining whether or not exclusive possession had been granted to the relevant "licensee".

74 In the judgement of Taylor J in Radaich v Smith, he considered at length some of the authorities in England that considered whether a grant created a lease or licence and whether the proper test (for a lease) was the existence of a right to exclusive possession. He noted at paragraph 6 that some doubt had been thrown on this proposition in Errington v Errington and Woods (1952) 1 KB 290. In the latter case, at 296 and 297 Lord Denning had noted that the test had often given rise to misgivings because it may not correspond to realities. A good instance is Howard v Shaw [1841] EngR 488; (1841) 8 M&W 118 (151 ER 913), where a person was let into exclusive possession under a contract for purchase. Alderson B said he was a tenant at will; and Parke B, with some difficulty, agreed with him, but Lord Arbinger said that "while the defendant occupied under a valid contract for the sale of the property to him, he could not be considered as a tenant". Now, after the lapse of a hundred years, it has become clear that the view of Lord Arbinger was right. 75 This passage is noteworthy because it indicates that it is possible that a person might be granted exclusive possession under a contract for purchase but that this might not necessarily make him a tenant (according to later authorities) but would if the test of "exclusive possession" were the only test for a lease.

76 Indeed in Errington at 298, Lord Denning said the following: Applying the foregoing principles to the present case, it seems to me that, although the couple had exclusive possession of the house, there was clearly no relationship of landlord and tenant. They were not tenants at will but licensees. They had the mere personal privilege to remain there, with no right to assign or sub-let. They were, however not bare licensees. They were licensees with a contractual right to remain. 77 The decision in Errington was later taken in Addiscombe Garden Estates Ltd v Crabbe to be confined to "exceptional cases" (per Jenkins LJ at 528). In the latter case, the fact of exclusive possession together with consideration of the clauses of the relevant agreement resulted in a finding that there was a lease. The ability or otherwise of the tenants to sub-let or assign was not referred to in this case.

78 In Radaich v Smith at 220, Taylor J noted that …it must be taken as beyond doubt that in cases where there is a real contest between the issues of lease and licence the problem may be solved by considering whether the right which is conferred is a right to the exclusive possession of the property in question. This, however, does not deny that exceptional cases may not arise in which it will be seen that a right to exclusive possession has been granted without the grant of a leasehold interest ……Upon examination it will, I think, be seen that this exceptional category is constituted by cases in which the facts do not give rise to a contest of the character abovementioned. (underlining added) 79 In Street v Mountford [1985] UKHL 4 at 13, it was concluded that there was a tenancy because there was a grant of exclusive possession, notwithstanding that the terms of the relevant agreement between the parties included a term that "no one but the abovenamed person may occupy or sleep in the room without prior permission and this personal licence is not assignable" (per Lord Templeman at 2). Further at 13, he stated: Legal relationships to which the grant of exclusive possession might be referable and which would or might negative the grant of an estate or interest in the land include occupancy under a contract for the sale of land, occupancy pursuant to a contract of employment or occupancy pursuant to a contract of employment or occupancy referable to the holding of any office. But where as in the present case the only circumstances are that residential accommodation is offered and accepted with exclusive possession for a term at a rent, the result is a tenancy.

80 From a review therefore of the abovementioned decided cases, and having regard to the reference by Taylor J in Radaich v Smith to possible exceptional categories, it seems to the Tribunal that special condition 43 and clause 18 do appear to indicate that the parties intended that the purchasers would take possession for a defined term. Further, having regard to the nature of the property and clause 18.3.2, to be discussed further below, it appears this possession would be "exclusive" to the purchasers for the defined term.

81 Whether or not the grant of exclusive possession means that there is a lease between the parties or whether, because the context is a contract for sale, it falls within an "exceptional category" (that negatives the grant of a tenancy) is not something that needs to be decided in the present case.

82 Returning, therefore, to a consideration of the clauses of the contract for sale, clause 18.2.2 prohibits the purchasers from making any change or structural alteration to the property. This clause is consistent with the parties having intended to give the Applicants possession of the property.

83 Clause 18.3.1 requires the purchasers to "keep the property in good condition and repair having regard to its condition at the giving of possession". This clause also infers that possession has been "given" to the purchasers and that thereafter until completion the purchasers bear the risk of keeping the property in good condition and repair.

84 The risk in relation to any damage to the property by the purchasers also appears to have passed to the purchasers by special condition 44 on the date of occupation by the purchasers. However it appears that the risk of damage to the property by third parties remained with the Applicants.

85 Clause 18.3.2 provides that the purchasers must allow the vendor (or an authorised representative) to "enter and inspect the property at all reasonable times". This is a reservation to the Applicants (vendors) for the purposes of "inspection" only and such inspection to be conducted "at reasonable times".

86 The existence of this clause infers that the parties did not intend that the Applicants could at any time enter the property and for any purpose (i.e. to continue to occupy the premises or part of the premises themselves). This clause is a strong indicator that the parties intended that the purchasers would have "exclusive possession" of the property for the defined term.

87 Special condition 43 provides that a "Licence fee" of $850 per week must be paid by the purchasers. The fact that the parties in the present case referred to a "licence" fee being payable, is not in itself determinative of what rights were indeed created by the agreement (Radaich v Smith (1959) 101 CLR 209 at 214 per McTiernan J citing Facchini v Bryson (1952) 1 T.L.R. 1386 per Lord Denning). Further, as previously mentioned, the question to be determined by the Tribunal is not whether there is a lease or licence, per se, but rather whether the contract conferred on the purchasers the right to exclusive possession of the property.

88 Finally, as their Honours did in Radaich v Smith, the subject matter of the "licence" agreement in special condition 43 must also be considered. The property in question is a residential property and it is reasonable to expect, having regard to this, that the parties intended (subject to the terms and conditions being met in clause 18) that the purchasers would have exclusive possession of the property. Indeed, the Applicant vendors reserved to themselves only the right to inspect as opposed to any use or occupation of the property by them during the defined term. 89 The Tribunal thinks it unlikely that the parties would have intended that the Applicants could themselves continue or be entitled to continue to occupy all or part of the residential property during the defined term until completion.

90 The terms of clause 18 and the numerous references to "possession", do in the view of the Tribunal indicate that what was intended by the parties was more than mere "occupation or use" of the property and was instead possession. The terms of the grant indicate the purchasers were to be given "possession" (Lewis V Bell (1985) 1 NSWLR 731 at 735).

91 Further, the making of special condition 43 subject to the provisions of clause 18 which has as its opening words application where the vendor "gives the purchaser possession of the property before completion" and by virtue of clause 18.3.2 the Applicant vendors only retained to themselves an entitlement of inspection at reasonable times, indicates the possession was to be exclusive to the Applicants.

92 In Commissioner of State Revenue (Vic) v KJRR Pty Ltd (1997) ATC 5079 at 5085, Gillard J in discussing the decision of the House of Lords in Street v Mountford [1985] AC 809 stated the following: The agreement gave the right to Mrs Mountford to reside at the premises. The agreement also gave the right to the owner at all times to enter the rooms to inspect their condition etc. It was conceded that the agreement did grant exclusive possession to Mrs Mountford. This was obvious taking into account the nature of the occupancy. 93 As noted previously, the agreement in Street v Mountford contained a clause that prohibited Mrs Mountford from allowing any other person from occupying or sleeping the room in question without prior permission and her personal licence was not assignable.

94 The Respondent placed some reliance on a passage from a CCH commentary on the News South Wales Land Tax 2003, CCH Australia Limited (3-160-3-190) to the effect that the inclusion of the requirement of "exclusive possession" in the present section 26 means that situations in which the purchaser occupies the land under a licence agreement with the vendor (as in Commissioner of Land Tax v Manors of Mosman (1994) 34 NSWLR 94 no longer amount to possession in the character of purchaser for land tax purposes. That particular passage was, however, followed by the words "That is, for the 2003 and subsequent land tax years, land tax liability will remain with the vendor where the purchaser enters into a license to occupy the land prior to completion in accordance with the terms of the contract for sale".

95 Two things might be briefly said about this matter.

96 Firstly, section 26(a) now explicitly requires that there be an entitlement to exclusive possession "under the terms of the contract". Prior to the amendments in 2001, a purchaser needed to have obtained possession under or referable to an agreement for sale. In the Manors of Mosman case, the appellant had (unsuccessfully) sought to argue that the sole source of the purchaser's entitlement to occupy was a licence agreement (as distinct from the contract of sale). Ultimately, the Court disagreed and found that the purchaser had obtained possession within the meaning of section 26(1)(a) LTMA as purchaser.

97 Secondly, in respect of the licence agreement in the Manors of Mosman case, there was a clear statement in the agreement that the licence did not confer upon the licensee or anyone claiming through the licensee any estate or interest in the unit.

98 For either or both of those reasons, it is quite possible that a purchaser who occupied a property under an arrangement in the Manors of Mosman case might not be said to have been entitled to exclusive possession under the contract of sale for the purposes of present section 26(a) LTMA.

99 The present facts can be distinguished from Manors of Mosman in that it is clear that the rights to possession (and indeed "exclusive possession" as the Tribunal has concluded) arise under the agreement for sale. There is no other agreement.

100 Secondly, there is no clause in special condition 43 or otherwise in the contract for sale expressly specifying that no estate or interest in land has been passed. Indeed the prohibition on letting or parting with possession in clause 18.2.1 appears to indicate to the contrary, that the parties intended that such an interest would pass but that there would be an absolute covenant prohibiting letting or parting with possession. It might be noted that clause 18.2.1 would not, for example, necessarily prohibit the purchasers granting a revocable licence over the property as long as they did not part with possession.

101 Accordingly, for the forgoing reasons, the Tribunal is of the view that the purchasers were entitled under the terms of the agreement for sale to exclusive possession of the property and this was the case as at 31 December 2008.

102 At the outset, it is noted that the definition of "owner" in section 3 LTMA includes in paragraph (a)(ii) a person who jointly or severally, whether at law or in equity: is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive , the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise. (underlining added) 103 It is noted therefore the section clearly covers situations where there is a person entitled to receive rents and profits from an actual lease as well as a hypothetical lease (i.e. "if the land were let to a tenant").

104 In Hoysted v. FC of T (1921) 29 CLR 537 the High Court when considering the construction of this provision, said that the words "if the land were let to a tenant would be entitled to receive the rents and profits thereof" are concerned with the case of land unlet but which could be let at the relevant time of determining ownership for the purposes of the Act.

105 The second part of the present section 26(3)(a), however, is differently worded. It refers to a situation where the purchaser "is entitled to receive, if the land is let to a tenant, any rents and profits derived from the tenancy". The use of the "is" (in contrast to "were" in section 3) suggests that the former provision refers to an actual lease that is in existence at the relevant time for determining whether or not the purchaser (as opposed to the vendor) is an owner under section 26.

106 Accordingly, the Tribunal agrees with the final position of both parties in relation to this matter, that as there was no lease over the property to a third party in the present case as at 31 December 2008, the second part of section 26(3)(a) does not fall for consideration.

107 The Tribunal also notes that it seems clear (although it did not appear to be in dispute between the parties by the time of the hearing) that the second part of section 26(3)(a) refers to a lease to a third party and does not refer to a situation where a vendor receives licence fees or rent from a purchaser, otherwise under all such arrangements a vendor would always remain liable for land tax which is clearly not the object of the exception offered by section 26(3) to the position under section 26(1).

108 The Respondent originally observed that in the present case, under clause 14.1 of the agreement for sale, the Applicants as registered proprietors were entitled to any rents and profits from the property up to completion. This was because special condition 43 provided that the "adjustment date" for the purposes of the agreement would be the completion date. On the basis that the second part of section 26(3)(a) refers to an actual lease, however, it does not matter in the present case that the terms of clause 14.1 of the contract for sale provide that the vendors (as opposed to the purchasers) would be "hypothetically" entitled to rents and profits under the terms of agreement for sale if there had been a lease of the property.

109 There was some debate between the parties in final written submissions as to whether the lease referred to in the second part of section 26(3)(b) refers to a pre-existing lease over the property at the time the contract for sale is entered into or whether it refers to a lease that is entered into after the time the contract for sale is entered into and the purchaser becomes entitled to "exclusive possession". Although it is not strictly necessary to decide this, for the purposes of the present case, given the absence of any lease, the Tribunal is of the view that the section could potentially refer to either case.

110 The first part of the requirement in section 26(3)(a) that a purchaser be entitled to exclusive possession under the sale agreement does not actually specify the time at which the entitlement to exclusive possession must arise. A purchaser may therefore be entitled under the agreement to exclusive possession of the property at the end of the pre-existing lease and still satisfy section 26(3)(a). It would appear that the entitlement to exclusive possession at some definite time must exist but the purchaser might not necessarily have taken exclusive possession in fact. The physical taking of "possession" (although note this does not have to be exclusive possession) is dealt with separately in section 26(3)(b).

111 Similarly, it is consistent with section 26(3)(a) for a purchaser to be entitled to exclusive possession under the agreement for sale and for the purchaser to grant a lease of the property after the exchange of contracts. Provided in such a case that the purchaser is entitled to the rents and profits from the lease under the sale agreement, then the first and second parts of section 26(3)(a) would appear to be satisfied.

112 Under the version of section 26 LTMA that preceded the abovementioned amendments in 2001, where land had been sold (whether or not the agreement was completed by conveyance or not), a purchaser was deemed to be the owner of the land for land tax purposes "so soon as he has obtained possession of the land". This requirement was considered by the Court of Appeal in Commissioner of Land Tax v Manors of Mosman Pty Ltd (1994) 34 NSWR 94.

113 In that case, a retirement village was built on the respondent's land and prior to the taxing date the respondent had entered into agreements for the sale of units to 31 purchasers.

114 Under the terms of those agreements, the respondent was entitled to rents and profits and bound to pay all outgoings up to and including the date of completion from which date the purchaser became entitled to and bound to pay the same respectively.

115 The property was sold with the benefit of possession to be given to the purchaser at completion or at the time and manner stipulated elsewhere in the agreement.

116 One clause of the agreements provided that, if before the transfer of title the purchaser was given the benefit of possession of the property, the purchaser should not let or part with possession of it and should keep it in good repair or condition and permit the vendor or the vendor's agent at all reasonable times to enter and view the state of repair.

117 There was also a special condition of the contract that provided that if the local Council provided a certificate enabling occupancy of the units prior to completion, then the vendor would by notice to the purchaser, require the purchaser to enter into a licence agreement with the vendor in the form annexed to the contract.

118 Under the terms of the relevant licence agreement (that is, an agreement that was separate from the contract for sale), the licensor granted to the licensee the licence and privilege to occupy the unit as a residence for a weekly licence fee of $1. The licensee was obliged at all times to conform to the reasonable requirements of the licensor in regard to the use and occupation of the unit. Further, the terms stated that the licence granted could not be assigned or sublicensed and did not confer on the licensee or anyone claiming through the licensee any estate or interest in the unit or in the village or any part thereof.

119 Although in that case, the appellant submitted that the purchaser's occupation of the property under the licence was not "possession under or referable to the agreement for sale" (and hence not possession of the land as then required pursuant to section 26), the appellant addressed what was meant by "possession" in section 26 and submitted that it was not established by the purchaser's actual occupation - rather the test was whether the purchaser had secured "that control of land which enables him to enjoy its profitable use or returns": Highlands Ltd v Deputy Commissioner of Taxes for South Australia (1931) 47 CLR 191 at 196. The Tribunal notes that the Respondent has put a similar argument in the present case in respect of the proper construction of section 26(3)(b).

120 In Manors of Mosman, Sheller JA (with whom Kirby P and Handley JA agreed) held that the purchasers had obtained "possession" for the purposes of the then section 26(1)(a). At 99, Sheller JA referred to three distinct elements in considering the nature of "possession" from Pollock and Wright, An essay on Possession in the Common Law (1888) at 26-27.

121 The first element was "physical control, detention or de facto possession" (i.e. an actual relation between a person and thing, a matter of fact).

122 Sheller JA then stated that in the Highlands case, Starke J at 199 held that the "possession" spoken of in respect of section 26 was a de facto possession referable to the agreement for sale of land, as opposed to the "second" or "third" elements of possession referred to in the Pollock and Wright essay (i.e. the right to possess or to have legal possession).

123 In the present case, the undisputed facts are that the purchasers physically occupied the property from 4 September 2008 until completion. In other words, the purchasers had, as at 31 December 2008, as a matter of fact, the physical control of the property. It is noted that the Highland's case spoke of "profitable use or returns" of the land (underlining added). Here the purchasers had secured physical control of the land and enjoyed its profitable use. The Tribunal has no difficulty in finding that the purchasers had taken possession of the property as at 31 December 2008 and section 26(3)(b) was thus satisfied.

124 In the objection decision, the Respondent stated: Based on the information you forwarded, that is, that the purchasers of the land situated at … Newport (the Property) moved into the Property under license and that your clients as the Vendors continued to receive the rent from the Property. It is consider (sic) that your clients are the owners of the land at…, Newport for 2009 land tax year for land tax purposes having regard to the definition of owner under section 3 of the Land Tax Management Act 1956 (the Act). 125 The Applicants submit that the Respondent determined the original objection based on a finding that the purchasers were paying rent and thus were not entitled to rent as required by Section 26(3)(a). The Applicants submit that that position of the Respondent appeared to have been abandoned by the acceptance of the Respondent at paragraph 8 of the Respondent's further submissions that the section refers to letting to a third party.

126 The Applicants also submitted that for the purposes of the hearing the Respondent altered its position from that in the objection decision and instead submitted the purchasers were not entitled to exclusive possession and the requirement that the purchaser be entitled to rents and profits of the land referred to the situation whereby the land could be let to a tenant (i.e. hypothetical lease). At the hearing, the Applicants submitted that the Respondent abandoned this argument in favour of an argument that "and" in Section 26(3)(a) should be read "or" in order for the Respondent's submissions to fit into the interpretation proposed by it.

127 The Applicants further submitted that the argument of the Respondent that "and" should be read "or" was then abandoned as a result of the Respondent's further written submissions. The Applicants submitted that because the Respondent altered its position at least four times in an attempt to place liability for land tax on the Applicants, it would be unjust to allow the Respondent to act in such a way that allowed it to determine objections on any grounds, substantiated or not, so that the onus of proving the correct application of the Act fell on the taxpayer to review a decision of the Respondent in an application to the Administrative Decisions Tribunal.

128 In relation to the above submissions, the Tribunal is not persuaded that the present case is analogous to that in Delmege v Chief Commissioner of State Revenue [2009] NSWSC 1052 as cited by the Applicants.

129 In that case, the Chief Commissioner served a supplementary written submission shortly before the hearing of the matter seeking to rely on a provision, section 10T(2)(c) LTMA, and adduce evidence relating to this provision, where it had not been previously raised at the objection decision stage or indeed prior to the filing of the supplementary submission. His Honour, Gzell J decided that it was not appropriate in the present proceedings for that new ground to be relied on however it was open to the Chief Commissioner to raise an assessment based on this ground after the conclusion of the present proceedings and the taxpayers would then have an opportunity to lodge an objection to such an assessment based on that ground.

130 In the present case, the objection decision did not state that the purchasers were entitled under the agreement to exclusive possession - it only noted that the purchasers had moved into the property under "licence". It then noted that the Applicants continued to receive rent from the property. It appears, although does not state explicitly, that the Respondent denied that section 26 operated to displace in any way the ownership of the property for land tax purposes in accordance with section 3 LTMA. The Tribunal is satisfied that the Respondent did not rely on any separate provision at the hearing, as was the case in Delmege, and merely dealt with sections 26 and 3. The Applicants were on notice that these provisions would be the subject of the proceedings. Accordingly, the Tribunal is of the view that the Respondent should not be estopped in any way from making submissions in relation to the satisfaction of all the requirements in relation to sections 26 and 3 at the hearing of the matter.

131 Further it is noted that section 100(2) TAA confirms that the applicants and respondents cases on an application for review are not limited to the grounds of the relevant objection.

132 As stated above, in the further written submissions filed after the hearing, the Applicant for the first time made an application for costs pursuant to Section 88 ADT Act. 133 The application was made in respect of costs thrown away by reason of the Respondent abandoning certain arguments concerning the proper interpretation of section 26(3) LTMA. In making the application, the Applicants submitted that the costs which the Respondent had caused the Applicant to incur outweighed the amount of the land tax liability in issue.

134 The Applicants submitted that it was clear that at least until preparing further submissions, the Respondent had failed to properly consider the application of Section 26(3) of the LTMA and that the Respondent could not assist the Tribunal at the hearing in respect of its interpretation necessitating the making of orders for further submissions. Further, the Respondent abandoned its argument on the interpretation of Section 26(3) put forward at the hearing and its final submissions rely solely on the proposition that the purchasers were not entitled to exclusive possession, rendering the prior submissions of the Applicants unnecessary.

135 Accordingly, the Applicants claim the costs of preparing all submissions that are not related to whether the purchaser was entitled to exclusive possession according to Section 26(3)(a). The Applicants also observed that the costs now incurred by the Applicants outweigh the amount of the land tax liability in issue.

136 The Respondent filed its further written submissions before the Applicant made an application for costs and therefore did not address the issue.

137 The Tribunal considers it appropriate to provide leave to the Respondent to make submissions concerning costs following the publishing of this decision and for the Tribunal then to make a decision in relation to costs, "on the papers" pursuant to section 76 of the ADT Act , following receipt of those submissions. That is, unless the parties have come to some prior agreement, particularly having regard to the apparent level of legal costs vis-a-vis the relevant land tax at stake.

138 For the forgoing reasons, the Tribunal makes the following orders: 1. The decision of the Respondent to assess the Applicants to land tax in respect of the property at Newport for the 2009 land tax year is set aside. 2. The Respondent has leave to file submissions in relation to the Applicants' application for costs thrown away, within 21 days. 3. The Applicants have leave to file any submissions in reply in relation to their application for costs within 14 days of receipt of the Respondent's submissions.

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