Appellant v Respondent

(a) Pursuant to a subscription and redemption agreement:

(i) Challenger Investments and Guardian Trust Australia Limited (collectively, "the new unit holders") each subscribed for, and was issued with, 36,500,000 units in the trust, at the cost of $1 per unit. The total subscription sum of $73,000,000 was paid to the old trustee;

(ii) Upon receipt of payment by the new unit holders, the old trustee redeemed the old units for $73,000,000. The old units were thereupon cancelled;

(iii) In addition to the new unit holders' rights under the agreement, they were to have the benefit of the rights of a purchaser under s.32 of the SLA in relation to the s.32 statement. At settlement, the new unit holders were required to deliver to the old trustee the s.32 statement, signed by them as purchasers.

(b) Pursuant to a deed of retirement and appointment, which was not to become effective until after the completion of the transactions required by the subscription and redemption agreement:

(i) The old trustee retired as trustee of the trust;

(ii) Challenger was appointed as trustee of the trust;

(iii) The old manager retired as manager of the trust; and

(iv) Challenger Property Management Pty Ltd ("the new manager") was appointed as manager of the trust.

(c) After the execution of the deed of retirement and appointment, and pursuant to it, the old trustee as transferor executed the transfer of the property to Challenger as transferee. The consideration was expressed on the instrument of transfer as "an entitlement in equity".

10 The undoubted commercial effect of this carefully planned sequence of transactions was that the legal and beneficial ownership and control of the property changed hands from the Leighton group of companies to the Challenger group of companies for $73,000,000.

11 The documents lodged for assessment with the State Revenue Office were the transfer, the trust deed and two statutory declarations dated 27 June 2002. In those declarations, officers of both the transferor and transferee companies declared that the transfer of the property was made "solely as a result of appointing a new trustee".

12 The transfer was initially stamped "not chargeable" by the Commissioner on 24 July 2002. However, shortly thereafter, the Commissioner commenced an enquiry into the transaction. By notice of assessment issued on 1 May 2003, the Commissioner assessed duty on the transfer of the property as follows:

Dutiable value $73,000,000.00

Stamp duty payable (5.5% of $73m) $4,015,000.00

Penalty 25% $1,003,750.80

Interest from 27/06/02 to 26/2/03 $343,252.80

13 The Commissioner subsequently reduced the amount of interest to $213,272.40, bringing the total assessment to $5,232,022.40.

14 The assessment was based on the proposition that the transfer was a transfer of dutiable property under s.10(1)(a)(i) of the Act, and there was no relevant exemption applicable under the Act. The assessment was also based on the dutiable value of the property being the market value assessed by Charter Keck Cramer.

15 By notice of objection dated 26 June 2003, Challenger objected to the assessment on the grounds that:

(a) The transfer was exempt under s.33(3) of the Act, because it was executed "solely as a result of appointing a new trustee"; and

(b) If not exempt, then the value of the property the subject of the transfer was nil or nominal, as it was only the bare legal title of property held by Leighton Funds as trustee of the trust.

16 The Commissioner issued a determination on 20 January 2004, disallowing the objection.

17 Challenger requested that its objection be referred to the Victorian Civil and Administrative Tribunal ("VCAT") for review. On 7 December 2004, Deputy President Macnamara ordered that the assessment be varied so as to assess the transfer as exempt from duty. In summary, the VCAT member determined that:

(a) The transfer had been executed "solely as a result of appointing a new trustee", within the meaning of s.33(3) of the Act, and was therefore exempt from duty;

(b) Alternatively, if the transfer was not exempt, the property transferred by it was "a bare legal estate", having a nil or nominal value;

(c) The trust structure was not part of an arrangement or scheme with a collateral purpose of reducing the duty otherwise payable on the transfer of the property, within the meaning of s.22(3) of the Act.

18 The Commissioner wishes to appeal against the VCAT decision in relation to the s.33(3) exemption and the valuation issue. The Commissioner does not challenge the VCAT decision in relation to s.22(3).

19 By virtue of s.148(1) of the Victorian Civil and Administrative Tribunal Act 1998, the Commissioner may only appeal on a question of law and must first obtain the leave of this court to do so.

20 Applying the principles set out in Department of Premier and Cabinet v Hulls[1], the Commissioner argues that there is a very clear case for leave here, because:

(a) There is a real argument that the VCAT member fell into error;

(b) The decision is attended by sufficient doubt to justify the granting of leave; and

(c) The questions of law are of general importance.

21 The application for leave and the substantive appeal were both heard on 13 April 2005, the parties being in agreement that the hearing of the appeal would only take marginally longer than the hearing of the leave application.

22 It is convenient to deal first with the arguments relating to the s.33(3) exemption. If the Commissioner does not demonstrate a relevant error in the VCAT member's findings in relation to the exemption, then duty is not chargeable on the transfer and Challenger must succeed. Only if there has been a relevant error in relation to the exemption will it be necessary for me to consider whether the VCAT member erred in holding that the dutiable value of the property transferred was nil or a nominal amount.

23 In relation to the s.33(3) exemption, the Commissioner's proposed notice of appeal dated 8 April 2005 identifies the following questions:

(a) Whether it was open to the VCAT member to be satisfied on the evidence before him that the transfer was made "solely because of the retirement of a trustee", within the meaning of s.33(3)(a);

(b) Whether the VCAT member erred in law in deciding that, on its proper construction, s.33(3)(a) was capable of applying, and did apply, to the facts as found;

(c) Whether the VCAT member erred in law in failing to take into account, in considering whether s.33(3)(a) applied:

(i) the entirety of the transactions which took place on 27 June 2002;

(ii) the purpose of the transactions;

(iii) the effect of the transactions.

24 The first matter I need to resolve is whether these are in fact questions of law, as the Commissioner contends, or questions of fact, as Challenger contends.

25 In S v Crimes Compensation Tribunal[2], the Court of Appeal helpfully summarised the relevant principles from the many authorities in this area as follows:

(a) What is the proper meaning, as a matter of construction, of the relevant statutory definition is a question of law;

(b) Once the task of construction is over, the question whether the claimant's particular circumstances fall within the relevant statutory description is essentially a question of fact.

(c) Nevertheless if, in determining whether the particular circumstances of the claimant are such as to fall within the relevant statutory description, the fact-finding tribunal arrives at a conclusion which was simply not open to it, that is an error of law; and the question whether it arrived at a conclusion which was not open to it is a question of law.

26 Before considering whether the VCAT member committed a relevant error of law, it is helpful to consider the basis on which he arrived at his decision in relation to s.33(3). His detailed summaries of the relevant transaction documents and the submissions of both sides are not the subject of any criticism before me and are not reproduced here. He then went on to arrive at the following decision:

"57. Finally, I turn to the exemption under section 33(3). Here the Commissioner's contention was that the purpose of the transfer should be seen in a wider context as merely a step in what [the Commissioner] described as the 'elaborate dance' to avoid stamp duty. I accept that there was a purpose of avoiding stamp duty. The structuring of the acquisition of the units in the [trust] in two 50% tranches by separate companies is clearly calculated to avoid the land rich corporation provisions of the [Act] by avoiding the acquisition by any party of a majority interest (cf section 79 of the [Act]). All of the steps taken at settlement can properly be characterised as [the Commissioner] did characterise them as 'an elaborate dance.' Nevertheless, do these matters prove that the transfer here was for any purpose other than the retirement of one trustee and the appointment of another? The most obvious objectives of this scheme or 'dance' could have been attained and were in fact attained without a change of trusteeship. According to the settlement agenda (which is relied upon by the Commissioner) whilst the deed of appointment and retirement of trustee were to be executed prior to the settlement itself they were not to become effective until after Step 1 which entailed the delivery of the $73m cheque to [the old trustee] with the cheque being payable at its direction to the [old unit holder], and the issue of the new $73m units to the [new unit holders]. The minutes of the outgoing trustee's directors redeeming the old units and issuing the new ones were to be tabled as Item 4. All of those steps were to be taken by the old trustee and presumably before it left office. Therefore the purchase and sale of the beneficial interest in the building had been fully effectuated before the retirement of the old trustee and the appointment of the new one. As previously noted since the duties of the trustee under the trust deed are largely passive ... with all management responsibility being vested in the manager, it would have been possible for the outgoing trustee to remain in office performing that role for Challenger. One may infer that Challenger preferred 'one of its own family' to be trustee and Leighton preferred to have no further involvement in a unit trust in which it had ceased to have a beneficial interest. These considerations it may be supposed explain why the trusteeship was changed but the change in trusteeship and therefore the transfer was not an essential step to effectuate the sale.

58. I accept [Challenger's] submission that whenever one trustee resigns and another trustee is appointed there is a wider agenda. The items on that agenda may include the promotion of the commercial interest of the incoming trustee, relief from personal burdens for the outgoing trustee, an acknowledgement by the outgoing trustee that it has lost the confidence of the beneficiaries or unit holders under the trust etc. In one sense then no transfer of land given in any of these circumstances might be said to have been given other than 'solely' because of the retirement of a trustee or the appointment of a new trustee and to vest the trust property in the new trustee; but no such analysis is appropriate in the examples I have given. [Challenger] submitted that the proper approach is not to ask 'why did the trustee resign?' and say that that is the purpose of the transfer, rather the question is, 'is the only purpose of the transfer to give effect to the change of trusteeship?'

59. As [Challenger] submitted Perpetual Trustee Co Limited v Commissioner for State Revenue [2000] VSC 177; (2000) 44 ATR 273 is an example of a transfer which changed a trusteeship but also had another purpose and effect. It will be recalled that it was submitted that the transfer of land from the vendor under a contract to a nominee for the purchaser was solely in consequence of the retirement of a trustee on the basis that the specifically enforceable contract rendered the vendor a trustee for the purchaser and the nominee for the purchaser was merely a newly appointed trustee. Hansen J accepted a submission by the Commissioner that the so called change in trustee, if it could properly be so characterised, entailed the carrying into effect of the contract of sale. [Challenger] observed that the obligation of a vendor under a contract for the sale of land was to convey to the purchaser or as the purchaser nominated. He referred to Vickery v Woods [1952] HCA 7; (1952) 85 CLR 336, 343 per Dixon J.

60. In my view, the exemption under section 33(3) is made out. I vary the Commissioner's assessment so as to show the transfer as exempt from duty."

The proper construction of s.33(3)

27 At the relevant time, s.33(3) provided as follows:

"No duty is chargeable under this Chapter in respect of a transfer of dutiable property to a person other than a special trustee[3] if the Commissioner is satisfied that the transfer is made solely -

(a) because of the retirement of a trustee or the appointment of a new trustee, or other change in trustees; and

(b) in order to vest the property in the trustees for the time being entitled to hold it."

28 The only part of that provision which is contentious in this case is the expression "solely because of".

29 The expression "because of" was recently considered by this court in Trust Company of Australia v Commissioner of State Revenue[4], in which Hansen J made the following observations[5], with which I respectfully agree:

"The critical question is the meaning and application of the expression 'because of' as it appears in the exemption. The Concise Oxford Dictionary defines 'because of' as meaning 'by reason of'. So defined, the expression 'because of' is reduced to its bare bones, so to speak. To seek to clarify the expression by language of my own would involve the risk of placing a judicial gloss or qualification on the expression. Further, to go beyond this definition with further definition would be to go around in circles or at least, hopefully, in a circle that would return one to the beginning, but also with the risk that I have mentioned. I merely observe that 'because of' is an expression of causation; if event Y occurred 'because of' event X, it follows that event X caused event Y."

30 The additional requirement in s.33(3) that the transfer be "solely" because of the relevant change of trustee imposes a rigorous factual test of causation. Here, the VCAT member was quite correct in saying that the question asked by the provision is: "Is the only purpose of the transfer to give effect to the change of trusteeship?"

31 The Commissioner does not really dispute that this is the correct question to ask. Rather, there is a dispute as to the matters to which regard may be had in answering that question. Both sides agree that whenever one trustee resigns and another is appointed there must be a reason for the change of trustee, a broader context which was described as a "wider agenda". However, they disagree as to whether one should ignore that wider agenda for the purposes of s.33(3).

32 The Commissioner argues that, in determining whether a transfer is made "solely because of" a relevant change of trustee, regard should be had to the "wider agenda", to the entirety and effect of all of the transactions which occurred on 27 June 2002, which the Commissioner characterised as "a sale".

33 The VCAT member pointed out that there will always be a reason for a change of trustee, and gave as examples the promotion of the commercial interests of the incoming trustee, relief from personal burdens for the outgoing trustee, or an acknowledgement by the outgoing trustee that it has lost the confidence of the beneficiaries or unit holders under the trust. Challenger offered further examples, including the replacement of a trustee due to illness, bankruptcy or absence from the jurisdiction. The VCAT member observed that if one were required to look at the reason for the change of trustee, then no transfer of land would ever fall within the exemption.

34 The VCAT member accepted Challenger's submission that the proper approach is not to ask "why did the trustee resign?" and say that that is the purpose of the transfer; rather the question is, "is the only purpose of the transfer to give effect to the change of trusteeship?" That is clearly the right question to ask.

35 The Commissioner says that one has to be able to look at the commercial effect of all of the transactions in order to give effect to the presumed policy behind the exemption. The Commissioner argues that the clear policy behind the exemption is that no duty should be payable where there is a "mere" change of trustee, necessitating a transfer of legal title, and no change of beneficial ownership. In those circumstances, the property continues to be held on the same trusts for the same beneficiaries and there has been no disposal which should properly attract duty.

36 Whilst it is appropriate to look at the context in which the transfer occurred, including the background to the trustee's resignation and appointment of the new trustee, to perform some sort of "reality check"[6], it is nevertheless necessary to analyse what happened from a legal point of view. The courts have stressed that liability for duty must be determined by reference to the actual transaction implemented and not by reference to its "economic equivalence." As Gleeson CJ observed in Prime Wheat Association Ltd v Chief Commissioner of Stamp Duties[7]:

"To describe the transaction as being substantially one which involved a mortgage back to the vendor does not provide an answer to the critical questions in this case, and, as was submitted on behalf of the appellants, carries a risk of resolving the issue by reference to considerations of economic equivalence rather than by reference to an accurate characterisation of the instrument under consideration."

37 Here, the VCAT member was permitted to and did analyse what happened during the various transactions, in considering the purpose of the transfer. But what he was not allowed to do, and did not do, was ignore the proper legal characterisation of what in fact occurred.

38 The Commissioner says that the VCAT member failed to correctly apply the principles laid down in Perpetual Trustee Co Ltd v Commissioner of State Revenue[8]. In that case, in dealing with the predecessor to s.33(3), Exemption 23[9], Hansen J made the following observations:

"In my view the purpose of the exemption is clear. It is to exempt from stamp duty a transfer of real property given in the context of a change of trustee of a pre-existing trust in order to vest the real property of the trust in the name of the trustee for the time being. In such a case the transfer is not given in consequence of a sale or other disposition of the real property for valuable consideration. In such circumstances it would be unreasonable to charge the instrument of transfer to duty. The beneficial interest has not changed. There has been a mere change in the registered proprietor ... consequent upon and because of the change in the office of trustee and the need for the trust property to be conveyed into the name of the trustee for the time being.

It is also clear why the legislature has considered it appropriate to use the word 'solely' in conjunction with the words 'in consequence of'. It aids in the achievement of the purpose. It does that by confining the operation of the exemption to instruments solely of the type described. ... In its common understanding in its present context the word 'solely' in conjunction with the words 'in consequence of' means that the exemption will apply only if the instruments of transfer were executed in consequence of the change in trustee and in order to vest the real property of the trust in the name of the new trustee and not in consequence of any other factor. ... The expression 'solely in consequence of' requires that for the exemption to apply it must be established, as a matter of fact, that the transfer of real property of the trust was executed only in consequence of a change of trustee and in order to vest the real property of the trust in the name of that new trustee."[10]

39 An examination of the reasons below shows that the VCAT member understood the general principles as enunciated in Perpetual Trustee, and correctly distinguished it on the quite different facts of that case, which will be discussed in the next section of my reasons.

40 In Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd[11], the Court of Appeal agreed in general terms with what Hansen J said in Perpetual Trustee as to the meaning and significance of the word "solely"[12].

41 Several points may be made about the decisions in Perpetual Trustee and Victoria Gardens. In both cases, the exemption was not available because the expression "the appointment ... of any trustee" was held to apply only to the appointment of a trustee to a pre-existing trust not one newly-created; each case could have been disposed of on that basis alone. In both cases, the facts were significantly different from those here, as will be discussed shortly. Finally, nothing was said in those cases which would suggest that a court can ignore the proper legal characterisation of what occurred, in searching for the purpose of the transfer.

42 A construction of s.33(3) which results in the transfer being exempt is not surprising when one has regard to the structure of the Act as a whole at the relevant time. Chapter 2 of the Act applied to make dutiable a transfer of dutiable property and certain specified transactions which included "any other transaction that results in a change in beneficial ownership of dutiable property"[13]. However a change of beneficial ownership "as a result of the issue, transfer, redemption or cancellation of units in a unit trust scheme", was expressly excluded from liability to duty under chapter 2[14], and was dealt with in chapter 3.

43 Chapter 3 imposes duty on certain transactions that are not dutiable transactions under chapter 2 and contains what are commonly referred to as the "land-rich" provisions of the Act, which apply to private companies or private unit trusts that have substantial land holdings. Here, the trust would fit within the statutory definition of a "land-rich corporation". Division 3 of chapter 3 imposes a liability for duty when a "relevant acquisition" is made[15]. As at June 2002, a person who acquired by various means a majority interest in a land-rich corporation would have made a relevant acquisition[16] and been liable to duty.

44 In this case, the VCAT member correctly pointed out that the structuring of the acquisition of the new units in two 50% tranches by separate companies was clearly intended to avoid the acquisition by any party of a majority interest and thereby to avoid the land-rich corporation provisions. The definition of "relevant acquisition" has been recently expanded, so as not to require the acquisition of a majority interest, as will be discussed later in these reasons.

45 I agree with Challenger that the Commissioner's argument could lead to double taxation in some cases, including this one. If, as the Commissioner contends, one is entitled to say that one of the reasons for the transfer is the change of beneficial ownership of the trust under the subscription and redemption agreement, then duty could be imposed on the change of beneficial ownership under the land-rich provisions, as well as on the change of trustee by reason of the unavailability of the exemption.

46 For these reasons, the Commissioner has not demonstrated any relevant error in relation to the construction of s.33(3). I turn to consider the alternative arguments based on the application of the section to the facts.

Application of s.33(3)

47 As has already been mentioned, the Commissioner does not dispute any of the findings of fact which underlie the VCAT member's ultimate decision in relation to s.33(3). Whether the undisputed facts of this case fall within the relevant statutory description is essentially a question of fact, not law. It is a matter in respect of which minds can legitimately differ, involving a value judgment on the evidence. Questions as to causal link, such as whether one thing is the result of some other thing, are classic questions of fact[17].

48 In order to make good this ground of appeal as an error of law, the Commissioner accepts that he has to establish that the VCAT member arrived at a conclusion which was simply not open to him, one that no reasonable decision-maker could have arrived at.

49 The Commissioner's proposed notice of appeal alleges the VCAT member committed the following specific errors in applying s.33(3) to the facts:

(a) Concluding that the relevant transfer was executed solely to give effect to a change of trustee;

(b) Failing to conclude that the transfer was executed as one step in the completion of the sale of the property the subject of the transfer;

(c) Failing to conclude that the execution of the transfer was the culmination of a series of pre-arranged steps and transactions which took place on 27 June 2002, so that the sole purpose of the transfer was not confined to giving effect to a change of trustee;

(d) Having concluded that:

(i) There was a purpose of avoiding stamp duty in the steps which were taken on 27 June 2002; and

(ii) All of those steps might properly be characterised as "an elaborate dance",

failing to hold that this demonstrated that the execution of the transfer was not made solely because of the change of trustee.

50 The first two of those grounds of appeal amount to little more than saying that the VCAT member came to the wrong conclusion. As to last two of those grounds, the VCAT member was well aware of the commercial reality of the series of transactions; indeed, he accepted that it could properly be characterised as an "elaborate dance", clearly structured for stamp duty purposes. However, he correctly perceived his task to be to apply s.33(3) to the facts before him, none of which were or are disputed.

51 The Commissioner sought to equate the factual position in this case with that in Perpetual Trustee and to rely on the following conclusion drawn by Hansen J in that case:

"What occurred was a series of steps ... by which, in the result, the vendors' full estate in fee simple passed to [the purchaser] as to the equitable estate by way of the constructive trust and as to the legal estate to Perpetual as trustee for [the purchaser] by way of the instruments of transfer. Whether or not there was between each step, from the offer to the execution of the instruments of transfer, a mere moment of time or, for some practical reason or other, a somewhat longer period, the fact is that what happened was a pre-planned, highly organised series of steps to the effect mentioned."[18]

52 The Commissioner submitted that the facts of this case exhibit the same sort of "highly organised series of steps" as the transactions in Perpetual Trustee. This transaction, the Commissioner submitted, was as much a disposal of dutiable property as any conventional conveyance of land.

53 It is necessary to consider the facts in Perpetual Trustee in some detail, to appreciate why that decision is entirely distinguishable. In that case, the Doncaster Shoppingtown shopping centre was owned by PT and 3 other entities. Unlike in this case, a contract of sale of the land and various other assets comprising the shopping centre was executed, pursuant to which PT agreed to buy the other 3 owners' interests for $147M. On the same day, PT paid the sum of $147M to the vendors, upon payment of which the vendors held their interest in the property on a constructive trust for the purchaser, PT. The vendors then resigned as trustee of the constructive trust and a new trustee, Perpetual, was appointed. The final step on the same day was the signing by the vendors of transfers of their respective interests in the land to Perpetual. Importantly, one of the terms of the contract of sale was that the purchaser could require the vendors to execute transfers of land.

54 This case differs significantly from Perpetual Trustee, in two main respects. As has already been mentioned, Hansen J held that the exemption was not available because there was no pre-existing trust, unlike here. Furthermore, in that case the transfer was made pursuant to and in order to complete a contract of sale. Given that fact, it is unsurprising that Hansen J held that the transfer was not made "solely because of" the change of trustee; it was clearly also made because of a contract of sale which required it to be made.

55 It is clear from the VCAT member's discussion of Perpetual Trustees that he also understood and appropriately distinguished that case.

56 Nor do the facts in the Victoria Gardens case provide any greater assistance to the Commissioner. In that case, three owners of adjoining parcels of land entered into a joint venture to develop the land as one site. The three parcels of land were transferred to a trustee, which held the land on trust for the purposes of the joint venture. The terms of the joint venture agreement did not allow the land to be returned to the three owners in specie, only the proceeds from the sale of their respective portion of the land. The Court of Appeal held that the transfers to the trustee effected a change in the beneficial ownership of each individual parcel of land. Accordingly, the court held that the transfers were not made "solely in consequence of the appointment of the trustee", rather they were made to give effect to the provisions of the joint venture agreement[19]. The court also held that the exemption was not available because of the absence of any pre-existing trust.

57 The Commissioner says that the present case involved no mere change of trustee. On the contrary, there was a wholesale change of legal and beneficial ownership of the property. The Commissioner points out that although the name of the trust remained the same, after the completion of the various transactions there was a different trustee and different beneficiaries. He says that this was effectively a sale of property on commercial terms between two arm's length parties and the transfer was made because of and in order to effect that sale.

58 The Commissioner relied in particular on the following matters to support the contention that the total effect of the steps taken on 27 June 2002 was to complete a purchase of the property:

(a) The Challenger Howard Property Trust deed referred to the principal asset of the trust being real property which the trust "proposed...to acquire or retain as an asset";

(b) The valuation of the property was equal to what the new unit holders paid in order to acquire all the units in the trust, of which the property was the sole asset;

(c) On 24 June 2002, the old trustee executed a s.32 vendor's statement; and

(d) The subscription and redemption agreement provided that, in addition to the rights of the new unit holders under that agreement and at law, they would have the benefit of the rights of a "purchaser" under s.32 of the SLA in relation to the s.32 statement.

59 The Commissioner's repeated references in written and oral submissions to the transaction as being one of purchase and sale, or to the land as having been sold, begs the question as to what in fact occurred.

60 The VCAT member made several critical findings of fact, the correctness of which was not challenged by the Commissioner. First, he held that the equitable and beneficial interest in the property ceased to be held by the old unit holder on 27 June 2002, and was thereafter held by the new unit holders. The means by which this was achieved was the issue of the new units and the redemption of the old units, not by the transfer. The change in the beneficial interest in the property had been fully effectuated before the retirement of the old trustee and the appointment of the new trustee.

61 The fact that the new unit holders received, as a matter of contract, the benefit of the rights of a "purchaser" under s.32 of the SLA in relation to the s.32 statement, does not detract from the finding that the beneficial interest in the property had been fully effectuated before the change of trustee.

62 The second significant finding was that, since the duties of the trustee under the trust deed are largely passive, with all management responsibility being vested in the manager, it would have been possible for the old trustee to have remained in office performing that role for Challenger. That is to say, it was not an essential requirement of the wider transaction that there in fact be any change of trustee or any transfer.

63 The VCAT member then asked himself the correct question: "why was the transfer executed?" He concluded that the transfer was executed merely to transfer the legal estate to the new trustee. In my opinion, it was reasonably open to the VCAT member to arrive at that conclusion. It cannot be said that no reasonable tribunal member could have arrived at that conclusion.

64 For these reasons, I am not satisfied that any relevant error has been demonstrated in relation to the application of s.33(3) to the undisputed facts of this case.

Are these questions of general importance?

65 Although the amount in dispute in this appeal is substantial, that is not sufficient of itself to justify the grant of leave to appeal.

66 The Commissioner says that leave should be granted because the issues raised are of general importance. If the VCAT decision stands, the Commissioner says that will lead to other people structuring transactions in a similar way, with enormous implications for revenue. Challenger disputes that and says that, by reason of recent changes to the land-rich provisions of the Act, this case is not of general importance.

67 As has already been mentioned, as the land-rich provisions stood as at 27 June 2002, the issue and redemption of units in this case did not fall within s.79 because no majority interest was acquired by the new unit holders.

68 No doubt this series of transactions was structured in the way it was having regard to what might be described as a "loophole" in the Act, as it was at the time. It seems to me that the hole has been substantially closed by the amendments made by the State Taxation Acts (Tax Reform) Act 2004, which took effect from 13 May 2004. The meaning of "a relevant acquisition" in s.79 has been changed from the acquisition of a "majority interest" to a "significant interest"[20]. An acquisition like the one by the new unit holders under the subscription and redemption agreement would be dutiable if it occurred under the new provisions. It is also significant that the amended legislation introduced broader anti-avoidance provisions, which apply to Chapters 2 and 3 of the Act.

69 Given the recent amendments to the land-rich provisions of the Act, the decision in this case in relation to s.33(3) is likely to be of limited interest in the future.

Conclusion

70 For these reasons, the Commissioner has not demonstrated either that there has been a relevant error by the VCAT member in relation to the s.33(3) exemption or that the question is of general importance. Accordingly, I propose to refuse the application for leave to appeal and to affirm the order of VCAT.

71 The decision as to exemption being upheld, there is no need to consider the valuation issue.

[1] [1999] VSCA 117; [1999] 3 VR 331 at 335 - 337.

[2] [1998] 1 VR 83 at 88-89 per Phillips JA and Hedigan AJA.

[3] It is common ground that Challenger is not " a special trustee", a term defined in s.33(1).

[4] [2006] VSC 64.

[5] His Honour was considering the exemption under sub-section (2) of s.33 of the Act, the exemption provision which applies to special trustees.

[6] As Hansen J suggested in Perpetual Trustee at [59].

[7] [1997] NSWSC 546; (1997) 42 NSWLR 505.

[8] [2000] VSC 177; (2000) 44 ATR 273.

[9] Section 33 replaced Exemption 23 under Heading VI of the Third Schedule to the Stamps Act 1958, which provided an exemption for: "Any instrument for the conveyance of real property where the Comptroller of Stamps is satisfied that the instrument is made solely in consequence of the appointment or retirement of any trustee or other change in trustees and in order to vest the real property in the trustees for the time being entitled to hold the real property."

[10] At [53]-[54].

[11] (2000) 46 ATR 61.

[12] At [28].

[13] Section 7(1)(b)(vi).

[14] Ibid.

[15] Section 78.

[16] Section 79.

[17] S v Crimes Compensation Tribunal at 89.

[18] At [59].

[19] At [29].

[20] Itself a defined term, the details of which are not necessary to consider for present purposes.