Appellant v Respondent

(a) Ground 1: The Re-Assessments are both incorrect as they assessed duty on the wrong dutiable value, which was excessive.

(b) Ground 2: Penalties - If any liability to additional primary duty does exist, as imposed by the Re-Assessments, the penalties imposed by the Re-Assessments should be remitted in full as Alphington took reasonable care to comply with the Duties Act (in accordance with s 30(3) of the TAA).

(c) Ground 3: Interest - If any liability to additional primary duty does exist, the interest imposed should be remitted in full (pursuant to s 28 of the TAA).

(d) Ground 4: The Re-Assessments are otherwise incorrect or excessive and should be withdrawn.

1. It was common ground that the issues to be determined were narrow and as follows:

(a) Issue 1: What was the consideration for the dutiable transactions (Transfers 1 and 3) for the purpose of s 20(1)(a) of the Duties Act? Was it, in total, $94.95m as contended by the Commissioner or approximately $76.61m as contended by Alphington? More specifically, in ascertaining the consideration, should account be taken of the payments required to be made by the vendor to Alphington under the Contract?

(b) Issue 2: Did the Commissioner err in failing to remit penalties and interest imposed on Alphington?

1. Alphington relied on the evidence of Leonard Charles Warson, a director of Alphington.

1. On 28 June 2013, Alphington and Alpha APM No 2 Pty Ltd ('Alpha'), as co-purchasers, and Amcor Packaging (Australia) Pty Ltd ('Vendor'), as vendor, entered into the Contract for a contract price of $120,000,000 (GST exclusive). A deposit of $10,000,000 was payable by Alphington. The land the subject of the Contract was described in 60 separate certificates of title which were aggregated into six 'Superlots'. Alphington is described in the Contract as 'Glenvill'. However, Glenvill Pty Ltd is a separate company to Alphington and was a guarantor of Alphington's obligations under the Contract.
2. The Contract provided for three settlement dates, as follows:

(a) on 15 December 2015 Superlots 1 and 2 would be transferred to Alpha and Superlots 3 and 6 would be transferred to Alphington;

(b) on 15 December 2016 Superlot 4 would be transferred to Alphington; and

(c) on 15 December 2017 Superlot 5 would be transferred to Alphington.

1. Special condition 11 of the Contract required Alphington to procure 'Demolition Works and Remediation Works' (as defined) and for the Vendor to pay the associated costs properly and reasonably incurred by Alphington.
2. Special condition 11, as amended by the Deed of Variation dated 18 February 2015, is set out below:

The Purchaser agrees and acknowledges that, subject to special conditions 7 and 11.3, it takes the Property (including the Plant and Equipment) on an as is, where is basis, including without limitation any and all improvements in whatever condition and any and all Contamination.

11.2 Purchaser to procure Demolition Works and Remediation Works

(a) Immediately following the release of the Deposit, [Alphington] will engage the necessary consultants and contractors to procure the Demolition Works, Remediation Works and the Consultant's Works, and use its reasonable endeavours to ensure that the Demolition Works and Remediation Works are completed in a time efficient manner that enables settlement to occur by the Settlement Date.

(b) [Alphington] must use reasonable endeavours to minimise the cost of the Demolition Works, the Remediation Works and the Consultant's Works, use reasonable endeavours to complete the Demolition Works, the Remediation Works and the Consultant's Works for an amount less than $14,000,000.00 and will procure the Demolition Works, the Remediation Works and the Consultant's Works to be carried out cost effectively and to a reasonable commercial standard. If required to ensure that those works are conducted cost effectively, [Alphington] agrees to make adjustments to its Master Plan, where reasonably possible in relation to any Unidentified Contamination, provided that [Alphington] will not be required to make adjustments to its Master Plan if to do so would materially increase the costs or time necessary for [Alphington] to develop the Land following completion of the Demolition Works, Remediation Works and the Consultant's Works. [Alphington] recognises that if tendered, contracted and managed appropriately, it may be possible to complete the Remediation Works for less than the amount specified in the GHD Remediation Cost Estimate and the Consultant's Works for less than the amount specified in the Consultant's Costing.

(c) [Alphington] will use reasonable endeavours to ensure that the contracts it puts in place for the performance of the Demolition Works, Remediation Works and Consultant's Works gives the Vendor a step-in right where this contract is terminated as a result of the default of [Alphington].

11.3 Vendor's obligation to pay

(a) The Vendor agrees to pay

(i) the sum of $6,078,946, being the cost of the Demolition Works specified in the Delta Contracts ($6,378,946) less preliminary costs of $300,000;

(ii) the costs properly and reasonably incurred by [Alphington] in procuring the:

(A) Remediation Works; and

(B) Consultant's Works (acknowledging that individual Consultant's Costs may vary), subject to the Vendor's maximum liability under special condition 11.3(d),

carried out in accordance with special condition 11.2, and the Vendor will make payment of such costs in accordance with the procedure set out in special conditions 11.3(b) and (c).

(b) Instalments of the amount payable by the Vendor for the Demolition Works, Remediation Works and Consultant's Works under special condition 11.3(a) will be paid to [Alphington] within 30 days of presentation of:

(i) valid tax invoices for Demolition Works, Remediation Works and Consultant's Works performed by the nominated contractor or consultant and payable by [Alphington];

(ii) certification of such invoices by a quantity surveyor (approved by the Vendor, acting reasonably) of the amount properly payable by the Vendor as applicable for the Demolition Works, Remediation Works and/or the Consultant's Works and the approved quantity surveyor shall certify the amount which is payable by the Vendor for each of the Demolition Works, Remediation Works, and/or the Consultant's Works; and

(iii) confirmation in writing affirmed by an officer or senior manager of [Alphington] certifying that all amounts then owing to any consultant or contractors engaged with respect of the relevant works have been paid;

(c) Subject to special conditions 11.3(a) and (b) and 11.5, if following completion of the Demolition Works, Remediation Works and the Consultant's Works, the amount (in aggregate) paid by the Vendor pursuant to this special condition 11.3 (including with respect to Remediation Works pursuant to special condition 11.5) (Total Costs) are less than $14,000,000, the Vendor shall pay to [Alphington] the difference between those amounts (in aggregate) and $14,000,000 (Surplus) within 30 days of receipt from [Alphington] of:

(i) a valid tax invoice for the Surplus;

(ii) certification by the main contractor of the Demolition Works that the Demolition Works have been completed; and

(iii) certification by the Environmental Consultant that the Remediation Works have been completed.

(d) Despite anything else in this Contract, (but without limiting the Vendor's obligations under clause 11.3(a), (b) and (c)) if the Total Costs:

(i) exclusive of Consultant's Costs are less than $14,000,000, then the Vendor will contribute and pay all the Consultants Costs up to a maximum of $550,000 provided however, the Vendor's maximum liability under this special condition 11.3(d) is not to exceed $14,275,000; or

(ii) exclusive of Consultant's Costs are $14,000,000 or more the Vendor will contribute or pay 50% of the Consultant's Costs or $275,000 whatever, whatever is the lesser.

For the avoidance of doubt, a maximum of $550,000 of the Consultant's Costs may be included, irrespective of the amount incurred for the Consultant's Works. Any amount incurred for the Consultant's Works in excess of the Vendor's agreed contribution is the sole responsibility of Glenvill. Nothing in this special condition 11.3(d) shall limit the Vendor's obligations under special conditions 11.3(a), (b), or (c).

(e) If the aggregate amount paid by the Vendor under this special condition 11.3 exceeds $14,275,000 and the Vendor has overpaid its contribution of the cost of the Consultant's Works as determined under special condition 11.3(d), Glenvill must within 14 days of receiving a valid tax invoice from the Vendor, repay the amount of the overpayment to the Vendor.

(f) The Vendor and Glenvill agree that payments for the Consultant's Works payable by the Vendor under this special condition 11.3 are the only amounts payable by the Vendor under the special condition 11.3 which are in addition to payments by the Vendor for the Demolition Works and Remediation Works. Any other costs for any other works whatsoever, including costs incurred by Glenvill in complying with special condition 11.2, must be paid by Glenvill and will not be funded by the Vendor.

If Glenvill varies the works comprised in the Demolition Works, Remediation Works or Consultant's Works so that they include items which are not Demolition Works, Remediation Works or Consultant's Works, or alters the Master Plan (and such alteration necessitates a variation to the Demolition Works, Remediation Works or Consultant's Works), any such cost must be paid by Glenvill and is not to be funded by the Vendor.

11.5 Unidentified Contamination not payable by Vendor

(a) If during the course of procuring the Demolition Works and Remediation Works, Unidentified Contamination is discovered, Glenvill may notify the Vendor of the Unidentified Contamination and such notice must:

(i) detail any adjustments that Glenvill proposes to its Master Plan to mitigate the effect of the Unidentified Contamination, provided that Glenvill is not required to make any adjustments which would materially increase the costs or time necessary for Glenvill to develop the Land following the completion of the Demolition Works and Remediation Works; and

(ii) be accompanied by a letter prepared by the Environmental Consultant stating:

(A) the presence, location and nature of the Unidentified Contamination;

(B) the Environmental Consultant's opinion as to whether the Unidentified Contamination must be remediated in order to allow the Land to be used for the uses specified in the Master Plan; and

(C) the Environmental Consultant's proposed scope of work and estimate of costs for the necessary remediation of the Unidentified Contamination that are additional costs above those estimated in the GHD Remediation Cost Estimate.

(b) Unless the Vendor objects to the notice or supporting information provided under special condition 11.5(a) (which objection must be notified within 15 Business Days), Glenvill must procure the necessary remediation of the Unidentified Contamination (as specified in the Environmental Consultant's letter) and the Vendor must pay the cost of such remediation properly and reasonably incurred, in accordance with the procedure under special condition 11.3(b). For the avoidance of doubt, special condition 11.2(b) applies to these works, provided, however, that the Vendor shall not meet costs of unidentified Demolition Works.

(c) If the Vendor objects to the notice or supporting information provided under special condition 11.5(a) within 15 Business Days, then an expert will be appointed (in accordance with special condition 18) to resolve:

(i) any adjustments that Glenvill should make to its Master Plan to mitigate the effect of the Unidentified Contamination, provided that such adjustments do not materially increase the costs or time necessary for Glenvill to develop the Land following completion of the Demolition Works and Remediation Works;

(ii) the presence, location and nature of the Unidentified Contamination and whether the Unidentified Contamination must be remediated in order to allow the Land to be used for the uses specified in the Master Plan; and

(iii) the scope of work and estimate of costs for the necessary remediation of the Unidentified Contamination that are additional costs above those estimated in the GHD Remediation Cost Estimate.

B.2 Claims for the Demolition Works and Remediation Works

1. Between 8 October 2013 and 14 February 2019, Alphington issued 54 progress claims to the Vendor, comprising 76 invoices, under special condition 11 of the Contract for the Demolition Works and Remediation Works. Some invoices were paid in full, some were short-paid by the Vendor and some remain unpaid.
2. There was litigation in this Court, brought by Alphington against the Vendor, in relation to short-paid and unpaid invoices. At first instance Alphington's claims in relation to the unpaid invoices were dismissed. On appeal, the Court of Appeal allowed the appeal and remitted the matter to the Trial Division.
3. The only payments made by the Vendor to Alphington that are the subject of this proceeding are the undisputed payments in the sum of $18,344,011.78 (GST inclusive), being $5,411,483.48 in relation to Transfer 1 and $12,932,528.30 in relation to

1. Transfer 1 was effected by the Transfer of Land instrument dated 15 June 2016 by which Superlots 1, 3 and part of 6, were transferred to Alphington. The consideration for Transfer 1 stated in the transfer form was $30,303,533.70 and was calculated as follows:

1. The Vendor's contribution of $4,869,772.01 was calculated on a proportionate area basis having regard to the proportion of land transferred under Transfer 1 which was, in June 2016, considered to be 30.86% of the relevant land against the whole of the land under the Contract.
2. On 7 July 2016, Transfer 1 was assessed for duty of $1,666,694, calculated on the dutiable value of $30,303,534.70. This duty was paid by Alphington.
3. Alphington submitted that payments made by way of consideration for the transfer of dutiable property are the GST-inclusive amounts as required by s 20(2) of the Duties Act. This was not disputed.
4. By its written submissions Alphington asserts that following a revision of the payments made by the Vendor and a change to the area-based apportionment of costs to each transfer, the amount to be deducted for the 'Vendor's Works Costs' should be increased from $4,869,772.01 (GST exclusive) to $5,411,483.48 (GST inclusive). Therefore, Alphington asserts that the dutiable value should be calculated as follows:

1. Transfer 3 was effected by the Transfer of Land instrument dated 29 November 2017 by which Superlots 4, 5 and part of 6, were transferred to Alphington. The consideration for Transfer 3 stated in the transfer form was $48,139,920.43 and was calculated as follows:

1. The sum of $11,636,451.52 was calculated on a proportionate area basis having regard to the proportion of land transferred under Transfer 3.
2. On 11 January 2018, Transfer 3 was assessed for duty of $2,647,695.60, calculated on the dutiable value of $48,139,920.43. This duty was paid by Alphington.
3. By its written submissions Alphington asserts that, following a revision of the payments made by the Vendor and a change to the area-based apportionment of costs to each transfer, the amount to be deducted for the 'Vendor's Works Costs' should be increased from $11,636,451.52 (GST exclusive) to $12,932,528.30 (GST inclusive). Therefore, Alphington asserts that the dutiable value should be calculated as follows:

1. In relation to Transfer 1, Re-Assessment 1, dated 19 October 2020, assessed a further duty payable by Alphington of $640,004.40, a penalty of $128,000.88, and interest of $16,777.66 for a total amount payable of $784,782.94. This sum was calculated on a higher dutiable value of $35,173,305.71, obtained by excluding the deduction described in the relevant table above as 'Less Vendor's Works Costs' from the calculation.
2. In relation to Transfer 3, Re-Assessment 2, also dated 19 October 2020, assessed a further duty of $267,838.00, a penalty of $53,567.60, and interest of $14,660.44 for a total amount payable of $336,066.04. This sum was calculated on a higher dutiable value of $59,776,371.95, obtained by excluding the deduction described in the relevant table above as 'Less Vendor's Works Costs' from the calculation.

1. Alphington objected to the Re-Assessments by a notice of objection dated

17 November 2020 made pursuant to s 96 of the TAA ('Notice of Objection'). 2. On 21 May 2024, by his delegate, the Commissioner sent Alphington a Notice of Determination ('Determination') which disallowed both objections. 3. On 22 August 2024, the Commissioner filed the Notice of Objection, pursuant to r 7.05 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008 (Vic), alongside the Re-Assessments, and thereby instituted the proceedings pursuant to s 106 of the TAA.

C Duties Act Provisions

1. Section 20 of the Duties Act defines the dutiable value of dutiable property that is the subject of a dutiable transaction. It provides as follows:

20 What is the dutiable value of dutiable property?

(1) The dutiable value of dutiable property that is the subject of a dutiable transaction is the greater of -

(a) the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration); and

(b) the unencumbered value of the dutiable property.

(2) In determining the dutiable value of dutiable property, there is to be no discount for the amount of GST (if any) payable on the supply of that property.

D Issue 1: What was the consideration for Transfers 1 and 3?

1. It was common ground that Transfers 1 and 3 were dutiable transactions and that

s 20(1)(a) was the relevant provision for the purpose of determining the dutiable value of the property the subject of each transfer. 2. The parties agreed that $94,949,677 ('Purchase Price') passed to the Vendor on the settlement dates. The parties also agreed that $18,344,011 had been paid by the Vendor to Alphington under special condition 11 of the Contract. The question before the Court is whether the payments by the Vendor are to be taken into account when determining the consideration for the dutiable transactions.

1. The applicable legal principles relevant to the determination of this issue were not in dispute. In summary:

(a) 'Consideration' in s 20(1)(a) of the Duties Act 'is not to be read as requiring identification of the consideration sufficient to support a contract'.[1]

(b) 'The word "consideration" should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts.'[2]

(c) The consideration is 'the money or value passing which moves the conveyance or transfer'.[3]

(d) The approach taken by the High Court is to ask: 'what was received by the Vendors so as to move the transfers to the Purchaser as stipulated in the Agreement' made by the parties.[4]

1. Following the hearing the parties drew my attention to the recent decision of the High Court in Commissioner of Taxation v PepsiCo Inc.[5] Relevantly, the majority observed that whether payments made constitute 'consideration for' a transaction 'will always depend upon what the parties have agreed. In that respect, the word "for" connotes a causal connection between the making of a promise to pay or confer some other benefit and the receipt of a right [in that case, a right to use intellectual property]. That connection will be satisfied when the giving of the promise can be seen to be the basis for, or a condition of, that receipt.'[6]

(a) The analysis of what the consideration is for a transfer does not start and finish with the Purchase Price but must take account of all relevant payment obligations under the Contract. In this case that includes:

(i) the payment of the Purchase Price by Alphington to the Vendor;

(ii) the payment of $5,411,483 by the Vendor to Alphington for the transfer of the land in Transfer 1; and

(iii) the payment of $12,932,528 by the Vendor to Alphington for the transfer of the land in Transfer 3.

(b) It is the combination of those payment obligations that results in the transfer of land because without the Vendor's promise to make those payments, the purchaser would not have paid the Purchase Price. The payment obligations are interlocking in the sense that 'those two conditions form part of the contract without which the contract of the sale of land would not have been signed'.[7]

(c) The Commissioner only took into account the Purchase Price, and erroneously failed to account for the payments from the Vendor to Alphington. Consideration under s 20 of the Duties Act is concerned with the receipt by the Vendor, not payment by the purchaser.

(d) Bradley J in Resolute Mining Ltd v Commissioner of State Revenue ('Resolute Mining') had no trouble in applying payments from a vendor back to the purchaser in the calculation of consideration.[8]

(e) The value of the land happens to be the same as the consideration identified by Alphington. While Alphington does not rely on the unencumbered value, it notes the symmetry between what it says is the market value of the land (un-remediated) and the consideration. If the Vendor's payment obligations are ignored then there will be a difference between the consideration for the transfer of land and the unencumbered value.[9]

(a) This case is only about the application of s 20(1)(a) of the Duties Act. There is no valuation of the property in evidence.

(b) The only question raised by the objection is the proper calculation of consideration under that provision.

(c) Consideration passes to a vendor, not from it.

(d) The authorities ask what moves the transfer. The amount the Vendor was obliged to pay under the Contract could not be said to have moved it to make the transfer.

1. The Commissioner further submits that what Alphington contracted to buy was not just un-remediated land, it was un-remediated land with a funded promise by the Vendor to remediate it. The net result of which is that what it agreed to buy was worth the full purchase price. Therefore, contrary to Alphington's submissions, there is symmetry between the purchase price and the value of what was purchased.

1. The question raised on this appeal is the dutiable value of the relevant property under s 20(1)(a) of the Duties Act. That provision describes dutiable value as 'the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration)'.
2. The agreement governing the transfers is the Contract. Having regard to the terms of the Contract and the events that unfolded, there are four promises in the Contract which are potentially relevant to the determination of the dutiable value:

(a) The Vendor will transfer the relevant properties to Alphington.

(b) Alphington will pay the Vendor the Purchase Price.

(c) Alphington must procure, at its own expense, works described in the Contract as the 'Demolition Works and the Remediation Works'.

(d) The Vendor must pay to Alphington sums in respect of those works.

1. The specific issue to be determined is whether the sums paid by the Vendor should be accounted for in the determination of the consideration for the transfers.
2. Those payments were made under special condition 11.
3. By special condition 11, Alphington was obliged (amongst other things) to:

(a) immediately following the release of the deposit, procure the Demolition Works and Remediation Works and use reasonable endeavours to ensure the Demolition Works and Remediation Works were completed in a time efficient manner that enabled settlement to occur by the 'Settlement Date' (defined in the Contract); and

(b) use reasonable endeavours to minimise the cost of those works.

(a) pay the costs properly and reasonably incurred by Alphington in complying with special condition 11; and

(b) pay by instalments by reference to tax invoices for those works that are payable by Alphington.

1. The sums paid by the Vendor that are the subject of this proceeding are not in dispute.
2. The relevant High Court authorities require me to ask, what was received by the Vendor so as to move the transfer to the purchaser as stipulated in the agreement made by the parties.[10]
3. It is Alphington's position that, in this case I should have regard to the Vendor's net position on the basis that the transfers would not have occurred had the Vendor not made the promises of payment.
4. I disagree for the following reasons.
5. First, it is the payment of the Purchase Price that moved the Vendor to make the transfers. That proposition can be tested in this way - if the Vendor had been relieved of the obligation to make payments (for whatever reason) there is little doubt it would have remained willing to proceed with the transfers.
6. Second, including a payment made by the Vendor is not consistent with the normal understanding of consideration being that which passes to the Vendor. As stated by Lord Wilberforce: 'the phrase "consideration for the transfer or conveyance" seems to me to refer clearly and naturally to that which passed to the transferor company "for" the transferred properties'.[11]
7. Third, for the following reasons, I am not satisfied that the parties' payment obligations are interrelated or indivisible obligations such that I should account for both in the determination of consideration.

(a) The payment obligations are directed to different subject matters. Alphington's obligation is directed to the transfer of property. The Vendor's payment obligation is directed to the Demolition Works and Remediation Works - it is not 'for' the transfer.

(b) The timing of the Vendor's obligation was determined by reference to invoices for the works performed by a contractor and payable by Alphington. It was not referrable to any date of settlement of the land to be transferred.

(c) There is no default provision in the Contract linking the transfer of the land to the performance by the Vendor of its payment obligations. That is, if Alphington had been unable to settle the land, there is no provision permitting the Vendor to escape its obligations to make payments for works done under special condition 11. Similarly if the Vendor breached its payment obligations, there is no default provision permitting Alphington to terminate the transfers. The inclusion of default provisions may have demonstrated that there was only one bargain between the parties.[12] As stated by the High Court in Commissioner of State Revenue v Lend Lease Development Pty Ltd, 'provisions made for the consequences of default show that the promised performance of all of the stipulations for payment occasioned by the transfer of a Stage was what moved that transfer'.[13] In this case, the absence of default provisions connecting the transfer of the land to the performance by the Vendor of its payment obligations, in my view, undermines Alphington's submission that the parties' payment obligations are interlocking.

1. Alphington relied on the decision of Resolute Mining in support of the proposition that payments made by the Vendor may be accounted for as part of the consideration. In my view, for the reasons that follow, that case does not assist Alphington.
2. In that case, the applicant ('Resolute') appealed the decision of the Commissioner to disallow its objection to an assessment and a re-assessment of the transfer duty payable on an agreement to transfer land. The agreement for transfer was contained in an agreement ('Funding Agreement') between Resolute and the Department of Education ('Department').
3. The outcome of the appeal turned on whether the consideration payable for the agreement to transfer land could be ascertained on the date on which the liability to pay the duty arose. In that context the Court had to identify what the consideration was.
4. The relevant facts were, in short, as follows:

(a) A wholly owned subsidiary of Resolute, 'Carpentaria', owned the Ravenswood Gold Mine. It proposed to expand that mine. The existing Ravenswood State School was located on land within the area of the proposed expansion.

(b) The Department and Carpentaria entered into an agreement ('Compensation Agreement') addressing a number of matters related to the expansion, including determining compensation between Carpentaria and the State as the owner of the existing school site. The compensation payable by Carpentaria to the Department was $1.

(c) The Department and Resolute recorded their agreement about the transfer in the 'Funding Agreement'. The recitals recorded:

(i) The existing school site was located within the area required for the expansion project.

(ii) Resolute and the Department agree, in summary, that:

(1) the Department would procure the design and construction of a comparable school complex for the school in a new location (the 'Project'); and

(2) Resolute would fund the cost of the Project and provide or procure provision of 'related works' at the new site. 'Related works' was defined to include the supply of temporary power to the new site and the provision and installation of a new mains supply and supply of concrete.

(d) Under the Funding Agreement the parties agreed that:

(i) The Department would transfer legal title of the existing school site to Resolute after:

(1) practical completion under the contract for the construction of the new school on a new site;

(2) the relocation of the students to the new school; and

(3) all resources required for the operation of the new school had been relocated to the new school.

(ii) Resolute was obliged to pay the 'Funding Amount' to the Department in the sum of $8,398,767 (GST exclusive).

(iii) The Department would appoint a 'Contractor' under a 'Construction Contract' to undertake the construction of the Project for, among other amounts, the 'Contract Sum'.

(e) In addition to the Funding Amount, the Funding Agreement provided for payments by Resolute for cost overruns. It also provided for refunds by the Department to Resolute in three circumstances:

(i) the Contractor refunds to the Department any payment of the Contract Sum;

(ii) the Contractor pays the Department any liquidated damages under the Construction Contract; and

(iii) if, on project completion, the total project costs paid to the Contractor are less than the Funding Amount.

1. Resolute contended that the monetary consideration for the Department's agreement to transfer the existing school site was the net amount payable by Resolute taking into account any cost overrun payment and any refund by the Department.
2. Bradley J held that Resolute's obligation to pay the Funding Amount (as adjusted by any cost overrun payment), and the Department's obligation to pay refunds of the Contract Sum, were part of a single, consistent scheme for Resolute to fund the cost of the relocation of the existing school site. He reasoned that:

The terms of the Funding Agreement in various ways operate so that Resolute is to pay the Department the amount the Department spends on discharging the Department's obligation, described in recital B(i) as procuring the design and construction of a school in a new location.[14]

3. He further reasoned that Resolute's obligations to pay for any increased cost and the Department's obligations to refund were interrelated. The subject matter of each obligation was the same - both were directed to the funding of the Project.
4. The facts of this case are clearly different. Unlike the payment obligations in Resolute Mining, the payment obligations of the Vendor and Alphington, as I have set out above, address different subject matters and the performance of them is not connected by way of, for example, timing of performance or any default provisions.
5. For the reasons given above, I find that:

(a) The payments by the Vendor in the sum of $18,344,011 should not be taken into account when determining the consideration for the dutiable transactions.

(b) The dutiable value for each transfer is:

(i) Transfer 1 - $35,173,305.71; and

(ii) Transfer 3 - $59,776,371.95.

E Issue 2: Did the Commissioner err in failing to remit penalties and interest imposed on Alphington?

1. By Re-Assessment 1, the Commissioner assessed additional primary duty payable by Alphington of $640,004.40, a penalty of $128,000.88, and interest at a rate of 2.6% of $16,777.66 for a total amount payable of $784,782.94.
2. By Re-Assessment 2, the Commissioner assessed additional primary duty payable by Alphington of $267,838.00, a penalty of $53,567.60, and interest at a rate of 2% of $14,660.44 for a total amount payable of $336,066.04.
3. Alphington contend that if any liability for additional primary duty does exist as imposed by the Re-Assessments, the penalties and interest components should be remitted in full.
4. At trial Mr Warson gave evidence for Alphington. Relevantly he gave evidence about the legal advice Alphington sought and received about how the Duties Act would apply to the transfers. In summary he gave evidence that:

(a) The transaction had a deadline of 30 June 2013 because the Vendor wanted to report a headline price for the property.

(b) The purchaser's goal was to acquire the site and there was some due diligence being done at the time in relation to a variety of legal issues, not just stamp duty.

(c) The 'site was not worth anything close to the headline price [the Vendor] wanted'.[15]

(d) There was exposure for unidentified remediation. That was a big issue.

(e) Alphington received advice about different ways to structure the transactions.

(f) In relation to the structure that was ultimately employed for the transactions, Alphington was advised that the dutiable value would be decreased by the deduction of the cost of the Demolition Works and Remediation Works.

1. Following the cross examination of Mr Warson, counsel for the Commissioner informed the Court that the Commissioner would not press for penalties but did maintain that interest charged at the market rate under s 25(1)(a) of the TAA was appropriate.
2. The total amount of interest charged is $31,438.10.
3. Interest is charged under Part 5 of the TAA. Section 24(1) provides that if a tax default occurs, the taxpayer is liable to pay interest on the amount of tax unpaid, calculated on a daily basis from the end of the last day for payment until the day it is paid. Section 25 sets the interest rate at the sum of 'the market rate' and the 'premium rate, being 8% per annum'. Section 28 provides that the Commissioner may remit any amount of interest payable by a taxpayer.

(a) it took legal advice on the transactions, relied on that advice, and acted on it and thereby took reasonable care to comply with the law;

(b) whether the taxpayer took reasonable care to comply with their obligations under the relevant duties law is a factor relevant to the exercise of the Commissioner's discretion to remit interest; and

(c) in those circumstances, the Commissioner erred in not taking into account the fact that Alphington had exercised reasonable care in deciding not to remit interest in full.

1. In support of that proposition, Alphington relied on the following authorities as guidance as to factors relevant to the exercise of the Commissioner's discretion:

(a) Conder Tower Pty Ltd v Commissioner of State Revenue per Pagone J at 141 [42].[16] In that case the Commissioner had determined that 'in this matter, penalty and premium interest rates have been correctly remitted'.[17] However, the 'Commissioner would only remit the market rate component of interest in exceptional circumstances'.[18] Pagone J found that applying a test of 'exceptional circumstances' was a 'fetter that is not found in the section'.[19] His Honour referred the matter back for consideration by the Commissioner stating, '[t]hat is not to say that the Commissioner was bound in this case to remit interest beyond the amount remitted. It does mean, however, that the Commissioner should consider the matter afresh without a fetter that is not found in the section'.[20]

(b) Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue.[21] In that case, the court was concerned with the remission of interest at a premium rate, not market rate.

(c) Challenger Listed Investments Ltd v Commissioner of State Revenue per Pagone J.[22] In that case the court was concerned with the imposition of penalties and not the imposition of interest at market rate.

(d) Snowy Hydro Ltd v Commissioner of State Revenue at first instance and on appeal.[23] This case was concerned with the imposition of penalties and not interest at market rate.

1. In relation to this issue I am asked whether the Commissioner erred in deciding not to remit interest (calculated at market rate) payable by Alphington.[24]
2. In this case interest was charged at the market rate of 2.6% in relation to Re-Assessment 1 and 2% in relation to Re-Assessment 2.
3. The discretion of the Commissioner under s 28 is expressed in broad terms, without qualification or restriction. The discretion is to be applied when the Commissioner considers it appropriate that it be applied in each case. Each case in which the question of remission under the section arises must be considered on its own facts and circumstances without a fetter that is not found in the section.[25]
4. The Determination states, and it was not disputed, that the purpose of the market rate component of interest is to reimburse the 'Victorian Government for the financing cost of revenue forgone'.
5. It is not in dispute that the Commissioner has not had the benefit of the duty payable.
6. Alphington submits that in deciding not to remit interest in full, the Commissioner erred in not taking into account the fact that Alphington had exercised reasonable care to comply with their obligations under the relevant duties law.
7. Remission of interest charged at the market rate on that basis is not supported by the authorities.
8. I find no error by the Commissioner in the exercise of his discretion not to remit interest.

1. I propose to order that each of the appeals should be dismissed.
2. I will hear from the parties as to the proposed form of order.

[1] Chief Commissioner of State Revenue (NSW) v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3; (2005) 221 CLR 496, 518 [71] (Gummow, Kirby and Hayne JJ) ('Dick Smith'), citing Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28; (1948) 77 CLR 143 ('Archibald Howie') and Davis Investments Pty Ltd v Commissioner of Stamp Duties (NSW) [1958] HCA 22; (1958) 100 CLR 392.

[2] Dick Smith, 518 [71] (Gummow, Kirby and Hayne JJ), quoting Archibald Howie, 152 (Dixon J).

[3] Dick Smith, 518 [71] (Gummow, Kirby and Hayne JJ), quoting Archibald Howie, 152 (Dixon J).

[4] Dick Smith, 518 [72]-[73] (Gummow, Kirby and Hayne JJ), quoted in Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51; (2014) 254 CLR 142, 159 [49], 160 [51].

[5] Commissioner of Taxation v PepsiCo Inc [2025] HCA 30.

[6] Commissioner of Taxation v PepsiCo Inc [2025] HCA 30, 58 [161].

[7] Transcript of Proceedings, Alphington Developments Pty Ltd v Commissioner of State Revenue (Supreme Court of Victoria, Stynes J, 15 July 2025) 55-56 ('Transcript').

[8] Resolute Mining Ltd v Commissioner of State Revenue [2020] QSC 281.

[10] Chief Commissioner of State Revenue (NSW) v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3; (2005) 221 CLR 496, 518 [72]-[73] (Gummow, Kirby and Hayne JJ), quoted in Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51; (2014) 254 CLR 142, 159 [49], 160 [51].

[11] Shop and Store Developments Ltd v Commissioners of Inland Revenue [1967] 1 AC 472, 503 (Lord Wilberforce).

[12] Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51; (2014) 254 CLR 142, 161[58] (French CJ, Hayne, Kiefel, Bell and Keane JJ).

[13] Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51; (2014) 254 CLR 142, 161[58] (French CJ, Hayne, Kiefel, Bell and Keane JJ).

[14] Resolute Mining Ltd v Commissioner of State Revenue [2020] QSC 281, 15 [48] (Bradley J).

[16] Conder Tower Pty Ltd v Commissioner of State Revenue (2012) 88 ATR 123, 141 [42] (Pagone J) ('Conder Tower').

[17] Conder Tower, 141 [42] (Pagone J).

[18] Conder Tower, 141 [42] (Pagone J).

[19] Conder Tower, 142 [42] (Pagone J).

[20] Conder Tower Pty Ltd v Commissioner of State Revenue (2012) 88 ATR 123, 142 [42] (Pagone J).

[21] Golden Age and Hannas the Rocks Pty Ltd v Chief Commissioner of State Revenue [2024] NSWSC 249 (Richmond J).

[22] Challenger Listed Investments Ltd v Commissioner of State Revenue [2010] VSC 464; (2010) 80 ATR 630 (Pagone J).

[23] Snowy Hydro Ltd v Commissioner of State Revenue [2010] VSC 221; (2010) 79 ATR 118 (Davies J); Commissioner of State Revenue v Snowy Hydro Ltd [2012] VSCA 145 (Maxwell P, Redlich JA and Robson AJA).

[24] Taxation Administration Act 1997 (Vic), s 28; Transcript, 120.

[25] Conder Tower Pty Ltd v Commissioner of State Revenue (2012) 88 ATR 123, 141 [42] (Pagone J).