Bondi Beachside Pty Ltd v Chief Commissioner of State Revenue

Judgment 1BATHURST CJ: I agree with Ward JA. 2WARD JA: The appellants (collectively, the Bondi entities) appeal to this Court from a decision of Gzell J (Bondi Beachside Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 21). His Honour reviewed and in part upheld a determination of the respondent (the Chief Commissioner of State Revenue) that additional mortgage duty was payable by the Bondi entities on a deed of variation under which the time for payment by them of the purchase price for certain loan notes was extended. His Honour agreed that mortgage duty was payable on the deed of variation but held that the Chief Commissioner had erred in including capitalised interest in the sum on which mortgage duty was assessed. His Honour revoked the assessment and remitted the matter to the Chief Commissioner to assess mortgage duty on the amount of $92,006,540, that being the amount that his Honour found had been secured by the relevant charge as at 28 August 2009, excluding capitalised interest. 3The Bondi entities contend that his Honour erred in concluding that additional mortgage duty was payable, in essence because, even if the extension of time for payment of the purchase price amounted to a "forbearance", it was one that did not involve the provision or obtaining of funds to or by the Bondi entities and hence was not an "advance" within the meaning of the relevant mortgage duty provisions. The Chief Commissioner maintains that his Honour was correct in that finding but has cross-appealed, contending that his Honour erred in concluding that capitalised interest should not have been included in the calculation of additional mortgage duty payable by the Bondi entities. 4For the reasons set out below, I am of the opinion that the primary judge erred in holding that the 2009 deed of variation was liable to additional mortgage duty as an advance within the definition in s 206(a)(iii) of the Duties Act 1997 (NSW). The appeal should be upheld and the Chief Commissioner's cross-appeal dismissed.

Background 5The relevant facts are not in dispute. They are contained in a Statement of Agreed Facts (Black 69). Briefly, on 30 November 2007, the Bondi entities and various associated companies entered into arrangements with National Australia Bank (the Bank) for the raising of funds for the acquisition of a property in Bondi. Those finance arrangements involved the issue and on-sale of loan notes with a mechanism for the deferral of the purchase price for those notes until the date on which the notes were to be redeemed. What transpired, relevantly, was as follows. 6On 3 December 2007, notes were issued by Bondi Notes Pty Limited (the Issuer and not one of the Bondi entities) and subscribed for by the Bank under the terms of a Senior Note Facility Deed dated 30 November 2007. The Notes were uncertificated instruments with a face value of $92,006,545. Unless redeemed earlier in accordance with the deed, the Notes were to be redeemed on the Termination Date, which was defined in the deed as 3 April 2009. 7The proceeds of issue of the Notes were immediately provided by the Issuer to the Bondi entities by way of loan under a Senior Issuer Loan Agreement also dated 30 November 2007. 8Pursuant to a Senior Note Sale Agreement entered into by the Bank and the Bondi entities also on 30 November 2007, the Bondi entities agreed to purchase the Notes from the Bank on the day of their issue for a purchase price equivalent to the face value of the Notes. 9Clause 4.1 of the Senior Note Sale Agreement obliged the Bondi entities to pay the purchase price for the Notes at Completion. Completion was to occur on the date that the Notes were issued to the Bank under the Senior Note Facility Deed (clause 5.2). However, subject to satisfaction of each condition precedent in accordance with the Senior Note Facility Deed, the Bondi entities were able to elect to defer payment of the purchase price until a deferred payment date (clause 4.2), in which case interest on the purchase price was payable in accordance with the Senior Note Sale Agreement (clause 4.3). Such interest was to be capitalised (clause 6.3). 10The Notes were duly transferred to the Bondi entities. A deferment notice was issued by the Bondi entities on the same day deferring payment of the whole of the purchase price for the Notes to the Termination Date (i.e., 3 April 2009) or any earlier date on which the Notes were to be redeemed under the Senior Note Facility Deed. 11As security for their obligation to pay the deferred purchase price and interest in respect of the Notes, the Bondi entities and associated companies entered into various security documents in favour of the Bank. For present purposes, there was no material difference between the security documents. They included a Fixed and Floating Charge (the Charge) under which the chargors included the Bondi entities. The Charge under the Senior Issuer Loan Agreement did not secure the obligations of the Bondi entities to repay to the Issuer the amounts lent to them under that agreement. The definition of "secured money" in the Charge adopted the definition of that term in the security trust deed as being all moneys owing and all obligations under any of the secured transaction documents, the latter not including the Senior Issuer Loan Agreement. 12In summary, therefore, under the finance arrangements (referred to as a deferred purchase arrangement), the Bank did not directly lend or provide any funds to the Bondi entities. Rather, the Issuer lent funds to the Bondi entities, those funds having been obtained by the Issuer from the subscription by the Bank for the Notes. The Bank in turn sold the Notes to the Bondi entities, payment for which was due on Completion (the date of issuance of the Notes) but was deferred in accordance with the Senior Note Sale Agreement to 3 April 2009 (and, as will be described shortly, successively from then until 31 August 2011). Payment for the Notes, and interest on the purchase price, was secured by the Charge. With capitalisation of the interest, the amount outstanding under the Senior Note Sale Agreement as at 3 April 2009 was $102,600,000. 13The Charge was initially stamped at $5.00. It was not suggested that the Charge was liable for any greater duty when first stamped. The Chief Commissioner accepts (for the reasons given in Prime Wheat Association Ltd v Chief Commissioner of Stamp Duties (NSW) [1999] NSWSC 546; (1997) 42 NSWLR 505 and referring also to Handevel Pty Ltd v Comptroller of Stamps (Vic) [1985] HCA 73; (1985) 157 CLR 177 at 193-4) that the Charge, which secured the payment of the unpaid purchase price for the Notes (not the repayment of the loan made by the Issuer to the Bondi entities), fell outside the mortgage duty provisions at the time it was executed (Orange 20 [13]). 14As noted, the time for payment of the purchase price for the Notes was extended beyond 3 April 2009. There were nine extensions in all. In at least some instances, the extension was effected after the purchase price (and interest thereon) had already become due and payable. The means by which the successive extensions were effected was that, on each occasion, the Senior Note Facility Deed was varied by substitution of a later date in the definition of "Termination Date" contained in the Senior Note Sale Agreement. 15The variation deeds were for the most part in similar terms, although there were some differences. The First Variation Deed (entered into on 3 April 2009) provided in clause 3.1(a) for the deletion of clause 6 of the Senior Note Facility Deed. Clause 6 was the provision under which the initial extension of the Termination Date was permitted but in its terms it permitted only one such extension (clause 6.6). The Ninth Variation Deed (dated 18 January 2010) differed slightly in its terms from the preceding deeds in that it not only varied the Senior Note Facility Deed (clause 3.3) but also restated it (clause 2). It was not, however, suggested that anything turned on either of these differences. The Ninth Variation Deed also provided for the reduction of the facility limit over time by payment down of the purchase price and the provision of an overdraft facility. 16For the Bondi entities, reliance is placed on the fact that none of the relevant deeds of variation operated in terms as a rescission of the then existing agreement and substitution of a new agreement. 17The Chief Commissioner did not contend that the initial deferment of the purchase price (by the deferment notice issued on 3 December 2007) or any of the first six variation deeds constituted an "advance" giving rise to a liability for additional mortgage duty. Nor did the Chief Commissioner contend that the fact that the Bank had chosen not to enforce its right to payment in any of the intervals between moneys becoming due and payable and the relevant variation being effected was a forbearance constituting an "advance" for the purposes of the mortgage duty provisions. 18However, on 1 July 2009, Schedule 1.3 of the State Revenue Legislation Further Amendment Act 2009 (NSW) came into effect. The Chief Commissioner contended that, as a consequence of the amendments there introduced, the seventh deed of variation (and for that reason also the following eighth and ninth deeds) gave rise to a liability for additional mortgage duty pursuant to s 208(2) of the Duties Act. The three deeds of variation in question were those entered into on 28 August 2009, 2 October 2009 and 18 January 2010. Senior Counsel appearing for the Chief Commissioner, Mr Gibb SC, explained the reason for this to the primary judge (Black 61; T 8.35-47) as being due to the broader ambit of s 213(1) of the Duties Act following the 2009 amendment. 19Relevantly, before the 2009 amendments, s 213(1) referred to the amount secured by the mortgage as "the definite and limited sum, until such time (if any) as a greater amount of advances is secured by the mortgage". In Mr Gibb's submission, the word "greater" arguably implied a further amount of advances and hence that there had been an "initial" advance. After the July 2009 amendments, the wording of s 213 was changed to refer to the amount of "any advances", hence removing any limitation introduced by the use of the words "greater amount of advances" in the previous version. 20By letter dated 24 December 2010, the Chief Commissioner issued a Duties Notice of Assessment for mortgage duty on the full amount of the purchase price and capitalised interest in respect of the Notes as at 28 August 2009. The Chief Commissioner did so on the stated basis that, on each of 28 August 2009, 24 September 2009 and 18 January 2010, there was, in the words of s 206(a)(iii) of the Duties Act, a "forbearance [by the Bank] to require the payment of money owing on any account whatever" and therefore an "advance" under s 206; and that the "advance" on 28 August 2009 was in the amount of $102,600,000 (that being the full amount of the deferred purchase price with capitalised interest to that date). The dutiable amount or the "amount secured" was therefore said to be the aggregate of the face value of the Notes issued with capitalised interest. (While the Chief Commissioner contends that each of the three post-July 2009 deeds of variation involved an additional advance, the Chief Commissioner does not accept that this has the consequence that double or multiple duty is thereby assessable.) 21Following the disallowance by the Chief Commissioner of an objection by the Bondi entities to that assessment, proceedings were commenced by the Bondi entities pursuant to s 97 of the Taxation Administration Act 1996 (NSW), seeking a review of the Chief Commissioner's assessment.

Relevant statutory provisions 22When each of the seventh to ninth deeds of variation was executed, the relevant provisions of Chapter 7 of the Duties Act were as follows: 206 What is an advance? In this Chapter, advance means the provision or obtaining of funds by way of financial accommodation, by means of: (a) a loan, being: (i) an advance of money, or (ii) the payment of money for or on account of, or on behalf of, or at the request of, any person, or (iii) a forbearance to require the payment of money owing on any account whatever, or (iv) any transaction (whatever its terms or form) that in substance effects a loan of money, or (b) a bill facility, being one or more agreements, understandings or arrangements as a consequence of which a bill of exchange or promissory note: (i) is drawn, accepted, endorsed or made, and (ii) is held, negotiated or discounted to obtain funds, whether or not the funds are obtained from the person who draws, accepts, endorses or makes the bill of exchange or promissory note and whether or not the funds are obtained from a person who is a party to any such agreement, and includes contingent liabilities of the kind referred to in section 215. ... 208 When does a liability arise? (1) A mortgage becomes liable to duty on the date of its first execution. (2) A mortgage becomes liable to additional duty on the making of an advance or further advance if, as a result of that advance or further advance, the amount secured by the mortgage exceeds the amount secured by the mortgage at the time a liability to duty last arose under this Act. ... 210 How is mortgage duty charged? (1) The amount of duty chargeable on a mortgage is calculated by reference to the amount secured by it at the liability date [defined as the date of execution], as determined under Part 2. ... 213 Amount secured by mortgage (1) For the purposes of this Chapter, the amount secured by a mortgage is the amount of any advances made under an agreement, understanding or arrangement for which the mortgage is security (even if the amount of advances made exceeds the amount of advances recoverable under the mortgage). (2) A reference in this Chapter to an advance secured by or made under a mortgage includes a reference to any advance made under an agreement, understanding or arrangement for which the mortgage is security (whether or not the advance is recoverable under the mortgage). (3) To avoid doubt, an advance made under an agreement, understanding or arrangement includes any advance made as a consequence of a variation to that agreement, understanding or arrangement.

Primary judgment 23The primary judge confined his reasons to the seventh variation deed of 28 August 2009. His Honour held (at [52]) that this deed constituted an "advance" (for the purposes of s 208(2) of the Duties Act) "as being a forbearance to require the payment of money owing on any account whatever" within the meaning of s 206(a)(iii) of the Duties Act. 24At [59], his Honour accepted that, upon execution of the Charge, there was no "amount secured" because the Charge secured payment of an unpaid purchase price rather than repayment of a loan, but went on to say that when the seventh variation deed was executed there was an advance by forbearance and the amount secured then became the amount of any advances made for which the Charge was security. 25His Honour did not accept the further submission made by the Chief Commissioner that where, by agreement, an obligation to pay interest was converted into an obligation to pay an additional advance, the amount secured would include that additional advance. His Honour noted that the Chief Commissioner had accepted that, where a mortgage secures a principal sum and the mortgage provides that the security extends to interest payable whether or not paid, the amount secured is only the principal sum and does not extend to the interest, citing Prudential Mutual Assurance Investment and Loan Association v Curzon (1852) 8 Exch 97 at 105, 107; 155 ER 1275 at 1278, 1279 and Bank of New South Wales v Brown [1983] HCA 1; (1983) 151 CLR 514 ([69]; [71]). His Honour held (at [72]) that capitalised interest was not an advance for mortgage duty purposes.

Appeal/Cross-Appeal 26The issues in this appeal and cross-appeal, in essence, are thus: (i) whether the extension of the Termination Date effected by the respective variation deeds entered into after July 2009 constituted an "advance" in the sense of a "forbearance to require payment on any account whatever" falling within s 206(a)(iii) of the Duties Act (grounds 1 - 3 and 5(a)-(b) of the notice of appeal); (ii) whether there was in any event an obligation to upstamp the charge under s 208(2) of the Duties Act (grounds 4 and 5(c) of the notice of appeal); and (iii) if the Bondi entities fail on their appeal, whether the amount secured by the Charge, upon which duty was chargeable, included capitalised interest (grounds 1-8 of the notice of cross-appeal). (i) Was there an "advance" by way of forbearance within the terms of s 206(a)(iii)? 27For the Bondi entities, the contention that his Honour erred in holding that the post-July 2009 deeds of variation fell within s 206(a)(iii) was put in oral submissions by Mr Richmond SC on two alternative bases. 28First, it was contended that, having regard to the opening words of the definition in s 206 (namely, "the provision or obtaining of funds by way of financial accommodation"), in order for there to be an "advance" or "further advance" for the purposes of s 208 there must be an actual "provision or obtaining of funds". Therefore, a "loan" by reason of a forbearance under s 206(a)(iii) will not be an "advance" on which mortgage duty is payable under s 208 unless the forbearance is the means by which there is an actual provision or obtaining of funds by way of financial accommodation. 29It was conceded by Mr Richmond that a submission in those terms had not been made to the primary judge. The Chief Commissioner, however, accepts that as this is an appeal by way of rehearing this Court must address that submission even though not put before his Honour. 30Second, it was contended in the alternative that even if the opening words of s 206 can encompass a constructive, rather than actual, provision or obtaining of funds, it is still necessary to give some effect to the concept introduced by the opening words and that this requires that the forbearance be one that involves the creation or substitution of a new debt (such as where there is a novation of an existing debt obligation). 31Although the written submissions filed for the Bondi entities in April 2012 (and then amended in August 2013) contend that s 206(a)(iii), when referring to a "forbearance to require payment", is a reference to a transaction other than a contractually binding arrangement (Amended Submissions at [17], as clarified in the Submission in Reply at [4]), no argument was ultimately pressed on the hearing of the appeal to the effect that s 206(a)(iii) is limited to a non-contractual forbearance. 32Rather, what was argued (in the context of the alternative submission referred to at [30] above) was that even if there was no requirement for an actual provision/obtaining of funds there must nevertheless be something amounting to a constructive loan in the sense described by Dr Pannam (The Law of Moneylenders in Australia and New Zealand, (1965 Law Book Company) at 21-22), when considering the concept of "advance" in the former Money-lenders and Infants Loans Act 1941, namely: As a matter of general principle it would be difficult to show that a forbearance from requiring payment of money owing constituted a loan. ... Arrangements made between parties as to payment of money owing as a result of some legal obligation do not, as a rule, affect the character of that obligation. ... The purpose of defining "loan" in this way would seem to be to bring transactions within the legislation where interest is charged in respect of these forbearances. It is as if the person who forbears actually lent the debtor the sum necessary to pay off the debt and charged interest on the loan. (my emphasis) 33It is submitted by Mr Richmond that if the deeds of variation did not bring into existence anything that might be described as a constructive new loan, there would not be an "advance" for the purposes of s 206(a)(iii). 34There is no doubt that in practical terms there was a "forbearance" by the Bank each time it chose not to enforce a right to payment of the purchase price that had then become due and payable (as was the case whenever the relevant deeds of variation were entered into after the then due date for payment of the purchase price). On one view, the deeds of variation that were entered into post the then relevant payment date (i.e., after the debt had already fallen due) did not effect any forbearance - that had already occurred by reason of the fact that the Bank had not sought to enforce payment on the due date. Rather, what was being achieved by the deed(s) of variation, with effect from the date of the variation, was to remove the ability of the Bank to sue for the amount that had fallen due until the now varied date. In that sense the deed(s) of variation simply recognised what had already occurred and substituted a new payment regime. 35It is not disputed by the Bondi entities that an agreement to leave unpaid purchase money outstanding is a form of financial accommodation. Moreover, they did not suggest that the relevant deed(s) of variation did not evidence a forbearance by the Bank. However, they maintain that it was not a forbearance involving the actual (or constructive) "provision or obtaining of funds" and hence submit that it does not fall within the additional mortgage duty provisions. 36The Bondi entities point to the distinction that has been drawn between the "a pre-existing contractual obligation which remains unperformed and which the parties treat as not involving a breach of contract" (Electronic Industries Limited v David Jones Limited [1954] HCA 69; (1954) 91 CLR 288) as opposed to a contractual variation that brings about a permanent change in the parties' obligations (Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570). 37It was not disputed by the parties that, as a matter of statutory construction, the words used in the definition of "advance" should be given the natural and ordinary meaning that they bear having regard to the context in which they are used (see Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41; (2009) 239 CLR 27 at [45]-[47] and [51] and Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55 at [39]).

• Primary construction advanced by the appellants - requirement for there to be an actual provision or obtaining of funds 38Mr Richmond argues that the construction for which the Bondi entities primarily contend is supported, first, by an analysis of the text of s 206; second, by reference to the legislative history of the mortgage duty provisions; and, third, by reference to the incongruity or absurdity of the results that it is said would follow from the construction for which the Chief Commissioner contends. Textual analysis 39The text of s 206 has been set out earlier. Emphasis is placed by Mr Richmond on the fact that the definition of "advance" is exclusive, not inclusive, in its terms. He submits that the principal concept in the definition, indicated by the comma after the words "financial accommodation", is that of the "provision" or "obtaining" of funds (by way of financial accommodation) and that the words following the comma ("by means of") then introduce the two particular means by which (and only by which) the provision or obtaining of funds by way of financial accommodation will satisfy the definition of "advance": namely, by means of a loan or a bill facility, each being separately defined. 40Hence it is submitted by Mr Richmond that it is not sufficient simply that there be either a "loan" or "bill facility", as defined in s 206(a) and (b) respectively; rather, a transaction satisfying the definition of "loan" or "bill facility" must also satisfy the opening words of the definition. Mr Richmond submits that his Honour erred in finding that because there was a forbearance within the meaning of s 206(a)(iii) there was a loan falling with the meaning of "advance". 41Approaching the matter textually, what is required, to be an advance within the meaning of s 206(a)(iii), is: first, that there be either the "provision" or the "obtaining" of "funds"; second, that this be "by way of financial accommodation"; and, third, that the said provision or obtaining of funds by way of financial accommodation be by means of a forbearance to require the payment of money owing on any account whatever. 42The difficulty in the present case, which both parties have sought to address in different ways, is giving a sensible operation to the different parts of the definition when applied to a "forbearance". On the one hand, the Bondi entities contend that the Chief Commissioner's construction ignores the requirement that a forbearance under this definition must be one that involves "the provision or obtaining of funds". On the other hand, the Chief Commissioner contends that the construction pressed by the Bondi entities leaves no meaningful operation for s 206(a)(iii), in the sense that any such forbearance (involving the actual provision or obtaining of funds by way of financial accommodation) would be a transaction falling within (a)(i) (i.e., a loan, being an "advance of money"). Mr Richmond quite fairly concedes that his preferred construction leaves little (or indeed no) work for s 206(a)(iii) to do that would not otherwise be done by s 206(a)(i). However, he contends that to construe s 206(a)(iii) as not requiring an actual provision of funds suffers from a similar problem, namely, that it ignores the opening words of the definition. 43The words "by means of", read literally, suggest that what follows are the means by which that which is envisaged by the first part of the definition is to occur. It is not any provision or obtaining of funds by way of financial accommodation that will constitute an advance with the meaning of the definition; rather, it is only where that occurs by one of the specified means. In that sense, the words "by means of ..." in ordinary parlance would operate to read down or qualify the opening words of the definition but would not warrant disregarding those words altogether. 44I accept, therefore, that the definition of advance requires that there be something that meets the description of a provision or obtaining of funds. 45That, however, does not answer the question whether the opening words are confined, as Mr Richmond contends, to an actual provision or obtaining of funds or, as Mr Gibb contends, can be satisfied by the constructive provision or obtaining of funds. 46The Chief Commissioner points, by way of analogy, to s 206(a)(ii) and notes that what is there contemplated (namely a loan being the payment of money for or on account of, or on behalf of, or at the request of any person) does not require that there be a handing over of funds to, or receipt of funds by, the person being financially accommodated by that arrangement. That is so. However, in such a case the transaction is one that clearly envisages the "provision" or "obtaining" of funds to or by someone; the relevant distinction being as to the recipient of the funds. 47Mr Gibb contends that the requirement that there be a "provision or obtaining of funds" may be satisfied if the effect of the relevant instrument (here, the deed(s) of variation) is that the chargor is left in the possession of funds or keeps funds that would otherwise be required to be paid out; in the sense of the chargor having the "continued use" of those funds. A difficulty with that construction is that it in effect requires the reading of words, such as "or the continued use", into the definition after the word "obtaining". As Lord Mersey said in Thompson v Goold & Co [1910] AC 409 at 420, "[i]t is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do". 48There would, in my opinion, be considerable force in the Bondi entities' submission that, for there to be an advance within the meaning of s 206(a)(iii), there must be a forbearance that involves the actual provision or obtaining of funds (since that would be the ordinary or natural meaning of the opening words of the definition) if such an interpretation left some independent work or operation for the concept of "forbearance" that would not otherwise be achieved by other parts of the definition. I am not satisfied that it does so. 49If the introductory words of s 206 require that there be an "actual" provision to, or obtaining by, someone of funds, I have difficulty seeing any practical scope for the operation of (a)(iii) that would not be met by (a)(i) or (ii). The reluctance of courts to find that words used in a statute are meaningless, unless driven to do so, is well known. In circumstances where two constructions are open, the construction that avoids the finding that certain words are surplusage and have no meaning should be preferred (Minister for Resources v Dover Fisheries Pty Ltd [1993] FCA 366; (1993) 43 FCR 565 per Gummow J at 574 (Hill and Cooper JJ agreeing); Gummow J there echoing the words of Lord Reid in AMP Inc v Utilux Pty Ltd (1971) 45 ALJR 123; [1972] RPC 103 at 109). 50By the same token, however, I see no basis for ignoring the opening words of the definition altogether. They must have been intended to have some operation. Legislative history 51It is submitted for the Bondi entities that the legislative history of the use of the term "advance" in the mortgage duty provisions indicates a clear legislative intention that the mere making of a "loan", in the broad sense set out in s 206(a) of the Duties Act, was not regarded as sufficient and that there needed to be a provision or obtaining of funds in order for there to be an advance for the purposes of s 206. 52It is noted by Mr Richmond that the precursor to mortgage duty (loan security duty) was introduced into the stamp duty legislation in 1974 at the same time as the separate "loan instruments" duty. He points to the differences in the definitions used in respect of those separate provisions (comparing the extended meaning of "loan" as used in the loan instruments duty provisions with the use of the term "advance" in the loan security provisions). Mr Richmond notes that the definition of "advance" introduced in 1986 into s 83 of the stamp duty legislation included the provision of funds by way of "financial accommodation", that term being defined to include funds provided by means of a "loan" as that expression is used in the present s 206(a). 53Mr Richmond submits that the use of the words "the provision or obtaining of funds by way of financial accommodation" in the opening part of the definition of "advance" in the present legislation shows an intention that the term "advance" has a narrower scope than the broad definition of "loan" found previously in the 1920 Act. 54While I accept that some assistance may be gained from an excursus into the legislative history of the present mortgage duty provisions, ultimately what to me is more persuasive is that if the definition of "advance" in s 206 had been intended to encompass no more than a "loan", falling within one of the sub-sections (a)(i)-(iv), or a bill facility falling within the definition under sub-section (b), it would not have been necessary for the legislature to include the words "the provision or obtaining of funds ... by means of" at all. 55The opening words must have been intended to have some meaningful operation. It therefore cannot be sufficient simply that there be a forbearance within the meaning of sub-section (a)(iii) for there to be a loan constituting an advance for mortgage duty purposes and to the extent that his Honour's reasons suggest otherwise then with respect I cannot agree. Perceived incongruity of the Chief Commissioner's interpretation 56The third matter relied upon as supporting the primary construction for which the Bondi entities contend is the perceived incongruity or absurdity of the operation of the relevant mortgage duty provisions if s 206 bears the construction for which the Chief Commissioner contends. This arises as follows. 57Under s 208(2) of the Duties Act, a mortgage is assessable for additional duty on the making of an advance or further advance if, as a result of that advance or further advance, the "amount secured" by the mortgage exceeds the amount secured by the mortgage at the time liability to duty last arose under the Duties Act. The words "amount secured" are defined in s 213(1) in expansive terms, encompassing the amount of "any advances ... for which the mortgage is security" (my emphasis) even if that amount exceeds the amount of the advances recoverable under the mortgage. While Mr Gibb emphasises that the definition does not use the word "all", in its context the word "any" must mean that, whatever advances are secured by the mortgage, they fall within the definition. 58It is submitted for the Bondi entities that on any ordinary loan transaction secured by an "all moneys" mortgage, the Chief Commissioner's approach to s 206(a)(iii) would have the result that on each occasion that there was an extension of the repayment date by a variation of the loan agreement, there would be a further "advance" of the whole amount secured by the mortgage even though no further funds had actually been provided to or obtained by the borrower on the extension of the repayment date. The Chief Commissioner, as I understand it, accepts that each contractual variation would in those circumstances amount to an advance. 59Mr Richmond submits that in such a scenario the mortgage would then secure successive "advances", the first in respect of the original loan (which would not have been discharged by the mere variation of the repayment date) and the second (and further advances) in respect of each extension of the repayment date (being an advance by way of a forbearance on the Chief Commissioner's construction). Hence it is submitted that multiple duty may be payable simply by reason of successive extensions of the repayment date. 60The Chief Commissioner accepts that if the mortgage duty consequences of extension of a loan repayment date were as the Bondi entities claim, this would be absurd and could not have been intended. However, it is submitted by the Chief Commissioner that although there would be "a forbearance to require the payment of money on any account whatever" within s 206(a)(iii) on each occasion that there was an extension of the repayment date by a variation of the loan agreement (and, therefore, an "advance" for mortgage duty purposes), the Duties Act does not treat every advance as necessarily increasing the amount secured by the mortgage nor the mortgage duty payable (and Mr Gibb said that the Chief Commissioner would not seek to impose such duty). 61The difficulty with the argument for the Chief Commissioner is that although s 208(2) determines when a liability for duty arises and does so by focussing on the result of the making of advance or further advance, s 213(1) defines "the amount secured" by a mortgage in wide terms and encompasses in the definition amounts that may not be recoverable under the mortgage.

Meaning of "advance" in other contexts 62In support of the primary construction for which he contends, Mr Richmond referred to cases where, in other statutory contexts, extension of the date for repayment of a loan was not treated as an "advance" in the ordinary meaning of that term (Burnes v Trade Credits Ltd [1981] 1 NSWLR 93) or as the raising of a loan (Commissioner of Taxation v Mercantile Credits Ltd (1986) 10 FCR 340), or as the provision of credit in the form of a cash loan (Santander UK Plc v Harrison [2013] EWHC 199); though he accepted that caution must be exercised when having regard to the meaning attributed to the same word in different legislative contexts (Baystone Investments Pty Ltd v Commissioner of Stamp Duties [1978] 1 NSWLR 441). 63In Burnes, the Privy Council, when considering whether there had been a "further advance" within the meaning of that term in a guarantee, said that: While the meaning of the word "advance" may be shaded somewhat by the context, it normally means the furnishing of money for some specified purpose [though not necessarily by way of loan]. 64Mahoney JA in the Court of Appeal (Trade Credits Ltd v Burnes [1979] 1 NSWLR 630) had expressed the contrary view (at 638), namely, that the word "advance", in its ordinary meaning, was not limited to transactions under which money or goods are, as part of the particular transaction, handed over or delivered to the debtor; but, rather, was wide enough to include a transaction under which "money being already available to a debtor, he becomes entitled to retain it for a period beyond that for which otherwise it would have been available to him". What Mahoney JA appears to have had in contemplation was a situation where money had already been made available to the debtor so that in ordinary parlance it would be proper to describe circumstances in which the debtor was given the ability to retain or use that money as ones in which that money had been advanced for a further term. In the present case, the Charge did not secure money that had been advanced or made available to the Bondi entities in the first place - and hence the proposition that they might, by reason of the variations, have the ability to retain or use such funds previously made available to them is not sustainable. 65In my opinion, little assistance is derived from consideration of what "advance" might mean in other contexts. Here, it is the statutory meaning of that term that must be determined.

Conclusion as to (i) 66I accept that the wording of s 206 places primacy on the "provision or obtaining of funds by way of financial accommodation". 67I am troubled by the incongruity that, on the Chief Commissioner's interpretation, multiple duty could arise by no more than the fact that extensions or variations to loan repayment dates had been agreed. Absurd results, of a kind that Mr Gibb concedes would flow from a literal application of the Chief Commissioner's construction, cannot have been intended. 68That said, I am equally troubled that the primary construction for which the Bondi entities contend gives no readily identifiable operation to s 206(a)(iii), i.e., none that would not otherwise be within s 206(a)(i). 69I consider that, for a forbearance to be an advance within the mortgage duty provisions, it must result in the provision or obtaining of funds. As noted earlier, the language of the section does not make clear whether an actual provision or obtaining of funds is required or whether the fact that there is a constructive provision or obtaining of funds is sufficient. 70In Baystone (at 443), where the Court cautioned against an assumption that words used in other legislation (there, the former moneylenders' legislation) would bear the same meaning when used in the 1920 Stamp Duties Act (noting that the former was a remedial statute and the latter a taxing statute), their Honours commented that the definition of loan for the purpose of ss 82A and 82B of that Act extended its meaning, so that the Act is itself concerned with constructive loans. Although here there is different legislation under consideration, it indicates that it is not inconceivable that the legislature could have intended to extend the meaning of "advance" in the mortgage duty context to encompass loans where there was a constructive provision or obtaining of funds. Such an interpretation would have the advantage of giving s 206(a)(iii) some independent work to do (even though it might have the result, having regard to s 213, of leading to multiple duty in some cases). 71I have therefore concluded that what is required for the purposes of s 206(a)(iii) is that there be an identifiable "provision" or "obtaining" of funds in the sense that the effect of the transaction is that there has been a provision or obtaining of funds, although this might not in all cases involve an actual receipt of funds by the chargor. If the forbearance in no real or effective sense involves a relevant person obtaining or being provided with funds, as is the case here, then in my view s 206(a)(iii) has no application.

• Alternative submission - need for a constructive loan that has to involve the constructive provision of funds 72The alternative submission for the Bondi entities is that, even if it is not necessary to identify an "actual" provision or obtaining of funds, it remains necessary, for the purposes of s 206(a)(iii), to identify a constructive loan in the sense of a constructive provision or obtaining of funds. For the reasons set out above, I consider this to be the correct interpretation of the section. 73Mr Richmond submits that in the present case there was no constructive loan because there was no transaction which could be described as a notional repayment of an old loan. He submits that the parties clearly intended not to discharge their then existing agreements and enter into new agreements on each occasion but, rather, intended simply to vary their agreements (referring to Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35, (2000) 201 CLR 520 at [27]; Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 10,(1957) 98 CLR 93 at 144). 74The Chief Commissioner relies on Tozer Kemsley & Millbourn (Australasia) Pty Ltd v Point (1961) 61 SR (NSW) 751 at 764; (1961) 78 WN (NSW) 250 at 258, where the Court considered the operation of the provision in the moneylenders' legislation from which s 206 is derived, as support for the contention that there was a forbearance in the present case that involved a constructive loan. 75In Prime Wheat, the Court of Appeal accepted that the ordinary meaning of a forbearance was as explained in Tozer Kemsley. However, it held that where the parties had agreed as to the time and amounts in which the purchase price was to be paid, the vendor had not exercised any "forbearance"; rather, it had observed mutually binding contractual obligations. 76In the present case, the effect of the deeds of variation was not that the Bondi entities actually received any new funds. The proposition that the Bondi entities retained, or had the continued use of, funds that they would otherwise have been required to pay to the Bank (and hence in that sense "obtained" funds by reasons of the extension of time for payment) requires the assumption to be made that the Bondi entities had such funds available to them at the relevant time. The Bondi entities were not the recipient of funds from the Bank in the first place (although they had received loan funds from the Issuer following the issue of the Notes). It may be that, had the deed(s) of variation not been executed, the Bondi entities would have been required to borrow funds for payment of the purchase price of the Notes from another source. If so, they would not in any effective sense have had the continued use of any such funds at all. Retention of funds for a longer period does not, in the ordinary sense of the words, involve the "provision" or "obtaining" of any new funds (even though it may well constitute financial accommodation). 77In Prime Wheat, Gleeson CJ, with whom Handley JA and Sheppard AJA agreed, noted that not all forms of financial accommodation are loans, (referring to Chow Yoong Hong v Choong Fah Rubber Manufactory [1962] AC 209) and found (at 193-194) that there was no advance of money where there had been a sale on deferred payment terms. His Honour said that: There was, as required by the language of the definition of advance, financial accommodation, but that is not sufficient. An agreement for sale which allows credit to a purchaser does not, on that account alone, involve an advance of money: Rabone v Deane (1915) 20 CLR 636 at 640. ... However, it did not constitute a form of financial accommodation that involved an advance of money; what was involved was a granting of time to pay. Ultimately, there was a debt, but no loan. ... A sale on terms giving the purchaser time to pay is not a disguised loan. The essence of a loan is an obligation of repayment. Here what was involved on the part of the purchasers was payment, not repayment: cf Handevel Pty Ltd v Comptroller of Stamps (Vic). 78The Bondi entities submit that in the present case the contractual variations that took place did not involve any transaction of the character of one where the Bank had in effect constructively advanced money to them when the payment date arrived and payment was not made. They submit that all that relevantly occurred was that the termination date as defined in the Senior Note Facility Deed was amended and hence they were granted further time to pay the purchase price for the Notes. I agree. 79There is no basis to conclude, where the original transaction did not involve the provision of funds by way of an advance or loan that was secured by the Charge, that the extension of the date for payment (not repayment) of the purchase price gave the Bondi entities an advance in the sense of the continued use of funds equivalent to that purchase price. There was no obtaining of funds even if there was a financial benefit in obtaining an extension of the date for payment of the purchase price. 80There was thus in my opinion no actual or constructive provision or obtaining of funds by way of financial accommodation on the facts of the present case.

(ii) Was there in any event an obligation to upstamp? 81The Bondi entities contended in their notice of appeal and written submissions that even if there was a forbearance falling within s 206(a)(iii) that amounted to an "advance" for the purposes of s 208, there was in any event no obligation to upstamp in accordance with s 208(2) of the Duties Act. That contention was not pressed on the hearing of the appeal (perhaps because it was inconsistent with the absurdity argument sought to be advanced in support of the Bondi entities' primary contention that s 206 requires the actual movement of funds). Hence it is not necessary to deal with that argument.

(iii) Is capitalised interest an "advance"? 82This question does not strictly arise having regard to the conclusions reached above. Had it arisen I would have concluded that his Honour erred in treating the "advance" constituted from forbearance of the requirement to pay capitalised interest differently from that constituted by forbearance of the requirement to pay the purchase price. 83The Bondi entities contend that his Honour was correct to reject the Chief Commissioner's submission that a forbearance to require payment of the capitalised interest meant that there was an advance in respect of that amount. They submit that the parties did not provide for the interest component to be treated as part of the principal and argue that the notional principal under the deferred purchase price arrangement remained no more than the amount it was at the inception of the arrangement (and, in fact, had decreased (by reference to clause 2 of the first variation deed); clause 10.2 of the ninth variation deed and Schedule 3). 84The Bondi entities rely upon Brown for the proposition that an amount charged as interest retains that character even though it is capitalised. 85In Brown, the question considered by the High Court was whether interest that had accrued on a debt was to be treated as interest or had been converted into capital when interest was debited to the company's overdraft account (that question being relevant to the determination of whether s 112 of the Bankruptcy Act applied to limit the amount of interest that could be claimed in a proof of debt lodged in the company's liquidation). Their Honours held that the character of the debt remained as a debt for interest not capital. 86Gibbs CJ (at 523) said: When, in accordance with normal banking practice, accrued interest is debited to a customer's current account, and itself bears interest, it may be convenient to say that, as between the banker and the customer, and those who stand in their shoes, the interest is treated as capital. In truth, however, the interest is not converted into capital, and the rights of third parties must be determined on the footing that the interest retains its character as such. 87Brennan J, as his Honour then was, said (at 545-546): It follows that the character of a debt for interest is not altered when it is capitalized in accordance with what Lord Eldon L.C. in Ex parte Bevan called a "previous agreement". It is immaterial whether the previous agreement is to be found in the acceptance of the custom of bankers (whether an express or implied acceptance), in a bill of mortgage or in some other instrument securing a debt owed to a bank. An agreement which merely authorizes a bank to add accrued interest to the principal in order that the total sum should be secured or should bear interest does not alter the character of the debt for interest. The total sum may appropriately be described as "principal", but capitalization in this sense is no legal alchemy for changing the character of a debt for interest. If the debt is discharged, whether by account stated, by payment or by other means, a liability which takes its place will be of a different character. But that is not the present case. (footnotes omitted) 88Similarly, Dawson J (at 555) said: From the foregoing it is clear, I think, that the interest which was added to the principal debt owing by the company for the purpose of calculating further or compound interest was not paid and did not cease to be owing. It is also clear, in my view, that the compounding of interest in this manner involved no novation either by a statement or settlement of accounts or otherwise. In so far as capitalization of the interest took place, it involved no more than a rearrangement of the accounts to enable interest to be charged upon interest. This was achieved, as must always be the case with compound interest, by periodically adding the interest owing to the principal sum for the purpose of calculating the further interest. The sum added by way of interest remained discernible in its original character as interest. Even if the total sum formed by the addition of interest might be said to have been capital, that does not mean that it did not include amounts which were identifiable in their origin as interest and remained identifiable as such. Indeed, compound interest is properly described as interest upon interest and so to describe it is to assume the continued identity of the component parts of the capital upon which interest is calculated from time to time. 89Brown was applied in Messenger Press Pty Ltd v Commissioner of Taxation [2012] FCA 756 by Perram J, where the relevant question was whether particular losses were to be characterised as on a revenue or capital account. 90However, what was considered in Brown (and similarly in Messenger Press) was a question as to the nature of a particular amount - namely, whether it was capital or interest. 91If s 206(a)(iii) extends to a forbearance to require the payment of what is a constructive loan, then it is difficult to see any relevance as to whether or not the money may be owing by way of principal or by way of capitalised interest. The Chief Commissioner thus contends that once there has been a forbearance of the obligation to pay capitalised interest this becomes an "advance" for mortgage duty purposes in the same way as a forbearance to require the payment of money owing on any other account and the character of the amount so deferred is irrelevant. 92Reference was made by Mr Gibb to Santander , where Males J accepted (at [24]) that the effect of a capitalisation agreement was to provide the borrowers with credit - since before that agreement was made, the amount of the arrears was immediately due and payable and the effect of the capitalisation agreement was that the amount of those arrears was no longer immediately due and payable once the requirement for payment was deferred. In the present case, the argument for the Chief Commissioner, in essence, is that there was a similar provision of credit (i.e., financial accommodation) when the Bank did not enforce a claim to capitalised interest at the time it fell due and when it agreed to defer the payment both of the purchase price and the capitalised interest thereon. 93The Chief Commissioner submits, and I accept, that it is the forbearance to require the payment of interest, not its anterior capitalisation, that would have the effect, in this case, of making the amount of such interest an "advance" for the purposes of s 206(a)(iii) (assuming the Chief Commissioner's argument on (i) above were to be accepted). The fact that interest had been capitalised was in that sense irrelevant. The "advance" comprised the deferral of the requirement for payment of a sum of money by way of interest, however that interest be calculated, as well as deferring the requirement for payment of the purchase price. 94The Chief Commissioner appears to accept that there was no relevant forbearance to require the payment of interest as it was accruing, because there was no requirement for interest to be paid until the time of its actual capitalisation, but that on each of the relevant termination dates there was a relevant forbearance to require the payment of previously capitalised interest because the parties had agreed that the capitalised interest, together with principal, was to become due and payable on that date. 95I agree that the characterisation of the amount payable on the relevant date (i.e., as an amount due by way of principal or an amount due as capitalised interest) does not logically determine whether there was a forbearance to pay that amount within the meaning of the mortgage duty provisions. Rather, the question is whether there was a sum (in respect of capitalised interest) that was required to be paid on the relevant date(s). If so, then an extension of the payment date must, on the Chief Commissioner's construction of s 206 of the Duties Act, have operated as an advance. However, since the deferral of the obligation to pay that amount did not in my view involve the actual or constructive "provision" or "obtaining" of funds by way of financial accommodation, there is no question of the forbearance to require payment of that amount being an advance for the purposes of s 206(a)(iii) in the present case. 96Had I agreed with his Honour's conclusion that the deeds of variation entered into after July 2009 (or any one of them was) were assessable to additional mortgage duty as an advance unde s 206(a)(iii), I would have accepted the Chief Commissioner's submission that the amount secured by the Charge, and thus assessable to duty, included the amount that was then due by way of capitalised interest on the purchase price for the Notes. 97As it is, I do not accept that the seventh to ninth deed(s) of variation operated as an "advance" within s 206(a)(iii). I therefore consider that the cross-appeal should be dismissed with costs.

Conclusion 98For the reasons set out above, I propose the following orders:

1. Appeal allowed.
2. Judgment and orders of Gzell J on 30 January 2013 be set aside and judgment entered for the plaintiffs in the proceedings before his Honour.
3. Cross-appeal dismissed with costs.
4. Respondent to pay the appellants' costs of the appeal and the proceedings at first instance. 99TOBIAS AJA: I agree with the orders proposed by Ward JA for the reasons she has expressed.

Amendments 12 May 2014 - '2 October 2009' should read '24 September 2009' Amended paragraphs: 18 12 May 2014 - '193-194' should read '512' Amended paragraphs: 77 07 July 2014 - 'Moneylenders' Infants Loan Act 1941' should read 'Money-lenders and Infants Loans Act 1941' Amended paragraphs: Coversheet and 32 07 July 2014 - typographical errors Amended paragraphs: 19, 20, 22, 27, 32, 47, 64, 76, 07 July 2014 - 'High Court' should read 'Court of Appeal' Amended paragraphs: 75 07 July 2014 - 'Handevel Pty Ltd v Chief Controller of Stamps (Vic)' should read 'Handevel Pty Ltd v Comptroller of Stamps (Vic)' Amended paragraphs: Coversheet and 13 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 July 2014