Chief Commissioner of State Revenue v ALH Group Property Holdings Pty Limited

HEADNOTE In 2003 the assignor entered into a conditional agreement for the purchase of a hotel and paid the deposit. In 2008 it assigned by deed the benefit of that contract and its deposit to the taxpayer. The taxpayer covenanted with the vendor to perform the purchaser's obligations under the agreement and the vendor released the purchaser from further liability. Ad valorem duty was paid on the deed. When it was later cancelled the taxpayer sought a refund under the Duties Act s 50. The Commissioner refused the refund because the deed was a transfer of dutiable property and not an agreement for its transfer. The taxpayer's appeal to the Supreme Court was allowed. On further appeal: Held (1) The deed was an assignment of the benefit of the 2003 agreement and not a novation of it; (2) The deed therefore was not an agreement for the transfer of dutiable property but a transfer of that property; (3) Accordingly cancellation of the deed did not entitled the taxpayer to a refund of the duty paid; (4) The Commissioner's appeal would be allowed and the assessments restored.

Judgment 1ALLSOP P : I have read the reasons in draft of Handley AJA. I agree with them and with the orders that his Honour proposes. 2TOBIAS JA : I agree with Handley AJA. 3HANDLEY AJA : This is an appeal from the decision of Gzell J who on 20 April 2010 set aside the Commissioner's assessment of ad valorem duty on a Deed of Consent and Assignment (the Deed) (blue 287) executed on 27 June 2008. He also set aside the Commissioner's decision that s 50 of the Duties Act 1997 (the Act) did not apply to the Deed and ordered a refund of the duty of $134,105.50 with interest. 4The Deed dealt with rights created by a contract of sale dated 5 September 2003 between Oakland Glen Pty Ltd (the vendor) and Permanent Trustee Co Ltd, as trustee of the Ale Direct Property Trust (the purchaser), for the sale of the Parkway Hotel Frenchs Forest (the hotel) for $6,386,611 (the 2003 contract) (blue 201). 5The 2003 contract was subject to conditions relating to the development of other land owned by the vendor in the same title, and its subdivision. It was not chargeable with ad valorem duty because it was part of a corporate reconstruction exempted under s 281. 6On 27 June 2008 the vendor, the purchaser, and ALH Group Property Holdings Pty Limited (the taxpayer) entered into the Deed (blue 287). On 22 November the Commissioner assessed it to ad valorem duty under s 22 (2) as a transfer of dutiable property. 7In the meantime on 24 October the vendor and the taxpayer entered into the Deed of Termination (blue 346) which rescinded the Deed and the 2003 contract. They then entered into a new contract for the sale of the hotel for $6,386,611 (blue 355) on which ad valorem duty was paid. 8The taxpayer claimed that the Deed of Termination avoided the liability of the Deed for ad valorem duty, and gave it a right to a refund under s 50. This provides, so far as relevant: "(1) An agreement for the sale or transfer of dutiable property that is cancelled is not liable to duty under this Chapter if the Chief Commissioner is satisfied: (a) that the agreement was not cancelled to give effect to a sub-sale, or (b) that the purchaser or transferee under the agreement is a promoter of a named company proposed to be incorporated ..., or (c) that the purchaser or transferee under the agreement and the purchaser or transferee under a subsequent agreement relating to the same dutiable property were related persons ... (2) If duty has been paid on an agreement that is not liable to duty ... because of this section, the Chief Commissioner must reassess and refund the duty if an application for a refund is made ... (3) In this section cancelled means rescinded, annulled or otherwise terminated without completion." 9The Commissioner ruled that s 50(1) did not apply and declined to refund the duty. The taxpayer objected and when its objection was disallowed it appealed to the Supreme Court. 10Gzell J held that the Deed effected a novation of the 2003 contract. There was no transfer of dutiable property but the taxpayer agreed to purchase the hotel for the price and on the terms of the 2003 contract. The Commissioner submitted that the Deed was a transfer of the benefit of the 2003 contract and s 50 did not apply. 11This Court has had the benefit of fuller and better developed arguments than those with which his Honour was favoured. Indeed the oral submissions in this Court bore little resemblance to the written ones. 12The relevant clauses of the Deed were as follows: (1) Clause 3.1 which relevantly provided: " ... [the purchaser] assigns to [the taxpayer] all of [the purchaser's] rights and entitlements under and in relation to the ... [2003] contract in consideration of [the taxpayer] paying: (a) [the purchaser] $638,661.10 by way of reimbursement of the deposit ... under [the 2003] Contract; and (b) [the purchaser] $2,063,389 ..." (2) Cl 4.1(b) which contained a covenant by the taxpayer with the vendor that "... [the taxpayer] shall perform and observe all obligations of the Purchaser under the [2003] contract". (3) Cl 4.2 in which the taxpayer covenanted with the purchaser that it "shall ... perform and observe all the obligations of [the purchaser] under the [2003] contract whether before or after the Date of Assignment". (4) Cl 5 in which the taxpayer covenanted that it would "indemnify [the purchaser] on demand against all liability which may be incurred by ... [the purchaser] consequent on or arising directly or indirectly out of any default or delay by [the taxpayer] in the performance of the purchaser's obligations ... under the [2003] contract." (5) Cl 6 in which the vendor and taxpayer released and discharged the purchaser from "(a) all claims, actions, demands and proceedings which [the vendor] or [the taxpayer] may have ... or but for this release might have had against [the purchaser] arising out of or in connection with ... the [2003] contract; and (b) all liability of [the purchaser] arising out of ... the [2003] contract, with effect from the Date of Assignment". 13Gzell J held that the Deed brought a new contract of sale into existence and extinguished the 2003 contract. He said: "11 The intention of the parties to the Deed ... is clear enough. [The purchaser] was to drop out and [the taxpayer] was to be substituted for it. The benefits under the [2003] contract were assigned to [the taxpayer] by cl 3.1. Its burdens were assumed by [the taxpayer] under cl 4.2 with the consent of [the vendor] under cl 4.1 and cl 6. 12 With its burdens and benefits removed from [the purchaser] the [2003] Contract had no content and was extinguished. 13 A new contract was constituted by [the taxpayer] undertaking obligations in terms identical to those of the [2003] contract under cl 4, its benefits having being assigned to it under cl 3.1. ... ... 17 It was submitted on behalf of the Chief Commissioner that the Deed ... did not take the form of a novation although it achieved the same effect. I reject that submission. ... [W]hile there is no express extinguishment of the [2003] contract it is nonetheless extinguished as all its benefits and burdens have been extinguished. 18 Novation occurs when the benefit and burden of an existing contract, in whole or in part, are replaced by the benefit and burden of a new contract. Here the Deed ... replaced [the purchaser's] benefits and burdens under the [2003] contract with benefits and burdens in identical terms between [the vendor] and [the taxpayer]. 19 In my view, the Deed ... is a novation containing a contract for sale of the land between [the vendor] and [the taxpayer] on identical terms to those contained in the [2003] contract. " 14The appeal turns upon the construction of the Deed, although questions of law also arise. The Deed must be construed as a whole to determine whether it effected an assignment or novation of the 2003 contract. 15The vendor's obligation to complete, and the benefit of the 2003 contract, were conditional upon payment of the balance of the purchase price. As Mason CJ said in Foran v Wight [1989] HCA 51, 168 CLR 385, 396: "... the vendor's obligation to deliver a good title and the purchaser's obligation to pay the purchase price are concurrent and mutually dependent obligations in the sense that they are simultaneous acts to be performed interchangeably". 16This was the view of the Court, see per Brennan J at p 417, per Deane J at p 433, per Dawson J at p 450, and per Gaudron J at p 455. 17The overall effect of the Deed was that the purchaser assigned its rights under the 2003 contract to the taxpayer (cl 3.1), the vendor released the purchaser from its obligations under that contract (cl 6), and the taxpayer assumed those obligations (cl 4.1(b)). 18The 2003 contract was not, in terms, rescinded and the vendor did not undertake any new or express obligation to transfer the hotel to the taxpayer on payment of the balance of the purchase money under the 2003 contract. The deposit paid by the purchaser remained in the vendor's hands for the taxpayer's benefit. No further or other deposit was paid. 19The source of the vendor's obligation to transfer the hotel remained the 2003 contract that had been assigned to the taxpayer. It was somewhat faintly argued by Ms Tsekouras for the taxpayer that the vendor's obligation to transfer the hotel arose under an ad hoc implied term. However, if the assignment was effective, it is not necessary to imply any such term to give the Deed the necessary business efficacy. 20The benefit of the 2003 contract could be assigned in equity and under s 12 of the Conveyancing Act, but the obligations, the burden, could not. 21The relevant principles were stated by Collins M.R. in Tolhurst v Associated Portland Cement Manufacturers (1900) Ltd [1902] 2 KB 660, 668-9: "...neither at law nor in equity could the burden of a contract be shifted off the shoulders of a contractor on to those of another without the consent of the contractee ... this can only be brought about by the consent of all three, and involves the release of the original debtor ...On the other hand, it is equally clear that the benefit of the contract can be assigned ... There is, however, another class of contract, where there are mutual obligations still to be enforced ... To suits on these contracts ... the original contractee must be a party, whatever his rights as between him and his assignee. He cannot enforce the contract without showing ability on his part to perform the conditions performable by him under the contract ... but ... the assignor may rely upon the act of another as performance by himself." 22The decision was affirmed by the House of Lords [1903] AC 414. See also FCT v Orica Ltd [1998] HCA 33, 194 CLR 500, 513 and Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85, 103. 23The application of these principles to contracts for the disposition of interests in land was considered in Shaw v Foster (1872) LR 5 HL 321. Lord Cairns said at pp 341, 343-4: "... it is an agreement ... to execute a valid assignment of the contract ... the agreement must ... be read as an agreement to put the assignee into the position of the purchaser - the assignee assuming that position, and taking the position of the purchaser ... with the obligation of performing the duties which the purchaser would otherwise have to perform for the fulfilment of the contract ... an undertaking to assign a contract means to assign in such a way that the assignee will take from the assignor the whole of the obligations of the contract and fulfil them according to its terms." 24Lord O'Hagan said at p350: "... the interest so vested in the purchaser may be the subject of charge or assignment, and ... the sub-assignee or incumbrancer may enforce his rights against the vendor, ... if he assumes the position of the vendee, and fulfils the duties and sustains the liabilities created by the contract." 25The question was considered in Queensland Insurance Co Ltd v Australian Mutual Fire Insurance Society Ltd (1941) 41 SR 195 where Jordan CJ said at 201, 203: "As a general rule a person may assign to another any benefit to which he may be entitled under a contract, but cannot escape his contractual liabilities by purporting to assign them, although if the contract be not of a personal nature, he may procure someone else to perform them for him. If therefore a contract be assigned by one of the parties, the assignee may in general compel the other party to do for his benefit whatever he would have been liable to do for the assignor's benefit, subject, however, to the obligations of the assignor being duly performed by the assignor or by someone else ... I see no reason in principle why this should not apply to an agreement for a lease ... As at present advised, I can see no reason in principle why ... the [appellant] and the M.L.C. cannot together sue for specific performance of that agreement, or why it cannot itself sue, joining the M.L.C. as defendant if the latter is unwilling to join as plaintiff." 26Given these principles the fact that the taxpayer assumed "the obligations" of the purchaser under the 2003 contract and the vendor released the purchaser from "all liability" did not prevent the Deed operating as an assignment of the benefit of that contract. 27The taxpayer would have to perform the purchaser's remaining obligations to obtain the benefit of the contract, and would have been bound, by necessary implication, to indemnify the purchaser. 28What, in my judgment, is critical is that the 2003 contract was not rescinded, and was the only source of the vendor's obligation to convey the hotel on receipt of the balance of the purchase price. 29The Judge's reasoning fundamental to his decision was in [12]-[13]: "12. With its burdens and benefits removed from [the purchaser] the [2003] contract had no content and was extinguished. 13. A new contract was constituted by [the taxpayer] undertaking obligations ... identical to those of the [2003] contract; its benefits having been assigned to it ...". 30I am unable, with respect, to accept this reasoning. An assignment of a contract always removes its benefits from the assignor. 31The Deed was a tripartite contract which did not impose on the vendor any new or direct obligation to transfer the hotel to the taxpayer on receipt of the balance of the purchase price. Its obligation to do so remained sourced in the 2003 contract, and the taxpayer's only right to enforce that transfer came from the assignment in cl 3.1. 32On the other hand the purchaser's obligations did not survive. In cl 4.2(b) the taxpayer covenanted to "perform and observe all obligations of the Purchaser under the [2003] contract". If this stood alone the Deed would have added the taxpayer's liability to that of the purchaser, without affecting the latter. However cl 6(b) released the purchaser from "all liability arising out of the ... [2003] contract." 33In this context the reference in cl 4.2(b) to "all obligations of the Purchaser" only incorporated them by reference. It did not require their continued existence. If there can be no liability for breach there can be no obligation. The law does not recognize a legal obligation without actual or contingent liability for its breach. 34In its context therefore cl 4.2(b) required the taxpayer to perform obligations equivalent to those that bound the purchaser before the Deed. It did not require the purchaser to remain bound. 35The Deed was not a mere assignment, which would not affect the purchaser's liability to the vendor, or impose a direct liability on the taxpayer. 36Nor was it a mere novation which would have rescinded the original contract and replaced it with a new one. 37The Deed was a hybrid tripartite contract under which the vendor's obligation flowed from the assignment and the taxpayer's "concurrent and mutually dependent obligations" flowed from the Deed. 38The Deed may have effected a novation of the "concurrent and mutually dependent obligations." At the same time it effected an assignment of the benefit of the vendor's obligation to transfer the hotel on payment of the balance of purchase money. 39The 2003 contract continued to determine the date and consideration for the vendor's disposal. The Deed also transferred to the taxpayer the deposit and purchaser's lien: Rose v Watson (1864) 10 HLC 672. The increase in value since 5 September 2003 accrued to the purchaser which received $2,060,389 from the taxpayer under the Deed. This would have accrued to an arms length vendor if the 2003 contract had been rescinded and replaced by a new contract with the taxpayer. 40The requirements for a straightforward novation are settled. In Scarf v Jardine (1882) 7 App Cas 345, at 351 Lord Selborne LC said: "... novation ... means this ... there being a contract in existence, some new contract is substituted for it, either between the same ... or different parties, the consideration mutually being the discharge of the old contract." (emphasis supplied) 41In Vickery v Woods [1952] HCA 7, 85 CLR 336, 345 Dixon J referred to novation as "a tripartite contract involving a rescission of the [original] contract". Kitto J agreed and at p 351 Fullagar J said: "There is no evidence that the original contract was ever rescinded or annulled." 42In In re United Railways of the Havana and Regla Warehouses Ltd [1960] Ch 52, 84-5 Jenkins LJ, delivering the judgment of the Court, said: "Mr Wilberforce ... submitted that novation comprises two distinct elements, viz, the annulment of one debt and the creation of a substituted debt in its place ... no express judicial authority was cited ... to support [the] suggested dichotomy, but in our view it is right in principle. The discharge of the original debtor must precede, and is distinct from, the acceptance by or imposition upon the creditor of the substituted debtor." These principles also apply to the assignment of the benefit of an executory obligation. 43In Olsson v Dyson [1969] HCA 3, 120 CLR 365, 376 Kitto J, with whom Menzies and Owen JJ agreed, said: "It would be out of the question ... to hold that any tripartite agreement was made by the deceased, the widow and the company, by which the deceased released the company from the debt in consideration of its promising to pay Mrs Dyson." Windeyer J, otherwise in dissent, agreed on this point at pp 388-9: "Novation is the making of a new contract between a creditor and his debtor in consideration of the extinguishment of the obligations of the old contract: if the new contract is ... to give enforceable rights or obligations to a third person he ... must be a party to the novated contract ... novation means simply a new contract standing in the place of the old. It may be ... between the parties to the old contract, or ... a contract between them and a new party" (emphasis supplied). 44In Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473, 491-2 this Court said: "Novation is a transaction by which all parties to a contract agree that a new contract is substituted for one that has already been made ... Novation involves the extinguishment of one obligation and the creation of a substituted obligation in its place. Intention is crucial to show a novation." 45Leading English text books add little. Chitty on Contracts "General Principles" 28th ed 1999 20-086 states that "the effect of a novation is not to assign or transfer a right or liability, but rather to extinguish the original contract and replace it with another." 46Trietel "The Law of Contract" 12th ed 2007 15-003 is to the same effect: "Novation is a contract between debtor [obligor], creditor [obligee] and a third party that the debt [obligation] owed by the debtor [obligor] shall henceforth be owed to the third party. This is not assignment ... because the original debt [obligation] is not, strictly transferred." 47Williston on Contracts 3rd ed contains a fuller treatment. Dealing with bilateral (executory) contracts the author states at para 418: "Either party ... without the assent of the other may assign effectively such rights as have accrued ... or are expected to accrue to him under the contract. An assignment of this sort is in effect an assignment not of the whole bilateral contract, but of a unilateral right." 48The right is unilateral because the burden of the contract cannot be assigned. 49At para 1865 the author states: "Novation may be broadly defined as the substitution of a new contract or obligation for an old one which is thereby extinguished. More specifically, it is a substitution by mutual agreement of one debtor or of one creditor for another, whereby the old debt is extinguished, or the substitution of a new debt or obligation for an existing one, which is thereby extinguished. A novation is a mode of extinguishing one contract or obligation by another." 50The author dealt with the distinction between assignment and novation in para 1867A: "An assignment differs from a novation in two respects: first, in that it does not itself constitute a novation since it creates no contract between the obligor and the assignee; and the second because, although there is the discharge of a duty from the obligor to the obligee - assignor, the original obligation is not discharged but merely transferred thus substituting for the obligor's duty to the assignor a new duty upon him to the assignee." 51A parallel line of authority which includes Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 10, 98 CLR 93, and culminated in FCT v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35, 201 CLR 520 (Sara Lee) considered the distinction between the variation of a contract and its replacement by a new contract without a change of parties. In the earlier case Dixon CJ and Fullagar J said at 112-3: "The argument ... tended to centre around the distinction ... between 'rescission' and 'variation'. It is not satisfactory distinction. It appears to be a matter of degree. Thus we find Lord Atkinson in the British and Beningtons' Case [1923] AC 48 saying at p 62: 'A written contract may be rescinded by parol either expressly or by the parties entering into a parol contract entirely inconsistent with the written one, or, if not entirely inconsistent with, inconsistent with it to an extent that goes to the very root of it.' His Lordship went on to say that in the particular case no such rescission could be found, the purpose of the parol contract being 'merely to vary the written contract with respect to one of its provisions.' If that is the test to be applied ... the plaintiff must ... fail ... It proved, at most, a contract made as to some of its terms in 1951 and as to some of its terms in 1952." 52Williams J quoted at p 124 from the speech of Lord Dunedin in Morris v Baron & Co [1918] AC 1 at 27 where his Lordship said: "The difference between variation and rescission is a real one, and is tested, to my thinking, by this: In the first case there are no such executory clauses in the second arrangement as would enable you to sue upon that alone if the first did not exist: In the second you could sue on the second arrangement alone, and the first contract is got rid of either by express words ... or because, the second dealing with the same subject matter as the first but in a different way, it is impossible that the two should be both performed. When I say you could sue on the second alone, that does not exclude cases where the first is used for mere reference, in the same way as you may fix the price by a price list, but where the contractual force is to be found in the second by itself'." 53Kitto J said at p135: "... a long line of authorities has committed the law to an acceptance of the doctrine that an agreement which deals with the subsisting rights and obligations of the same parties under an earlier contract may vary that contract without terminating it, and that whether it effects a variation on the one hand or a discharge on the other is a question depending upon the intention of the parties as appearing from the new agreement." 54In Sara Lee (above) at [21] the plurality said: "When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration." 55Thus an existing contract may be varied without being rescinded but novation appears to require the rescission of the existing contract, or a severable part thereof. 56The cases and text writers do not appear to have considered the juristic nature of a hybrid contract which assigns the benefit of an executory contract, and makes the assignee solely responsible for "the concurrent and mutually dependent obligations." Uninstructed by direct authority I would have characterised the Deed as an assignment of the benefit of the 2003 contract as varied. It was not a novation of the whole contract because it did not impose a new obligation on the vendor to transfer the hotel and it varied the old contract, without rescinding it. 57Ms Tsekouras submitted that Sara Lee [2000] HCA 35, 201 CLR 520 (Sara Lee), Orica Ltd v FCT [2010] FCA 197 (Orica) and Goodridge v Macquarie Bank Ltd [2010] FCA 67 (Goodridge) were authority to the contrary. 58In Sara Lee the Court had to decide whether a disposal on 30 August 1991 was effected pursuant to the contract of 31 May or that of 30 August. The plurality said [25]: "The manifest intention of the parties was not that the agreement of 31 May 1991 should be wholly rescinded and replaced by any new agreement, but that the rights and liabilities under, in the mode of performance of, the agreement, should be varied in certain respects." 59The agreement of 31 May provided [9] that on the completion date the Sellers would transfer to the Buyer and the Buyer would acquire the assets and intangible rights being sold. 60Section 12.3 in Article XII of that agreement provided [10] that it could not be assigned without the prior consent of the other parties but: "... the Buyer may assign any of its rights or obligations ... to one or more of its subsidiaries ... provided ... the assignee shall agree to be bound by the terms ... of this Agreement and that such assignment shall in no way limit or relieve the assignee of any of the assignor's obligations hereunder." 61The Buyer assigned its rights and obligations in relation to the taxpayer's business in Australia [11] to a newly incorporated subsidiary which agreed to be bound by the agreement of 31 May [27]. 62The plurality referred [27] to the position of that subsidiary: "Nicholas Products Pty Ltd was not a party either to the purchase and sale agreement of 31 May or to the amendment agreement of 30 August. Its agreement to be bound by the terms and conditions of the agreement of 31 May was a necessary condition of the capacity of Roche to assign to it its rights. By reason of the provisions of s 12.3 of the 31 May agreement Roche itself was not relieved of its obligations by such assignment. In the absence of novation, the reference in s 12.3 to 'assignment' of obligations is curious, but the result which the parties intended to achieve is reasonably clear." 63Their statement that the 'assignment' of the Buyer's obligations was curious recognised the principle that liabilities cannot be assigned. 64The plurality may have considered that a tripartite contract in which an assignee assumed direct obligations to the obligee without the assignor being released, was not a novation. Whether that is so or not the decision does not assist the taxpayer. 65The question in Orica [2010] FCA 197 was whether, for capital gains tax purposes, the Assignment Deed between the taxpayer, Zeneca and Zeneca BV was a disposal by novation of the benefit of its Distribution Agreement with Zeneca. 66The taxpayer argued that there was no novation because there was [116] "an assignment of [its] rights and a partial release of [its] potential liabilities". The Distribution Agreement survived so that Zeneca could enforce accrued rights against the taxpayer. 67Despite the description "Assignment Deed" and the heading "Assignment" to cl 2, there was no express assignment to Zeneca BV. The clause provided [48] "[Zeneca BV] shall be bound by and comply with the provisions of the [Distribution Agreement] binding on [Orica] and shall enjoy all the rights and benefits of [Orica] under the [Distribution Agreement]." 68Sundberg J said [119]: "Rights and obligations can be effectively transferred by a novation." 69His Honour was referring to the practical, not the legal, operation of a novation because he cited [119] the statement of Windeyer J in Olsson v Dyson [1969] HCA 3, 120 CLR at 388 that "the result of a novation may be the same, or much the same as if there had been an effective assignment" (emphasis supplied). 70Windeyer J described its legal operation in another passage cited by Sundberg J at [122]: "Novation is the making of a new contract between a creditor and his debtor in consideration of the extinguishment of the obligations of the old contract: if the new contract is ... to give enforceable rights or obligations to a third person he ... must be a party to the novated contract" (emphasis supplied). 71The assignment of a right from A to B transfers it to B. A novation may vest an equivalent right in B. In the first case an existing right is transferred, in the second a new one is created. 72The distinction is brought into focus by the different consequences for B. An assignee is bound by the "equities" of the obligor against the assignor. A new party acquiring the equivalent right by novation is not. Time, for limitation purposes, can commence to run against the obligee before an assignment, but not before a novation. 73Sundberg J referred to the statements of principle by Lord Selborne, above [40], and Windeyer J, above [43] and continued [123]: "The question is what is meant by the 'extinguishment of the obligations of the old contract' and 'the discharge of the old contract'." 74He cited Bailey "Novation" (1999) 14 Journal of Contract Law 189 and continued [123]: "... whether the novation lets B off the hook depends on what the parties intended to do in rescinding the original contract. If they intended only to rescind the original contract without affecting existing causes of action A will be able to pursue B for past breaches. But if it was intended that the original contract and all accrued causes of action ... were to be discharged by the novation, that will be the effect." 75He cited Westwood-Westply Ltd v Cundy (1965) 50 DLR (2d) 744 where the Supreme Court of Canada held that there could be a novation of part of a debt. 76The parties can mould their novation in a number of ways. The extinguishment of existing rights can be total, or partial provided the rights are severable, and the new rights may be the same, greater or less than those extinguished. 77In Orica the benefit of the existing contract was not assigned to the subsidiary. Accordingly it is not authority for the proposition that a hybrid transaction, such as the Deed, must take effect as a novation. 78The decision of Rares J in Goodridge v Macquarie Bank Ltd [2010] FCA 67 was reversed: Leveraged Equities Ltd v Goodridge [2011] FCFCA 3. The Full Court adopted a different construction of the contractual documents and held that contracting parties can prospectively authorise a novation at the option of one of them. 79The Full Court emphasised the freedom which contracting parties have to provide for novation in an unusual way. The law should allow the same freedom for assignments. 80The only passage of possible relevance in the judgment of Rares J is at [108] where he said: "A novation, or some similar result, can be achieved without following a set formula. It is possible to provide in separate clauses, or indeed in separate contracts or deeds between the same parties, for an assignment of property in one and an assumption of liabilities and obligations in another: ... Sara Lee [2000] HCA 35, 201 CLR 520 at 532-533 [16] - [18]." 81Those paragraphs in the judgment in Sara Lee refer to facts and documents without any statement of principle. 82This vague statement by Rares J ("a novation, or some similar result") cannot assist the taxpayer. The similar result could be an assignment. The plurality in Sara Lee [58]-[64] above did not decide that an assignment with an assumption of direct liability by the assignee was a novation. 83The judgment of the plurality in Sara Lee does not compel, and comity does not require, this Court to characterise the hybrid contract in the Deed as a novation of the 2003 contract. 84I would prefer to characterise it as an assignment of the benefit of the 2003 contract to a new purchaser. 85Even if, contrary to my view, there was a novation, it was limited to "the concurrent and mutually dependent obligations". The benefit of the vendor's obligation was not novated, but assigned. 86On either characterisation the Deed was a transfer of dutiable property, namely the benefit of the 2003 contract, and not an agreement for its sale or transfer. Accordingly its cancellation did not attract s 50(1), the taxpayer was not entitled to a refund, and the appeal should be allowed. 87The taxpayer did not rely on s 50A which provides for a refund of duty in some circumstances when a transfer of dutiable property is cancelled. There was no reliance either on the conditional nature of the 2003 contract, and the extent to which the conditions remained to be performed when the Deed was executed. 88In my judgment therefore the following orders should be made: (1) Appeal allowed with costs. (2) Judgment of Gzell J of 27 April 2010 set aside. (3) In lieu thereof order that the respondent's appeal from the decision of the Chief Commissioner be dismissed with costs. (4) The respondent to have a certificate under the Suitor's Fund Act for the costs in this Court, if qualified.

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