CCM Holdings Trust Pty Ltd v Chief Commissioner of State Revenue; CCT... [2013] NSWSC 1072 | Case summary

Implementation Deed 49On 19 June 2007, CCMH (Administrator Appointed) (Receiver and Manager Appointed), referred to in the Deed as "CCM Holdings", and CCMN1 (Administrator Appointed) (Receiver and Manager Appointed), referred to in the Deed as "CCM Nominees 1", (referred to together as "the Owners") entered into the Implementation Deed with ABN AMRO Australia Pty Limited (referred to in the Deed as "ABN AMRO Australia"), ABN AMRO Infrastructure Capital Management Limited (referred to in the Deed as "ABN AMRO Global"), Leighton Infrastructure Investments Pty Limited, referred to in the Deed as "Leightons" (referred to together as "the Investors"). 50The "Background" section of the Implementation Deed recorded that CCMH was the registered owner of the CCM Shares and the CCM Loan Notes and that CCMN1 was the registered owner of the Property Trust Units. After reference to the appointment of the receivers and managers on 27 December 2006, it was noted that the Owners and the Investors had agreed to implement the transactions set out in the Deed in relation to the "Relevant Securities" and to arrange for the "New Financiers" to re-finance the "Current Financing Facilities". The "Relevant Securities" were identified as the CCM Shares and the Property Trust Units (cl 1.1). The "Current Financing Facilities" were defined as the loan facilities provided to CCM, the Property Trust and CCMF, referred to as "the Subsidiary", under the Senior Loan Notes Subscription Agreement (cl 1.1). 51The Investors were required to pay the Deposit of $30 million by 5 pm on 21 June 2007 to the Owners (cll 1.1 and 2.1). That amount was paid on 21 June 2007 in two tranches of $28.5 million and $1.5 million. 52The Implementation Deed included the following: 4. Implementation Steps for Completion 4.1 Completion Subject to the terms of this deed, on or prior to Completion the Owners and the Investors must implement the steps set out in clause 4.2 to be implemented by them in relation to the Relevant Securities and will in good faith work together to achieve the implementation of such steps. 4.2 Implementation Steps for Relevant Securities On or prior to Completion and provided the implementation of the steps set out below do not impose any liability on the Owners or the Relevant Entities [defined as CCM and the Property Trust] up to Completion [defined as the completion of the implementation steps in relation to the shares and the Property Trust units and the refinancing by the new financiers]: (a) CCM Nominees 1 will establish the Property Hold Trust; (b) CCM Holdings will establish the Company Hold Trust; (c) the Investors will subscribe or procure subscriptions for units in the Property Hold Trust for the Property Units Subscription Amount and provide, or procure the provision of, the Property Unitholder Loans for the Property Unitholder Loan Amount to the Property Hold Trust; (d) the Investors will subscribe or procure subscriptions for units in the Company Hold Trust for the Company Shares Subscription Amount and provide, or procure the provision of, the Company Unitholder Loans for the Company Unitholder Loan Amount to the Company Hold Trust; (dd) the Investors will procure the loan of the Company Hold Loan Amount and the Property Hold Loan Amount to be made to the Company Hold Trust and the Property Hold Trust respectively; (e) CCM Holdings will enter into the CCM Holdings Acknowledgment; (f) CCM Nominees 1 will enter into the CCM Nominees 1 Acknowledgment; (g) each of the Owners will execute the Deed of Resignation and Appointment; and (h) the Investors will procure that the New Hold Trustee executes the Deed of Resignation and Appointment. 53The "New Hold Trustee" was defined to include both the new Trustee of the Company Hold Trust and the new Trustee of the Property Hold Trust (cl 1.1). Sale Agreement 54On 19 June 2007, CCMH (Administrator Appointed) (Receiver and Manager Appointed), as Vendor, and ABN Amro Australia, ABN Amro Global and Leightons, as the Purchaser, entered into a Sale Agreement for the sale of the "Sale Shares" defined as "the CCM Nominees 2 Shares". The Sale Agreement included the following: 4.1 Sale (a) Subject to the terms of this document, on Completion the Vendor will sell the Sale Shares to the Purchaser, or at the Purchaser's direction to its nominee, CCM Holdings Trust Pty Limited (to be incorporated), and the Purchaser, or at the Purchaser's direction to its nominee, CCM Holdings Trust Pty Limited (to be incorporated), will purchase the Sale Shares for the Sale Shares Amount on the terms of this document. (b) If the Sale Shares are sold to CCM Holdings Trust Pty Limited (to be incorporated), the Vendor agrees that the Purchaser automatically assigns to its nominee, CCM Holdings Trust Pty Limited the benefit of, and all rights associated with, the Warranties given by the Vendor under this document but subject to the limitations set out in this document. 4.2 Transfer of rights The Sale Shares will be transferred to the Purchaser or at the Purchaser's direction, CCM Holdings Trust Pty Limited (to be incorporated), with all the Rights applicable to the Sale Shares, on and from Completion free from Encumbrances except for Permitted Encumbrances. 55The parties agreed and acknowledged that Completion under the Sale Agreement would not occur unless completion under the Implementation Deed occurred simultaneously with Completion under the Sale Agreement (cl 7.1(b)). CCMH was obliged to deliver to the Purchaser a transfer for the Sale Shares, duly executed by it, and the original share certificate for the Sale Shares (cll 7.2(a) and 7.2(b)). The Sale Agreement also included the following: 7.5 Title, property and risk The right, title to, and property and risk that the Vendor has in the Sale Shares passes to the Purchaser or CCM Holdings Trust Pty Limited (as the case may be) on Completion. 56Between June and September 2007, the Consortium's lawyers, Freehills (now Herbert Smith Freehills), arranged for the incorporation of the corporate vehicles by which the Consortium would complete the purchase transactions. Escrow Agreement 57On 26 September 2007, an Escrow Agreement was executed. That Agreement required the execution of each document listed in Schedule 2 in the sequence therein set out. It provided that, when each document was executed and delivered to Freehills, Freehills was required to retain custody of each Document in accordance with the Escrow Agreement. Clause 7(a) required Freehills to hold each Document in escrow until the earlier of the satisfaction of the Release Conditions and the Sunset Date as defined in the Agreement. Clause 7(c) of the Escrow Agreement provided that each Document would have full force and effect and become binding on the parties to that Document upon its release pursuant to clause 7(b) and in the sequence that the documents were so deemed to be released. 58Peter Paradise has been a partner of Freehills since July 2008. At the time of these transactions, Mr Paradise acted for the Consortium. Having prepared the documents for the completion of the transactions, Mr Paradise and others observed the execution of the documents on 26 September 2007 and 27 September 2007 in the sequence as required by the Escrow Agreement. 59Mr Paradise's affidavit evidence set out that sequence in detail. It is not necessary to repeat the sequence here. However, there was some suggestion to Mr Paradise in cross-examination that he may have been mistaken as to the sequence in which the documents were executed. Mr Paradise gave evidence that there were some three or four hundred documents executed at the time, with some documents having eight counterparts (tr 83). It was suggested to Mr Paradise that, without a note, and given the passage of time between when he swore his affidavits and the events about which he gave his evidence, he really could not be certain about the sequence in which the documents were executed. Mr Paradise was emphatic in his answer that such a suggestion was "incorrect" (tr 83). He gave the following evidence (tr 83): Q. And just before I ask you anything else, you don't allow of any doubt that you might have got the sequence wrong? A. I have no doubt at all. 60I accept Mr Paradise's evidence. I am satisfied that the documents were executed in the sequence provided for in the Escrow Agreement. 61The "Implementation Steps" in the Implementation Deed for the transfer of the units in the Property Trust were as follows: (1) CCMN1 established the New Property Hold Trust (CCT Motorway Property Trust) (cl 4.2(a)); (2) The Investors subscribed for units in CCT Motorway Property Trust and provided or procured the Property Unitholder Loans for the CCT Motorway Property Trust (cl 4.2(c)); (3) The Investors made (or procured the making of) the loans to the CCT Motorway Property Trust (cl 4.2(dd)); (4) CCMN1 entered into the "Acknowledgement" by which it settled the Property Unit Trusts on itself (cl 4.2(f)); (5) CCMN1 executed a Deed of Resignation and Appointment by which it retired as Trustee of the CCT Motorway Property Trust (cl 4.2(g)); and (6) The Consortium procured the New Property Hold Trustee, CCM Holdings Trust Pty Ltd, to execute the Deed of Resignation and Appointment pursuant to which CCMN1 resigned as Trustee of CCT Motorway Property Trust and CCM Holdings Trust Pty Ltd was appointed as Trustee of the Trust (cl 4.2(h)). 62The "Implementation Steps" in the Implementation Deed for the transfer of the shares in CCM were as follows: (1) CCMH established the Company Hold Trust CCT Motorway Company Trust (cl 4.2(b)); (2) The Investors subscribed for units in the CCT Motorway Company Trust and procured the Company Unitholder Loans Amount for the Trust (cl 4.2(c)); (3) The Investors made the loan to the CCT Motorway Company Trust (cl 4.2(dd)); (4) CCMH entered into the Acknowledgment by which it settled the shares in CCM on itself (cl 4.2(e)); (5) CCMH executed a Deed of Resignation and Appointment by which it retired as Trustee of the CCT Motorway Company Trust (cl 4.2(g)); and (6) CCT Motorway Company Nominees Pty Ltd executed the Deed of Resignation and Appointment pursuant to which it was appointed as the new Trustee of the CCT Motorway Company Trust (cl 4.2(h)). 63The transactions are depicted graphically in the Schedule to this judgment. Post Transaction Event 64By written offer (by CCMN2) and acceptance (by CCM) on 14 November 2007, the Sublease was varied by reducing the rent for the two year period from 27 September 2007 to $500,000 for the first quarter and increased by 2% per quarter thereafter (to be reviewed at 2 to 3 year intervals) effective from 27 September 2007. But for this amendment, the rent would have been $33.35 million for the period to 31 December 2007. The Chief Commissioner's Assessments 65The plaintiffs' lawyers, Freehills, and the Chief Commissioner's lawyer, the Crown Solicitor, communicated over many months in relation to the duty payable on the transactions. 66On 6 September 2011, the Chief Commissioner wrote to the plaintiff in the Trust Proceedings, advising that he intended to assess land rich duty on the PT Transfer at $36,285,490. The Chief Commissioner advised that he had obtained a valuation from Lonergan Edwards & Associates Limited (the LEA Valuation) that had valued the Land Lease at an unencumbered value of $660 million as at the acquisition date (27 September 2007). The Chief Commissioner also advised that the LEA Valuation valued the Intercompany Loan at $11 million as at the acquisition date. 67The Chief Commissioner referred to the history of submissions that had been made by Freehills (which included valuations by the accountancy firm, Deloitte Touché Tohmatsu (Deloitte)) and explained why an exemption was not available to the plaintiff under s 163ZB(1)(i) of the Duties Act. The Chief Commissioner was not satisfied that the PT Transfer was not part of a scheme of the kind referred to in s 54(3)(c) of the Duties Act. The Chief Commissioner concluded that the relevant scheme comprised the steps set out in cl 4.2 of the Implementation Deed. In this regard, he concluded that the relevant trust property was the units in the Property Trust; the relevant persons on whom an interest in the units was conferred were the unit holders of the Property Trust and/or the transferee as the new trustee of the Property Trust; that the relevant persons whose beneficial interest or potential beneficial interest in the units suffered a detriment because they no longer held the beneficial interests in the trust units, or CCMN1, on the basis that prior to the transaction it held all interests in the units and after the transaction, it was left with no interest. 68The Chief Commissioner advised that the scheme adopted and implemented was a scheme of the kind referred to in s 54(3)(c) of the Duties Act. The letter included the following: Unencumbered Value of Land Holdings - For Land Rich Duty Purposes 48. Unless the position as to s 163ZB(1)(i) changes, the relevant acquisition resulting from the CCM Trust Units Transfer gives rise to a liability for land rich duty. As the acquirer of all the units in the Trust under the CCM Trust Units Transfer, you are liable to pay land rich duty pursuant to s 163J(1) of the Duties Act (as it then was as at 27 September 2007). 49. The amount of land rich duty payable is calculated by reference to the unencumbered value of all the land holdings of the Trust in New South Wales as at the Acquisition Date (see s 163K of the Duties Act as it then was as at 27 September 2007). 50. The enclosed LEA valuation values the market value of the Land Lease held by the Trust as at the Acquisition Date at $660,000,000. 51. I propose to assess land rich duty on the relevant acquisition resulting from the CCM Trust Units Transfer on the basis that the market value of the land holding of the Trust (being the Land Lease) as at the Acquisition Date was $660,000,000. 52. As stated in paragraph 2 above, that is a primary amount of $36,285,490. 69The Notice of Assessment was issued on 9 December 2011. The plaintiffs objected on 7 February 2012. The defendant wholly disallowed the plaintiffs' objection on 27 March 2012. Nature of the applications 70In each case the plaintiff makes an application under s 97(1)(a) of the Taxation Administration Act 1996 for a "review" of the Chief Commissioner's decision that has been the subject of an objection and in respect of which each plaintiff is dissatisfied. Such a review is "taken to be an appeal" for the purposes of the Supreme Court Act 1970 and the regulations and rules made under that Act: s 97(4). 71The plaintiffs' cases on review, and that of the Chief Commissioner, are not limited to the grounds of objection: s 100(2). In dealing with the application for review the Court may: (a) confirm or revoke the assessment in question; (b) make an assessment or other decision in place of the assessment; (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid; (d) remit the matter to the Chief Commissioner for determination in accordance with the decision of the Court; and/or (d) make any further order as to costs or otherwise as it sees fit: s 101(1). 72The plaintiffs are not required to prove that the Chief Commissioner erred on the materials before him or that the Chief Commissioner's exercise of discretion is vitiated by error of a kind justifying judicial review such as failing to address the correct statutory test, making a mistake of law, taking some extraneous reason into account or excluding some relevant factor from consideration. By "dint" of s 97(4) of the Taxation Administration Act, s 75A of the Supreme Court Act 1970 (NSW) is "picked up" and on the review or "appeal" the Court may receive further evidence and may make any assessment that ought to have been made: Tasty Chicks Pty Limited & Ors v Chief Commissioner of State Revenue of New South Wales [2011] HCA 41; (2011) 245 CLR 446 at 453 and 455. The legislative framework 73The land rich provisions of the Duties Act in existence at the time of the transaction in 2007 were contained in Chapter 4A. A liability for duty arises "when a relevant acquisition is made": s 163E. A "relevant acquisition" occurs when, inter alia, a person acquires a "significant interest" in a "land rich landholder": s 163F(1)(a)(i). A "landholder" includes a private unit trust scheme: s 163A(1)(a). The Property Trust was a "landholder" as defined. 74An "interest" in a landholder is defined as "an entitlement (otherwise than as a creditor or other person to whom the landholder is liable) to a distribution of property from the landholder on a winding up of the landholder or otherwise": s 163D(1). A "significant interest", in the case of a private unit trust scheme, means an entitlement to 20% or more of the property distributed: s 163D(2)(a). A person acquires an interest in a land rich landholder if the person obtains an interest in the landholder irrespective of how it is obtained: s 163G(1). Such acquisition may be by purchase, or by issue of a unit or share or through a number of other mechanisms: ss 163G(2) and 163G(3). It is not in issue in the proceedings that a significant interest in the Property Trust was acquired. 75Section 163B provided: (1) For the purposes of this Chapter, a landholder is land rich if: (a) it has land holdings in New South Wales with an unencumbered value of $2,000,000 or more, and (b) its land holdings in all places, whether within or outside Australia, comprise 60% or more of the unencumbered value of all its property. (2) In calculating the unencumbered value of the property of a landholder for the purposes of sub-section (1), property of any of the following kinds is not counted: ... (c) loans that, according to their terms, are to be repaid on demand by the lender or within 12 months after the date of the loan, (d) if the landholder is a private unit trust scheme or a wholesale unit trust scheme, loans to persons who, in relation to a trustee or beneficiary of the scheme, are associated persons, ... 76Section 163Y of the Act relevantly provided: (2) In determining the unencumbered value of land holdings under this Chapter, any arrangement made in respect of the land holdings that has the effect of reducing the unencumbered value is to be disregarded, subject to subsection (3). (3) An arrangement is not to be disregarded if the Chief Commissioner is satisfied that the arrangement was not made as part of an arrangement or scheme with a collateral purpose of reducing the duty otherwise payable in relation to the relevant acquisition or relevant disposal. (4) In considering whether or not he or she is satisfied for the purposes of subsection (3), the Chief Commissioner may have regard to: (a) the duration of the arrangement before the relevant acquisition or relevant disposal, and (b) whether the arrangement has been made with an associated person, and (c) whether there is any commercial efficacy to the making of the arrangement other than to reduce duty, and (d) any other matters the Chief Commissioner considers relevant. 77Section 163C(1) provided that, for the purposes of Chapter 4A, "a land holding is an interest in land other than the estate or interest of a mortgagee, chargee or other secured creditor or a profit à prendre". 78Section 163ZB (Exempt transactions) relevantly provided as follows: (1) An acquisition or disposal by a person of an interest in a landholder is an exempt transaction: ... (i) if the acquisition or disposal of an interest in a landholder would be chargeable with duty of $10 under section 54 if the property being acquired or disposed of were land in New South Wales. 79Section 54 relevantly provided: (3) Duty of $10 is chargeable in respect of a transfer of dutiable property to a person other than a special trustee as a consequence of the retirement of a trustee or the appointment of a new trustee, if the Chief Commissioner is satisfied that, as the case may be (a) none of the continuing trustees remaining after the retirement of a trustee is or can become a beneficially under the trust, and (b) none of the trustees of the trust after the appointment of a new trustee is or can become a beneficially under the trust, and (c) the transfer is not part of a scheme for conferring an interest, in relation to the trust property, on a new trustee or any other person, whether as a beneficiary or otherwise, to the detriment of the beneficial interest or potential beneficial interest of any person. If the Chief Commissioner is not so satisfied, the transfer is chargeable with the same duty as a transfer to a beneficiary under and in conformity with the trusts subject to which the property is held, unless subsection (3A) applies. Issues 80The three main issues in the Trust proceedings are: (1) whether the Property Trust was land rich at the relevant date; (2) if it was, whether the PT Transfer was exempt under s 163ZB(1)(i) of the Duties Act; and (3) if it was land rich and the PT Transfer was not exempted, what was the unencumbered value of the land holdings of the Property Trust at the relevant date? 81The only issue in the Company proceedings is whether the plaintiff is liable for duty of $10 under s 54(3) of the Duties Act. 82A landholder (in the Property Trust proceedings, a private unit trust) is "land rich" under the Duties Act if: (1) it has land holdings with an unencumbered value (being a market value free of encumbrances) of at least $2 million (a matter not in issue in these proceedings); and (2) its land holdings are 60% or more of the unencumbered value of all its property: s 163B. Whether a landholder is land rich is determined as at the time of the relevant acquisition of "an interest". In this case, that was at the time when the agreement by which the interest was acquired was "completed", whether or not it was then registered: s 163G(2A). The agreement is "completed" when the "necessary transfer of title documents are delivered to the person acquiring the interest and the purchase price is paid in full": 163G(2B). 83The plaintiffs propounded two reasons for why the Property Trust was not land rich. The first is that the Property Trust had a separate non-land asset, the right to levy, collect and keep tolls (the Tolling Right), which, it claimed, had a value at least equal to the value of the only land asset, the Land Lease (the Tolling Right Issue). The second reason is that, if the Tolling Right is not a separate non-land asset, the Intercompany Loan was an asset having a market value at least equal to its face value of $298 million (the Loan Issue). 84The Chief Commissioner contends that the Tolling Right is not a separate item of property and, in any event, it is an interest in land. Even if the Tolling Right is a separate item of non-land property, the Chief Commissioner claims that there is no proper basis for attributing any value to it and certainly not a value equal to the value of the Land Lease, as the plaintiff claims. The Chief Commissioner also contends that the Intercompany Loan is not to be counted as part of the property of the Property Trust because it was excluded under the Act as a loan repayable on demand or within 12 months of the loan being made (s 163B(2)(c)) and/or because it was a loan made to an associated person (s 163B(2)(d)). 85In relation to the second main issue of whether the PT Transfer was exempt, the plaintiff contends that duty of $10 is chargeable in respect of the transfer of the units in the Property Trust because it was a transfer "as a consequence of" the retirement of a trustee or the appointment of a new trustee and the transfer was not part of a scheme conferring an interest on the new trustee to the detriment of the beneficial interest or potential beneficial interest of any person (s 163ZB(1)(i) and s 54(3)). The Chief Commissioner contends that the transfer was not as a consequence of the retirement of a trustee and, in any event, it was part of a scheme for conferring an interest to the detriment of a beneficial interest or potential beneficial interest of a person (the Exemption Issue). 86There are also issues in relation to interest and penalty tax (Interest and Penalties Issues). The valuation of each of the assets is in issue (the Valuation Issues). The Evidence 87In addition to volumes of documentary material (Exhibits PD1 - PD 21) the plaintiffs relied upon the evidence of a number of witnesses. This evidence included that of Kenneth Ivan Dawson, the current CEO of CCM and other relevant entities in the CCM Group. Mr Dawson's evidence related to the classification of the Intercompany Loan and the manner in which the tollway operated. The evidence also included that of Peter Jeremy Hicks, a director of both plaintiffs, appointed by one of the members of the Consortium. Mr Hicks gave evidence in relation to the bidding process and advice received by the plaintiffs in the course of that process. His evidence was relevant to the interest and penalty issues and for reasons explained later, those matters are not necessary for determination. However, there was one aspect of Mr Hicks' cross-examination upon which the defendant relied. Mr Hicks accepted that the purpose of the structure in the Implementation Deed for the transfer of the units in the Property Trust was to ensure that there would be no stamp duty payable on the transfer of the units in the Property Trust (tr 66). 88The plaintiff also relied upon the evidence of Sean Victor Ian Miller, a former employee of ABN AMRO, whose evidence was relevant to the issues of interest and penalty. There was also the evidence of Peter Paradise, to which reference has already been made, and Ken Nam, another lawyer at Freehills who gave evidence of his role in ensuring that certain steps in relation to the transaction were effected in accordance with the Escrow Agreement. 89The plaintiff also relied upon the evidence of John Bastian and Ewan McLean, which is referred to in more detail later in respect of the Intercompany Loan. 90The plaintiff relied upon the expert valuation opinion and evidence of Terrence Michael Potter, a principal of Axiom Forensics Pty Ltd, a firm specialising in the provision of forensic accounting services. The Chief Commissioner relied upon the expert valuation opinion and evidence of Wayne Richard Lonergan, a director of Lonergan Edwards & Associates Ltd, who provided the LEA valuation upon which the Chief Commissioner relied in making his assessments. 91The three assets the subject of the valuation evidence are the Land Lease, the Tolling Right and the Intercompany Loan. It will be necessary to analyse the approach adopted by the experts in some detail. However by way of summary, Mr Lonergan considered the Trust to be land rich at the acquisition date. Mr Potter's opinion varied according to the assumptions that he adopted. In summary, his opinion was that one valued the assets as if the Intercompany Loan were to be written off and the Tolling Right had no separate value, the Property Trust would be land rich. If the Tolling Right were valued as a separate, non-land asset and the Intercompany Loan was taken into account, Mr Potter's opinion was that the Property Trust would not be land rich at the acquisition date. Tolling Right Issue 92The matters to be determined in respect of the Tolling Right Issue (exclusive of valuation issues) are: (1) is the Tolling right a separate item of property (Question 1); (2) if it is a separate item of property, is it an interest in land (Question 2); and (3) is the Property Trust's title to the Tolling Right qualified by the Sublease, in particular, by cl 1.3 thereof (Question 3). Question 1: Is the Tolling Right a separate item of property? 93The plaintiff contends that the Tolling Right is a statutory right granted to the Property Trust by the RTA under the Roads Act, which is separate from any rights granted to the Property Trust by reason of the RTA's ownership of land. It contends that it is property separate from the Land Lease. The Chief Commissioner contends that the Tolling Right is not a right or an item of property separate from the Land Lease. The Tolling Right 94It is important to identify the attributes that constitute the Tolling Right as described by the parties. The contractual entitlement of CCMN2 as trustee of the Property Trust (to which I will refer as "the Property Trust") under the Project Deed and the Land Lease was to "levy, collect and... keep tolls" for the use of the Tunnel by motor vehicles in accordance with the Toll Collection Schedule (cl 17.1(a) of the Project Deed; cl 1.8(a) of the Land Lease). The Property Trust was prohibited from levying or imposing any toll "for the use of the Tunnel" other than in accordance with the Toll Collection Schedule (cl 17.1(b) of the Project Deed; cl 1.8(b) of the Land Lease). 95The RTA consented to the Property Trust "licensing or otherwise conferring that right" on CCM (cl 17.1(a) of the Project Deed; cl 1.8(a) of the Land Lease). CCM was prohibited from levying or imposing any toll "for the use of the Tunnel", other than in accordance with the Toll Collection Schedule (cl 17.1(b) of the Project Deed). 96The plaintiff contended that the Tolling Right is a sui generis statutory right granted to the Property Trust by the RTA under s 213 of the Roads Act, which provided: 213 Tolls and charges for tollways (1) The RTA may levy and collect tolls and charges for traffic using a tollway. (2) The RTA may, on such terms as it may decide: (a) lease the operation of a tollway, or (b) lease the collection of tolls and charges on a tollway. (3) The amount of any toll or charge must not exceed the amount prescribed by or in accordance with the regulations. 97The parties are at issue on the meaning of the word "lease" in s 213(2). The plaintiff contends that it is not used in the "real property sense", meaning that it is not a lease of real property or land. The Chief Commissioner contends that the provisions of the Roads Act together with the provisions of the Roads (General) Regulation 2000 (with which the Property Trust and CCM were required to comply under cl 17.1(d) of the Project Deed) support the conclusion that the expression is used in the "real property sense" because tolls are to be collected by a toll operator, who must be the RTA or a person to whom the RTA has leased land. 98It will be necessary to analyse and interpret the relevant statutory and contractual provisions to determine this issue. However, it is appropriate first to deal with the Chief Commissioner's contention that the Property Trust could have levied or imposed tolls for the use of the Tunnel for the passage of motor vehicles, irrespective of the Tolling Right. Was the Tolling Right essential for the collection of Tolls? 99The Chief Commissioner submitted that, even without the grant of a statutory lease from the RTA under s 213(2) of the Roads Act, the Property Trust had a right to collect tolls. It was contended that, as a matter of common law, it could have levied and collected tolls in reliance solely on its rights as the lessee of the road comprising the Tunnel under the Land Lease. This contention, if correct, would lead to the conclusion that the Tolling Right was superfluous and would support the Chief Commissioner's contentions that it is not an asset capable of having value independently of the rights otherwise conferred under the Land Lease. 100In support of this contention the Chief Commissioner referred to the history of tolls on the King's highways in England referred to by Windeyer J in Commonwealth Freighters Pty Ltd v Sneddon (1959) 102 CLR 280. The question for the High Court in that case was whether the Road Maintenance (Contribution) Act 1958 (NSW) validly applied to commercial goods vehicles engaged in inter-State trade. The appellant appealed from a conviction for failing to deliver to the Commissioner for Motor Transport a record that the Act required it to keep. The Act provided that the owner of every commercial goods vehicle was to pay to the Commissioner, as compensation for wear and tear caused thereby to public streets in New South Wales, a charge at the rate prescribed in the schedule to the Act. The issue was whether the charge imposed by the Act could include inter-State journeys without violating s 92 of the Constitution. The appeal was dismissed. Windeyer J said at 303: The attitude of the common law towards tolls upon the users of highways was that they might properly be authorised by Crown grant if they were for the maintenance of the highway or for the use of some facility provided for travellers on the highway such as a bridge; but if they were mere exemptions from highway users they were inconsistent with the public right of way. 101His Honour referred (at 303-304) to mediaeval times during which repair to the highways was performed by enforced labour and later by parishioners, so that road tolls for the repair of the highways were rare. However, his Honour also said that "tolls-thorough" (in contrast to "tolls-traverse"), for the maintenance and repair of the highway where it passed through towns, were not unknown. The theme in this historical overview was that unless there was some quid pro quo to the highway user (such as the provision of a bridge or the maintenance of the highway), a toll could not be exacted. After referring to the turnpike trusts in England as part of the system of tolls authorised by Act of Parliament, his Honour observed that the "toll bars" previously existing in New South Wales and Victoria had all been abolished well before 1900 (at 304-305). 102The Chief Commissioner also relied upon the descriptions of a "toll-thorough" and a "toll-traverse" in Frederic Gunning's Practical Treatise on the Law of Tolls (1833 Saunders and Benning). The "toll-thorough" was described consistently with the theme of the history outlined by Windeyer J in Commonwealth Freighters Pty Ltd v Sneddon, in that there must be some consideration for the imposition of the toll for passing along a highway (p 3). The "toll-traverse" was described as a toll for which a landowner may prescribe "without alleging any consideration" and "the law supposes a reservation of the toll to have been made by the proprietor of the soil at the time when he first allowed the public the privilege of passing over it": at 27. 103The Chief Commissioner submitted that the Tunnel was constructed pursuant to the Project Deed on land owned by the RTA and leased to the Property Trust. It was never a "public road", and its first use was as a tollway. It was submitted that, in these circumstances, there was no public right to use the land consisting of the Tunnel, and that the ability of the public to use the Tunnel arose from its opening as a "tollway". The situation might have been different if the Tunnel were a public road, because s 5(1) of the Roads Act gives a member of the public a statutory right (equivalent to the common law right to use the King's highway) to use a public road. Section 5(2) provides that the right conferred by the section "does not derogate from any right of passage that is conferred by the common law" but also provides that "those rights are subject to such restrictions as are imposed by or under this or any other Act or law". 104By these submissions the Chief Commissioner contended that, because the Tunnel was not a "public road", the Property Trust was free to exact tolls, apparently unrestrained except by the provisions of the Project Deed and the Land Lease, and without the need for a "lease" from the RTA under s 213(2) of the Roads Act. The restraints in the Project Deed included that the Property Trust and CCM could only levy tolls by means of the Toll Collection System and that they had to comply with the Roads (General) Regulation 2000 (cl 17.1(d)). 105The Chief Commissioner submitted that the grant of the Tolling Right in the Project Deed and the Land Lease was merely "out of abundance of caution" and it was only for "reasons of prudence" that it was appropriate for the Property Trust to ask for a grant of the lease (or right) under s 213(2) of the Roads Act. It was submitted that the plaintiff has failed to establish that the Tolling Right is an essential requirement for the collection of tolls. 106A "tollway" is defined in the Dictionary to the Roads Act as "a road that is declared to be a tollway by an order in force under section 52". The Minister by order under s 52 of the Roads Act published in the Gazette, declared as a tollway "the road proposed to be constructed" between Darling Harbour and Rushcutters Bay and known as the Cross City Tunnel. A direction was given by the Minister under s 63 of the Roads Act that "all of the functions of a roads authority with respect to a classified road" ("the tollway known as the Cross City Tunnel") were to be the responsibility of the RTA. I agree with the plaintiff's submission that these formal acts served to bring the area of land comprising the road and the Tunnel within the regulation of the Roads Act as a tollway. Only roads and proposed roads of the kind described in s 52(1) of the Roads Act are capable of being given the formal status of tollway. 107In response to the Chief Commissioner's argument, the plaintiff referred analogously to the water rights conferred under statute that were considered in ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; (2009) 240 CLR 140. In that case, the plaintiffs had argued that the legislative regime in place in New South Wales (being the Water Act 1912 and the Water Administration Act 1986) was "merely a regulation of a common law right" that was "a proprietary interest in land": at 217 [194]. In rejecting this argument, Heydon J traced the legislative history in respect of bore licences, noting that, from 1966, sub-surface water had vested in the State of New South Wales by the insertion of s 4B(1) into the Water Act and that, from 1986, the right to the use, flow and control of sub-surface water had vested in the Ministerial Corporation under s 12(1) of the Water Administration Act 1986. Although in dissent (but not on this issue) his Honour said at 217 [196] (footnotes omitted): Hence while bore licences gave rights, from 1966 on they were rights operating by way of an exemption from a general prohibition through s 4C on extracting ground water which had been vested in the Commission for the benefit of the Crown by s 4B. They were rights which were created by the legislature. They were subject to conditions imposed by the legislature. It is true that they derived from, and had close but far from complete resemblances with, the right of landowners at common law to abstract water percolating or running beneath the surface of the land. Like the common law right of landowners, although the right of bore licensees did not give a right of ownership and groundwater, it did give a right to abstract it if it was there. The resemblances are far from complete because the bore licences were highly regulated. But at least from 1966, although the rights conferred by bore licences derived from those recognised at common law, it cannot be said that any common-law right has survived. 108A toll that is levied pursuant to the Roads Act is enforced through the machinery provisions of Roads Regulation 2008 (previously Part 3 of the Roads (General) Regulation 2000) that include offence provisions dealing with the failure to pay tolls. 109The RTA, the Property Trust and CCM agreed that the reference to the term "tolls" in the Project Deed (cl 1.2(q)), the Deed of Agreement to Lease (cl 1.2(p)), the Company Lease (cl 1.3(p)), the Land Lease (cl 1.3(p)) and the Sublease (cl 1.2(o)) "has the meaning given to that term in s 250A of the Roads Act" as at the date of each of those Deeds and agreements. Section 250A of the Roads Act defined "toll" to include "a charge or a private toll or charge". The Dictionary to the Roads Act defined "private toll or charge" as "a toll or charge levied or imposed by a person other than the RTA or a roads authority, in connection with traffic using the tollway, bridge, tunnel or road-ferry to which the toll or charge applies". 110The legislature recognised that there may be persons other than the RTA or a roads authority who might levy a toll and identified this as a "private toll". I agree with the plaintiff's submission that there is no room within this statutory scheme to accommodate an additional right on the part of the RTA, or the lessee of the RTA, to impose a common law toll over land specifically declared to be a tollway for the purposes of the Roads Act. The right in the RTA to levy tolls and the right in a person other than the RTA to levy a private toll exist by reason of the provisions of the statute. The character of these rights must be ascertained by reference to those provisions. 111I am satisfied that the Tolling Right was essential for the collection of tolls. The statutory lease under s 213 of the Roads Act 112An important pre-requisite to the Ministerial Direction under s 52 of the Roads Act is that the RTA owned or would own the land on which the road the subject of the declaration was to be constructed. 113The plaintiff submitted that s 213(2) is not directed to the leasing of the land on which the tollway is situated but to the operation of the tollway (s 213(2)(a)) or the collection of tolls and charges on a tollway (s 213(2)(b)). It was submitted that the two limbs of s 213(2) refer to two distinct "leases" that might be granted. That is, the expression "the operation of a tollway" in s 213(2)(a) refers to an activity that does not encompass the collection of tolls and charges on that tollway. Conversely, the activity of the "collection of tolls and charges on a tollway" does not involve "the operation of a tollway". It was also submitted that the person conducting the activities the subject of such leases might, but need not, be given rights in relation to the land comprising the tollway. In the event that this person (or those persons) did not have any rights in relation to the land on which the tollway was to be operated (or the tolls were to be collected), a court would imply into a lease given under ss 213(2)(a) or 213(2)(b) the right for the lessee to enter onto the land comprising the tollway to conduct these activities. 114The plaintiff submitted that the word "lease" in s 213(2) is used in the sense of conferring the relevant right for a term, and not for all time. It was submitted that the word "lease" is used to indicate that the RTA has no power to deprive itself permanently of the rights in s 213(2) as they relate to roads that have been declared tollways. 115The Chief Commissioner submitted that the Tolling Right may only be granted with a lease of land, that it is inseparable from that lease and, accordingly, that it is not a separate item of property. In support of this submission the Chief Commissioner relied upon cl 3 of the Roads (General) Regulation 2000 (NSW) (now repealed) (the Regulation). Clause 17.1(d) of the Project Deed imposed an obligation on the Property Trust and CCM to comply with that Regulation. Clause 3 of the Regulation included the following definition: toll operator means: (a) the RTA, or (b) any other person to whom the RTA has leased any part of land on which a tollway is operated and who collects a toll in respect of the tollway. 116The Chief Commissioner submitted that these provisions support the conclusion that the word "lease" in s 213(2) of the Roads Act should be understood in 'the real property sense', as a lease of land. 117The plaintiff submitted that it is impermissible to interpret the provisions of the Roads Act by reference to the contents of a delegated instrument that is subservient to the statute. The plaintiff emphasised this point by reference to the amendment and later repeal of the Regulation, with the removal of the definition of "toll operator" in 2010: Roads Regulation 2008; Roads Amendment (Tollways) Regulation 2010. A definition of "toll operator" was inserted into the Roads Act from 13 August 2010 by the Road Transport Legislation Amendment Act 2008 (cl 9 of Sch 5), and this definition made no reference to a lease of land. It was defined relevantly as the RTA or "any other person who is declared by the Minister by order published in the Gazette to be a toll operator in respect of a tollway for the purposes of this definition". 118In Hanlon v The Law Society [1981] AC 124, Lord Lowry reviewed the relevant cases and textbooks regarding the extent to which regulations may be considered in construing statutes and formulated the following six propositions (at 193-194): (1) Subordinate legislation may be used in order to construe the parent Act, but only where power is given to amend the Act by regulations or where the meaning of the Act is ambiguous. (2) Regulations made under the Act provide a Parliamentary or administrative contemporanea expositio of the Act but do not decide or control its meaning: to allow this would be to substitute the rule-making authority for the judges as interpreter and would disregard the possibility that the regulation relied on was misconceived or ultra vires. (3) Regulations which are consistent with a certain interpretation of the Act tend to confirm that interpretation. (4) Where the Act provides a framework built on by contemporaneously prepared regulations, the latter may be a reliable guide to the meaning of the former. (5) The regulations are a clear guide, and may be decisive, when they are made in pursuance of a power to modify the Act, particularly if they come into operation on the same day as the Act which they modify. (6) Clear guidance may also be obtained from regulations which are to have effect as if enacted in the parent Act. 119The only propositions relevant to the present case are propositions (1), (2) and (3). Lord Lowry cited no authority for proposition (1). In support of proposition (3), his Lordship cited Hales v Bolton Leathers Ltd [1950] 1 KB 493 at 505 per Somervell LJ and [1951] AC 531 at 544 per Lord Normand (in the House of Lords). In Hales v Bolton Leathers Ltd Lord Somervell observed that the regulations in question "could not contradict the Act", but that they might "properly be referred to as working out in detail the provisions of the Act consistently with its terms". Lord Normand said that regulations could not "control the construction of the Act" but that it was of "some importance to consider whether they fit into the construction which I think the Act properly bears". 120In Australia, the general rule has been that delegated legislation made under an Act should not be taken into account for the purpose of the interpretation of the Act itself: The Great Fingall Consolidation Ltd v Sheehan (1905) 3 CLR 176 at 184 per Griffiths CJ; Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board (1985) 157 CLR 605 at 625 per Mason J; D C Pearce and R S Geddes, Statutory Interpretation in Australia (7th ed, 2011, Butterworths), at 105-107. However, in Purden Pty Ltd v Registrar in Bankruptcy (1982) 64 FLR 306 at 311; 43 ALR 512 at 516, the Full Court of the Federal Court of Australia (Bowen CJ, Fisher and Lockhart JJ) cited with apparent approval the above-mentioned passage of Lord Normand's speech in Hales v Bolton Leathers Ltd, in respect of proposition (3). Proposition (4) was applied by Heerey J in Elazac v Commissioner of Patents (1994) 53 FCR 86 at 90; 125 ALR 663 at 667 and Blue Wedges Inc v Minister for Environment, Heritage and the Arts and Others (2008) 165 FCR 211 at 218 [31], both cases being "exceptional occasions where regulations can be used as an aid to the construction of an Act". 121Australian courts have not applied or approved the breadth of the second limb of proposition (1), that a regulation may be used to construe an Act where the meaning of the Act is ambiguous, without qualifications. One qualification is that the statute and the regulations should come into force contemporaneously and establish an interdependent regime: O'Connell v Nixon (2007) 16 VR 440 at 447 [28] per Nettle JA, with whom Chernov and Redlich JJA agreed. Proposition (1) should be read with, at least, proposition (4), so that the use of regulations is limited to circumstances where the relevant Act and regulations come into operation at the same time. That is not the case here. The relevant regulation came into operation seven years after the enactment of the Roads Act. 122The possible "ambiguity" in the Roads Act is whether the expression "lease" in s 213 is to be understood as a lease in the "real property sense", being a lease of land. To resort to a regulation that came into operation seven years after the Act, that was not made in pursuance of any power to modify the Act, and which was not to have effect "as if enacted in" the Act, to assist in settling an ambiguity in an Act is in my view impermissible. At best, proposition (3) may have some application in a particular case. However, I am of the view that the use of regulations in that context is questionable. This is exemplified in the present case, where a subsequent amendment to the Regulation removed all reference to the leasing of land from the definition of "toll operator". If one could resort to regulations to settle an ambiguity in an Act or confirm an interpretation, the Act may be construed differently at different times according to the change in the regulations over the years. 123I am of the view that it is impermissible to have regard to terms of the Roads (General) Regulation 2000 in interpreting the meaning of the expression "lease" in s 213 of the Roads Act. However, if that view is mistaken, the Regulation does not assist. The RTA is given very broad powers under s 213. It has the power to "levy and collect tolls and charges for traffic using a tollway" (s 213(1)). Its power in this regard is limited by s 213(3), in that it may only levy and collect tolls and charges for no greater amount than that prescribed by or in accordance with the Regulation. However, its power to "lease" either the "operation of a tollway" (s 213(2)(a)) or the "collection of tolls and charges on a tollway" (s 213(2)(b)) is not otherwise limited. It may do so "on such terms as it may decide" irrespective of whether the person has a lease of land or some other right, such as a licence, to use the land on which the tollway is operated. 124The RTA has the power to levy and collect the tolls not only "for traffic using a tollway" (s 213(1)) but also (with the approval of the Minister) for traffic using a bridge, tunnel or road-ferry (s 214(2)). The RTA has the power to "lease" the collection of tolls on a tollway (s 213(2)(b)) and on a bridge, tunnel or road-ferry (s 214(3)(b)). There was no separate express power given to the RTA to grant a lease to "levy" the tolls in either instance. However, in respect of a road-ferry that formed part of a public road that was under the control of a roads authority other than the RTA, that roads authority was given the power to levy and collect tolls for traffic using a road-ferry and was also given the power to lease the collection of tolls on a road-ferry (s 216). 125The plaintiff submitted that the power given to the RTA under s 213(1) of the Roads Act to levy tolls and charges is a statutory impost, being a power to levy a tax. In this regard, it was contended that s 213 falls within the classic conception of a tax as a "compulsory exaction of money by a public authority for public purposes, enforceable by law": Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263 at 276 per Latham CJ; Roy Morgan Research Pty Limited v Federal Commissioner of Taxation [2011] HCA 35; (2011) 244 CLR 97 at 109-110 [36]-[38]. The statutory recognition of the "private toll" supports the conclusion that the RTA is able to lease the power to levy tolls as part of the lease of the "the operation of a tollway" pursuant to s 213(2)(a). 126The Chief Commissioner submitted that s 213(2)(b) is a subset of s 213(2)(a). It was submitted that s 213(2)(a) deals with a situation where the RTA wishes to lease the whole operation of the tollway that necessarily includes maintenance, repairs and the levying and collection of tolls. It was submitted that one would not be operating a tollway if one were not levying and collecting tolls, because the essence of a tollway is the "toll" for its use. The Chief Commissioner also submitted that s 213(2)(b) deals with the situation where the RTA does not wish to lease the entire operation of the tollway but only wishes to lease a lesser component, namely, the collection of the tolls. It was submitted that s 213(2)(b) is designed to deal with the situation where the RTA still maintains and does everything else to do with the tollway, but permits someone else to operate the toll collection process. 127I am of the view that in its statutory context the expression "the operation of the tollway" in s 213(2)(a) includes the levying and collection of the tolls. If the RTA leases the operation of a tollway, it is leasing not only the right to levy and collect tolls, but is also imposing the obligations to do those things necessary to "operate" the tollway, including maintaining it and keeping it in such repair as to enable its continuous use for the period of the lease (unless of course such lease expressly provides otherwise). 128The Project Deed, the Land Lease and the Sublease include the right to "levy" the toll. The RTA was entitled, as the roads authority in respect of the Tunnel, to exercise its function to levy a toll through its agent or an independent contractor: see s 256 of the Roads Act. However, this is not the language of the Project Deed and other Project Documents. The RTA granted the right not only to levy and collect the tolls but also to keep the tolls. It was not contracting the Property Trust, or CCM as its agent, to exercise its function to levy tolls. The right to levy tolls was granted within the lease for "the operation of the tollway". 129The plaintiff submitted that the RTA's power to levy and collect tolls and charges does not arise as an incident of ownership of the land. Rather, it is a power conferred specifically by s 213(1). This submission must be qualified in light of the fact that the only basis on which the tollway is established is by Ministerial declaration in respect of a road on land owned by the RTA. 130The RTA granted the Property Trust the right to operate the Tunnel pursuant to cl 1.7 of the Land Lease. It granted the Property Trust the Tolling Right pursuant to cl 17.1 of the Project Deed, the substance of which is repeated in cl 1.8 of the Land Lease. Clause 1.3 of the Sublease contains the licence of the Tolling Right to CCM. Clause 17.1 of the Project Deed and cl 1.8 of the Land Lease are not statutory leases under s 213(2)(b) merely for the "collections of tolls and charges on a tollway". They are for the levying, collection and keeping of the tolls. 131I am satisfied that the rights the RTA granted to the Property Trust to "undertake the Project", including the "ownership, operation, maintenance and repair of the Tunnel" and the "levying, collection and, as against the RTA and the Government, keeping of tolls" was an exercise of the RTA's statutory power under s 213(2)(a) to grant a "lease to operate a tollway". However, that is not decisive of the issue. It is necessary to consider the terms and conditions of the various Deeds and Agreements pursuant to which the RTA granted the Tolling Right to the Property Trust together with its consent for the Property Trust to licence the Tolling Right to CCM. Is the Tolling Right separate property? 132It has been observed that it is "difficult, if not impossible" to find a clear and useful definition of "property": PW Young, C Croft and ML Smith, On Equity (2009 Lawbook Co), at p 560 [8.20]. Indeed "property" has been described as "a category of illusory reference" and as "a conceptual mirage": Gray, "Property in Thin Air" (1991) 50 Camb LJ 252 at 305; K Gray and S Gray, Elements of Land Law (4th ed, 2005 Oxford University Press); referred to by Finn and Sundberg JJ in Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40; (2006) 149 FCR 395 at 407-408 [40]-[41]. 133In Smith Kline French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73, in dealing with the construction of s 51(xxxi) of the Constitution (Cth), Gummow J said at 120: The authorities establish that s 51(xxxi) is to be given the liberal construction appropriate to a constitutional guarantee. The concept of 'property" is not to be narrowly confined and comprehends "innominate and anomalous interests", in addition to those estates in land or those interests in land or in a chattel or in a chose in action which are recognised at law or in equity. 134Latham CJ has said that "property" in s 51(xxxi) of the Constitution (Cth) includes both "land itself and proprietary rights in respect of land": Minister of State for the Army v Dalziel (1944) 68 CLR 261 at 276. 135Similarly, in McCaughey v Commissioner of Stamp Duties (1945) 46 SR (NSW) 192 at 201 Jordan CJ observed that the word "property" is used in different senses and may "denote objects of proprietary rights" (for instance land, domesticated animals and machinery) "or the proprietary rights themselves". The Chief Justice then said, also at 201: Property, in the sense of proprietary rights, may exist in relation to physical objects, or to intangible things such as debts or patent rights. Each separate piece of property consists of a bundle of proprietary rights relating to a particular object, ... 136In National Provincial Bank Ltd v Ainsworth [1965] AC 1175 Lord Wilberforce said at 1247-1248: Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability. 137In citing that passage with approval in The Queen v Toohey; ex parte Meneling Station Pty Ltd [1982] HCA 69; (1982) 158 CLR 327 Mason J said at 342-343: Assignability is not in all circumstances an essential characteristic of a right of property. By statute some forms of property are expressed to be inalienable. Nonetheless, it is generally correct to say, as Lord Wilberforce said, that a proprietary right must be "capable in its nature of assumption by third parties": see generally the discussion by Dawson and Pearce, Licensing Relating to the Occupation or Use of Land (1979), p. 220. 138In cl 17.1 of the Project Deed, the RTA granted to the Property Trust the right to "levy, collect and...keep" tolls for the use of the Tunnel. In the same clause, the RTA consented to the Property Trust "licensing or otherwise conferring that right" to or on CCM. It also consented to the encumbering of "such rights". In cl 1.8 of the Land Lease the RTA granted to the Property Trust the entitlement to "levy, collect and... keep" tolls for the use of the Tunnel. In the same clause the RTA consented to the Property Trust "licensing or otherwise conferring that right" on CCM. The RTA also consented to the encumbering of "such rights". 139The Sublease pursuant to which the Property Trust licensed the Tolling Right to CCM (cl 1.3(a)) incorporates the provisions of the Land Lease with certain additions and exclusions (cl 3.1). One such addition to the Sublease was contained in cl 3.1(m) (extracted earlier) pursuant to which the following was inserted at the end of cl 10.2 of the Land Lease (also extracted earlier), as incorporated into the Sublease: The Trustee consents to granting of a security interest over the Company's rights under clause 1.3(a) to secure Project Debt and any Security (as defined in the Security Trust Deed) and to the exercise of all rights under them. 140The "Project Debt" was defined in the Project Deed as "any actual or contingent indebtedness under the Debt Financing Documents" or under the refinancing of those facilities with the consent of the RTA under cl 31.1 of the Project Deed. It included the net amount payable to CCMF, as borrower, to the Property Trust or to CCM in respect of any hedging contracts entered into to manage the exposure to interest rate fluctuations in respect of the facilities (cl 1.1). The Debt Financing Documents included the "Financiers' Securities", defined in the RTA Consent Deed to include: the "real property mortgage" to be granted by the Property Trust over the Land Lease; "the real property mortgage" to be granted by CCM over the Company Lease; and "the mortgage" to be granted by CCM over the Sublease. There was no mention of any separate mortgage or securities over the Tolling Right as contained in clause 1.8 of the Land Lease or cl 1.3(a) of the Sublease. The mortgage as granted was over the Sublease, as a whole. 141Applying, the criteria referred to by Lord Wilberforce in National Provincial Bank Ltd v Ainsworth, the Tolling Right was clearly definable. It was a right to levy, collect and keep the tolls for use of the Tunnel. It was identifiable by third parties by reference to the relevant clauses of the Project Deed, the Land Lease and the Sublease. It had a degree of permanence and stability in that it was granted for the term of the Lease and the Sublease. The real question is whether it satisfied the requirement of being "capable in its nature of assumption by third parties". It appears from Mason J's observations in The Queen v Toohey; ex parte Meneling Station Pty Ltd that the term "assumption" in this context has been treated as the capacity for the third party to take ownership. This is in line with the plaintiff's submission, with which I agree, that an assignment involves an intention immediately to transfer outright the relevant right of property from the assignor to the assignee: GJ Tolhurst, The Assignment of Contractual Rights (2006 Hart Publishing) at [3.04]; Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 26. The question, then, is whether the Tolling Right was capable of separate assumption or assignment. 142Clause 31.1 of the Project Deed (Entitlement to assign) allowed the Property Trust and CCM, subject to the prior written consent of the RTA, to "sell, transfer, assign, mortgage, charge or otherwise dispose of, deal with or encumber their respective interests in the Tunnel or in any of the Project Documents" (which include the Project Deed, the Agreement to Lease, the Company Lease, the Land Lease and the Sublease (cl 1.1)). 143Clause 10.1(a) of the Land Lease (Assignment by the Lessee) prevented the Property Trust from assigning or otherwise dealing with "its interest in or obligations under this Lease" except in accordance with cl 31 of the Project Deed. It also prevented the Property Trust from sub-leasing or licensing the Land except in accordance with cl 31 of the Project Deed. However the RTA consented to the grant of the Sublease to CCM (cl 10.1(b)). The RTA and the Property Trust agreed that it was reasonable for the RTA to impose a condition of the RTA's "consent to an assignment (other than by way of security) of this Lease" requiring the assignee to enter into a deed on terms reasonably acceptable to the RTA (cl 10.1(a)). 144The plaintiff submitted that the Company Lease and the Land Lease were not necessary in order for the Property Trust to enjoy the rights conferred by the statutory lease(s) granted to it under s 213(2) of the Roads Act. It was submitted that the Land Lease was intended to confer rights of access and use in relation to the land comprising the tollway and the land adjoining the tollway to be used in order to operate the tollway and to collect the tolls. This submission is based on the erroneous premise that the RTA's grant to the Property Trust was a "lease" was under s 213(2)(b) of the Roads Act for the collection of tolls on a tollway, whereas I have concluded that it was under s 213(2)(a) for the operation of the tollway. 145The plaintiff contended that the mere fact that the Tolling Right is contained in a contract (being set out in the Project Deed and repeated in the Land Lease) that confers other rights (and obligations) on the Property Trust does not result in the Tolling Right losing its character as a separate and distinct item of property for two reasons. First, the terms of the Project Deed take priority over the Land Lease. Second, cl 1.8 of the Land Lease is itself a separate and severable right from the remainder of the Land Lease and so could be dealt with separately from the remainder of the Property Trust's rights under the Land Lease. 146The plaintiff also submitted that where a contract confers a number of contractual rights on a person, that person has a chose in action comprising the bundle of rights under the contract: Pacific Brands Sport & Leisure Pty Limited v Underworks Pty Limited (2006) 149 FCR 395 at 407 [39]. It was submitted that the Property Trust had a chose in action comprising its bundle of rights under the Project Deed and another chose in action being its bundle of rights under the Land Lease. Each of those choses in action was capable of disposition by assignment or otherwise, with the RTA's consent (not to be unreasonably withheld), except in the case of a disposition between the Property Trust and CCM, where no consent was required. 147The Chief Commissioner submitted that the relevant grant of the Tolling Right is in the Land Lease, and not in the Project Deed, because when the Tunnel was constructed the Project Deed was spent and the Land Lease came into operation. I do not accept that the Project Deed was "spent" in the sense that it had no further application. There were interdependent provisions in the Land Lease and the Project Deed. For instance, cl 2.6 of the Land Lease provided that the tenancy was to be determined on the termination of the Project Deed. There were ongoing rights granted under the Project Deed that enured after the construction of the Tunnel (for instance, those in cl 14). The Land Lease was also subject to the terms and conditions of the Project Deed (cl 3(a)). 148Although I have concluded that it is impermissible to interpret the provisions of s 213 of the Roads Act by reference to clause 3 of the Roads (General) Regulation 2000, it is permissible to have regard to those provisions in considering this issue, because both the Property Trust and CCM were required to comply with that Regulation in exercising the Tolling Right. The fact that a "toll operator" was defined in that Regulation as a person to whom the RTA had leased land is a factor that may be taken into account in construing the suite of agreements, as opposed to interpreting the statute. 149The Chief Commissioner submitted that, in order to collect tolls, it is necessary to have access to the relevant tollway, and that without such access there would be no means to enforce the right to collect the tolls. The Chief Commissioner submitted that this strongly suggests that the Tolling Right is not separate and severable from the other rights associated with the Land Lease. The Chief Commissioner also emphasised the provisions of cl 10.1(a) of the Land Lease that regulate assignments by the Property Trust. The Property Trust was prohibited from assigning or otherwise dealing with "its interest in" the Land Lease. Particular emphasis was placed upon the last paragraph of cl 10.1(a), which is repeated here for convenience: For the purposes of clause 31 of the Project Deed, it will be reasonable for the Lessor to require, as a condition of its consent to an assignment (other than by way of security) of this Lease, that the assignee enters into a deed with the Lessor on terms reasonably acceptable to the Lessor under which the assignee covenants from the date of the assignment in favour of the Lessor to comply with and be bound by all of the covenants, obligations and liabilities of the Lessee under this Lease and whether or not such covenants, obligations or liabilities run with the Land. 150The Chief Commissioner submitted that cl 10.1(a) of the Land Lease suggests that the parties intended that only the whole of the Lessee's (that is, the Property Trust's) interest in the Land Lease could be assigned, and not part of it, such as the Tolling Right. In support of this contention, emphasis was also placed upon the use of the word "interest" rather than "interests" being capable of being assigned. The same emphasis was placed upon the use of the expression "an assignment" of the Lease. Similarly, it was noted that the assignee is required to covenant that it will be bound by "all" of the covenants, not any particular part. 151The Chief Commissioner also referred to the termination provisions in the Agreement to Lease and the Land Lease. Clause 12 of the Agreement to Lease, extracted earlier, refers to "all interests derived under" the Agreement to Lease being "determined". Clause 2.6(a) of the Land Lease, extracted earlier, provided that "all estates and interests derived or dependent upon" the Land Lease were determined. The Chief Commissioner submitted that these provisions support the conclusion that the Tolling Right was not a separate and severable right from the remainder of the Land Lease when, by virtue of cl 12.2 of the Agreement to Lease, any event that leads to the determination of the Project Deed would result in the determination of the Tolling Right. Similarly, it was submitted that any termination under cl 25 of the Project Deed would result in the termination of the Tolling Right. It was submitted that these provisions suggest that the Tolling Right is inherently part of the bundle of rights conferred by the Agreement to Lease and the Land Lease, and that an attempt to characterise the Tolling Right as separate and severable from the other rights associated with the Land Lease seeks to view it in isolation, devoid of its contractual context. 152The Chief Commissioner also submitted that the plaintiffs have failed to address the fact that the Tolling Right had been dealt with by the Property Trust as part of the Sublease and that it had not been treated as a severable and separate right. It was submitted that the Sublease contains an on-grant of the Tolling Right "co-extensive with" the Land Lease. Reliance was placed on cl 1.3(a) of the Sublease, pursuant to which, for a licence fee of $10 per annum, the Property Trust granted the Tolling Right to CCM "during the Term". 153Under the Project Deed, the Property Trust was granted the "right to establish the business" and the "ongoing right to undertake the Project" (cl 14.1). The "Project" included the Property Trust's "ownership, operation, maintenance and repair of the Tunnel" and "the levying, collection [and] keeping of tolls" (cl 1.1). The Property Trust was also allowed to engage in "Non-toll Business" (including the installation and operation of telecommunications infrastructure) with the prior written approval of the RTA (cl 17.3). 154It was thus envisaged that the Property Trust might operate more than one business using the Land and the Tunnel. However, the "business" of the levying, collection and keeping of tolls (the exercise of the Tolling Right) had at its core the use of the Tunnel. The Property Trust and CCM could only levy tolls on the traffic passing through the Tunnel. The Tunnel was a pivotal part of the "business". The Tunnel and the Land were also a pivotal part of any Non-toll Business; for instance, the installation of mobile phone towers. 155The purpose of the Property Trust's entitlement to encumber the "rights" referred to in cl 17.1 of the Project Deed and clause 1.8 of the Land Lease and the Property Trust's consent to the grant of a "security interest" over CCM's rights in respect of the licence of the Tolling Right, was to secure the Project Debt. This was for the purpose of financing the Project as a whole. 156The permission in cl 31.1 in relation to the assignment of the "interests" in the Tunnel and the Project Documents required the Property Trust and/or CCM to go through a process of obtaining the RTA's prior written consent to the assignment of such interests. The entitlement in cl 17.1 of the Project Deed and cl 1.8 of the Land Lease to "encumber" the Tolling Right is in contrast to the broader entitlement to sell, transfer, assign, mortgage, charge or otherwise dispose of, deal with or encumber the respective interests referred to in cl 31.1 of the Project Deed. I am of the view that the more limited consents in relation to encumbering the Tolling Right were for the purpose of allowing the financier of the Project to have all of the rights and property under the Project Deed, the Land Lease, the Company Lease and the Sublease as security for financing the Project. These entitlements did not permit the Property Trust to separately assign the Tolling Right, nor its "assumption" by a third party. 157Although it has been recognised that some individual rights can be separately assigned (for instance, perhaps the royalty payments in the sub-licence between Sara Lee and Underworks in Pacific Brands Sport & Leisure Pty Limited v Underworks Pty Limited), the Tolling Right is part of and integral to the operation of the tollway. The tollway could not "operate" without it. To use the language adopted by Finn and Sunberg JJ in Pacific Brands Sport & Leisure Pty Limited v Underworks Pty Limited at 407 [40], to attempt to separate the Tolling Right from the operation of the tollway is to disassociate it from the body of the contract from which it has its connection and from which it draws its vitality. The Tolling Right and the lease of the Tunnel (the operation of the tollway) are inseparable parts of a composite whole. The fragmentation of the rights under the Project Deed, the Land Lease and the Sublease for which the plaintiff contends is not consistent with the structure of the suite of Deeds and Agreements for the operation of the tollway. 158I am satisfied that the Tolling Right is not an item of property separate from the Land Lease. 159That finding renders much of the balance of the plaintiffs' cases unnecessary for decision. However, the plaintiffs requested that I deal with the other aspects of their cases. Accordingly, I will consider the majority of the other issues. Question 2: Is the Tolling Right an interest in land? 160I will deal with this question on the basis that the Tolling Right is separate property. The plaintiff submitted that the Tolling Right is not an interest in land. The Chief Commissioner submitted that it is an interest in land. 161For the purposes of the land rich provisions of the Duties Act, a "land holding" is defined as "an interest in land other than the estate or interest of a mortgagee, chargee or other secured creditor or a profit a prendre": s 163C(1). The Dictionary to the Duties Act includes the following definitions: "interest" includes an estate or proprietary right. "land" includes a stratum. 162Section 21(1) of the Interpretation Act 1987 (NSW) provides relevantly: estate includes interest, charge, right, title, claim, demand, lien, and encumbrance, whether at law or in equity. ... land includes messuages tenements and hereditaments, corporeal and incorporeal, of any tenure or description, and whatever may be the estate or interest therein. 163In Re Lehrer and the Real Property Act 1900-1956 [1960] NSWR 570 at 575 Jacobs J said that such a meaning (as is now found in the definition of "land" in the Interpretation Act 1987) should be assigned to the word "land" in any statute unless the contrary intention appears in the statute. His Honour also observed that the definition of "land" is "wide" and said at 575: The word includes freehold and leasehold, corporeal and incorporeal interests of every description. The estate in fee simple at law or at equity, the other estates of freehold, whether in possession or remainder, the lease hold, whatever be the term, are all included. Undoubtedly the lease or conveyance of an upper chamber could come within the definition. But there would also come within the definition every interest which in law is, or savours of, realty. Probably the easement, and certainly a profit à prendre, and the rent charge, are "land" within the definition of s 21(e). 164The Chief Commissioner submitted that it is appropriate to have regard to the following definitions in the Dictionary to the Roads Act: interest in land means an estate, interest, right or power, at law or in equity, in or over or in connection with the land. land includes any estate or interest in land. 165The Chief Commissioner submitted that, having regard to these definitions, the Tolling Right is an interest in land because it is one or other of an "interest", "right" or "power" and it "is in or over or in connection with the land". The Chief Commissioner submitted that the same reasoning applies with even more force in relation to the Duties Act. The definition of "interest" in the Duties Act includes "estate" or "proprietary right". "Estate" includes a right. It was argued that the Tolling Right is an "estate" within the wide definition and it is in relation to the land being the Tunnel. However, the definition in the Duties Act is an interest "in" land not "in relation to" land. 166The plaintiff submitted that for the purposes of the Duties Act, the definition of "interest in land" does not extend to a right or power "in connection with the land" as defined in the Roads Act. In support of this submission, the plaintiff relied upon Evershed J's reference in Newcastle-Under-Lyme Corporation v Wolstanton Ltd [1947] Ch 92 at 103 to the "general rule that no greater rights or interests should be treated as conferred on the undertakers [of the statutory right] than are necessary for the fulfilment of the object of the statute". 167In Commissioner of Main Roads v North Shore Gas Co. Limited (1967) 120 CLR 118 the respondent had claimed an entitlement to compensation for the value of mains and pipes underlying the streets that had been resumed by the appellant for the construction of an expressway. The High Court identified the only relevant question as whether "the mains and pipes, or the space occupied by them, constituted an interest in land": per Barwick CJ, McTiernan, Kitto and Taylor JJ at 125. Their Honours referred to the earlier decision of the High Court in North Shore Gas Co Ltd v Commissioner of Stamp Duties (1940) 63 CLR 52 in which the Court considered whether the gas mains and service pipes embedded in the soil of public roads were "goods, wares or merchandise" within the meaning of the relevant exemption provisions in the Stamp Duties Act 1920 (NSW). 168Their Honours doubted whether Dixon J's conclusion that the mains and pipes constituted an interest in land was either necessary or correct (at 126-127) and rejected the contention that the respondent had an interest in the land in which the mains and pipes were embedded (at 128). In reaching their conclusion their Honours cited with approval Evershed J's abovementioned reference to the "general rule" in Newcastle-Under-Lyme Corporation v Wolstanton Ltd (at 127). 169The object of the land rich provisions of the Duties Act is to identify the land holdings of the landholder at the time an interest is acquired in a landholder for the purposes of determining if duty is to be charged on the acquisition. 170The plaintiff contrasted the definition in the Duties Act with the extended definition in s 167(1) of the Duties Act 2001 (Qld) which defines "land-holdings" as including rights held by the entity that "(i) relate to, or affect, the use of the entity's land; and (ii) enhance the value of the entity's land". The plaintiff also emphasised that, for the purposes of the Duties Act, a statutory licence or permission under Commonwealth or State law constitutes a "business asset", and therefore "dutiable property", (ss 11(1)(g) and 11(1)(h)). The plaintiff submitted the definition of "land holding" in the Duties Act does not extend to such statutory licences or permits. It was submitted that this specific treatment of statutory licences and permits for other purposes indicates that there was no intention to include such rights within the concept of a "land holding". 171The plaintiff submitted that the Chief Commissioner's reliance on the definition in the Roads Act is misplaced. It accepted that in its own case and in its opening written submissions it had contended that the Tolling Right was an "interest in land" within the Roads Act definition (paragraph [157]). However, the plaintiff submitted that it is impermissible to impose or use the definition of "interest in land" in the Roads Act for the purposes of s 163C(1) of the Duties Act. 172The definition of "land holding" as "an interest in land" is wide, but subject to some express exclusions. Excluded from the definition are the "estate or interest of a mortgagee, chargee or other secured creditor or a profit à prendre". The definition is also qualified in circumstances where the land holding is held by a unit trust scheme, so that it is only an "interest in land" if it is held by the trustees in their capacity as trustees of the scheme. The definition of "interest" is also broad, defined "to include an estate or proprietary right". The exclusory character of the s 163C definition of "interest in land" and the use of the word "includes" in the definition of "interest" supports the conclusion that the definition of "interest" is not exhaustive. 173The definition in the Duties Act is of a "land holding". There is no definition of "land holding" in the Roads Act. The subject matter that is defined in each statute is an "interest in land". The objects and purposes of each statute are different. The object of the Roads Act as it is relevant to the subject matter is to identify an interest in land for the purpose of compensation for compulsory acquisition. This is to be contrasted with the object of the Duties Act, being to identify the relevant interest for the purpose of the imposition of duty. 174If the definition in the Roads Act were to apply to the Duties Act, a land holding would not be confined to an interest in land as ordinarily understood. It would be extended to an interest over land or in connection with land. As Mason J said in Yager v The Queen (1977) 139 CLR 28 at 43, there is "no legitimate foundation for resorting to the definitions contained in [one Act] for the purpose of modifying or qualifying another definition contained in a different Act of Parliament", especially one with a different object. 175The Tolling Right was a right to impose a levy on motorists driving through the Tunnel. Albeit that such a right might reasonably be described as a right in connection with land, it is not reasonably described as an interest "in" land within the meaning of the definition of "land holding" in the Duties Act. 176I am of the view that, if the Tolling Right were separate property, it would not be an interest in land within s 163C of the Duties Act. Question 3: Is the Property Trust's title to the Tolling Right qualified by the Sublease? 177It is unnecessary to decide this question, the answer to which is relevant to the valuation issues with which I have dealt below. However, I will refer to the competing positions for which the parties contended. The plaintiff submitted that if the Tolling Right is not a land holding, then the sub-licence is merely a contractual right of CCM against the Property Trust. It was submitted that such a contractual right does not qualify the Property Trust's title to the Tolling Right for the purpose of valuing the Tolling Right in the hands of the Property Trust. 178The plaintiff submitted that a related reason why the sub-licence in cl 1.3(a) of the Sublease does not qualify the Property Trust's title to the Tolling Right is that, at the time of the PT Transfer on 27 September 2007, CCM was insolvent and accordingly would have been unable to obtain an order for specific performance of the Agreement to Sublease or of the Sublease, in which the sub-licence was contained. At the time of the PT Transfer, the Sublease had not been executed or registered. It was submitted that had CCM been able to obtain an order for specific performance of the Agreement to Sublease, the argument might arise that the Agreement to Sublease was an equitable lease under the rule in Walsh v Lonsdale (1882) 21 Ch D 9, which qualified the Property Trust's title to the Tolling Right. However, it was submitted that such an argument would fail at the first hurdle. To constitute an equitable lease to CCM under the rule in Walsh v Lonsdale, it would be necessary to show that CCM would have been able to obtain an order for specific performance of the Agreement to Sublease at the date of the Transfer. It was submitted that CCM's insolvency meant that it was unable to meet the rental payments under the Sublease. Historically, CCM had only been able to meet rental payments by drawing down on the Intercompany Loan. 179Specific performance is a discretionary remedy and CCM would need to satisfy the Court that it was an appropriate remedy to enforce the rights under the Agreement to Sublease and the Sublease. It was submitted that CCM's insolvency would have been a good defence to the application for such a decree. The plaintiff submitted that insolvency subsisting at the time specific performance is sought disentitles a plaintiff to the remedy absolutely: Jennings' Trustee v King [1952] Ch 899 at 909; Mehmet v Benson (1965) 113 CLR 295 at 308 per Barwick CJ (with whom McTiernan J agreed). 180The Chief Commissioner submitted that the Property Trust granted a contractual Tolling Right to CCM coextensive with the original right. It was submitted that in those circumstances the contractual right of CCM must qualify the Property Trust's title to the Tolling Right. It was submitted that an implicit aspect of the plaintiff's valuation case is that the Property Trust can grant the contractual Tolling Right in 2002 to CCM and can again grant the Tolling Right for full value to the hypothetical purchaser. The Chief Commissioner submitted that, if this is correct, there would be nothing to prevent the Property Trust from granting the Tolling Right numerous times to successive parties. The Chief Commissioner submitted that the plaintiff's case has not explained how the second grant to the hypothetical purchaser could be effective. 181The Chief Commissioner submitted that the hypothetical purchaser would have to contemplate acquiring the Tolling Right from the Property Trust on the footing that there was an existing coextensive grant of the Tolling Right to CCM of which CCM would be in possession and exploiting. The hypothetical purchaser would have to devise some strategy to be able to collect either the same toll (to the exclusion of CCM) or some further toll. It was submitted that this is a practical absurdity. It was also submitted that the plaintiff's case does not explain how the hypothetical purchaser could exercise the Tolling Right at the same time as CCM. 182It was also submitted that the plaintiff's case fails to grapple with why CCM would take no steps if the Property Trust sought to grant the Tolling Right a second time. Presumably, as it was put, CCM would have a damages claim against the Property Trust if the second grant to the hypothetical purchaser was effective. It was also submitted that the plaintiff's case does not explain why the hypothetical purchaser would provide valuable consideration for the Tolling Right if the Property Trust were in a position to grant the Tolling Right again to a subsequent hypothetical purchaser. 183The plaintiff submitted that the Chief Commissioner's reasoning rests on the proposition that the Property Trust assigned or "on-granted" the Tolling Right to CCM. The plaintiff submitted that if the defendant were correct, the Property Trust would no longer retain the Tolling Right for valuation purposes. It was submitted that such a proposition is incorrect and that there is a clear and important distinction between an exclusive licence and an assignment. The latter involves an intention immediately to transfer outright the relevant right or property from the assignor to the assignee. By contrast, an exclusive licence is the conferral of permission to do a thing which, absent a licence, would be unlawful, coupled with a contract not to give such permission to anyone else to do the same thing: Heap v Hartley (1889) 42 Ch D 461 at 470; Federal Commissioner of Taxation v United Aircraft Corp (1943) 68 CLR 525 at 533. 184The parties agreed that the term of the Sublease would be one day shorter than the term of the Land Lease: cl 6.4(a) of the Agreement to Sublease. The use of the term "licence" in clause 1.3(a) the Sublease reflects the deliberate choice to license the Tolling Right rather than to assign it. The plaintiff submitted that it is well established that a mere licence is personal and does not convey or transfer any property or proprietary interest in the subject matter to which it relates: Heap v Hartley (1889) 42 Ch D 461; RP RP Meagher, JD Heydon, MJ Leeming, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (4th ed, 2002 Butterworths LexisNexis), pp 759-760 [21-240]. An exclusive licence confers no interest or property in the thing the subject of the licence: Heap v Hartley per Fry LJ at 470. The licence is liable to be revoked, even wrongfully, with the rights of the licensee limited to a claim for damages for wrongful termination: Cowell v Rosehill Racecourse Co Ltd [1937] HCA 17; (1937) 56 CLR 605. 185The plaintiff submitted that it is not relevant to ask whether CCM would or could in fact have sought injunctive relief, or damages, against the Property Trust if it were to deal with the Tolling Right inconsistently with what it referred to as the sub-licence. It was submitted that the statutory valuation exercise does not involve asking whether the actual vendor holds property subject to personal obligations that restrict its ability to deal with the property. The fact that CCM would have rights against the actual vendor of the Tolling Rights (the Property Trust) is not relevant to the valuation of the property held by the Property Trust for the purposes of s 163B of the Duties Act. 186If the Tolling Right were separate property and the sub-licence is a bare permission, not coupled with the grant of a lease of land, the Property Trust's title is unaffected. However, the licence of the Tolling Right was coupled with the lease of the land under the Land Lease. CCM was also the lessee of the Company Land. The Sublease included the provisions of the Land Lease, and the licence to exercise the Tolling Right. Accordingly CCM was authorised to operate a tollway. 187If the Tolling Right were an item of property, separate from the Land Lease, the hypothetical purchaser would have to take into account the existence of CCM's rights under the Sublease. 188It is now appropriate to consider the Loan Issue before turning to the expert valuation evidence generally and, specifically, to the valuation of the Land Lease, the Tolling Right and the Intercompany Loan. Loan Issue 189There are valuation issues in respect of the Intercompany Loan. However, there are also some preliminary issues for decision prior to the consideration of the valuation issues. The plaintiff contended that the Intercompany Loan was an asset of the Property Trust at the time of the transfer of the units in the Trust in 2007 and should be taken into account in the valuation of the property of the Property Trust at the time of the acquisition. 190The Chief Commissioner contends that the Intercompany Loan should not be taken into account in the valuation process because it is excluded from such consideration by s 163B(2) of the Duties Act. It would be excluded from consideration if it were repayable on demand or within 12 months after the date of the loan: s 163B(2)(c). It would also be excluded if CCM were a person "associated" to the Property Trust (s 163B(2)(d)). 191There was an issue as to whether the loans were made under Facility B as provided for in the Intercompany Loan Agreement. The Chief Commissioner submitted that the appropriate mechanisms under the Intercompany Loan Agreement were not utilised each time a loan was purportedly made to CCM. It was submitted that in those circumstances the loans were ad hoc rather than being made under the Facility B provisions of the Intercompany Loan Agreement. Repayable on Demand/Facility B 192The plaintiff contends that none of the advances that constitute the Intercompany Loan are repayable within twelve months of when they were made; nor were any advances repayable on demand. The Chief Commissioner submitted that, having regard to the classification of the Intercompany Loan as a current asset and current liability respectively in the accounts of the Property Trust and CCM for the periods ending 31 December 2006 and 27 September 2007, both the lender and the borrower expected the Loan to be repaid within 12 months of the reporting date. 193The plaintiff submitted that there is no substance to this contention. It submitted that the Intercompany Loan was recorded as a current asset, in accordance with the relevant accounting standards, because the relevant entities were in receivership at the time. It was also submitted that the extension of the Termination Date of the Intercompany Loan Agreement on 27 September 2007 confirmed that the lender and borrower did not expect repayment within the next 12 months. 194The plaintiff relied on the affidavit evidence of Kenneth Ivan Dawson affirmed on 31 August 2010; Ewan McLean affirmed on 19 October 2012; 11 March 2013 and 9 April 2013; and John Bastian sworn on 21 February 2013. The evidence of Mr Dawson and Mr McLean explained that the entries in CCM's financial statements recorded the Intercompany Loan as a "current liability" because at the time CCM had been placed into receivership. Mr Dawson gave evidence that he understood from his accountancy training that, when an entity is in receivership or liquidation, there is doubt, from an accounting perspective, as to whether the entity will continue as a going concern. In those circumstances he understood it was appropriate to mark liabilities as current, even if those liabilities were due in more than 12 months' time. In this regard, he referred to Accounting Standard AASB 101. Mr Dawson gave evidence that by 30 June 2008, the balance date for the 2008 Financial Report, the loan was listed as a "non-current liability" because CCM was no longer in receivership. Mr McLean and Mr Bastian gave similar evidence. 195The Chief Commissioner sought to establish in cross-examination that the loans between the Property Trust and CCM were "ad hoc". This was resisted by Mr McLean in particular who gave evidence that the loans between the Property Trust and CCM were all paid under Facility B, notwithstanding that they were at times by "book entry" only. The structure of the Intercompany Loan Agreement was such that the payments to be made from CCMF to the Property Trust were then on-loaned to CCM (tr 142-148). 196The Chief Commissioner relied upon cl 3(a) of the Intercompany Loan Agreement, which provides as follows: Subject to this Agreement if a Borrower requests an advance under a Facility, the relevant Lender will make available that advance on the Drawdown Date to the account as specified in the request, which must be a Construction Account or the D&C Escrow Account before the Switch Date and must be an Operating Account after the Switch Date (each as defined in the Senior Loan Note Subscription Agreement). 197CCM did not make any particular "requests" as referred to in cl 3(a). There were no particular formal structures in place in respect of "Drawdown Dates"; rather, the plaintiff submitted that the ostensible intention of cl 3(a) was to comply with the prescriptive requirements as to the movement of funds between bank accounts. Clause 3(a) sets out a procedure to be followed where advances are to be made by movement between the designated bank accounts, but does not preclude the parties adopting a different approach where the advance is to be made in a different way. 198It appears to me that the loan arrangements between the Property Trust and CCM took place in accordance with usual intercompany practices and the advances and transfers were listed in the Intercompany Loan account records. 199It must be remembered that this is an intra-group dealing and although CCM and the Property Trust did not go through the "form and ceremony of handing money backwards and forwards", it seems to me that they complied with the spirit of the agreement regarding the way in which the funds were to be on-loaned to CCM to meet its obligations to the Property Trust: In re Harmony and Montague Tin and Copper Mining Company; Spargo's Case (1873) LR 8 Ch App 407 at 412 and 414; Commissioner for Stamp Duties v Perpetual Trustee Co Ltd (1929) 43 CLR 247 at 263 per Knox CJ and Dixon J. 200I am satisfied that each of the loans set out in the Loan Account Statement were loans from the Property Trust to CCM under Facility B of the Intercompany Loan Agreement. 201The extension of the Termination Date of the Intercompany Loan Agreement was effective. I am not satisfied that these loans were repayable within 12 months. Associated Person 202The Dictionary to the Duties Act provides that private companies are "associated persons" if common shareholders have a majority interest in each private company. A private company and a trustee are associated persons if a related body corporate of the company is a beneficiary of the relevant trust. The plaintiff accepts that, prior to 27 September 2007, the Intercompany Loan was a loan to a person associated with CCMN2 (the Trustee of the Property Trust), because CCMH held the shares in each of CCMN2 and CCM. However, the plaintiff contended that, prior to the transfer in September 2007, all the shares in CCM had been transferred to CCM Motorway Company Nominees Pty Ltd by the CCM transfer and that, at that time, CCM and CCMN2 had no common shareholders. It was also submitted that no beneficiary of the Property Trust was a related body corporate of CCM at the time of the PT Transfer. Accordingly, it was submitted that the Intercompany Loan is not excluded by s 163B(2)(d). 203The Chief Commissioner submitted that there was a relevant association within the Property Trust because CCMN2 and CCM had a common parent, CCMH. It was submitted that there were several difficulties with the plaintiff's contention. First, the sequencing of transfers on the day of completion ought not, as a matter of proper interpretation, defeat the exclusion in s 163B(2)(d). It was submitted that as a matter of statutory interpretation, the Court should give effect to the anti-avoidance purpose of that section. Secondly, the land rich provisions of the Duties Act are essentially a self-assessment scheme and the Property Trust was land rich up to the morning of 27 September 2007. While the plaintiff contends that this provision should be interpreted so as to treat the Property Trust as no longer land rich by reason of the sequencing of the execution of the documents on the day of completion, the Chief Commissioner contended that an interpretation of the provision that focuses on a moment in time should be rejected, as it would defeat the purpose of the provision. In response, the plaintiff submitted that there was at the relevant time no general duty avoidance provision in the Duties Act. The specific avoidance provision with which the statute was concerned, in relation to excluded property, is set out in s 163B(3), which applies where the property in question was obtained to reduce the land rich ratio of a landholder. It was submitted that the sequencing of transactions is not caught by this provision and no broader avoidance provision ought to be read into the Duties Act. 204The "sequencing" to which the parties referred was the plaintiff's contention that the transfer of the shares in CCM took place just before the transfer of the units in the Property Trust, both taking place on 27 September 2007. 205The Chief Commissioner also contended that the execution of the Share Transfer does not effect a change of shareholder, and that the change of a shareholder only occurs when the Transfer is registered. It was submitted that this is a standard principle of company law and follows from statutory provisions related to companies in the Corporations Act 2001 (Cth). For instance, s 1072F(1) of the Corporations Act provides that a person transferring shares "remains the holder of the shares until the transfer is registered and the name of the person to whom they are being transferred is entered in the register of members in respect of the shares". 206It is not in issue that the Share Transfer was not registered in 2007. Indeed it was not registered until April 2013, during the trial. 207The Chief Commissioner further submitted that the plaintiff is unable to prove that the directors of CCM approved the registration of the transfer of the shares on 27 September 2007. The Minutes of the meeting of directors of CCM on 28 September 2007 record the following resolution (Tab 189 of Exhibit PD10): That subject to the payment of stamp duty on the transfer, the transfer of 3,686,547 fully paid shares from CrossCity Motorway Holdings Pty Limited (Subject to Deed of Company Arrangement) (Receiver and Manager Appointed) to CCT Motorway Company Nominees Pty Limited in its capacity as trustee of the CCT Motorway Company Trust is approved for registration in the company's register of members. 208The Share Transfer Form was dated 27 September 2007. It included the following (Tab 526 of Exhibit PD18): The transferor as registered holder transfers to the transferee the securities registered in the transferor's name in the register of the corporation, subject to the conditions on which the transferor holds the securities. The transferee accepts the securities on the conditions on which the transferor held them. If transfer is signed under a power of attorney, the attorney states that the attorney has not received any notice of the revocation of the power of attorney under which this transfer is signed. The transferee states that upon registration of this transfer the transferee will hold the securities non-beneficially. 209The Share Certificate, which is undated, includes the following (Ex PD10/526): This is to certify that CCT Motorway Company Nominees Pty Limited ACN 127 591 235 of Level 22, 88 Phillip Street, Sydney NSW is the registered holder of the shares in the company shown above, subject to the constitution of the company. 210The letter from CCM to the Chief Commissioner on 18 September 2009 enclosed a copy of the Share Transfer and a copy of the Share Certificate. That letter advised the Chief Commissioner that CCM's shareholding "will decrease" and that the "decrease is subject to stamping and registration in the Company's share register of the Transfer". That letter also included advice that the share register had not been updated because the Transfer had not been stamped. Reference was made to the Share Certificate being "issued on or after 27 September 2007". It included advice that "subject to stamping and registration of the transfer in the Company's share register, the shareholding of CCT Motorway Company Nominees Pty Limited would increase from nil to 3,686,547 by reason of the Transfer". That letter also explained that the ASIC records contained an error, in that they recorded that the shares were held "beneficially" when they were not. The letter included the following: Strictly, CCT [CCT Motorway Company Nominees Pty Limited] does not 'hold' any shares in CCM 'since the Transfer has not yet been registered'. 211The Escrow Agreement relevantly provided that CCM would "ensure that the directors" of CCM register the transfer of shares in CCM "as a result of the change in trustee" in its statutory books, subject to the relevant stamp duty being paid and that they would issue the relevant Share Certificates to Nominees Trustee (CCT Motorway Company Nominees Pty Ltd) (cl 11(c)). 212Prior to the CCM Transfer, CCMH, the sole shareholder of CCM, had settled the shares in CCM on itself as trustee for the CCT Motorway Company Trust. CCM's share register as at 27 September 2007 records that CCMH held the shares non-beneficially as trustee of the CCT Motorway Company Trust from that date. A document executed prior to the CCM Transfer entitled "Confirmation", confirmed that this was the capacity in which the shares were held. By the Deed of Resignation and Appointment, CCMH retired as trustee of the CCT Motorway Company Trust and the unitholders in the CCT Motorway Company Trust appointed CCT Motorway Company Nominees Pty Ltd as the new trustee. Clause 4 of the Retirement Deed provided that CCMH had to: (a) as soon as practicable deliver to CCT Motorway Company Nominees Pty Ltd all assets of the CCT Motorway Company Trust and documents of title relating to the assets; and (b) immediately upon request, execute any transfer and do any thing necessary to allow CCT Motorway Company Nominees Pty Ltd to gain title to the assets and fulfil the obligations of the trustee. Immediately after the Retirement Deed was executed, the CCM Transfer was executed. 213The plaintiff contended that CCT Motorway Company Nominees Pty Ltd had the right to be entered onto the CCM share register on and from the time when the CCM Transfer was executed on 27 September 2007. 214In Federal Commissioner of Taxation v Patcorp Investments Limited (1976) 140 CLR 247 Mason J heard appeals from the disallowance of objections by taxpayers which involved a consideration of whether the shareholders were correctly entered on the respective shareholder registers on the date the dividends were declared. His Honour said at 272: The requirement in s. 151 [of the Companies Act 1961 (NSW)] that there should be entered in the register "(b) the date at which the name of each person was entered in the register as a member" in my view refers, not to the date on which the entry was physically made, but to the date on which he should have been entered in the register as a member, that is, in the case of a subscriber to the memorandum, the date on which he subscribed and, in the case of a transferee, the date on which the directors approved the transfer, or resolved that it be registered. It is the duty of the officers of a company to give effect promptly to the company's obligation to enter the names of its members in the register. The statutory provision is to be read accordingly as authorizing, indeed requiring, the entry in the register of the date when the directors approved, or directed the registration of, the transfer to the transferee. 215On appeal from Mason J, the issue before the Court was whether the taxpayer was a shareholder as at the date a particular dividend was paid. It was held that the taxpayer was a shareholder on that date because the taxpayer subsequently became registered and the registration took effect from the date the directors approved the registration of the share transfer. Gibbs J said at 296: If a person ought to have been on the register on a certain day and he is subsequently registered as from that day, speaking generally I consider that it should be held that he was a shareholder on that day. The registration, assuming it to be a proper registration, operates retrospectively from the date on which it was effected to the date at which the name of the shareholder was entered in the register. 216In the same case, Jacobs J addressed the question of whether the meaning of "shareholder" in the Income Tax Assessment Act 1936 (Cth) was confined to a person whose name appears on the register of members and said at 303: In my opinion it is not. It also includes a person who is entitled as against the company to be registered and whom the company is absolutely entitled to register as a member of the company. If a company is at the relevant date absolutely entitled to register the person concerned and he is absolutely entitled to have the register rectified so that his name appears thereon as a shareholder at that date, such a person has more than a beneficial interest in the shares enforceable primarily against the vendor. He is in a direct relationship with the company involving reciprocal rights and duties between them. 217In Rivkin Financial Services Ltd v Sofcom Ltd (2004) 51 ACSR 486 Emmett J said at 519 [129]: If a person ought to have been on the register on a certain day and he is subsequently registered as from that day, that person should be held to be a shareholder on that day. Registration operates retrospectively from the date on which it was effected to the date at which the name of the shareholder was entered in the register. 218The Chief Commissioner submitted that the plaintiff had misled itself on this issue by failing to realise the significance of the need for the directors to have approved registration. In this regard emphasis was placed on the following passage of Jacobs J's judgment in Federal Commissioner of Taxation v Patcorp Investments Ltd at 303-304: In the present case once the directors of each company had approved the respective transfers and directed registration the transferee was absolutely entitled to have its name entered on the respective registers. It was not only beneficially entitled to the shares as property with consequent rights against the vendor in whose name the shares stood. It was entitled vis-à-vis the companies to be treated as a shareholder and to be registered as such and was therefore a "shareholder" within the meaning of the Income Tax Assessment Act. 219The Chief Commissioner also referred to CCM's Constitution, which provided an "absolute discretion" to the directors to refuse to register the Share Transfer. The directors could also decline to give their reasons for such refusal. It was submitted that these provisions support the proposition that the transferee was not entitled to be entered on the CCM Register until after the directors approved the registration of the transfer on 28 September 2007. Reliance was also placed upon the following passage of Hope JA's judgment in Kingston v Keprose Pty Limited (1987) 11 NSWLR 404 at 411-2: Whatever the articles provide and whatever in the case of particular companies may be the strict position about the passing of the legal title to shares, it is in my opinion clear that a transferee does not become a shareholder until his name is on the register, the date of registration being deemed to be the date on which the directors approved registration of the transfer. 220The Chief Commissioner submitted that there is no basis to conclude that the entitlement to be treated as a "shareholder" could have occurred prior to the directors' approval on 28 September 2007. Accordingly, the two companies CCM and CCMN2 were still associated persons until that time. 221The real issue is whether the date from which CCT Motorway Company Nominees Pty Limited was entitled to be registered or "ought to have been on the register" was the date that the Share Transfer Form was executed (27 September 2007) or the date on which the directors of CCM approved the transfer to CCT Motorway Company Nominees Pty Limited for registration (28 September 2007). The approach adopted by Gibbs J is that the entitlement dates from when it was "effected". Jacobs J defined that date as when the directors of each of the relevant companies in that case had approved the transfers and directed registration. 222Applying the approach adopted by Jacobs J in Federal Commissioner of Taxation v Patcorp Investments Limited, CCT Motorway Company Nominees Pty Limited "ought to have been on the register" on the date of approval of the transfer, being 28 September 2007. 223The two companies were still "associated persons" as at 27 September 2007. Accordingly, the Intercompany Loan is excluded from the valuation process. However, having regard to the request made by the plaintiffs, I will deal with the Intercompany Loan as part of the Valuation Issues below. Valuation Issues 224Having regard to the findings thus far that the Tolling Right is not a separate item of property and that the Intercompany Loan is not to be counted in the process of valuing the unencumbered property of the Property Trust, the outcome is that the plaintiffs' claim that the Property Trust was not land rich at the time of the valuation date must fail. However, having regard to the requests made that I consider all issues, I will now proceed to consider the valuation issues. 225The Chief Commissioner relied upon Mr Lonergan's report of 10 August 2011 in which he made the assessments the subject of these proceedings. The Chief Commissioner also relied on this report in these proceedings. No issue was raised in respect of the Chief Commissioner's previous reliance on the report, as Mr Lonergan had been asked to comply with the Expert Code of Conduct in anticipation of litigation. 226The plaintiff relied on Mr Potter's report dated 31 August 2012 in which he reviewed Mr Lonergan's report of 10 August 2011 and provided his opinion in respect of the unencumbered value of the Property Trust's "land holdings" and the unencumbered value of all the property of the Property Trust as at 27 September 2007. Mr Potter provided his opinion on the basis of two scenarios: Scenario 1, in which the only land holding of the Property Trust was the Land Lease (including the Tolling Right) on the premise that the hypothetical purchaser of the Lease would be bound by the Sublease; and Scenario 2, in which he provided his opinion as to the unencumbered value of the Lease (not including the Tolling Right), the Tolling Right, and the Intercompany Loan, on the basis of the following assumptions (p 61): (c) In order for a person to levy, collect and/or keep tolls over the CrossCity Tunnel, it is necessary for that person to either: (1) be the holder of the Tolling Right; or (2) reach an agreement with the holder of the Tolling Right. (d) The hypothetical purchaser of the Lease would be bound by the Sublease. (e) The hypothetical purchaser of the Tolling Right is not bound by the sub-license of the Tolling Right between the Property Trust and the Company [CCM] under the Sub-Lease. 227Mr Lonergan provided a further report dated 22 September 2012 responding to Mr Potter's report. 228The experts held a meeting on 13 November 2012 and conducted further discussions by telephone and correspondence. They produced a Joint Report dated 20 December 2012 (JR). 229The guiding principles for the valuation of the Property Trust's assets are those identified in Spencer v Commonwealth (1907) 5 CLR 418 (referred to by the parties as "the Spencer test") in which Griffith CJ said at 432: In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell would actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?" It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together. 230In that same case, Isaacs J said at 440-441: All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike disregarded. ... [A]nd the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. ... To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially ... 231The experts have provided their opinions on this basis describing the value as the price that will be paid by a hypothetical willing, but not anxious, purchaser to a hypothetical willing, but not anxious, vendor after proper negotiations between them have been concluded: Commissioner of State Taxation v Nischu Pty Ltd (1991) 4 WAR 437 at 443; Abrahams v Federal Commissioner of Taxation (1944) 70 CLR 23 at 29. 232The following matters are not in dispute. The hypothetical vendor and the hypothetical purchaser are assumed to be fully cognisant of all the circumstances that might affect the value of the asset, either advantageously or prejudicially: Spencer v Commonwealth at 441 per Isaacs J. This will include the predicted impact of future events, as well as the experience of the past: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259 at 276 [51], citing McHugh J in Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 at [49]-[50]. 233Both experts referred to the hypothetical purchaser's contemplation and/or expectation that the arrangements under the Sublease and the Intercompany Loan would be restructured. It is to be assumed that any restructure would take place after the sale, as any assumption of a restructure that is prior to the sale would change the nature of the subject assets for valuation. The assumption in this regard is that the post-acquisition negotiations in respect of any restructure would be reasonable and commercially rational. 234In performing a valuation for the purposes of the Duties Act it is permissible to take into account legitimate taxation considerations that would affect the decision of hypothetical vendors and purchasers. I agree with the plaintiff's submission that tax, and its implications, is an "ordinary business consideration" to which the parties in such a transaction would have regard: Spencer v The Commonwealth at 441 per Isaacs J. 235Notwithstanding their consensus as to these principles, the experts differed in the way they approached their valuations. Mr Potter was instructed to proceed on the basis that there was a single hypothetical owner of both the Land Lease and the Intercompany Loan selling to one or more hypothetical purchasers. Mr Lonergan considered that each asset was to be valued "as if" owned by a separate hypothetical vendor. He expressed the opinion that the correct application of the principles in Spencer "should not rest on the premise of a single hypothetical vendor of the subject assets" as Mr Potter had been instructed to assume, "nor of a single hypothetical purchaser of each of, or all of the subject assets" (JR 1). In this regard, the plaintiff submitted that the structure of the hypothetical sale will depend on the circumstances of each particular case and that "the notion of a single hypothetical purchaser for the whole property being valued is not in all cases an essential ingredient of the valuation process": Nelson v Housing Commission of New South Wales (1962) 8 LGRA 408 at 411 per Hardie J. 236Although Mr Potter proceeded on the basis (in Scenario 2) that there would be a single purchaser of both the Land Lease and the Intercompany Loan, it is not necessary to analyse this matter further because of the conclusions I have reached. Mr Lonergan's valuation 237Mr Lonergan valued the Land Lease on a discounted cash flow basis (DCF), cross-checked with a residual approach, as being in the range from $623 million to $697 million, with a market value of $660 million [288]. 238In valuing the Intercompany Loan, Mr Lonergan noted that CCM was unable to meet the rent obligations under the Sublease without access to the Intercompany Loan and that it had no other source of income. He expressed the view that CCM was effectively in default at the valuation date. Taking this default into account, and on the basis that the value of CCM's assets were assumed to be equal to their book value, the market value of its assets was $8 million ($7.7 million rounded). On a valuation on the basis of future cash flows that the assets could generate, Mr Lonergan assessed the market value of the Intercompany Loan at $11 million [300]. 239Mr Lonergan was not asked to value the Tolling Right as a separate item of property. However he expressed the opinion that: the Tolling Right would have "no material value" in its own right; that it was not a "separate financial instrument"; and that it was "in economic substance, an administrative licence of nominal value or negative net value" [240]. He concluded that the Tolling Right was not an asset of "any (other than nominal) value" [241]. Mr Lonergan accepted in cross-examination that if the Court found that the Tolling Right was a separate item of property, it would be a separate financial instrument (tr 288-289). 240Mr Lonergan expressed the opinion that, if the hypothetical purchaser of the Land Lease was bound by the Sublease and the Tolling Right had been sub-licensed to the Company for a nominal fee of $10, then the Tolling Right was only the reversionary right at the end of the Tunnel life and would thus have no value [106(a)]. If the hypothetical purchaser of the Tolling Right was not bound by the Sublease, Mr Lonergan considered that the Tolling Right should be part of the Land Lease and could not be sold separately from it. However, Mr Lonergan once again accepted in cross-examination that this latter reason would fall away if the Court found that the Tolling Right was not part of the Land Lease and could be separately sold (tr 283). 241Mr Lonergan referred to a number of options available to the hypothetical purchaser of the Land Lease [169]. He expressed the opinion that the "most likely" decision of the hypothetical purchaser of the Land Lease would be to keep the structure in place for the collection of tolls and allow CCM to keep a management fee with all remaining net cash flows under the Tunnel operations being accrued by the hypothetical purchaser as rental income [169(c)]. He expressed the following opinion [172]: In addition to the options set out in paragraph 169 above, there may be options to split the net cash flows from the Tunnel operations into payments for rents and payments for the Intercompany Loan interests in various non-commercial and non-arm's length ways in order to minimise tax and maximum overall financial outcomes. However the values of the assets of the Trust and the Company determined on this basis would not reflect their market values. 242Mr Lonergan contemplated that any arrangements allowing the structure to remain in place and/or restructuring the arrangements had to be considered on an arm's length basis, because to assume otherwise would be to determine a "special value" rather than the "market value" of the individual assets [173]. Mr Potter's valuation 243Mr Potter valued the assets of the Property Trust on the assumption that there would be a post-acquisition restructure that involved: (1) the Intercompany Loan remaining in place and being repaid during the Term; (2) an equity investment of $33 million in CCM to "provide a measure of solvency and stability" to the operation of the Tunnel; and (3) a determination that the only rent payable by CCM under the Sublease would be "equal to the residual cash" after repayment of (a) the Intercompany Loan and (b) the rate of return (between 8.39% and 8.81%) required by "the investor" in CCM [6.55; 6.64; 6.65]. Although Mr Potter's report implied that the "investor" would most likely be some third party, he conceded in cross-examination that it would be the hypothetical purchaser of the Land Lease and/or the Loan that would inject the equity (tr 237). 244Mr Potter valued the Land Lease alone, without a separate Tolling Right and without the Intercompany Loan, at $643 million (being the midpoint between $619.92 million and $666.17 million). 245Mr Potter expressed the view that, if the Tolling Right is an item of property separate from the Land Lease, "a commercially rational or reasonable value would be 50%" of the above figure attributed to each of the Land Lease and the Tolling Right. This opinion was reached on the basis that Mr Potter was unable to identify a reason for preferring one asset over the other, assuming them to be sold jointly, and that, assuming sales to different purchasers, the bargaining position of each purchaser with respect to CCM's cash flows would be equal [7.8]. 246Mr Potter valued the Land Lease and the Intercompany Loan (on the basis of a 10% equity injection) at $398.56 million and $298.63 million respectively (at a discount rate of 8.39%) and $365.05 million and $298.63 million respectively (at a discount rate of 8.81%) [Attachment 1]. This approach retained the Intercompany Loan at face value with, purportedly, a market rate of interest. 247Mr Potter produced what was described as the "Axiom Model" in an Excel file (Exhibits 4 to 6, 9 and 10). It was utilised to demonstrate and compare the values of the Land Lease and the Intercompany Loan in what Mr Potter claimed was his "maximising approach". It is based on the various premises adopted in Mr Potter's proposed restructure. The Model included the discount rate for the Intercompany Loan and the interest rates. It is not necessary to include detailed references to the Model, having regard to the conclusions I have reached. However, I should record that the Chief Commissioner submitted that the Model did not compare like with like when using the vertical comparison. It was submitted that a diagonal comparison should be used and, if used, Mr Potter's maximising approach does not work. The Land Lease 248There is no issue between Mr Lonergan and Mr Potter in respect of the valuation of the Land Lease, if it is to be valued alone. Mr Potter's values were higher than $660 million. However, in the circumstances Mr Lonergan's valuation of $660 million will be adopted. Intercompany Loan 249The experts were diametrically opposed in respect of the value of the Intercompany Loan. Although Mr Lonergan valued the Intercompany Loan at $11 million [300] he referred to it in his oral evidence as a "junk bond" with a nominal or nil value (tr 299-300; 302; 303; 375). Mr Potter attributed a face value of $298 million to the loan. The Chief Commissioner submitted that Mr Potter did not engage in a valuation process, but simply fixed the amount outstanding on the loan at the valuation date as the value of the Intercompany Loan. Evidentiary Issue 250I should deal at the outset with the plaintiff's submission that Mr Lonergan's opinion was rendered inadmissible, or should be given no, or little, weight, because: (a) he changed his position throughout his cross-examination; and (b) he made concessions that justify such an outcome. 251The plaintiff submitted that Mr Lonergan changed his position particularly in relation to the manner in which the Intercompany Loan was to be dealt with or valued. A portion of the Joint Report headed "Interest Rate Applied to the Intercompany Loan" included a statement by Mr Lonergan that Mr Potter's range of market interest rates (8.16% to 8.60%) was "too high" with a reference to "the rapidly increasing interest rate environment" in the period between the valuation date and 30 June 2008 (JR 13b). Mr Lonergan was asked in cross-examination whether this was a reference to the 2008 "credit crisis". His answer included the following (tr 299): The answer is longer than that. There are two loans. One is the loan that would hypothetically be used as part of the funding mechanism to acquire the head lease on a standalone basis. Mr Potter made the proposition that the market rate of interest for that was something in the sort of mid high 8 percent range. That's the debt that you would fund the whole acquisition with, and that rate is a little bit too high and that means that he undervalues the head lease. In the context of the Intercompany Loan, that's an entirely different creature. It's a junk bond. It is a loan to an insolvent company making massive losses, it is unsecured and it's just a junk bond, that's what it is. And the rate of interest on that, I mean there is no rate of interest that would solve that problem, nothing would be high enough to deal with it. 252Mr Lonergan was pressed further on this topic. He was asked whether it was a fair reading of the Joint Report that he accepted that Mr Potter's interest rate of between 8.39% and 8.81% as the rate for the Intercompany Loan was an appropriate rate to use to determine its market value on the assumption that the debtor was creditworthy. Mr Lonergan gave the following evidence (tr 302): No, that is not a fair reading at all, Mr Richmond. I have repeatedly taken you to the whole introduction to this section and the before and after tax issue which you seem to just gloss over. The second thing I emphasise is I have at all times said the loan is of nominal value. It cannot conceivably be a reasonable interpretation of all this discussion and all that I have said about the loan that somehow this junk bond loan, which I have emphatically said has nominal value, is now quite okay if it pays a rate of interest of 8 percent before tax. That just cannot possibly be put together as a logical interpretation. The only proper interpretation is this whole section, there was an attempt, which was not successful at the time, as you can see from the drafting of it, to clarify what Mr Potter meant in his joint statement where he denies that it is before tax when he is talking about interest and what he meant in his report where there is no clarity either. That's what the context of all this is and your interpretation is, I am sorry, with great respect, unfair and incorrect. 253In further clarification of how his observations on this topic in the Joint Report should be read, Mr Lonergan said (tr 303): It has sort of implications for a discussion we actually haven't had so far and that is the whole question of discounting is a question of risk and interest rates. They are two different things. And all of the discussion, really no criticism of anybody, to date has been about interest rates, but in fact there is a risk element and the way you price risk starts off with the going rate of interest and when you price equity the rate of interest is a function, well, the risk on equity is a function of the going interest rates. And Mr Potter says market rates of interest are the numbers that are in his report. I've said both here and to him that rate's too high. It's only a bit too high, but it's too high and that has implications for the whole of his discounting calculation. Put rather simply, because he hasn't properly allowed for risk he has undervalued the head lease, that is what it comes to and -- 254Mr Lonergan went on to say that the test of market value was not just what non-arm's length parties might do. Rather it was what anybody would do at the same point in time. He said (tr 304): If it happens to be the case there is one purchaser and one vendor of both assets, that still doesn't mean that the market value can be arbitraged on non arms length terms to create a fiction. 255Mr Potter suggested in his report that Mr Lonergan was silent as to whether the Intercompany Loan should be "written off" [6.30.2]. Mr Lonergan's response in his second report was that the Intercompany Loan should be "substantially economically written off" but should not be assumed to be "legally written off" [85]. Mr Potter expressed the view in his report that if the Intercompany Loan is "forgiven", the future income tax benefit of the depreciable plant and equipment asset ($151 million) in CCM would be lost [4.42-4.43; 6.52]. Mr Lonergan's response in his second report was that it would be possible to enter into some form of "forbearance arrangements" to protect the tax deductibility in CCM [85]. 256The plaintiff submitted that in his first report, Mr Lonergan implied that the Intercompany Loan would be written off when the Land Lease was acquired. However, that submission must be understood in light of the distinction Mr Lonergan drew in his second report between the Loan being "economically" as opposed "legally" written off. In cross-examination Mr Lonergan gave the following evidence in relation to the Intercompany Loan being written off (tr 324): Q. You say that the holder of the loan gets a tax benefit being the benefit of the write-off? A. Yes Q. The tax deduction? A. Yes. Q. But we have established that is not a tax benefit that we can take into account in valuing the asset that has been dealt with here, the head lease, because you have to assume in Spencer in your view that the hypothetical vendor of the head lease is a different entity from the hypothetical vendor of the loan? A. Yes. Q. Right. Now, you accept on a proper analysis of the Spencer test that it is appropriate to take into account those three matters we were talking about that would occur after the valuation date, being reduction of the rent under the lease, a new management fee arrangement and some negotiation, be it most likely a write-off of the intercompany loan, and they are all matters which one would expect to occur after the valuation date, but nevertheless the hypothetical vendor of the head lease and the hypothetical purchaser of the head lease could take those matters into account in the hypothetical transaction that you have regard to under Spencer? A. I think there would only be two of the. In fact, yes, there would be only be two. The loan is not part of the deal in the scenario we are looking at. So, yes, in due course you would have to come to a more sensible rent deal and, yes, you would have to agree the management fee and what was to be done under it. Q. Let's go back to the loan again. I thought you agreed with me the loan has to be dealt with? A. You just write it off. Just a straight journal entry. It's gone. You don't have to negotiate, you don't have to do anything, it's gone. And it's not a matter for the owner of the head lease anyway, it's a matter for the trust. So you don't have to worry about it as per the head lease. The vendor of the head lease might think about it. 257A point being made by Mr Lonergan in this last answer was that the Loan was between the Property Trust and CCM, and so the hypothetical purchaser of the Land Lease could not be regarded as a party to it. His evidence continued (tr 324-325): Q. Wouldn't the directors of the company want to know they are no longer obliged, it is no longer the case that their company is obliged to pay 298 million. A. They would want to know, but they don't have any power. They are insolvent. There is nothing they can do. Q. Well, you say that they are insolvent, but nevertheless they are coming out, in this scenario C they are coming out of insolvency? A. Well, they will come out by virtue of the arrangement that you put together, which, put simply, is to leave the structure basically in place. What you do with the loan is just tax optimisation. Q. Just tax optimising, is it? A. Yes. Q. So Part IV A is not relevant? A. No. Part IV A is hugely relevant, but writing it off is not a Part IV A problem. Q. It is clear, is it not, that the company in order to continue under option C that is, as you indicated earlier, would need to have something done about the loan to ensure that the company was not obliged to repay the loan in the future and a mere write-off of that loan in the books of the Property Trust would not be sufficient, would it? A. Well, they'd probably want more than that. Q. Yes, they would? A. That's an issue of there's a letter saying, Look, we've written the loan off. It's not difficult. It's not. 258In later cross-examination Mr Lonergan gave the following evidence in relation to a forbearance arrangement (tr 342): Q. And in response to my questions as to what happens to the Inter-entity Loan which is still owed by the company, you are saying that you would have most likely have that loan remaining with the Property Trust, is that right? A. Yes. In my scenario you leave everything. The most likely outcome of the negotiations is you would leave everything in place, because it benefits everyone. Q. Okay. But you then have as part of your restructure negotiation after the sale and the hypothetical transaction of the head lease, a negotiation between the company and the owner of a loan, which is the Property Trust, and the purchaser of the head lease, under which some arrangement is entered into for that loan to be either written off or forborne, is that right? A. Under my scenario it is forborne, but written off seems to be entirely possible. ... Q. I am now talking about the holder of the loan, that is under your scenario, it is the Property Trust that still holds the loan? A. Yes. Q. It doesn't get a management fee, does it? A. No, it doesn't get a management fee. Nobody gets a management fee, unless they agree with the purchaser of the head lease that the best way forward is either to leave everything in place, or if you want to write the loan off, that's up to the trust and the company. But in my scenario, I didn't go down that track. I put a forbearance arrangement in, which is what I think would happen. That avoids your consultancy under your legal agreements. 259Shortly after this cross-examination, Mr Lonergan was provided with a document created by the plaintiffs' representatives, which was intended to illustrate how the tax shelter of $151 million passes through to the holder of the Land Lease (tr 347). That document referred to two scenarios in which there was a restructure with the Loan (Scenario A) and a restructure without the Loan (Scenario B) (Exhibit C). In further cross-examination Mr Lonergan gave evidence that the hypothetical purchaser would not have a taxable income on the tolling revenues that came back to it as rent for a number of years because it would have deductions for depreciation itself (tr 355). He also gave the following further evidence in cross-examination (tr 356-357): Q. Yes, alright, you have indicated that the acquisition of the head lease gives to the acquirer of the head lease depreciation deductions which you say are in the order of 500 million? A. Yes. Q. Which I will accept for the moment. That comes about not from any write off of the loan or any acquisition of the loan, that comes about because the acquirer of the head lease acquires the head lease together with the assets that are associated with it, is that right? A. Yes, that's correct. Q. It does not follow from that, that the hypothetical purchaser of the head lease would acquire a loan and consequently shall write off deduction for the writing off of that loan, does it? A. No, but the trust who owns it gets the benefit. Q. We are not talking about the trust, we are talking here about the purchaser of the head lease. Is that not right? Have I missed something? A. No, no, that is correct. You are talking about the purchaser. But the reason that the purchaser of the head lease will be able to do a management deal, management fee deal on a, you know, forbearance type arrangement, is you can optimise all this. What you have done is moved away from that scenario, and put simply, changed the outcome of the deal. ... Q. But I thought you indicated this morning the way in which that matter, in fact you indicated to me about five minutes ago that the way that would be dealt with is that the Property Trust would accept that the debt is written off so that in fact there's no debt owing. You said that to me in not less than five minutes ago? A. I think that's a practical outcome that would emerge. Q. We're trying to deal here with practical outcomes. A. The practical outcome is the deal would be done because there's benefits in it for everyone. Q. The management fee doesn't benefit the person writing off the debt? A. We've had that discussion. Q. It doesn't, does it? A. Lets take it in nice easy bits. The company gets a management fee of $17 million. Q. $17 million, do you mean 2%? A. 2% the present value because its spread over 25 odd years is a relatively low sum. It gets whatever the number is let's say its $20 million. Its now got $20 million in the bank and it owes 300 to the trust. The trust says thank you very much, I'd like $20 million back on my loan. They now write off the balance of the loan which is 280. They're still much better off. It has a tax loss of $280 whereas if the depreciation benefit had been obtained the benefit ultimately would be 151, still much better off. They get that as a side benefit. That's why they agreed to the proposal that I believe a willing but not anxious purchaser would put to them. ... Q. So are you saying that the net present value of the management fee is paid over by the company to the owner of the head lease as part of this write off? A. I think that's what would happen in a practical level. Firstly there's a common ownership of the trust and the company so which pocket its in doesn't really matter all that much, but under the strict independent vendor scenario or independent entity scenario you'll still come to the same outcome. Q. Whilst you've allowed for the company to retain the management fee of 1 to 2%, in fact it gives that away to the Property Trust in consideration for a release of the debt, is that right? A. Not a release of the debt, a partial repayment. Q. A partial repayment on terms that the debt is then written off? A. That would be the natural thing that would then follow. The debt would then be written off. Q. So the company doesn't in fact benefit, does it, from the management fee because it's given away? A. It doesn't give it away. It discharges part of its obligations. 260A further "scenario" was suggested to Mr Lonergan in cross-examination and he gave the following evidence (tr 363): Q I suggest to you Mr Lonergan that another scenario which is as realistic as yours, is that the hypothetical purchaser of the head lease would also want to acquire the loan so it could ensure that the transaction that you're describing, the write off of the debt, actually occurs or alternatively that another transaction of the sort I showed you in the first column scenario A occurs which involves the tax shelter of $151 million being taken advantage of? A. I don't think it's necessary to acquire the loan, but if that's your proposition you'd acquire the loan and I presume you'd acquire a loan for its fair market value which is $1. Q. Do you not accept that the hypothetical purchaser of a loan also requires a head lease would take into account in deciding upon an appropriate price to pay for those two assets at least two matters. The first is that it de-risks the matter if he acquires both the lease and the loan. Do you agree with that? A. No, I don't think it quite works like that. A willing but not anxious purchaser- ... Q. Isn't the reason why the person who acquires the head lease would also want to acquire, of one of the reason why the person who acquired the head lease would also wish to acquire the loan is that it de-risks the acquisition of the head lease because it takes out of play any risk in relation to the loan? A. No, I wouldn't put it like that. I don't think you needed the scenario after all Mr Richmond if you leave everything in place. Practically at some stage you would do a deal about the loan. Ultimately as I've said before you will get rid of it but the preliminary arrangement I think would be a forbearance. Sooner or later you will get rid of it. In fact to be crassly commercial about it, what you would do is leave the structure in place, benefit the $151 million of depreciation in the company for the vendors. At that stage the loan is down to, loosely put, $150 million odd. Then you'd write it off and totally optimise your tax structure. That's probably what you would do. Q. You'd think that's probably what would happen? A. After you bought the thing you'd probably sit down and sort out a deal that optimised for everyone and make it even better that I've simply put to you about getting the extra benefit of the write off. That's what you'd do. 261Mr Lonergan was cross-examined further as follows (tr 366): Q. I think we're working backwards here. I'd rather work forwards. I'm trying to ascertain what you think would occur in the real world. Let's then work out what prices are paid for things. Is it correct that you think a likely, it may not be what actually happens but it's likely or a possibility, is that the owner of the head lease would want to acquire the loan so that it could take advantage to the extent of $151 million of the tax shelter in the company through repayments up to $150 million at principal? A. It can't. A purchaser of the loan can't obtain the $151 million. The loan is worth $1, so there's no tax deduction or tax benefit for the purchaser of the loan. You have to leave the loan in place. You can leave the whole structure in place. That's the most likely outcome. In due course when you've eaten up the $151 million of depreciation allowances in the company, there's probably no point in keeping the loan in place so then you don't have to go through constant 18 month rolling forbearance arrangements. Once you've eaten up the 151 the trust would write off the balance of the loan because there's nothing to repay it out of. They'll get another $150 million deduction as a side benefit on top of the management fee that it gets for looking after this arrangement and leaving it there. That's why they'd agreed to it. They agreed for it just for the money for the management fee but the side benefit is very significant. That's why it's a very likely outcome. 262Mr Lonergan said that leaving the loan between the Property Trust and CCM in place was of "no benefit" to the hypothetical purchaser. He gave evidence that it would be the Property Trust which would have the benefit of the receipt of payment of principal in the amount of $151 million and that it would then write off the balance of the loan. CCM would receive the 2% management fee, or the Property Trust might "get it back", which it could do because of the inter-entity relationship (tr 367). Mr Lonergan also gave this evidence in further cross-examination (tr 367): Q. So what you're contemplating in your answers to her Honour is that option (c) could involve the loan remaining on foot at the time that the head lease is sold to the hypothetical purchaser, is that right? A. Yes. Q. And over time the company repays the debt which is still owed to the Property Trust to the tune of $151 million thereby giving to the Property Trust the benefit of a tax shelter in the company to the tune of $151 million, is that right? A. Yes. Q. And then after that time which is some time in the future, some many years in the future, on these figures of $10 million a year it could be 15 years hence, the loan is then written off in some way? A. Yes. 263Mr Lonergan also gave the following evidence, on which the plaintiff places particular emphasis (tr 373-375): Q. Now, in response to a question I think it was from her Honour, you indicated that you thought in your preferred option (c) that it was likely that to take advantage of a tax shelter in a company which we have agreed is about $150 million, the holder of the loan, which is the Property Trust, would retain the loan and receive repayments of principal over time up to the figure of $150 million. Is that right? A. Yes. Q. And then the suggestion I think you made was that there then would be a discussion which would occur whereby the balance of the debt would be written off or forgiven or some other similar arrangement to reflect the fact that it served no more utility commercially in the structure? A. Yeah, some years down the track. Q. Some years down the track. Now, I think the misunderstanding on my part has come about because I had thought, in valuing the head lease in your first report, you had taken, made an assumption that the revenues from tolling derived by the company would be passed back to the owner of the head lease and there would be no other claim on those monies because the loan would no longer be in place? A. Well, the easiest way to explain the thing, Mr Richmond, is my model shows that the money goes straight through to the owner of the head lease. That's the same as the document you just took me too. ... Q. So what I am now exploring is how a change in approach, which I think has occurred under which part of the revenue from the tolling does not go to the owner of the head lease, but rather goes to the holder of the loan, being in this scenario the Property Trust, how that affects your valuation in your report which was on a different basis, being that all the revenue, without any deduction, payments on the loan, would go to the purchaser of the head lease? A. The simplest way to answer that, Mr Richmond is this: the head lease value does not reflect any of that benefit at all. It doesn't. Q. But it does reflect, does it not, an assumption that all of the revenue, without deduction of the $150 million will go to the person who acquires the head lease? A. All the revenue from the tunnel goes to the person who gets the head lease, that's the basis of the valuation, net of costs, obviously. Q. So your valuation in your first report does not take into account the possibility of $150 million of revenue from the tolling operations, would not go to the person who holds the head lease, but would go to somebody else? A. It's a straight look-through basis with no leakage. That's what it is. Q. The answer to my question is "yes"? A. Yes, it is, other than the management fee issue, which is not serious money. 264The plaintiff submitted that the positions variously adopted by Mr Lonergan in his evidence in cross-examination were that the Intercompany Loan would be (economically) written off; that it would be forborne; that it would be written off so that in fact no debt would be owing; and that it would remain in place until $151 million was repaid and the balance would then be written off some years later. It was submitted that Mr Lonergan's change of position renders his opinion unreliable and it should thus be rejected. 265The plaintiff submitted that Mr Lonergan's valuation of the Land Lease and the Intercompany Loan in his first report cannot stand, having regard to what were referred to as "concessions" made in his cross-examination extracted above (particularly at tr 373-375). It was submitted that, having regard to the requirements of s 79 of the Evidence Act and the principles in Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705 at 743-744 [85] per Heydon JA and Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588 at 604 [37] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ, Mr Lonergan's evidence as to valuation is not properly admissible. Alternatively, his opinion should be excluded under s 135 of the Evidence Act due to its low probative value or, "at the very least", little or no weight should be given to his opinions. 266It is clear that in his valuation in his first report Mr Lonergan did not accommodate a purchase of the Intercompany Loan by the hypothetical purchaser of the Land Lease. His evidence was that the Intercompany Loan had a nil or nominal value, albeit that it was valued in his first report at $11 million. An important aspect of Mr Lonergan's evidence in cross-examination upon which the plaintiff relied was that the "crass commercial reality" for the hypothetical purchaser of the Land Lease would be that it would sit down with the relevant parties, being the Property Trust and CCM, post-acquisition, to "sort out a deal" (tr 363). Mr Lonergan expressed the opinion that the "preliminary arrangement" would be one of forbearance (tr 363). He expressed the view that the structure could remain in place and the $151 million of depreciation would go through to the Property Trust as the lender, if the loan were to be kept in place. However, it must be understood that Mr Lonergan was dealing with the two scenarios that were put to him by the cross-examiner. These were not matters relevant to what Mr Lonergan stated was his preferred position. His preferred position was that the loan be written off or forborne for a period. The reason Mr Lonergan did not bring the tax deductibility benefit to the Property Trust in either of his reports was because his preference was to write the loan off or to have a forbearance arrangement. 267I am not satisfied that Mr Lonergan's evidence in cross-examination either renders his opinion inadmissible or justifies a conclusion that it should be given little or no weight. I intend to take Mr Lonergan's evidence into account in considering the valuation issues. The preferred valuation of the Intercompany Loan 268Mr Lonergan expressed the view that the expected future cash flows in respect of the Land Lease should be discounted to their present values using an appropriate discount rate that reflects the risk and timing of those cash flows [195]. In analysing the risk characteristics of toll road projects in general and of the Tunnel in particular, Mr Lonergan concluded that the Tunnel project had a low level of systematic risk because toll road revenues are generally insensitive to changes in macroeconomic factors. Mr Lonergan also reached the conclusion that there was a low level of project-specific risk because: the construction of the Tunnel had been completed; it had been open to the public for over two years; and the tolls were allowed to escalate at the inflation rate or higher, meaning they were "inflation hedged" [199]. 269Taking into account the low level of risk as at the valuation date, Mr Lonergan expressed the view that a margin of around 1.25% to 2% over the 10-year Commonwealth Government bond yield of 6.17% as at 27 September 2007 was appropriate. He expressed the view that this risk premium range implied an asset beta in the range of 0.20 to 0.30, in turn reflecting the very low level of systematic risk and low level of project specific risk. Mr Lonergan said that this range of implied beta was broadly consistent with the low historical beta of similar projects; for example, the Transurban Group [201]-[202]. In those circumstances Mr Lonergan concluded that the range of risk premium resulted in a discount rate in the range of 7.42% to 8.17%. 270Mr Lonergan then considered the significant transaction costs that were incurred by the Consortium in its bid, but noted that some of those costs were "sunk costs" that the Consortium would have expected to incur irrespective of the success of the bid. Mr Lonergan took account of the transaction costs that would be incurred only if the bid were successful. He said that the allowance for transaction costs could be made either in the cash flows or covered by increasing the discount rate. In taking the latter course Mr Lonergan concluded that an appropriate discount rate was in the range of 7.54% to 8.30%. Mr Lonergan then observed that a discount rate of 7.29% had been applied by ABN AMRO in setting the bid price of $695.1 million. This resulted in a marginally lower discount rate than Mr Lonergan had initially calculated. He then carried out a "cross-check calculation" and concluded that it was appropriate to apply a discount rate in the range of 7.29% to 8.30%. 271Mr Potter claimed that Mr Lonergan's discount rate was a "cost of equity rather than a weighted average cost of capital (WACC)". He explained that the asset beta is a measure of relative risk that excludes the effect of debt. He agreed with Mr Lonergan's approach of using an asset beta to calculate the cost of equity on the basis that it was consistent with an unencumbered asset basis of valuation. However, he disagreed with the range Mr Lonergan adopted. He concluded that, having regard to his analysis of the "comparable companies" he had identified that had asset betas in the range of 0.44 to 0.90, Mr Lonergan's range was "understated" [5.8-5.13]. Mr Potter expressed the opinion that the minimum asset beta that should be applied in calculating the discount rate is that which was implied in the discount rate adopted in the Bid model, being an asset beta of 0.37. Accordingly he applied an asset beta in the range of 0.37 to 0.44 on the basis that a hypothetical purchaser may assume a greater asset beta than 0.37. He also expressed the opinion that this would be considered "conservative" [5.14]. 272The experts disagreed in relation to the interest rate that should be applied to the Intercompany Loan in the valuation process. 273In deciding on the applicable interest rate, Mr Potter referred to what he regarded as "comparable companies", for instance, the ConnectEast Group. Its Annual Report recorded that the loans that were in place were fully secured with pledged assets that gave a loan to security ratio of 54.9%. In cross-examination, Mr Potter accepted that the Intercompany Loan was unsecured and that the debtor was an insolvent company (tr 230-231). He gave the following evidence in cross-examination (tr 232-233): Q. Mr Potter, what I want to suggest to you is that the rates of interest which you used as comparison derived from ConnectEast and Transurban are wholly inappropriate for this reason, those are rates of interest for the entity borrowing from external sources which are providing high degree of security by way of security over the relevant assets and it is fundamentally different to the position that the CCM company was in where it could not provide security because the only asset it had was the sublease, apart from some computer equipment? A. I disagree. I think effectively what I am saying is that a purchaser of the two assets, one being the loan, one being the head lease, being asked to look at the acquisition by the same vendor would consider a restructure along the lines I have postulated, that the intercompany loan would in effect become a project type debt, that first tier of debt that I mentioned, and there could be security for that repayment of that debt. Q. So that you say there could be, if there wasn't security it would be fundamentally different to Transurban and ConnectEast, wouldn't it? A. You would expect so but I don't know how different because I haven't got a, an unsecured rate, I don't know what that would be. Q. You just don't know and you made no enquiry about it, did you? A. Well, there is the only, I did undertake quite a broad search for comparable companies for toll roads and this is the best information I could find publicly, that was publicly available. Q. Even restructured your way it couldn't provide any real estate security except over this sliver of the lease that it gets for the tolling gantries or security over sublease which was already owned by the head lessor because it had the head lease so it can't provide any effective security anyway, can it? A. Well, it is a restructured, the purchaser would be assuming it is a restructured entity and there would be some security over the sublease, whether that's any better than or any worse than the head lease I don't know. Q. Mr Potter, in your maximisation approach I want to suggest to you your model is incredibly sensitive to the input interest rate that is payable on the loan between the company and the property trust? A. Yes, you're correct. 274The matter of the sensitivity of Mr Potter's opinion to different interest rates (in his Axiom Model) was the subject of further cross-examination as follows (tr 261-263): Q. And one would see that there is not maximising at a 10 per cent interest rate? A. That's correct. Q. Yesterday you agreed that your model was very sensitive to interest rates? A. That's correct. Q. And this is an example of the sensitivity, I suggest to you? A. That's correct. If that interest rate you have asked me to put in is a realistic interest rate, that's correct. ... Q. Mr Potter, in relation to the other five outputs that you produced, first of all for the 8.39 per cent, the interest rate of 10 per cent that we have just looked at, if that is the correct rate, means that your maximising theory would not work, do you agree with that? A. Yes, I do. Q. Therefore that would be the case and more so with 10.5 per cent and 11 per cent? A. Yes, the position gets worse. 275Mr Potter made a number of comparative points about the Tunnel having been completed and the public having used it for some years. However, I am of the view that the interest rate applicable to a series of fully secured loans from external lending parties in the commercial and financial market place to companies in respect of which there was no question of insolvency, is a very different situation from a totally unsecured loan between two related companies, where the debtor company is insolvent. Mr Lonergan expressed the view that "no rate of interest" would be acceptable and "nothing would be high enough to deal with it" (tr 299). It seems to me that any interest rate in these circumstances would be at least 10%. It follows from Mr Potter's concession that the Axiom Model would be compromised in those circumstances because the maximising theory "would not work". That is a factor to be taken into account in assessing whether Mr Potter's valuation is to be preferred. 276There are other aspects to Mr Potter's valuation approach that cause me not to prefer it to Mr Lonergan's valuation approach. I am of the view that there are real problems with the restructure assumptions that Mr Potter has adopted. 277Mr Potter's reasoning as to why a hypothetical purchaser would pay $298 million for the Intercompany Loan is intrinsically linked to his view about the tax benefits that he described as "an enhanced net after-tax cash flow" to the hypothetical purchaser "in the order of $10 million to $20 million" (7.21). The Chief Commissioner questioned the reasonableness of the prospect of a hypothetical purchaser being willing to pay $298 million (that would have to be funded and taxed) to obtain only the enhanced net after-tax cash flow of possibly only $10 million but no more than $20 million. 278In any event, the capacity to obtain the benefit of such an enhanced cash flow (assuming it to be a benefit) relies upon the reasonableness of the hypothetical purchaser's contemplation that a post-acquisition restructure (as constructed by Mr Potter) would occur. Putting aside the parties' differing positions as to the appropriate application of the Spencer test, Mr Potter assumed that the single hypothetical purchaser of the Land Lease and the Intercompany Loan would approach this acquisition with the contemplation that, after the acquisition, three things would occur. There would be an injection by the hypothetical purchaser of $33 million of equity into CCM to enable it to emerge from insolvency. The Sublease would be varied so as to reduce the rental to the residual cash amount after repayment of the loan and the required return on equity. Lastly, all the tolling revenue would be paid to the hypothetical purchaser (then the owner of the Land Lease and the Intercompany Loan), apparently on the basis that priority would be given to the repayment of the loan (and perhaps the return on equity) before the payment of rental. 279In his maximising approach, Mr Potter reduced the value of the Land Lease and increased the value of the Intercompany Loan to its face value ($298 million) so that the purchaser who acquired both would receive a sum greater than its parts (tr 190). Mr Potter's maximizing approach is dependent on there being no risk (or a probability of 1) involved in the restructure process. This is in part based on the proposition that CCM's negotiating position would not be strong, thus giving the hypothetical purchaser the "whip hand" in the contemplated negotiations (tr 222). It would have to procure an agreement that CCM would provide the whole of the tolling revenue to it, giving priority to the payment of principal over rental (to take advantage of the tax benefit). A further assumption is that there would be no risk in achieving agreement as to an appropriate variation in rental under the Sublease. 280Obviously, if the rental were to be reduced, such an agreement may be attractive to CCM per se. However, if the negotiation were to occur at the same time as the negotiation that all tolling revenue be paid to the hypothetical purchaser, the prospect of achieving a rental figure at the level to be suggested by the hypothetical purchaser may have a deal of risk. 281Mr Potter did not describe the terms that would need to be put in place to implement the cash flow priorities in a contract concluded in an arm's-length negotiation. Notwithstanding CCM's weak negotiating position vis-à-vis the hypothetical purchaser, I agree with the Chief Commissioner's submissions that Mr Potter failed to give appropriate weight to the fact that the hypothetical purchaser would not be in control of CCM. The Chief Commissioner also submitted that Mr Potter had moved away from that part of the principles in Spencer that he correctly identified in his report (3.34) that "the seller is hypothetical, the buyer is hypothetical and the transaction is hypothetical". The Chief Commissioner submitted that in this regard, it is important that the hypothetical vendor is not identified with the owner at the valuation date: Commonwealth v Arklay (1952) 87 CLR 159. 282The Chief Commissioner submitted that Mr Potter did not value the Intercompany Loan in its condition as at the valuation date but had rather "altered" its condition. The relevant condition of the Intercompany Loan at the time of the acquisition was a debt that CCM had no prospect of repaying. CCM was insolvent, and could only pay the rental under the Sublease by virtue of its access to the Intercompany Loan funds. Although it is appropriate to look at and assess any "future advantages or potentialities" of the Intercompany Loan, they must be assessed according to the condition of the Intercompany Loan as it stood at the date of the acquisition: Turner v Minister of Public Instruction (1956) 95 CLR 245 at 268-269 per Dixon CJ. In Mr Potter's analysis, the future advantages or potentialities of the Intercompany Loan were dependent upon the injection of equity and the achievement of a successful negotiation with CCM in respect of both the priority of the repayment of the loan over the payment of rental and of the variation of the terms of the Sublease. This is different from the situation of the land that was being valued in Turner v Minister of Public Instruction, which had the potential for subdivision. The "potential" or "advantage" of the Intercompany Loan was dependent upon agreement being reached in potentially quite complex post-acquisition negotiations about the terms of the Sublease and the priority to be given to the payment of debt over rental. 283It appears that what is being proposed in these hypothetical post-acquisition restructure discussions with the directors of CCM is that, notwithstanding that there will be an injection of $33 million by the "investor", there will be no entitlement to keep any of the tolling revenue. It is also apparent that the directors will have to agree to give priority to the repayment of the debt ($298 million) over the payment of rental and that the return to the investor will also have to be considered in the order of priorities. The directors of CCM may (for various reasons, including tax effectiveness) prefer a different structure or a different priority for the Company's payments. The directors may also demand an entitlement to retain a percentage of the tolling revenue for the company for the provision of its services as the toll collector. I do not regard these negotiations as being without risk. Notwithstanding the weaker bargaining position of the company, it is quite inappropriate to regard the directors as supine to the whip hand of the hypothetical purchaser. Regard must be had to the presumption that directors will take their duties seriously and seek to do what is best for the company in all the circumstances. There is certainly a deal of risk involved in these negotiations. I am not satisfied that this is a restructure without risk. These risks are real and complex. 284They are even more complex if there were separate hypothetical purchasers of the Land Lease and the Intercompany Loan. That is clear from the following passage of Mr Potter's cross-examination (tr 211): Q. Putting it rather bluntly to you Mr Potter your methodology cannot survive if you had two different purchasers independent, could it? A. It may or it may not, I don't know. Its one of those things where there would be a degree of speculation about, if they were separate purchasers how would those potential purchasers see the risks of negotiating their view of the outcome once, from the cash flows of the tolling revenues once they bought those assets. It could be that the value of the total sale price gets diminished quite a bit below, I don't know how much, I couldn't tell you. Quite a bit below the price that it was actually sold at in the actual transaction that occurred, approximately 700 million because that risk of things going wrong in the negotiation once the assets are being brought (sic) by separate people would have to be factored in and I couldn't tell you what price that would be but I don't think it would be insubstantial. 285In any event, it is not clear that Mr Potter actually valued the loan. He converted the amount of the debt to the "value", notwithstanding that to obtain any advantageous outcome in purchasing the Intercompany Loan, the hypothetical purchaser would have to first inject equity of $33 million into the debtor Company. 286Mr Potter was very candid in his admission that if there were a change to the percentages that he used in his analysis and in his Axiom Model or if there were a greater risk than a probability of 1, his maximising approach would fail. I am satisfied that, both in respect of the interest rate that he applied and his approach to the low risk (or no risk) relating to the restructure negotiations, Mr Potter's model fails. 287I am not satisfied that it is appropriate to attribute a value of $298 million to the Intercompany Loan. I am satisfied that it is appropriate to adopt Mr Lonergan's value of $11 million. 288In practical terms on the various approaches adopted by the experts, the equation for the determination of whether a landholder is land rich is to divide the value of the landholdings (the numerator) by the value of all the property (the denominator). 289If the value of the Land Lease (inclusive of the Tolling Right) is $660 million and the value of the Intercompany Loan is $11 million on Mr Lonergan's approach, the $660 million is divided by $671 million ($660 million plus $11 million) with the result that the Property Trust would be land rich (with its land holdings accounting for 60% or more of all its property) at 98%. 290If the Intercompany Loan were to be given its face value of $298 million on Mr Potter's approach, then the $660 million would be divided by $958 million ($660 million plus $298 million) with the result that the Property Trust would still be land rich at 68%. 291If the Tolling Right is separate property and equal in value to the Land Lease such that the value of each is $330 million, and the Intercompany Loan is valued at $298 million, then the $330 million is divided by $958 million ($330 million plus $330 million plus $298 million) with the result that the Property Trust would not be land rich at 34%. 292If the Tolling Right is separate property and equal in value to the Land Lease such that the value of each is $330 million and the Intercompany Loan is valued at $150 million (the depreciation figure) then the $330 million is divided by $810 million ($330 million plus $330 million plus $150 million) with the result that the Property Trust would not be land rich at 40%. 293If the value of the Land Lease is $398 million (rounded) on Mr Potter's preferred discount rate of 8.39%, and the Intercompany Loan is valued at $298 million, the $398 million is divided by $696 million ($398 million plus $298 million) with the result that the Property Trust would not be land rich at 57%. If the Tolling Right is separate property and attributed equal value to the Land Lease, the percentage is even lower. 294If the value of the Land Lease is reduced to $321 million (50% of Mr Potter's value of $643 million) and the Tolling Right is also valued at $321 million and the Intercompany Loan is maintained at $298 million, the $321 million is divided by $940 million ($321 million plus $321 million plus $298 million) with the result that the Property Trust would not be land rich at 34%. 295Having regard to my earlier findings and the conclusions I have reached on the valuation issues, the Property Trust was land rich at the time of the acquisition. The Tolling Right 296Although I have concluded that the Tolling Right is not a separate item of property and, accordingly, its value does not have to be determined, I should refer to the plaintiff's contentions on this aspect of the matter. 297The plaintiff submitted that, if there are assets that have an interdependent relationship that bears on the value of each asset, it is arbitrary and wrong in principle to assign all the value to one asset and ignore the other, or to characterise one asset as has having no value other than to "enhance" the value of the primary asset. 298In this regard, the plaintiff relied upon the decision of the Queensland Court of Appeal in MIM Holdings Ltd v Commissioner of Stamp Duties [2001] 1 Qd R 294. That case related to whether the land rich provisions of the Stamp Act 1894 (Qld) applied to a transaction in which shares were acquired in a mining company, Ernest Henry Mining Pty Ltd (EHM), that owned a mining lease, ML 2671, over land that was rich in gold and copper. The respondent, MIM Holdings Ltd, acquired shares in EHM on 9 October 1993. On 8 November 1993, the respondent paid a further amount in response to a call, the effect of which was that the shares carried rights to a distribution on a winding up. The Commissioner of Stamp Duties issued a default assessment of $2.89 million on the transaction. The trial judge set aside the assessment. 299On appeal, the question was whether the respondent acquired a majority interest in EHM by reason of the events in October and November 1993. The decisive issue was whether there was an acquisition by reason of the payment of the call in November 1993; and, in particular, whether this was "by virtue of" a variation or alteration of "a right pertaining to a share". The trial judge held that the right to participate in a distribution on a winding up inhered in the shares from their issue and was realised by the payment of the required amount in November 1993, and that this did "not arise 'by virtue of' any variation of any right pertaining to the shares themselves" (at 308 [42]). The Court of Appeal agreed and the appeal was dismissed (McMurdo P at 300 [1], Chesterman J at 311 [53], Derrington J at 303 [15]). 300Although observing that the "further points" that were argued would not determine the outcome of the appeal, Chesterman J said that because they were canvassed fully in argument he would discuss them "briefly" (at 311 [54]). Derrington J referred to these other points as "redundant" but said it was "convenient to refer briefly" to them (at 303 [15]). It is the reasoning in respect of one of these other points upon which the plaintiff relies. 301The land rich provisions of the Stamp Act provided that a corporation was a "land holder" if it was entitled to land in Queensland, the full unencumbered value of which was not less than $1 million and was 80% or more of the full unencumbered value of all property to which it was entitled: s 56FL. The relevant point related to EHM's asset identified as "contractual rights under agreements with the owners of adjacent mining tenements". 302Not all of the minerals within ML 2671 could be extracted by utilising only the land within the lease. By "supplemental deed" with the owners of surrounding country, rights were granted to use the surrounding land to enable the exploitation of the full potential of ML 2671. The trial judge concluded that the contractual rights did not form part of the realty of ML 2671. However, the trial judge also concluded that the contractual rights had no separate value from the mining lease but rather enhanced its value (at 312-313, [61]). 303Chesterman J held that the contractual rights were separate property and had a value independent of ML 2671. His Honour concluded (at 313 [64]) that the contractual rights were not part of ML 2671 and that they were "separate property". After referring to the authorities in respect of the meaning of "property" at 313-314 [65] his Honour said: The rights contained in the supplemental deed fit these concepts. They were bargained and sold as Pollock C.B. [in Potter v Commissioners of Inland Revenue (1854) 10 Ex 147; 156 ER 392] thought important. The rights allow EHM to do things it could not otherwise do with respect to the property of WMC and HR. The rights are of a kind which have been recognised by the authorities as amounting to property. Once it is accepted that the contractual rights are property distinct from the realty it becomes impossible, in my view, to say that they have no value. It is, with respect, question begging to say that they merely "enhance the value" of the mining lease. The mining lease and the contractual rights together have a value. Without the rights the lease is less valuable. A purchaser would not pay for the lease without the rights what it would pay for the lease and the rights. It is not without significance that the rights were acquired from the parties other than the vendor of the shares in EHM which owned the mining lease. That is, EHM might have sold the mining lease but it could not sell the rights. To consider the value of the "project as a whole" is to focus on the wrong issue. Does the project consist of property, other than land, which has a value? That is the enquiry compelled by s 56FL. 304Derrington J observed that, while the bundle of rights to use the neighbouring land to facilitate mining on its own land "may aptly be described as property, and in some respects as separate property", such rights were all ancillary to the use of the land and had no separate value apart from the land (at 303, [16]). His Honour expressed the view that there was "no justification in valuing the land as if the company did not possess the additional rights that enhanced its value, that is, to give it a value less than it actually has" (at 303 [17]) and said at 303 [18]-[20]: With respect, the learned trial judge was right to look at the enhanced value having regard to the way the land could be mined because the respondent had other rights that permitted, for example, a far larger quantity of ore to be extracted from it than was extractable without the rights. Just as it would be artificial to say that those rights were worthless without the land, so too in this exercise it would be artificial to value the land as if the rights did not exist. When the value of the land is to be compared with the company's total assets, there is just no reason in logic or in substance why its enhanced value to the company should not be adopted. It is irrelevant to this process that, if valued separately, the facilitative rights that were valueless without the land were worth a certain figure because they elevated the value of the land by that amount. Their value does not come into the comparison, which is limited to the value of the land and the total value of all assets. For the purpose prescribed, the value of the land is virtually the same as the value of the land and the rights. But that is no reason why its value should be reduced by a deduction of the value of the rights. That value is to be assessed only on the basis that the land in fact enjoys this enhancement of its value. By analogy, if the value of land is dramatically increased by its acquisition of a small but essential easement, it cannot be said that the land has only its original value and that the value of the easement is the difference between the before and after values of the land. If one were to compare the after value of the land with the value of the entirety, they would usually be virtually equal and that would be contrary to the point of the exercise to use the original value that would no longer be valid. 305On the basis that the Tolling Right is a separate item of property from the Land Lease, and that it is not a land holding under the Duties Act, Mr Potter's approach to the valuation is as he described in "Scenario 2". 306The plaintiff submitted that, if the Tolling Right is necessary in order to collect tolls, it follows logically that it is property of significant value. It was submitted that, on the assumption that the Tolling Right must be combined with existing proprietary rights to access and use the land under the Land Lease, the Tolling Right is worth at least as much as the Land Lease. 307Although Mr Lonergan maintained his view that the Tolling Right was of minimal or no value, he gave the following evidence (tr 295-297): Q. Can I put something to you I put to Mr Potter, I suggested to him the real value in this tollway is the toll, isn't it? A. But, I'm sorry your Honour -- Q. Do you agree with that proposition? A. No, it's the right to generate revenue by virtue of providing a facility, the tolls in my view, the mechanistic way in which the money comes from motorists to keep this thing open. Q. But if you can't get it from the motorists, if you are not allowed to extract the toll or impose the toll, then it is not of much value? A. If that was the position in totality forever, everybody loses, it is mutually assured destruction. Q. So the attractiveness of the asset for the purchaser is being able to extract it from the motorists, isn't it? A. But the sort of a, constant practical quid pro quo in my view your Honour, firstly there is the government and the RTA will all do whatever is necessary to keep it open, that's one sort of practical consideration. The other is that the company acting in the best interest of the shareholding and owners would do a deal rather than simply destroy itself to help destroy someone else, or damage somebody else. --- Q. I am really just asking you that someone coming along to buy this would not really be interested if they couldn't have the right to extract the toll, wouldn't that be right? A. It would be like infrastructure, if you can't get money you don't bother buying it but conversely again, as with all infrastructure, there are other competing considerations, not the least of which is the public utility which must be facilitated as a matter of practicality. Q. But the purchaser is not going to look at this as a valuable proposition to even negotiate about unless they can extract the toll, isn't that right? A. Well, I wouldn't see it that way your Honour, I think that a willing but not anxious purchaser would think there will be a practical resolution of this either with the existing company owners, who end up much better off under my scenario than Mr Potter's -- Q. Don't worry about the scenarios. I am just really trying to simplify it for my own mind. If you have a purchaser of an asset that can't earn money because it can't extract a toll they wouldn't be interested in purchasing it. That seems to me to be the proposition that is reasonable? A. I can understand your Honour's perspective on it. As I understand it, the head lease -- Q. Do you agree with that proposition or not? A. If there was no right at all to ever get any money, you wouldn't buy it. I think I would agree with that, your Honour. 308Mr Lonergan was resisting the proposition, it seems, on the basis that a hypothetical purchaser may still purchase the lease of the Tunnel without the Tolling Right assuming that after having purchased the asset, it would be in a position to negotiate either with the holder of the Tolling Right or the RTA to obtain the benefit of the Tolling Right. 309Mr Potter's "valuation" of the Tolling Right as at least equal to the Land Lease did not seem to me to be based on any particular expertise. Mr Potter took the view that each item of property was equally important. The capacity to earn revenue from either item of property was dependent on the other item of property. Accordingly Mr Potter attributed 50% of the available cash flows to each. Although he approached the question from a different starting point and did not accept that the Tolling Right was a separate item of property, it appears that Mr Lonergan accepted that, if it were, the hypothetical purchaser would not be interested in purchasing the Land Lease without the Tolling Right. 310A difference between MIM Holdings and the present case is that it was possible to exploit the mining rights without the contractual rights. The contractual rights enabled better exploitation for those parts of the mining tenements to which access was difficult. In the present case it is not possible to operate the tollway without the Tolling Right. It is not a mere enhancement of the value of the Land Lease. It was essential to the operation of the tollway. The Tolling Right could not be exploited without the Tunnel. Each was dependent on the other for the capacity to earn the revenue. Putting to one side how that revenue could be dealt with if there were separate hypothetical purchasers of the respective rights or property, the attribution of a value of at least equal to the value of the Land Lease is not unreasonable. Other Issues 311Although it is unnecessary to decide, I should also record that the Chief Commissioner submitted that the restructure proposed by Mr Potter reduces the rental payments under the Sublease very substantially and would be caught by ss 163Y(2) and 163Y(3) of the Duties Act. 312The Chief Commissioner relied on some evidence given in cross-examination by Sean Victor Miller. At the date of valuation Mr Miller was a director of ABN AMRO and it was his role to manage the tax implications arising from the proposed transaction, and in particular, income tax and stamp duty (Affidavit 31 August 2012; par 10). In cross-examination, he gave the following evidence (tr 80): Q. If you could just read over it to yourself. Mr Miller, will you accept that the proposal to adjust the rent and the rates and so forth for the loan had a stamp duty aspect? A. I will accept, yes. 313This of course relates to the actual transaction and the actual restructure. However, it is necessary for this analysis to focus on the hypothetical restructure proposed by Mr Potter. In this regard, Mr Potter gave the following evidence (tr 190): Q. What I am trying to get you to agree is that the maximisation approach definitely restructures the value of the head lease making it lower by reducing the rent very much below the available cash flow? A. That's correct, yes. 314If it had been necessary to decide this issue, I am of the view that the arrangement to reduce the value of the Land Lease by reducing the rental payments under the Sublease would be disregarded by reason of s 163Y of the Duties Act. The Exemption Issue 315The issue of whether the exemption provisions of the Duties Act apply arises because the Property Trust was land rich at the time of the acquisition. On the plaintiffs' cases, the exemption applies to the CCM Transfer directly, having regard to s 54(3), whereas the exemption applies to the PT Transfer through s 163ZB(1)(i). It is convenient to refer once again to the relevant provisions of the Duties Act for the purpose of determining this issue. 316Section 163ZB(1)(i) provided as follows: (1) An acquisition or disposal by a person of an interest in a landholder is an exempt transaction: ... (i) if the acquisition or disposal of an interest in a landholder would be chargeable with duty of $10 under section 54 if the property being acquired or disposed of were land in New South Wales. 317Section 163ZB(1)(i) of the Duties Act requires the decision-maker to assume that the acquisition is of land in New South Wales (rather than of the landholder) so that the relevant question is then whether there would be an exemption under s 54. 318Section 54 relevantly provided: (3) Duty of $10 is chargeable in respect of a transfer of dutiable property to a person other than a special trustee as a consequence of the retirement of a trustee or the appointment of a new trustee, if the Chief Commissioner is satisfied that, as the case may be (a) none of the continuing trustees remaining after the retirement of a trustee is or can become a beneficially under the trust, and (b) none of the trustees of the trust after the appointment of a new trustee is or can become a beneficiary under the trust, and (c) the transfer is not part of a scheme for conferring an interest, in relation to the trust property, on a new trustee or any other person, whether as a beneficiary or otherwise, to the detriment of the beneficial interest or potential beneficial interest of any person. If the Chief Commissioner is not so satisfied, the transfer is chargeable with the same duty as a transfer to a beneficiary under and in conformity with the trusts subject to which the property is held, unless subsection (3A) applies. 319The plaintiffs contend that the acquisition of the units in the Property Trust and the shares in CCM were "as a consequence of" the retirement of the trustee and that the transfer was not part of a scheme of the kind referred to in s 54(3)(c) of the Duties Act. It is common ground that the new trustee is not and cannot become a beneficiary under the trust (s 54(3)(b)) and s 54(3)(a) is inapplicable. 320The first issue for consideration is whether the transfers were "as a consequence of" the retirement of a trustee or the appointment of a new trustee. "as a consequence of" 321The plaintiffs claim that the retirement of CCMN1 (by the Deed of Resignation and Appointment of Trustee on 27 September 2007) and the simultaneous appointment (by that Deed) of CCM Holdings Trust Pty Limited as the new trustee is the event "as a consequence of" which the units in the Property Trust were transferred to CCM Holdings Trust Pty Limited. They also claim that the retirement of CCMH as trustee of the CCT Motorway Company Trust and the appointment of CCT Motorway Company Nominees Pty Ltd as the new trustee is the event "as a consequence of" which the CCM shares were transferred to CCT Motorway Company Nominees Pty Ltd. 322The Chief Commissioner submitted that the words "as a consequence of" in s 54(3) involve a causal nexus more significant than mere sequencing. He noted that on 19 August 2007, when the contract was "exchanged" by the execution of the Implementation Deed, it was agreed that a deposit of $30 million would be paid. The deposit was paid on 21 June 2007. It was submitted that at this point the purchaser entities had bargained to receive the relevant transfers on completion. In other words, the steps to cause the transfers of the units in the Property Trust and the CCM shares had already been taken before the new trusts were brought into existence. It was further submitted that the transfer of the units (and the shares) was as a consequence of the bargain struck and documented on 19 June 2007 and that the transfer was not causally connected to the retirement and appointment of the trustees. 323At the time of the assessments the Chief Commissioner advised the plaintiffs that "only in the narrowest sense could it be asserted that the transfers were as a consequence of the change in trustee". Both then and in these proceedings the Chief Commissioner contended that s 54(3) "requires that the underlying cause of the transfer is as a result of a change in trustee (as opposed to a wider commercial transaction)" (par 46 of the letter dated 6 September 2011 (the Letter)). 324The plaintiffs relied on the decision in Perpetual Trustee Company Limited v Commissioner of State Revenue [2000] VSC 177; (2000) 44 ATR 273. That was a case in which the appellant sought to set aside assessments of stamp duty that the Commissioner had issued under the Stamps Act 1958 (Vic) on certain real property conveyances. One of the grounds was that the transfers were exempt pursuant to exemption 23 of Sch 3 (Heading 6 exemptions) which provided as follows: Any instrument for the conveyance of real property where the Comptroller of Stamps is satisfied that the instrument is made solely in consequence of the appointment or retirement of any trustee or other change in trustees and in order to vest the real property in the trustees for the time being entitled to hold the real property. (emphasis added) 325Hansen J said at [54]: In its common understanding in its present context the word "solely" in conjunction with the words "in consequence of" means that the exemption will apply only if the instruments of transfer were executed in consequence of the change in trustee and in order to vest the real property of the trust in the name of the new trustee and not in consequence of any other factor. The object is to protect the revenue when an instrument of transfer is the consequence of another factor or factors. The use of the word "solely" indicates the extent of the legislature's concern in that regard. If the word "solely" had not been used, the question would merely have been whether the transfers were a consequence of the change of trustee in the sense of it being sequential or following on from it. It would not matter if the transfers were also a consequence of another factor or factors. 326The plaintiffs submitted that if the intention had been to catch broader transactions of the type for which the Chief Commissioner is contending, then the legislature would have enacted a provision similar to that found in the Victorian exemption by including the word "solely" before the expression "as a consequence of" in s 54(3). It was submitted that this conclusion can be more comfortably drawn because the legislatures of the various States, particularly New South Wales and Victoria, had consulted for the purpose of enhancing "the prospect of uniformity across jurisdictions". Many of the provisions of the Duties Act were developed in consultation with revenue offices throughout the nation, including in Victoria (see the second reading speech in respect of the Duties Bill: New South Wales, Parliamentary Debates, Legislative Assembly, 12 November 1997, 1612 (the Honourable RJ Debus)). 327The plaintiffs also relied upon Reseck v Federal Commissioner of Taxation (1975) 133 CLR 45. That case involved an employment agreement, which provided that, on satisfactory termination of employment, the employee was entitled to a severance payment calculated by reference to the work performed during his employment. The employer terminated the employee's employment on two occasions and the employee received lump sum payments on both occasions. The question that arose was whether tax of 5% on those lump sums was payable under s 26(d) of the Income Tax Assessment Act 1936 (Cth), which provided that the liability arose if the payments were "in consequence of" the termination of employment. 328Gibbs J said at 51: Within the ordinary meaning of the words a sum is paid in consequence of the termination of employment when the payment follows as an effect or result of the termination. In the present case the payment did follow as a result of the termination of the taxpayer's services. It is not in my opinion necessary that the termination of the services should be the dominant cause of the payment. The reasons for holding that "purpose" in s. 26(a) refers to the main or dominant purpose actuating the acquisition of the property have no place in the different context of s. 26(d). 329Section 26(a) of the Income Tax Assessment Act to which Gibbs J referred in this passage provided that the assessable income of a taxpayer would include profits arising from a sale of property acquired "for the purpose of profit-making by sale". His Honour also said that, although payments pursuant to s 26(d) could be made in consequence of a number of circumstances, including the fact that the taxpayer's service had been satisfactory and the industrial agreements made provision for the payment, it was nonetheless paid in consequence of the termination of the employment (at 51). 330Jacobs J said at 56: It was submitted that the words "in consequence of" import a concept that the termination of the employment was the dominant cause of payment. This cannot be so. A consequence in this context is not the same as a result. It does not import causation but rather a following on. 331The Chief Commissioner emphasised that the interpretation of the expression "in consequence of" in Reseck v Federal Commissioner of Taxation was very much dependent upon the context of the particular provision with which the High Court was dealing. It was also submitted that the interpretation of these words in the particular subsection is not a basis for construing similar words in a different statutory context. 332Although there has been no case in which the expression "as a consequence of" in s 54(3) of the Duties Act has been decided, the parties referred to a number of cases in which similar expressions in other statutes have been construed. The same expression in s 54(3A) of the Duties Act has been the subject of decision to which the parties also referred. 333In Trust Company of Australia Ltd v Commissioner of State Revenue [2006] VSC 64; (2006) 15 VR 1, Hansen J considered s 33(2) of the Duties Act 2000 (Vic), which provided that no duty was chargeable on a transfer of dutiable property "because of" the retirement of a trustee or the appointment of a new trustee. At the time that his Honour considered the provision it had been amended so that it provided "solely because of" the retirement of a trustee or the appointment of a new trustee. His Honour said (at 20-21, footnotes omitted): 44. As to this, I accept the appellant's submission, relying on Perpetual, that, even if the underlying purpose of the transactions was to effect a change in the beneficial ownership of the properties, absent the word "solely" in s 33(2), it did not matter that the transfers were "because of" other factors, provided that the transfers were also "because of" the retirement or appointment of a trustee, in the sense that the retirement or appointment of trustees was a cause of the transfers. In Perpetual, the exemption was available if the transfer was "solely in consequence of the appointment or retirement of any trustee or other change in trustees...". On the facts in that case, the exemption was not made out, as the transfer was made in consequence of other factors in addition to the change of trustee. As I observed there however, without the word "solely", it would have been enough that the transfer was in consequence of the change in trustees even if it was a consequence of another or other factors as well. I do not consider that to be a statement of principle but rather a statement of common sense flowing from the language of the relevant exemption provision. 334Reference was also made to Commissioner of State Revenue v Challenger Property Nominees Pty Limited [2006] VSC 203; (2006) 63 ATR 65. That case dealt with s 33(3) of the Duties Act (Vic), which provided that no duty would be payable if the Commissioner was satisfied that the transfer was made "solely because of" the retirement or appointment of the trustee. Hollingworth J observed that the correct question arising from that provision was whether the "only purpose of the transfer" was to "give effect to the change of trusteeship": at 72 [30]-[31]. 335Reference was also made to CPT Manager Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1286; (2006) 64 ATR 654 in which Gzell J dealt with a transfer of property after the retirement of one responsible entity (ING) and the appointment of another responsible entity (CPT) of a trust (PPS). The relevant provision of the Duties Act with which his Honour was concerned was s 54(3A), which provided relevantly: Duty of $10 is chargeable in respect of the transfer of property as a consequence of the retirement of a responsible entity of a managed investment scheme or the appointment of a new responsible entity of a managed investment scheme if the Chief Commissioner is satisfied that the only beneficial interest acquired by a person in relation to the property as a result of the transfer is a beneficial interest acquired by the replacement or new responsible entity solely because of its appointment as responsible entity for the scheme. 336The first element of this subsection was whether the transfer was "as a consequence of" the retirement or appointment of a responsible entity. The second element was whether the Chief Commissioner was satisfied that the relevant beneficial interest was acquired "solely because of" the appointment of the new responsible entity. The Chief Commissioner was not so satisfied. The appellant appealed from that decision. Gzell J concluded that the Chief Commissioner should have been satisfied. In place of the Chief Commissioner's decision, his Honour decided that the Court was so satisfied: at 660-661 [40]. 337In analysing s 54(3A), Gzell J referred to Reseck v Federal Commissioner of Taxation and said at 660 [30]: The transfer of the subject land was as a consequence of the appointment of CPT as a new responsible entity of PPS. There is no requirement of exclusivity of purpose to satisfy the first element under the Duties Act 1997, s 54(3A). The transfer followed as an effect or result of the new appointment and was thus in consequence of it. 338The parties also referred to other cases in which the absence of a pre-existing trust was found to be fatal to a claim for concessional duty under the analogous Victorian provisions: Commissioner of State Revenue v Victoria Gardens Developments Pty Limited [2000] VSCA 233; (2000) 46 ATR 61; Commissioner of State Revenue (Vic) v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 84 ATR 62. The Chief Commissioner submitted that the Victorian cases also proceeded on the basis that the word "solely" was an independent ground for reasons explained in Commissioner of State Revenue v Victorian Gardens Developments Pty Limited at 72 [28] per Batt JA. It is not necessary to decide whether it is appropriate to read Batt JA's judgment in this way, because that expression "solely" is not found in s 54(3)(c) of the Duties Act. 339The Chief Commissioner submitted that at the time the parties struck the bargain on 19 June 2007 and documented it in the Implementation Deed, there was no trust that was capable of delivering concessional duty under s 54(3). The trusts were not established until 26 September 2007. 340The plaintiffs submitted that there is no dispute that the Victorian cases dealing with exemption 23 in the Stamps Act 1958 (Vic) and its replacement, s 33(3) of the Duties Act 2000 (Vic), only apply to the appointment of a new trustee of a pre-existing trust. However, it was submitted that it must be appreciated that those cases were concerned with drawing a distinction between the appointment of a new trustee of a pre-existing trust on the one hand and the appointment of a first trustee of a new trust on the other. It was submitted that a similar distinction is applicable to s 54(3): Sportscorp Australia Pty Limited v Chief Commissioner of State Revenue [2004] NSWSC 1029; (2004) 58 ATR 1 at 13 [68]. 341It was submitted that the error in the Chief Commissioner's approach is the reliance on the Victorian cases for the proposition that it was necessary for a trust to exist prior to 26 September 2007. It was submitted that there is no support in those cases, or any other authorities cited by the Chief Commissioner, for that proposition. Here the relevant trusts had been established by the time the new trustee for each trust was appointed on 27 September 2007. Consequently, each transfer to the new trustee satisfies the requirement that it be "as a consequence of" the retirement and the appointment of a trustee to a pre-existing trust. 342The Chief Commissioner submitted that the words "as a consequence of" restrict the concession to appropriate cases where the underlying or dominant cause is the change of trustee and are intended to prevent a trust mechanism being used as a device to avoid payment of duty. The Chief Commissioner likened the situation to "falling dominoes". It was submitted that whilst the fall of the last domino may be as a consequence of the falling of the second last domino in a physical sense, the fall of the last domino is actually part of a wider action which lined up all the dominoes and then tipped the first one, so as to achieve the ultimate result. The plaintiff's contention that the transfers of the units and the shares were "as a consequence of" a change in trustee does not ignore the reality of the transaction. The last step in the transaction but for one was, of course, the retirement and appointment of trustees. 343In construing the expression "as a consequence of" in s 54(3A) of the Duties Act, Gzell J adopted the reasoning of the High Court in Reseck v Federal Commissioner of Taxation and was satisfied that exclusivity of causation was not required. Had the legislature intended that the retirement was to be the only cause of the transfer of the property, it is reasonable to assume that the expression "as the consequence of" would have been used instead of "as a consequence of" in 54(3) of the Duties Act. I also agree with the plaintiffs' submission that, had it been intended to limit the circumstances that cause or effect a transfer, then the legislature could have enacted a provision with the limiting word "solely". 344I am satisfied that the expression "as a consequence of" in the context of s 54(3) of the Duties Act does not require exclusivity of purpose. It is sufficient that the transfer is a consequence of the retirement or appointment of the trustee, even if it is also a consequence of other factors. Accordingly, I am satisfied that the units and the shares were transferred "as a consequence" of the change in trustee. Detriment 345The next question that arises is whether or not there was a scheme of the particular kind referred to in s 54(3)(c). It is not necessary to dwell upon the identification of the scheme. The parties have litigated on the basis that the scheme is that found in cl 4.2 of the Implementation Deed, which identifies the steps for the transfer of the units and the shares. The plaintiffs accepted that the PT Transfer and the CCM Transfer were part of a "scheme" within the meaning of that expression in s 54(3)(c). They also accepted that the scheme was one for "conferring an interest in relation to the trust property". The only issue for determination is whether the scheme was for the conferral of that interest "to the detriment of the beneficial interest or potential beneficial interest of any person". 346The Chief Commissioner described s 54(3)(c) as an "anti-avoidance measure" the purpose of which was to eliminate the use of schemes for transfers of dutiable property on a change of trustee that were designed to avoid what otherwise would have been a liability for duty payable in the absence of such a scheme. It was for the plaintiffs to persuade the Chief Commissioner (and now the Court) that the transfer of dutiable property as a consequence of a change in trustee was not part of a scheme as described in s 54(3)(c). 347At the time of the assessments the subject of these appeals, the Chief Commissioner formed the view that the scheme implemented had "all the elements of the scheme of a kind referred to in s 54(3)(c)" and that the transfers were "part of that scheme" (par 25 of the Letter). In describing the "detriment" in respect of the transfers of the units in the Property Trust, the Chief Commissioner advised the plaintiffs that (par 24(d) of the Letter): the relevant person(s) whose beneficial interest or potential beneficiary interest in the Trust Units suffered a detriment pursuant to the scheme was either (or both): (i) the unit holders of the CrossCity Motorway Holdings Trust - on the basis that, prior to the step in the scheme when an acknowledgment was made by the Transferor, the unit holders of the CrossCity Motorway Holdings Trust held a beneficial interest in the Trust Units and after that step no longer held a beneficial interest in the Trust units; and/or (ii) the unit holders of the CrossCity Motorway Holdings Trust - on the basis that, if the correct analysis is that because the CrossCity Motorway Holdings Trust was a unit trust its unit holders did not have a beneficial interest in trust property, they at least had a potential beneficial interest and, after the acknowledgment, they no longer held a potential beneficial interest in the Trust units; and/or (iii) the Transferor - on the basis that, if the correct analysis is that because the CrossCity Motorway Holdings Trust was a unit trust its unit holders did not have an interest in trust property, prior to the CCM Trust Units Transfer, the Transferor held all interests in the Trust Units and after that step it was left with no interest. 348The Chief Commissioner's contention was at the time of the assessments, and is in these proceedings, that the "detriment" in s 54(3)(c) is to be understood as "a loss of a beneficial interest in trust property" and is not to be determined "by making an assessment of the commercial outcomes for each of the participants in a scheme" (par 39 of the Letter). The Chief Commissioner's contention is that the trust property the subject of the scheme is no longer available to those who had, or may have had, a beneficial interest in it because it was replaced by something different, being an amount of money. 349Thus the Chief Commissioner's contention is that the sale of property is to the "detriment" of those with a beneficial or potential beneficial interest in it. If that contention is correct, a concessional rate of duty under s 54(3) is only available if the transfer of dutiable property that occurs as a consequence of the retirement (or appointment) of a trustee keeps the trust property intact, so that the beneficial interests and potential beneficial interests of all persons in that trust property remain the same. It was also contended that it is not permissible to consider whether the trust property has been "exchanged" for market value in determining whether there is "detriment" to the beneficial or potential beneficial interest of any person. 350In contrast, the plaintiffs contended, both during the assessment process and in these proceedings, that in determining whether the scheme for conferring the relevant interest had the requisite "detriment", it is permissible to take into account the fact that market value was paid on the transfer of the dutiable property. 351The plaintiffs submitted that the opening words of s 54(3) are concerned with the transfer of "dutiable property" because that is the transfer from which one needs an exemption of duty. The expression "in relation to the trust property" in subparagraph (c) directs attention to the terms of the trust on which the property is held. 352The plaintiffs also submitted that the conferral of an interest in relation to the trust property must be to the detriment of the beneficial interest, or the potential beneficial interest, of some person. It was submitted that the concluding words of the sub-section strongly indicate that the focus should be on whether there has been any detriment to the interest of a person who can be said to be a beneficiary or a potential beneficiary. The plaintiffs highlighted the position of discretionary objects of discretionary trusts. It was submitted that, until the trustee's power is exercised in the potential beneficiary's favour, that person does not have a beneficial interest in anything but merely a right to require the trustee to exercise the discretion in accordance with the trust deed. 353The plaintiffs submitted that the intention in s 54(3) is to cover persons or potential objects of trustees' bounty (not as yet objects). If they are excluded in some way then their potential beneficial interest will be detrimentally affected. In this regard the plaintiffs relied upon Commissioner of State Revenue v Serana Pty Ltd (2008) 36 WAR 251 in which Buss JA said at 285: [134] The word "beneficial" is usually employed in trust law as a cognate of "beneficiary". See Linter Textiles, where Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ explained (at [52]): "That term identifies those persons for whose benefit the trustee of a private trust (ie not a charitable purpose trust) is bound to administer the trust property. [135] The word "beneficial", in the context of a beneficial interest in property, ordinarily denotes a proprietary interest to which a person or persons, other than the person in whom legal title to the property is vested, is entitled. That is, a beneficial interest in property usually denotes a proprietary interest held for the benefit of another or others... 354It was submitted that the natural meaning of the words "in relation to the trust property" in s 54(3) are concerned with the property of the continuing trust and the terms on which it is held. The plaintiffs also submitted that s 54(3) requires analysis of the impact on the interests of the beneficiaries under the trust in respect of which the change of trustee is occurring, and not some broader scheme. It was submitted that the focus is on whether, in relation to the disposition on change of trustee, there is some diminution of the interest of the beneficiaries or the potential beneficiaries of the trust. In other words, there must be an analysis of what the interests of the beneficiaries were before and after the transfer. 355The plaintiffs also submitted that the effect of s 163ZB(1)(i) is that the "trust property" of the CCT Motorway Property Trust to be considered in applying s 54(3) is not its actual trust property but notional land in New South Wales that is deemed for the purpose of the analysis to be acquired by the new trustee as part of the acquisition. In other words, the effect of the deeming provision is that the trust property to be considered is not the actual trust property (i.e., the units that are being transferred to the new trustee); it is the deemed or notional trust property being notional land in New South Wales. 356In this regard, the plaintiff relied upon DCC Holdings (UK) Ltd v Revenue and Customs Commissioners [2011] 1 WLR 44, a case in which the Supreme Court of the United Kingdom considered, inter alia, the deeming provisions in s 730A and s 737A of the Income and Corporation Taxes Act 1988. Lord Walker of Gestingthorpe JSC (with whom Lord Hope of Craighead DPSC, Lord Collins of Mapesbury, Lord Kerr of Tonaghmore and Lord Clarke of Stone-Cum-Ebony JJSC agreed) referred to the inevitable problems which arise from the use of "statutory fictions" (at 57). Lord Walker referred to the judgment of Peter Gibson J in the Court of Appeal in Marshall v Kerr (1993) 67 TC 56, in which reference was made to Nourse J's judgment in Inland Revenue Commissioners v Metrolands (Property Finance) Ltd [1981] 1 WLR 637. In this latter case, Nourse J said that if the application of the relevant deeming provision would lead to an "unjust, anomalous or absurd result, then unless the application would clearly be within the purposes of the fiction, it should not be applied" (at 646). In Marshall v Kerr, Peter Gibson J (with whom Balcombe and Simon Brown LJJ agreed) said: For my part, I take the correct approach in construing a deeming provision to be to give the words used their ordinary and natural meaning, consistent so far as possible with the policy of the Act and the purposes of the provisions so far as such policy and purposes can be ascertained; but if such construction would lead to injustice or absurdity, the application of the statutory fiction should be limited to the extent needed to avoid such injustice or absurdity, unless such application would clearly be within the purposes of the fiction. I further bear in mind that, because one must treat as real that which is only deemed to be so, one must treat as real the consequences and incidents inevitably flowing from or accompanying that deemed state of affairs, unless prohibited from doing so. 357This passage of Gibson J's judgment was approved on appeal in the House of Lords by Lord Browne-Wilkinson [1995] 1 AC 148 at 164. 358It is not in issue that, under s 163ZB(1)(i) of the Duties Act, it is necessary to: (a) postulate a hypothetical transaction in which the property acquired is (hypothetical) land in New South Wales, rather than the interest in the Property Trust which was actually acquired; and then (b) determine whether the hypothetical transaction would have been chargeable with duty. 359The plaintiffs submitted that the ostensible purpose of s 163ZB(1)(i) is to extend the same concessional duty, that applies under s 54(3) to acquisitions of land, to acquisitions of interests in land rich landholders. It was submitted that the ostensible purpose of s 54(3) of the Act is to levy concessional duty on transfers of dutiable property as a consequence of a change of trustee. However, as an acquisition of an interest in a landholder may not involve an acquisition of dutiable property, it was necessary for s 163ZB(1)(i) to state a test for the application of s 54(3) that covered all potential types of acquisition. It was submitted that it is significant that the legislature chose to refer to hypothetical land in New South Wales (which is dutiable property under s 11(1)(a) of the Act) and not the actual land of the landholder. 360It was submitted that the mischief to which the exception in s 54(3)(c) is directed appears to be where changes of trustee in discretionary trusts are effected to the detriment of existing discretionary objects. The plaintiffs submitted that, if the land to be considered for the purposes of the exemption in s 163ZB(1)(i) is notional land which does not have the ownership history of the actual land holdings of the Property Trust, then it is difficult to see any basis to suggest that there is a scheme of the kind referred to in s 54(3)(c). Accordingly, it was submitted that the PT Transfer will be exempt from duty under s 163ZB(1)(i). Notwithstanding the force of this submission, I am of the view that the analysis is of what, if any, detriment was caused by the transfer of the actual trust property rather than a transfer of notional land. 361In any event, the plaintiffs submitted that the conferral of the interest referred to in s 54(3)(c) must deprive the person of their beneficial interest or potential beneficial interest, or otherwise impair that interest, in a way that causes detriment. It was submitted that a disposal for market value does not involve "detriment" in the ordinary sense of the word. 362The Chief Commissioner submitted that there was a scheme within the meaning of s 54(3)(c) and, more relevantly, the plaintiffs could not discharge the onus of demonstrating there was not such a scheme to the satisfaction of the Chief Commissioner and should not be held to have discharged that onus to the satisfaction of the Court. 363The Chief Commissioner submitted that the scheme included the step of creating a new trust into which the units in the Property Trust were placed. It was submitted that the plaintiffs' argument incorrectly assumes that the detriment needs to result from the transfer on the change of trustee rather than from the scheme as a whole. It was submitted that s 54(3)(c) makes it clear that the transfer must be considered as "part of the scheme". It was contended that the plaintiffs' submissions impermissibly limit the enquiry to the point immediately before and immediately after the transfer of the units in the Property Trust. 364Although the Chief Commissioner was satisfied the scheme fell within s 54(3)(c) for the reasons outlined above, he considered that, even if the broader "before and after" approach were adopted, the same conclusion could be reached. In that respect the Chief Commissioner said (par 27 of the Letter): Such an approach would be to conclude that before the first step in the scheme the Transferor was the holder of the Trust Units (and all interests in them) on trust for the unit holders of the CrossCity Motorway Holdings Trust and after the last step in the scheme the Transferee was the holder of the Trust Units on trust for the unit holder of the CCT Motorway Property Trust. Accordingly, the conferring of interests in the Trust Units under the scheme operated to the detriment of the beneficial interest of the Transferor and/or the unit holders of the CrossCity Motorway Holdings Trust in that the Transferor and/or the unit holders of the CrossCity Motorway Holdings Trust lost all its/their prior interest in the Trust Units as a result of the implementation of the scheme and so must have lost a beneficial interest (or potential beneficial interest) in the process. 365This analysis is indicative of the Chief Commissioner's contention referred to above that, in determining whether there is "detriment" to the beneficial or potential beneficial interest of any person, it is not permissible to consider whether the trust property has been "exchanged" for market value. It is the fact of the transferring away (the loss) of the trust property per se that is said to amount to the detriment. 366The Chief Commissioner's Supplementary Written Submissions of 24 May 2013 continued in the same vein. They included the following (par 10): The use of the different terms "dutiable property" and "the trust property" is a function of the purpose of the concession available under s 54(3). In the paradigm situation where the concession would be available, there would be a retirement of a trustee (Trustee1) of a trust and the transfer of trust property to an incoming trustee (Trustee2). If all that happens is that the interest of Trustee1 as trustee is transferred to Trustee2 as trustee and there is no alteration in the beneficial interest (or potential beneficial interest) of anyone in relation to any of the trust property, then the legislative policy is to allow a concession in respect of such of the trust property transferred by that process that would be dutiable property - no concession is needed for such of the trust property that is not liable to duty. The concession is not to be available where there has been a movement of an interest held beneficially: that is dealt with by the words "beneficial interest or potential beneficial interest". 367In a further submission in the same document the Chief Commissioner identified the two parts to 54(3)(c): the first looking at giving an interest ("conferring"); and the second, taking away ("to the detriment of"). It was submitted that the second part of the subsection is necessarily cast more narrowly so that paragraph (c) "does not catch that which it intended to allow", namely the transfer by Trustee1 (as trustee) to Trustee2 (as trustee) "of an interest (bare legal title) in the trust property". 368The thrust of the Chief Commissioner's submissions and the content of the Letter is that the beneficiaries and the trust property must remain unchanged. This is evidenced by the further submissions made by the Chief Commissioner that the trust property changed when it was swapped for the purchase monies and the people with interests in the trust property changed because the vendor entity ceased to have any interest in the dutiable property after the transfer. It was submitted that such change was to the detriment of the beneficial interest or the potential beneficial interest in the dutiable property of the vendor entities. 369The plaintiffs submitted that the Chief Commissioner's submissions are based upon the erroneous assumption that because the units in the Property Trust are held by a trustee (CCMN1), it must follow that some person or persons hold the beneficial interest in those property trust units. It was submitted that what is required is a careful consideration of the terms of the Trust Deed for the CrossCity Motorway Holdings Trust to determine the nature of the interest conferred by a holding of units in that trust. The Trust Deed in question denies the unit holder a beneficial interest in any particular asset of the trust (cl 4.7). The plaintiffs submitted that it follows that the unit holders of the CrossCity Motorway Holdings Trust did not have a beneficial interest in the units in the Property Trust when they were held by CCMN1 as trustee of the CrossCity Motorway Holdings Trust. 370The word "detriment" should be given its ordinary meaning in the context in which it appears in s 54(3)(c). It is to be understood as "the state of being harmed or damaged" (The New Oxford Dictionary of English (1998)) and includes "loss, damage, or injury" (The Macquarie Dictionary Federation Edition). If an interest is conferred "to the detriment" of the beneficial interest or potential beneficial interest "of any person", it must cause harm, loss or damage to the interest. 371The plaintiffs submitted that the observations in MSP Nominees Pty Ltd v Commissioner of Stamps (SA) [1999] HCA 51; (1999) 198 CLR 494 are apt in the present circumstances. The question for the Court in that case was whether the redemption of a unit in a unit trust constituted a "transfer" within the meaning of the Stamp Duties Act 1923 (SA), where "transfer" was defined to include "surrender or renounce a beneficial interest or potential beneficial interest in, or in relation to, property". The Court held that to redeem for value was not to "surrender" or "renounce". In relation to the term "surrender", the Court said that the "essential characteristic" of surrendering was "the enlargement of one interest by absorption or 'drowning' of the other. This is of particular significance where the statutory context is directed to transfers and conveyances and, in particular, to the passing of value without reciprocal consideration": at 509 [33]. 372The plaintiffs submitted that neither the PT Transfer nor the CCM Transfer could be characterised as schemes for the conferring of an interest "to the detriment of" the beneficial interest or potential beneficial interest of any person. The plaintiffs made the following points in respect of the PT Transfer: The beneficiaries of the relevant trust, prior to and after the transfer, were unchanged and so there was no detriment to their beneficial interest; CCMN1 was granted a release and indemnity in respect of its liabilities as trustee and so suffered no detriment to any beneficial interest it held in the Property Trust as trustee; and The previous beneficial owner of the Property Trust was CCMH Trust. It no longer had that interest. However, its beneficial interest in the Property Trust was irrelevant, because it was not an interest held under the relevant trust which underwent a change of trustee, and, in any event, CCMH Trust received valuable consideration for the disposal of its ownership interest. 373Accordingly the plaintiff submitted that the PT Transfer is exempt from duty under s 163ZB(1)(i) of the Duties Act. 374The plaintiffs made the following points in respect of the CCM Transfer: The beneficiaries of the relevant trust, prior to and after the transfer, were unchanged. Accordingly, there has been no detriment to their beneficial interest. CCMH, the retiring trustee, had a beneficial interest in CCM only to the extent of any unsatisfied right of indemnity in respect of its liabilities as trustee. However, it suffered no detriment to that interest because, under the relevant Deed of Resignation and Appointment of Trustee, CCMH was released of its liabilities as trustee and granted an indemnity by the new trustee and the unitholders of the Company Trust. CCMH also previously had a beneficial ownership interest in CCM. It no longer has that interest. However, its beneficial interest in CCM as owner was irrelevant, because it was not an interest held under the relevant trust that underwent a change of trustee. Indeed, at the time CCMH held the interest, the CCM shares were not trust property of any kind. In any event, CCMH received valuable consideration for the disposal of its ownership interest. 375Accordingly, the plaintiff submitted that the CCM Transfer was liable to duty of $10 under s 54(3) of the Duties Act. 376The plaintiffs accept that, if exempt, the purchaser entities were able to acquire ownership of a land rich landholder without paying land rich duty. It was submitted that, although this may appear anomalous, it is the result of the proper construction of the statutory provisions. 377The Chief Commissioner submitted that, if one takes the alternative, broader approach, determining "detriment" requires the identification of, and a comparison of, the extent and tangibility of the beneficial interest (or potential beneficial interest) of any person before and after an interest in the trust property is conferred on any other person. It was submitted that one does not look at the value (in commercial or other terms) of the interest, but rather, its existence or otherwise as a matter of fact. It was submitted that an exemption of this kind cannot depend on a calculation exercise to determine whether beneficiaries are sufficiently protected in relation to transactions conducted by their trustees. It was submitted that the statutory exemption for duty is not some form of fiduciary safeguard for beneficiaries. It was also submitted that, if the plaintiffs' approach is correct, it is difficult to conceive of any transfer of dutiable property that could not be fitted into the concession under s 54(3), provided the vendor agreed to structure the sale via a new trust mechanism. 378The "detriment" identified by the Chief Commissioner was that there had been a "100% loss in the beneficial interest in the units" replaced with an amount of cash "which is entirely different property and not the trust property the Vendor Entity initially held". 379If the legislature intended that the instrument transferring dutiable property as a consequence of a change in trustee would only be stamped at the concessional rate under s 54(3) if the trust property did not change its character (for instance, from rights to earn revenue from the operation of the tollway to an amount equivalent to the present value of such revenue) then it would have been quite simple for it to prohibit such a change. For one thing, it could have introduced the word "solely" before the expression "as a consequence of the retirement of the trustee". It could have also introduced a provision that any transfer that changed the character of the trust property could not qualify for the concession. 380I am of the view that the Chief Commissioner's approach should not be accepted. If such an intention is to be reflected in the legislation, it will need amendment. However, as presently enacted, both the Chief Commissioner and the Court must give consideration to all relevant circumstances in deciding whether the relevant transfer is not part of the scheme for conferring an interest to the detriment of the beneficial interest or potential beneficial interest of any person. It is inappropriate to limit that consideration to only part of the scheme. 381If, notwithstanding the transferring away of the trust property, the scheme were obviously to the enhancement of the beneficial interest or potential beneficial interest of any person, it is difficult to comprehend how one could not be satisfied that the transfer was not part of the scheme for the conferring of an interest to the detriment of the requisite interests of those persons under s 54(3)(c). 382I am not satisfied that it is correct to assume harm, loss and/or damage has occurred merely because the trust property is transferred away. In assessing whether there is harm, loss or damage, it is necessary to weigh up whether the purpose of the scheme was to confer an interest to the detriment of the beneficial interests or potential beneficial interests in the trust property of any person. That seems to me to require an assessment of the totality of the scheme rather than only part of it. To exclude consideration of the money that was received when the trust property was transferred away is to exclude consideration of an integral part of the scheme. 383I am of the view that it is permissible to take into account the amount of consideration paid in the transfer. 384In this regard the Chief Commissioner claimed that the $30 million deposit "creates a problem" for the plaintiffs. It was submitted that the documents created in late September 2007 to give effect to the structure relied upon by the plaintiffs do not properly account for the $30 million. Although the plaintiffs relied upon a "Deposit Direction Letter", the Chief Commissioner claimed that it was "flawed". It was contended that none of the parties to that Letter were parties to the Unit Subscription Deed Poll. 385In the Supplementary Submission of 24 May 2013, the Chief Commissioner submitted that although valuable consideration may have been received, the transaction was not at "market value" because the $30 million did not go to CCMN1 or the unit holders in the CCMH Trust, but to a different vendor entity. It was contended therefore that the plaintiffs cannot establish that CCMN1 or the unit holders received all the consideration. Thus it was said they cannot prove that they received the market value for the transaction and cannot succeed on their "no commercial detriment argument". 386The Deposit Direction Letter was a direction from the investors to CCMN1 and CrossCity Motorway Holdings Pty Limited directing that the deposit be applied to the Property Units Subscription Amount, as defined in the Implementation Deed, being a component of the subscription amount. They were the two entities in favour of which the Unit Subscription Deed Poll was made. The release of the deposit was further governed by clause 2.2 of the Implementation Deed. On completion, the deposit was to be released to the owners in accordance with their "Relevant Proportion". 387The plaintiffs dealt with these submissions in their Supplementary Submissions in response dated 28 May 2013. The plaintiffs submitted that, if the Chief Commissioner is suggesting that the investors lacked the capacity to direct that the deposit be applied as directed in the Deposit Direction Letter, such submission must be rejected, given the terms of the Implementation Deed. By cl 5.1 of the Implementation Deed the Investors agreed to contribute or procure the contribution of the Subscription Amount (less the Deposit) and that the deposit be applied as directed by the Investors. It was submitted that it is therefore apparent from the evidence that, contrary to the Chief Commissioner's submission, CCM Holdings Pty Limited and CCMN1 did receive full market value consideration, including the $30 million deposit. I agree. 388Detriment may take many forms. It may be a diminution in value of a particular interest. It could be the introduction of obstacles to the beneficiaries' enjoyment or access to their interests in a timely manner. It could be the appointment of a trustee who is perceived to lack support for particular beneficiaries. The only issue raised by the Chief Commissioner in respect of detriment is that the persons with a beneficial interest or potential beneficial interest in the trust property lost the trust property because it was sold. I do not accept that it is appropriate to describe that transaction as a "loss". The receipt of market value for the trust property at a time of uncertainty of commercial viability could in fact be seen as an enhancement rather than a detriment to those interests. Consistently with what I have said above, if one is to assess a "loss", it is necessary to see whether there has been, as the plaintiffs put to the Chief Commissioner, a quid pro quo or a receipt of a benefit to counter or neutralise any loss. 389I am satisfied that the relevant transfers were not part of a scheme for the conferring of interests in relation to the trust property on a new trustee "to the detriment" of the beneficial interest or potential beneficial interest of any person. 390I am satisfied that duty of $10 is chargeable under s 54(3) of the Duties Act in respect of the CCM Transfer. 391I am satisfied that the PT Transfer is exempt under s 163ZB(1)(i) of the Duties Act. 392Having reached this conclusion, it is unnecessary to consider the remaining issues of penalty and interest. Conclusion 393In the Trust Proceedings, the Chief Commissioner's assessment of duty of $36,285,490 plus penalty tax of $5,442,823.50 (following partial remission on objection) and interest on the Property Trust Transfer is revoked. 394In the Company proceedings, the Chief Commissioner's assessment of duty of $20,431.20 plus interest on the CCM Transfer is revoked. 395In place of each of the assessments by the Chief Commissioner it is appropriate that the Court make assessments consistently with these findings. I will hear the parties on the appropriate orders in relation to these exemptions. 396If the parties are unable to agree on a costs order I will hear argument on the next occasion when it is listed for the filing of Short Minutes of Order reflecting these reasons. Such listing should be arranged with my Associate.

CCM Holdings Trust Pty Ltd v Chief Commissioner of State Revenue; CCT Motorway Company Nominees Pty Ltd v Chief Commissioner of State Revenue

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