1. The decision of the Commission of State Revenue under review is affirmed.

For the Applicant: Mr J.W. de Wijn QC and Mr P. Solomon of Counsel, instructed by Arnold Block Leibler

For the Respondent: Mr C.M. Caleo of Counsel, instructed by the Solicitor for the Commissioner for State Revenue

1. The Gandel group of companies is one of the largest property owning groups in Australia. In particular it has interests at the Chadstone Shopping Centre in metropolitan Melbourne and shopping centres at Broadmeadows and Frankston. Arjon Pty Ltd ("Arjon") the applicant in this proceeding is trustee of three discretionary trusts which via the ownership structures to be described below are beneficial owners of one half of the interests in the Chadstone Shopping Centre and the whole of the shopping centres at Broadmeadows and Frankston.

2. The respondent Commissioner of State Revenue assessed Arjon for land tax with respect to the entire interest in the Broadmeadows and Frankston Shopping Centres and a 50 percent interest in the Chadstone Shopping Centre by way of amended assessments for the years 1998 and 1999, both dated 14 March 2000 and an assessment dated 2 March 2000 for the year 2000.

3. The ownership structure relevant to these assessments was set out in the written submission made by Mr Caleo of counsel who appeared on behalf of the Commissioner of State Revenue ("the Commissioner"). These matters are not in dispute and so we will quote the relevant passage from the submission:

"2. The following facts are not in dispute between the parties. At the time relevant to each of the assessment years:

(a) Arjon was the trustee for three family trusts called:

(b) each of the Gandel Family Trusts was a conventional discretionary trust constituted by Deeds of Trust, amended from time to time;

(c) Bridgehead Pty Ltd `Bridgehead') and Perpetual Trustees Australia Ltd (as trustee for the Gandel Retail Trust, a publicly listed trust) were the joint owners of the land on which the Chadstone Shopping Centre stands (`the Chadstone Land');

(d) Bridgehead held its undivided 50 per cent of the Chadstone Land as bare nominee for Arjon, in its capacity as trustee for the Gandel Family Trusts;

(e) Braybridge Pty Ltd (`Braybridge') was the owner of the land on which a shopping centre at Frankston stands (`the Frankston Land');

(f) Braybridge held the Frankston Land as bare nominee for Arjon, in its capacity as trustee for the Gandel Family Trusts;

(g) Gandel Seabridge Finance Pty Ltd (`GSF') was the owner of the land on which a shopping centre at Broadmeadows stands (`Broadmeadows Land');

(h) GSF held the Broadmeadows Land as trustee for The Gandel Seabridge Finance Trust (`the GSF Unit Trust'). The GSF Unit Trust was a unit trust, established by Deed dated 4 May 1993. Arjon, in its capacity as trustee for the Gandel Family Trusts held all the issued units in the GSF Unit Trust."

4. It is also common ground that the companies referred to above and which are registered under the Transfer of Land Act as proprietors of fee simple estates in the relevant shopping centres were assessed for land tax under the Land Tax Act 1958 for the entirety of the interest in the relevant shopping centres.

5. Land tax is assessed at progressive rates and the rates increase the larger the holdings of a land owner are. Whilst Arjon has been given a credit for the land tax paid by the registered proprietors of each of the centres, the aggregation of the land holdings of the three Gandel Family trusts in question means that Arjon is taxed at a higher rate than any of the registered proprietors. The practical affect is to increase the ultimate land tax liability of the Gandel group with respect to these centres by an amount of approximately $500,000 over the three years for which assessments have been made.

6. Arjon now seeks review by the Tribunal of the assessments. It contends primarily that it should not be assessed at all, particularly in light of the fact that the registered proprietors of each of the relevant shopping centres has already been assessed. As an alternative contention, Arjon submits that if it is to be assessed for land tax for these centres, it should be assessed separately in respect of each such centre.

7. Land tax is an ancient source of revenue. In 18th Century England it was the principal source of Government finance. The tax exists in all States of the Commonwealth of Australia and was formerly levied by the Commonwealth itself. The present Land Tax Act 1958 ("the Act") took its general shape as long ago as 1910 and has been consolidated and re-enacted since. The basic charging provision of the Act is Section 6 providing:

"Subject to this Act there shall in the case of each owner of land be charged levied and collected by the Commissioner and paid for the use of Her Majesty in aid of the Consolidated Fund for each and every year a duty of land tax upon land for every dollar of the unimproved value thereof in accordance with the provisions of the Second Schedule."

"(1) Subject to sub-section (2) tax on land shall in the case of each owner thereof be assessed charged levied and collected by the Commissioner for each year on the total unimproved value of all land of which he is the owner at midnight on the thirty-first day of December immediately preceding the year for which such tax is assessed charged levied and collected."

9. Section 14 provides for taxpayers to furnish returns to the Commissioner. Section 17 provides:

"The Commissioner shall from the returns and from any other information in his possession or from one of those sources and whether any return has been furnished or not cause an assessment to be made of the taxable value of the land owned by any taxpayer and of the land tax payable thereon."

10. These provisions show that whilst the tax is levied with respect to land it is levied upon "owners" of land. Arjon through its Counsel, Mr De Wijn QC and Mr Solomon of Counsel, submits that it can be subjected to land tax only if it is established that it was an "owner" of the relevant land in the year of assessment in accordance with the provisions already quoted. Mr Caleo who appeared for the Commissioner did not, as we understand it, contend otherwise.

11. Central therefore to the operation of the statute is the definition of "owner" which is to be found in Section 3 of the Act. The definition of "owner" includes the following provisions:

"owner" in respect of land means , except in Part IIA -

(a) every person entitled to any land for any estate of freehold in possession;

and includes every person who by virtue of this Act is deemed to be an owner"

Paragraphs (b) to (e) of the definition are not relevant to the present dispute. Paragraph (a) has remained unchanged in the statute since the Land Tax Act 1910. It was re-enacted without material change in the Land Tax Act 1915, the Land Tax Act 1928 and in the present statute.

12. "Land" is defined in Section 3 of the Act to include "all land and tenements and all interests therein" (our emphasis). The issue of the division of interests between legal and beneficial is dealt with in Sections 51 and 52 which are in the following terms:

"51. Subject to the other provisions of this Act, the owner of any equitable estate or interest in land shall be assessed and liable in respect of tax as if the estate or interest so owned by him was legal, but there shall be deducted from the said tax so payable by him in respect of that estate or interest the amount of any tax paid in respect thereof by the legal owner of the land.

52. (1) Every person in whom land is vested as a trustee, shall make returns and be assessed and liable in respect of the tax as if he were beneficially entitled to such land, save that when he is the owner of different lands in severalty in trust for different beneficial owners who are not, by reason of joint occupation or otherwise, liable to be jointly assessed for tax in respect of the same, the tax so payable by him shall be separately calculated and assessed in respect of each of those lands; and save also that when a trustee is also the beneficial owner of other land, he shall be separately assessed in respect of that land, and of the land of which he is a trustee, unless by reason of joint occupancy or for any other reason he is liable to be jointly assessed independently of this section.

(2) Provided that any trustee who has paid any tax under this section shall be entitled to be repaid the amount he has so paid by the owner of any equitable estate or interest in land who is also liable to pay such tax and in addition shall have a right to be recouped out of any of the trust property in his hands subject to the same or the like trusts as the land on which the tax is charged."

13. The Commissioner assessed for the three years mentioned above, upon the following basis:

"(a) Arjon, as trustee for the Gandel Family Trusts (for whom 50 per cent of the Chadstone Land was held upon trust by Bridgehead as bare nominee), was the owner of the equitable estate or interest in the undivided 50 per cent of that land;

(b) Arjon, as trustee for the Gandel Family Trusts (for whom the Frankston Land was held upon trust by Braybridge as bare nominee), was the owner of the equitable estate or interest in that land; and

(c) Arjon, as trustee for the Gandel Family Trusts (the sole unitholder of all the issued units in the GSF Unit Trust), was the owner of the equitable estate or interest in the Broadmeadows Land."

14. The Commissioner assessed Arjon under Section 52(1) as trustee of the relevant Gandel Trusts.

15. Mr De Wijn QC and Mr Solomon on behalf of the applicant submit that the Commissioner's reliance on Section 52(1) of the Land Tax Act is misconceived. In their submission none of the land was "vested" in Arjon "as a trustee". To sustain such a conclusion they said it would be necessary to show that Arjon was:

(b) alternatively, if an equitable interest is sufficient for land to be vested in Arjon as a trustee, such equitable interest must constitute Arjon as an owner of the land, as defined in Section 3 of the Act.

They rely upon the decision of the New South Wales Court of Appeal in Chief Commissioner of Land Tax v Macary Manufacturing Pty Ltd [1999] NSWCA 471; (1999) 48 NSWLR 299, 312. They submit that Macary's case demonstrates that no person could be liable to assessment for land tax under the equivalents of Sections 51 and 52 of the Victorian Land Tax Act 1958 in the New South Wales Land Tax Management Act 1956 unless that person was within the definition of "owner" in the relevant legislation. They noted that in Macary's case, Mason P found that the registered proprietor of land subject to a bare trust was the "owner" for the purposes of the land tax legislation "notwithstanding the imposition of a trust requiring the proprietor to hold that estate on behalf of beneficiaries". [1999] NSWCA 471; (1999) 48 NSWLR 299, 309

16. They contend that Section 52 of the Victorian Act deals only with persons who hold the legal estate in land as trustee.

17. They contend that the Commonwealth Land Tax Assessment Act 1910, which has been considered on a number of occasions by the High Court of Australia, has an equivalent provision to Section 52 of the Victorian Act, as Section 33 and Section 35 of the Commonwealth Act is "substantially similar" to Section 51 of the Victorian Act. In their written submission they state that:

"The policy underpinning the two sections of the Commonwealth Act was a legislative desire:

(a) to impose the primary obligation to pay tax on the holder of the legal estate or interest in the land;

(b) in doing so, to ensure that the taxing authority could charge the land, in the hands of the legal owner, if tax were unpaid;

(c) to enable land tax to be imposed on beneficiaries whose interest in the land made them owners, but in such a way that double taxation was avoided [they referred to Bailey v Federal Commissioner of Taxation [1911] HCA 69; (1911) 13 CLR 302, 316 per O'Connor J; Clifford v Deputy Federal Commissioner of Land Tax for New South Wales [1914] HCA 57; (1915) 19 CLR 593, 615 per Isaacs J]."

18. They conclude therefore that the primary obligation to pay the tax "historically, has fallen on the legal owner". They submit that Arjon was never legal owner of any of the three shopping centres and thus even if the words, "vested as a trustee" as used in s.52(1) of the Act could extend to equitable interests, "the interest would still require the trustee to be constituted an owner under the provisions of the Act".

19. To justify an assessment under Section 51 it is necessary in their submission:

(a) to assume the equitable interest referred to in the section is in fact a legal interest; and

(b) to consider whether that interest is such as to constitute its holder "an owner", which will require a consideration of whether that interest constitutes an "estate of freehold and possession".

20. They refer to the evidence which shows that the registered proprietors of each of the three shopping centres had incurred liabilities with respect to the relevant centres as trustee in the millions or tens of millions of dollars (in the case of Chadstone the liability as at 31st December 1999 was $102,067,779) for which those trustees/registered proprietors were entitled to recoupment from the trust property. They refer to the decision of the High Court of Australia in Octavo Investments Pty Ltd v Knight [1979] HCA 61; (1979) 144 CLR 360; a decision of the Full Court of the Supreme Court of Queensland in Kemtron Industries Pty Ltd v Commissioner of Stamp Duties [1984] 1 Qd R 576 and the decision of the High Court of Australia in Chief Commissioner of Stamp Duties for New South Wales v Buckle [1998] HCA 4; (1998) 192 CLR 226. These authorities establish, they submit, that the right of recoupment accruing to the trustee in circumstances such as the present, gives the trustee an independent beneficial interest in the trust property to secure its right of recoupment. They rely in particular upon the following statement in the joint judgment of the High Court (Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ) in Buckle's case where their Honours said of a trust estate burdened with a trustee's right of recoupment or exoneration:

"Until the right to reimbursement or exoneration has been satisfied, `it is impossible to say what the trust fund is'. The entitlement of the beneficiaries in respect of the assets held by the trustee which constitutes the `property' to which the beneficiaries are entitled in equity is to be distinguished from the assets themselves. The entitlement of the beneficiaries is confined to so much of those assets as is available after the liabilities in question have been discharged or provision has been made for them. To the extent that the assets held by the trustee are subject to their application to reimburse or exonerate the trustee, they are not `trust assets' or `trust property' in the sense that they are held solely upon trusts imposing fiduciary duties which bind the trustee in favour of the beneficiaries." [1998] HCA 4; (1998) 192 CLR 226, 246 at [48]

21. So when trust property was conveyed and was in accordance with Section 65 of the Stamp Duties Act 1920 subject to stamp duty as a "conveyance" on the basis of its "unencumbered value" duty was not payable upon that portion of the property affected or consumed by the trustee's right of recoupment. The Court said:

"The interest of the beneficiaries are not `encumbered' by the trustee's right of exoneration or imbursement. Rather, the trustee's right to exoneration or recoupment `takes priority over the rights in or in reference to the assets of beneficiaries or others who stand in that situation'. A court of equity may authorise the sale of assets held by the trustee so as to satisfy the right to reimbursement or exoneration. In that sense, there is an equitable charge over the `trust assets' which may be enforced in the same way as any other equitable charge. However, the enforcement of the charge is an exercise of the prior rights conferred upon the trustee as a necessary incident of the office of trustee. It is not a security interest or right which has been created, whether consensually or by operation of law, over the interests of the beneficiaries so as to encumber them in the sense required by S.66(1) of the [New South Wales Stamp Duties] Act. In valuing the interests of the beneficiaries which are conveyed by an instrument, there is no encumbrance which the Act requires to be disregarded." [1998] HCA 4; (1998) 192 CLR 226, 247 at [50]

22. So in the Kemtron case where a conveyance of trust property was once again to be charged with stamp duty as a conveyance upon its "full unencumbered value" duty was chargeable only upon the value of the relevant share minus the trustee's liability (which in the event was a negative value).

23. Based on these principles Mr de Wijn and Mr Solomon conclude:

"At each relevant date, the registered proprietors of each of the Chadstone Land, the Frankston Land the Broadmeadows Land had incurred trust liabilities. Until those liabilities were discharged, the entitlement of the beneficiaries of the Arjon Trusts was:

As a consequence, Arjon says that it follows that, however the equitable interest be properly characterised, it is necessarily less than an `estate of freehold in possession'. As a consequence, and for that reason alone, in respect of all land assessed, Arjon cannot be assessed as an `owner'."

24. In viva voce submission Mr de Wijn said that in the circumstances, Arjon's interest in the relevant trust, rather than being "in possession" was in "reversion or remainder".

25. Counsel for Arjon put an additional submission specifically with respect to the Broadmeadows land. They referred to the decision of the High Court of Australia in M.S.P. Nominees Pty Ltd v Commissioner of Stamps (SA) [1999] HCA 51; (1999) 198 CLR 494. In the M.S.P. case the Court, Gleeson CJ, Gaudron, Gummow, Hayne and Callinan JJ considered the stamp duty liability arising out of a redemption of units in a unit trust. Amongst the instruments brought to charge by Section 91 of the Stamp Duties Act 1923 (South Australia) and deemed to be conveyance as operating as voluntary dispositions inter vivoc were instruments which operated to "surrender or renounce a beneficial interest or potential beneficial interest in, or in relation to property". The trustee exercised a discretion to make an entry in the unit trust register cancelling units at the request of the unit holders and paying the share from a trust estate attributable to the cancelled unit. The High Court reversing the Full Supreme Court of South Australia set aside the Commissioner's assessment, concluding that there was no surrender or renunciation of a beneficial interest. Their Honours said:

"The use of terms such as `beneficial interest' is apt to mislead when applied to beneficiaries' interests in a discretionary trust. As effected by CL4 of the Trust Deed, the unit holders were denied any specific interest in any item of property held in the trust fund. Rather, the rights enjoyed by Budget and Galaxy as unit holders were, upon favourable exercise by the trustee of its discretion conferred by CL34, transmitted by the redemption process into the entitlement to the price arrived at by the valuation for which CL36 provided." (1999) 98 CLR 494, 509 at [34]

26. Mr de Wijn and Mr Solomon stress that the unit trust affecting the Broadmeadows land provides for the trustee to convert the investments into money and divide them among the unit holders at the vesting day. With the consent of 75 percent of the unit holders the trustee can raise any sum of capital of the trust fund and pay that sum proportionately to the unit holders. Speaking of the passage from the Court's judgment already quoted, they said:

"It can be seen that the High Court considered a unit trust, in which the trustee had numerous powers and discretions, could properly be characterised as a discretionary trust."

27. They concede that a person entitled to equitable relief to enforce rights in respect of property has an equitable interest in that property commensurate with the equitable relief available. They refer to Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489, 522-3; Suncorp Insurance and Finance v Commissioner of Stamp Duties [1997] QCA 225; [1998] 2 Qd R 285, 301. They submit however that "equity draws a clear distinction between a right of a person, with an interest in a fund, to prevent trustees dissipating in the fund, and_,_ [emphasis in the original] alternatively, an interest in possession, separate from and addition to this interest. Historically in the context of land tax, the High Court has always recognised that an equitable interest in land might not constitute its holder an `owner' for statutory purposes." They refer to Trustees Executors and Agency Co Ltd v Commissioner of Land Tax [1915] HCA 35; (1915) 20 CLR 21; Hoystead v Federal Commissioner of Land Tax (192) [1920] ArgusLawRp 49; 27 CLR 400, 409; [1921] HCA 56; (1921) 29 CLR 537.

28. They argue that the judgment of Brooking J in Costa & Duppe Properties Pty Ltd v Duppe [1986] VicRp 9; [1986] VR 90 that a unit holder under a typical commercial unit trust had a caveatable interest in land forming part of the trust fund should be regarded as confined to that particular situation. Specifically they note that Section 89 of the Victorian Transfer of Land Act 1958 enables "any person claiming any estate or interest in land" to lodge a caveat with respect to that land. This entitlement, they submit, reaches far beyond an estate or interest in possession. The High Court's decision in Charles v Federal Commissioner of Taxation [1954] HCA 16; (1954) 90 CLR 598, 608-9 which appeared to recognise an interest of unit holders in land forming part of the unit trust asset should be seen as the Court's distinguishing "the rights attaching to units from those attaching to shares, [and not as specifying] the precise nature of the equitable interest attaching to units." They rely upon the dictum of Lord Reid in Gartside v Inland Revenue of Commissioners [1967] UKHL 6; [1968] AC 553, 602 where His Lordship said:

"A person, who has a contingent right to some benefit from the trust fund in some future event, has a present right to prevent the trustees from dissipating the fund. But that right is not an interest in possession separate from and in addition to his contingent interest."

29. Mr Caleo of counsel on behalf of the Commissioner submits that the assessments should be affirmed. He observes that in the case of the Frankston and Chadstone land the relevant registered proprietors were conceded by Arjon to hold as "bare trustee" for it. He referred to the characterisation of the so called "bare trust" made by Gummow J sitting as a Judge of the Federal Court of Australia in Herdegen v Federal Commissioner of Taxation [1988] FCA 419; (1988) 84 ALR 271 at 281 where His Honour said:

"Today the usually accepted meaning of `bare' trust is a trust under which the trustee or trustees hold property without any interest therein, other than that existing by reason of the office and the legal title as trustee, and without any duty or further duty to perform, except to convey it upon demand to the beneficiary or beneficiaries or as directed by them, for example, on sale to a third party. The beneficiary may of course hold the equitable interest upon a sub-trust for others or himself and others: see Halsbury's Laws of England_, 4th ed, vol 48 `Trusts', para 938. The term is usually used in relation to trusts created by express declaration. But it has been said that the assignor under an agreement for value for assignment of so-called `future' property becomes, on acquisition of the title to the property, trustee of that property for the assignee (_Palette Shoes Pty Ltd v Krohn (1937) 58 CLR 1 at 27) and this trust would answer the description of a bare trust. Also, the term `bare trust' may be used fairly to describe the position occupied by a person holding the title to property under a resulting trust flowing from the provision by the beneficiary of the purchase money for the property."

30. Mr Caleo submits that in a typical "bare" trust, both trustee and beneficiary are to be regarded as having interests "in possession".

31. He submits that there is no authority which would confine the expression "vested" when used in Section 52 of the Land Tax Act to the vesting of legal property.

32. He contends that the existence of a trustee's right of recoupment and exoneration, even though it constitutes a beneficial interest in the trust property which takes in priority to the interests of the beneficiaries, does not render those beneficiary interests "in remainder or reversion as distinct from being `in possession'". He relies upon the dictum of Mason P in Chief Commissioner of Stamp Duties v ISPT Pty Ltd (1997) 45 NSWLR 639, 653 where His Honour said:

"A trustee's right of indemnity arises at the time when a liability is incurred, and it is at this stage that the lien over trust assets arises: see Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd (1992) 8 WAR 42 at 52-53 (and authorities cited). The reference in Chief Commissioner of Stamp Duties v Buckle to `priority' simply means that, if termination of a trust is sought by all beneficiaries in accordance with the rule in Saunders v Vautier_, the trustee has (at that stage) a right in the nature of lien for the recoupment of any rust expenses actually incurred at that point of time, such right being superior (prior) to that of the beneficiaries to receive the trust assets."_

33. As to the Broadmeadows land, in Mr Caleo's submission the interposition of the unit trust leads to no different conclusion than for the Frankston and Chadstone land. He relies upon the judgment of Brooking J in Costa v Duppe. His Honour in that case held that a unit holder under a typical unit trust had a caveatable interest in land, the subject of the trust upon the following basis:

"[T]he that is the conclusion is inescapable that the unit-holders in the Costa & Duppe property's unit trust have a proprietary interest in all the property which is for the time being subject to the trust deed. This proprietary interest is recognised by Cl7(a) of the deed. Clauses 7(a) and 8(a) cannot mean that the unit holders, while having a proprietary interest in the whole, have no such interest in any of the constituent parts. If there is a proprietary interest in the entirety, there must be a proprietary interest in each of the assets of which the entirety is composed: Cf Smith v Layh [1953] HCA 16; (1953) 90 CLR 102, at pp. 108-9 what Cl8(a) recognises is that no unit-holder can claim to have any particular asset appropriated to his share or transferred to him otherwise than in accordance with the deed." [1986] VicRp 9; [1986] VR 90, 96

34. We accept Mr de Wijn's contention that Sections 51 and 52 can only operate to subject the applicant to land tax liability if it is to be regarded as an "owner" within the meaning of the Act. The only paragraph of the definition in the Act and which is relied upon is paragraph 3(a). Accordingly the question is whether Arjon is "entitled to any land for any estate of freehold in possession"? Dealing with the corresponding provision in the definition of owner in the Commonwealth Land Tax Assessment Act 1910 in Glenn v Federal Commissioner of Land Tax [1915] HCA 57; (1915) 20 CLR 490, 496 Griffith CJ said:

"The term `estate in possession' is sometimes used in real property law merely to denote the first of two or more successive estates, the others being called `estates in remainder' or `estates in expectancy'. It is also used to denote an estate of which some person has the present right of enjoyment.

Mr Fearne, in the preface to his well-known work on Contingent Remainders_, distinguished between estates vested in possession and estates vested in interest, and added that an estate is vested when there is an immediate fixed right of present or immediate enjoyment, is vested in possession when there exists a right of present enjoyment, and is vested in interest when there is a present fixed right of future enjoyment. On this Mr Butler, in a note to the 10th edition, comments thus (p.1, note (a)):-_

`From the manner in which this distinction is expressed, it might be inferred, that Mr Fearne considered that, under a conditional limitation or executory devise, depending on a certain event, the cestui que use or devisee takes a vested estate, (emphasis in the original) while the event, on which it depends, is in suspense: but it seems evident, that, as in all these cases, the whole fee simple is either in the person from whom the land moves, or in his heirs, or is included in the actual limitations, the person taking under the conditional limitation or executory devise, cannot, while the suspense continues, in the proper sense of that word, have any estate (emphasis in the original), though the event, on which it depends, is certain of happening.

A conveys land by lease and re-lease to B and his heirs, to the use of C and his heirs, from the first day of the following January; or devises land to C and his heirs, from the first day of January next after the testator's decease:- In the first case, the fee remains in A; in the second, it descends to the heir at law of A, till the day arrives, upon which C is to be entitled to the land, for an estate in fee simple in possession. In the meantime, C has not an estate in possession, as he has not a right of present enjoyment; he has not an interest in remainder, as the limitation to him depends on the estate in fee simple, which, in the first case, remains in A; and, in the second, descends to A's heir; he has not a contingent interest, as he is a person in being and ascertained, and the event, on which the limitation to him depends, is certain; and he has not a vested estate, as the whole fee is rested in A and his heirs.

He therefore has no estate; the limitation is executory, and confers on him and his heirs a certain fixed right to an estate in possession at a future period."

In my opinion the term `estate in possession' is used in the Land Tax Assessment Act in the sense explained by Mr Butler. This is not only the natural, but the only just, interpretation that can be put on the words. For the tax is an annual tax, and the `owner' of the land is the person who is in the present enjoyment of the fruits which presumably afford the fund from which it is to be paid."

35. We take the elaborate analysis referred to in the preceding paragraph to mean that a person has an estate or interest "in possession" when it is available for present enjoyment. What then is the situation of Arjon with respect to the Chadstone and Frankston land? First, its interest however characterised, is one in equity and not a legal interest. The legal interest remains with the registered proprietors; nevertheless the definition of "land" in the statute encompasses both legal and equitable estates or interests so the fact that Arjon's interest is equitable only, does not exclude the possibility of it being an "owner" within the meaning of the Act. The only matter urged by Mr de Wijn and Mr Solomon was that the existence of the trustee's right of recoupment or exoneration changes the character of the estate. It was not suggested that subject to the right of recoupment and exoneration being met, Arjon was not entitled to present enjoyment of the equitable fee simple in the relevant land.

36. To accept that the existence of liabilities for which the trustee is entitled to exoneration negates the possibility that the holder of the equitable fee simple is to be regarded as having an ownership right in possession would have curious results. Typically trust property consists not only of corpus but also of income. We were not taken to any detail on these matters with regard to the present land but one would imagine as a general proposition that a shopping centre would generate a substantial rent roll on a monthly basis. Putting to one side what might be done with the present shopping centres, in a hypothetical situation one could well imagine that a trustee might be able to keep down his, her or its liabilities as trustee by resort to the income of the trust property. According to the submissions made for the applicant, the beneficiaries would have an interest "in possession" once the liabilities were paid off by resort to the income. The interest would be relegated to the "remainder or reversion" category once a new liability accrued. Again, in the case of a bare trust, in the absence of a provision to the contrary the trustee would have a right of personal indemnity against the beneficiaries. See Hardoon v Belilios [1900] AC 118. The beneficiary may "clear" the trustee's right of recoupment or exoneration from time to time by putting the trustee in funds either in advance of the liabilities' arising or subsequently. Is it likely that the fundamental character of the equitable interest of the beneficiary changes from one "in possession" to one "in reversion or remainder" and vice versa every time a liability arises and every time it is met? It has not been suggested that trust property which is constituted by an interest which is less than the entire fee simple of a piece of realty would prevent a beneficiary's being an owner "in possession" if that beneficiary had an existing freehold right in present enjoyment. For instance, the fact that Arjon's interest in the Chadstone land is only an undivided half share is not urged as a reason why it could not be regarded as being the holder of an interest "in possession" in that land. The effect of the cases on the trustee's "charge" or "lien" to secure his right of exoneration mean no more than this. Once such a right of exoneration exists the interest of the beneficiaries is not an interest in the entire trust fund but only in the complement of the trust fund after the trustee's liabilities have been met. If a beneficiary holding a fee simple interest in equity in an undivided half share of a piece of land which is the subject of a trust can be regarded as having an interest "in possession" in that land, we are unable to see why a beneficiary, whose interest is in the complement of a piece of realty after deducting the amount of the trustee's liabilities for which he is entitled to recoupment or exoneration, is not likewise to be regarded as having an interest "in possession".

37. Acceptance of the applicant's submissions here would lead to the startling conclusion that the holder of a life estate under a settlement of land would not be regarded as having a right "in possession" merely because the trustee of the settlement might have certain rights to exoneration against the trust estate. It would be a most inappropriate use of language to describe a life estate in present enjoyment as being "in reversion or remainder" for this reason alone.

38. We are fortified in our view by the consideration that an analysis of Glenn's case shows that it was essential to the High Court's conclusion that the residuary beneficiaries were not to be regarded as "owners" for the purposes of the Commonwealth land tax legislation, that the immediate enjoyment of their interests was postponed by a period of accumulation. It is in that context that Griffith CJ made his extended reference to Fearne's Contingent Remainders. Had it not been for that element of accumulation, the beneficiaries would have been regarded as "owners" for the purposes of the Commonwealth legislation.

39. It follows that in our view Arjon with respect to the Chadstone and Frankston land falls within the definition of "owner" in the Act.

40. At this point we should note a submission made in reply by Mr de Wijn. In the primary submission on behalf of Arjon, reference was made to the existence of a definition of "special trust" which had been inserted into the Land Tax Act in 1991. In the event they said, that definition now had no work to do in the Act, though it is of some significance for stamp duty. The part upon which they rely is a reference in sub-paragraph (b) of the definition to:

(iii) the interests of the beneficiaries under which in relation to that trust property which comprises land are not such as to constitute those beneficiaries owners of that land for the purposes of this Act."

41. A corresponding definition to that referred to in the preceding paragraph was considered by the Court of Appeal in New South Wales in Macary's case. Under the regime then in force in New South Wales, land subject to a "special trust" was subject to tax at a higher rate. The majority of the Court concluded that an attempt to "vest" the trust early was ineffective. In those circumstances the majority of the Court, Mason P and Sheller JA concluded that the land in question was subject to a "special trust". Reference to the entire report indicates that the trust in question was a discretionary trust and not a unit trust or a "bare" trust. No beneficiary, according to the terms of the deed, prior to vesting had a vested entitlement to any corpus or income. Clearly, once it was concluded that the attempt to "vest" the trust was ineffective, the Court in Macary's case was obliged to conclude that none of the beneficiaries under the discretionary trust was to be regarded as an "owner" within the meaning of the land tax legislation. None had a right to present enjoyment of corpus or income.

42. Next, we are unable to accept the submission that for Section 52(1) to operate with respect to Arjon the property "vested [in it] as a trustee" must be the legal interest in the relevant land. Vested bears a variety of meanings in different contexts. Certainly it is used in various senses including "vested in interest" (in the Modern Rule Against Perpetuities) and more generally "vested in possession". In the context of Section 52 we regard property as vested in a person as a trustee where:

(b) the property is held by that person upon trust.

43. As Mr de Wijn readily concedes it is quite common for "sub-trusts" to be established whereby a trustee holds on behalf of his beneficiaries property which is itself a beneficial interest in another trust. Common examples are where superannuation trustees hold units in investment trusts as part of their superannuation investment or where a superannuation trustee permits shares, debentures or other such items to be held by and in the name of a nominee or custodian. Mr de Wijn cited no authority for the proposition that only legal property can be "vested" and we know it may. We reject this submission. In the ISPT case Mason P was quite happy to speak of property constituted by a mere equitable interest as being "vested" in a trustee:

"It is of the essence of a trust that property is vested in the trustee. Accordingly, where the subject matter of a trust is a beneficial interest in property - for that is the discrimen of a sub-trust - it must follow that the beneficial interest passes to the sub-trustee in order that it can be held by the sub-trustee for the benefit of the ultimate beneficiary. Another way of expressing this is to state that the effective vesting of a sub-trust depends upon the beneficial interest in property which is its subject matter to be vested in the sub-trustee. This is what distinguishes a duly created sub-trust from the appointment of a new trustee." Chief Commissioner of Stamp Duties v ISPT Pty Ltd (1998) 45 NSWLR 639, 650-1

44. It follows that to find that in the circumstances Arjon is an "owner" of the Frankston and Chadstone land, (and hence subject to Section 52) it is unnecessary for Arjon's interest to be a legal as distinct from an equitable one. We reject the applicant's submission with regard to the application of Section 52. The Commissioner was entitled to rely upon the section as he did.

45. Likewise, and on the basis that Arjon can be regarded as an "owner" and an owner of an estate of freehold and possession, we conclude that the Commissioner was entitled to rely on Section 51 of the Land Tax Act in the manner in which he did.

46. There is an additional complication with regard to the Broadmeadows land, which on one view might lead to a different conclusion with respect to it than with respect to the other two shopping centres, that is, that the registered proprietor holds that land not as bare trustee for Arjon but rather as trustee of a unit trust, the sole unit holder of which is Arjon.

47. In our view the reasoning of Brooking J in Costa & Duppe is compelling and authoritative. His Honour's analysis whilst expressed in a particular context viz. the caveatability of the interest of a unit holder under a unit trust, is not in our view, specifically dependant upon that context. His Honour did not for instance rely upon any unusual provisions of Section 89 of the Transfer of Land Act 1958. Mr de Wijn and Mr Solomon rely upon Gartside in a passage already quoted from the speech of Lord Reid; but the trust in Gartside's case was a discretionary one in which no object of the discretion could ask for more than that the trustee give proper consideration to the object's claims. Clearly no discretionary object had any interest in any trust asset. In Suncorp Insurance and Finance v Commissioner of Stamp Duty the Queensland Court of Appeal had to consider a complex set of events in which the Commissioner of Stamp Duty sought to bring to charge a transaction relating to two unit trusts which were established with nominal sums of money with Suncorp as trustee. Suncorp in its personal capacity subscribed for units in the unit trust and then paid the subscription moneys (now assets of the trust), to itself in its personal capacity so as to subject certain real estate that it already owned, to the trusts of the unit trusts. The Commissioner sought to bring this transaction to charge under Section 54AB(1) of the Stamp Act 1894 which section is entitled "duty payable where no dutiable instrument". In terms of the sub-section the Commissioner contended that "the arrangements constituted a transaction ... which results in a person obtaining an estate or interest in any real estate in Queensland". The Court, Fitzgerald P, Davies JA and Fryberg J set aside the Commissioner's assessment. Fitzgerald P said:

"Principle and authority seem to me to indicate that a majority unit holder which has the right to have the trust deeds performed according to their terms, including the `trust funds' dealt with as each deed requires, and accords the realisation of each `trust fund' and distribution of the proceeds, has an equitable `estate or interest' in the trust fund and each of the `trust fund' `investments'. Further, since the appellant's `estate or interest' obviously falls short of full ownership, the minority unit holder, which also the right to participate in the distributions, likewise has an equitable `estate or interest' in each investment held on trust by the appellant for the unit holders.

If the appellant's units entitle it to an equitable `estate or interest' in the relevant land, in one sense it obtained that `estate or interest' as a result of the transaction: its `estate or interest' in the land the subject of each trust is different from and importantly less than, its original full ownership of that land." [1997] QCA 225; [1998] 2 Qd R 285, 301-2

48. That passage is in our view consistent with the analysis adopted by Brooking J in Costa & Duppe. The Court decided the matter against the revenue because the assessment was made on the basis that no estate or interest was obtained by Suncorp. In the Court's view the effect of the transaction was not to give Suncorp an estate or interest in real property in Queensland which it did not already possess so that it could be said that the transaction enabled it to "obtain" that interest, rather it merely restricted the estate or interest which Suncorp already had.

49. Mr Caleo submits that the unit trust deeds which Brooking J considered in Costa & Duppe were strikingly similar to the unit trust deeds affecting the Broadmeadows' land. Mr de Wijn and Mr Solomon did not distinctly admit that the unit trust was similar or that there were no material differences. On the other hand they did not direct our attention to any particular distinctions between the unit trust deeds in question.

50. Mr de Wijn submits that if we are to accept the submissions of the Commissioner on this point the result would be that holders of units in publicly listed property trusts would be regarded as "owners" of land for the purposes of the Land Tax Act and would be subject to tax under that Act. The practical implications of this argument were not explored before us. Obviously an initial question would be as to the value to the land "owned" by any such unit holder. Furthermore, for the Commissioner to go to the trouble of assessing the beneficiaries as well as the trustee would in most cases, not be as productive in terms of additional revenue as the assessment in the present case has been. At any rate these problems are problems, be they problems, for another day. If the legislation has such an unintended effect and requires attention from Parliament, then that is a matter for Parliament.

51. We are not persuaded that the use of the term "discretionary trust" by the High Court in the MSP case represents any change to the distinction which has traditionally been drawn between unit trusts and the trust such as the one considered in Macary where no beneficiary has a vested interest in any property before the vesting day.

52. For these reasons in our view the Commissioner's assessment with respect to the Broadmeadows land should likewise be affirmed.

53. The notices of objection lodged by Arjon argued that in the circumstances Arjon was entitled to the benefit of the proviso to Section 52(1) on the basis that if Arjon was to be affected by that section then it was "the owner of different lands in severalty in trust for different beneficial owners ..." and therefore the tax should be separately calculated and assessed in respect of those lands. That submission was not pressed in any detail before us, but was not distinctly abandoned either. Mr Caleo submits that in circumstances where the beneficiaries of the "several" trusts are discretionary only and have no entitlements in possession, the proviso has no application. He relies upon the decision of Balmford J in Commissioner of State Revenue v Famajohn Nominees Pty Ltd (1999) 43 ATR 29. Her Honour's decision appears to us to be to the effect submitted by Mr Caleo and accordingly this last submission of Arjon based upon the proviso, whatever its status, is rejected.

54. We will with respect to each of the three notices of assessment affirm the respondent's decision.

55. We have heard no submissions as to costs and will reserve this question.