Court of Appeal (ACT)|2013-12-20|Before: Murrell CJ, Cowdroy JJ, Penfold J, Luke J

Commissioner for ACT Revenue v Araghi & Anor. [2013] ACTCA 54 (20 December 2013)

APPEAL - TAXES AND DUTIES - stamp duties - contract for the sale of land - separate contract for the construction of a house - contracts interdependent - assessment of stamp duty to be paid by the purchasers of the land - whether dutiable value of the dutiable property for the dutiable transaction included the monetary consideration for the construction of the house - whether the dutiable value of the dutiable property for the dutiable transaction included any non-monetary consideration received by vendor of the land

APPEAL - JURISDICTION - appeal from decision of the ACT Civil and Administrative Tribunal removed to the Supreme Court of the Australian Capital Territory - whether appeal before the Supreme Court of the Australian Capital Territory needed to identify a question of fact or law

ACT Civil and Administrative Tribunal Act 2008 (ACT) ss 79, 83

Duties Act 1999 (ACT) ss 7, 8, 10, 11, 12, 16A, 20, 22

Land (Planning and Environment) Act 1991 (ACT), s 180

Appellants v Council of the Law Society of the ACT (2011) 252 FLR 209

Archibald Howie Proprietary Limited v Commissioner of Stamp Duties (New South Wales) [1948] HCA 28; (1948) 77 CLR 143

B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar [2013] ACTSC 219

Bambro (No 2) Pty Ltd v Commissioner of Stamp Duties [1963] SR (NSW) 522

Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3; (2005) 221 CLR 496

Commissioner for ACT Revenue v Roozbeh Araghi and Luke Jonathon Dorsett [2013] ACTSC 43

Lend Lease Development Pty Ltd v Commissioner of State Revenue [2013] VSCA 207 Roozbeh Araghi and Luke Johnathon Dorsett v Commissioner for Australian Capital Territory Revenue [2010] ACAT 78

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Court of Appeal of the Australian Capital Territory

IN THE SUPREME COURT OF THE ) No. ACTCA 20 of 2013

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: COMMISSIONER FOR ACT REVENUE

1. The orders of Penfold J made on 14 March 2013 be set aside.

2. The appeal from the decision of the ACT Civil and Administrative Tribunal delivered on 3 November 2010 in the matter of Roozbeh Araghi and Luke Johnathon Dorsettt v Commissioner for Australiana Capital Territory Revenue [2010] ACAT 78 be dismissed.

4. The Appellant pay the costs of the Respondents of the proceedings before the primary judge and of this appeal.

1. Pursuant to the Contract for Sale dated 9 April 2009 made between the Land Development Agency and the Respondents, the Respondents are only liable to pay duty assessed under the Duties Act 1999 (ACT) in respect of the consideration paid by them for the purchase of the Crown Lease known as Block 25, Section 15, Crace, ACT, namely $81,000.

2. The Respondents are not liable to pay stamp duty in respect of the amount of $352,900.00, being the amount payable by the respondents to Crace Developments Pty Limited pursuant to the contract made between those parties on 9 April 2009 for construction of a house on the said land.

IN THE SUPREME COURT OF THE ) No. ACTCA 20 of 2013

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

BETWEEN: COMMISSIONER FOR ACT REVENUE

1. This appeal raises for consideration the question of the proper amount of stamp duty payable under the Duties Act 1999 (ACT) ('the Act'), in respect of dealings involving two contracts made on the same day and to be completed simultaneously. One contract was for a conveyance of land, whilst the other contract was for the construction of a house on such land.

2. On 9 April 2009 Roozbeh Araghi and Luke Johnathon Dorsett ('the respondents') as purchasers entered into a contract ('the land sale contract') as joint tenants for the purchase of a Crown Lease known as Block 25, Section 15, Crace, ACT ('the land'), which was registered under the Land Titles Act 1925 (ACT) ('the Land Titles Act') for a price of $81,000. The vendor under the contract was the Land Development Agency ('LDA').

3. On the same day the respondents entered into a Home Building contract ('the building contract') with Crace Developments Pty Limited ('Crace'). That contract provided for the construction of a two story non-detached row house on the land, the cost of construction being $352,900.

4. Pursuant to cl 30.1(b) of the land sale contract, the respondents, as purchasers, acknowledged that they undertook to develop the land in accordance with the Community Title Scheme and the Community Title Plan. The Community Plan, to which the 'Community Title Plan' stated in cl 30.1(b) presumably referred, was defined as the community plan attached as a draft to the contract which was to be registered. The Community Scheme, to which the 'Community Title Scheme' stated in cl 30.1(b) presumably referred, was defined as the community title scheme constituted on registration of the Community Plan.

5. Annexure B to the building contract is a copy of the Crown Lease, together with a copy of the Memorandum of Provisions ('the memorandum') registered on 22 December 2008 under s 103A of the Land Titles Act. The memorandum refers to obligations imposed upon a lessee under the Crown Lease. Significantly, cl 2.3 entitled 'Commence Construction' imposes the following obligation upon a lessee:

[W]ithin twelve (12) months from the Commencement Date or within such further time as may be approved in writing by the Authority, commence construction of an approved development on the Land as approved by the Authority at a cost of not less than sixty thousand dollars ($60,000) per dwelling;

6. Completion of the land sale contract was made interdependent upon completion of the building contract. Clause 31.1 of the land sale contract relevantly provided:

Completion of this contract is interdependent with and conditional on completion of the Home Building Contract entered into with respect to the Land by the Buyer. If the Home Building contract is rescinded or terminated, this Contract is taken to be rescinded.

7. The 'Home Building Contract' is defined in cl 1.1 of the land sale contract as follows:

"Home Building Contract" means the home building contract entered into between the Buyer and Crace Developments Pty Limited on or about the date of this Contract.

8. Clause 22 of the land sale contract provided in respect of completion as follows:

Clause 22 - Date for Completion

22.1 In this clause the following definitions are used:

(a) Date for Completion means the date for completion of the Contract determined in accordance with this Clause 22; and

(b) Registration Date means the date that the Crown Lease has been issued and registered by the Registrar General.

22.2 The Seller will notify the Buyer in writing of the Registration Date.

22.3 Subject to clause 31.1, the Date for Completion is the date which is 28 days after the later of:

(a) the Registration Date;

(b) the Community Plan Registration Date; and

(c) the Date of Practical Completion under the Home Building Contract.

[Emphasis in original]

9. Clause 1.1 of the land sale contract defines 'Date of Practical Completion' as 'the date that Practical Completion has taken place under the Home Building Contract'.

10. The building contract contained complementary provisions to the land sale contract relating to completion. By cl 1.1 the terms 'Completion' and 'Date for Completion' in the building contract are defined as having the meaning given in the land sale contract. Accordingly, completion of the building contract was designed to be simultaneous with completion of the land sale contract.

11. In summary therefore, completion of the land sale contract and completion of the home building contract was to be effected 28 days after one of three dates listed in cl 223 of the land sale contract, including the date of practical completion of the building contract.

12. The improved land was transferred to the respondents on 30 July 2010. The respondents then duly paid the amounts stipulated under each of the land sale contract and building contract. The appellant assessed stamp duty for the transaction under the Act based on the dutiable value of $433,900, being the combined value of the land and house.

13. The respondents challenged such assessment in the ACT Civil and Administrative Tribunal ('ACAT'). In its decision delivered on 3 November 2010, ACAT set aside the decision of the appellant, drawing particular attention to the fact at [99] that there were 'two separate and distinct contracts in existence notwithstanding that they are interlocked to some degree': see Roozbeh Araghi and Luke Johnathon Dorsett v Commissioner for Australian Capital Territory Revenue [2010] ACAT 78. The appellant appealed such decision pursuant to s 79 of the ACT Civil and Administrative Tribunal Act 2008 (ACT) ('the ACAT Act') and on 17 December 2010 the ACAT Appeal President referred the matter to the Supreme Court pursuant to s 83 of the ACAT Act.

14. Chapter 2 of the Act concerns the transfer of 'dutiable property'. Section 7 of such Act relevantly provides:

Imposition of duty on certain transactions concerning dutiable property

(i) an agreement for the sale or transfer of dutiable property;

(ii) a declaration of trust over dutiable property;

(2) A transfer or transaction mentioned in subsection (1) is a dutiable transaction for this Act.

[Emphasis in original]

15. Section 8 contains a table ('Table 8') which states the transactions that are dutiable, identifies when a transfer of property is deemed to have occurred, and identifies the transferee. Relevantly, s 8(1) deems duty to be chargeable on an agreement for the sale and transfer of dutiable property 'when the agreement is entered into': see Item 1, Column 5, Table 8. Section 10 relevantly defines dutiable property as follows:

10 Dutiable property

(1) Dutiable property is any of the following:

16. Section 11 of the Act defines the occasion when liability for duty arises as follows:

(1) A liability for duty charged by this chapter arises when a transfer of dutiable property occurs.

(2) However, if a transfer of dutiable property is effected by an instrument, liability for duty charged by this chapter arises when the instrument is first executed.

17. Section 12 of the Act imposes payment of duty as charged by chapter 2 upon the transferee.

18. Special provisions apply for an 'off the plan' purchase which is defined in s 16A(4) as follows:

'off the plan' purchase agreement means -

(a) an agreement for the sale or transfer of dutiable property that is, or includes, land where a residence is to be erected or developed before completion of the sale or transfer; or

(b) a purchase agreement for a declared affordable house and land package.

19. In respect of 'off the plan' purchase agreements, s 16A(1) provides:

Payment of duty - 'off the plan' purchase agreements

(1) For section 16, liability for duty on an 'off the plan' purchase agreement is taken to arise if at least 1 of the following events happens:

(a) the agreement is completed;

(b) the whole, or any part, of the purchaser's interest under the agreement is assigned;

...

20. Section 20 of the Act sets out how the dutiable value of dutiable property is to be established. It relevantly provides:

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

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

(i) for a long-term lease or franchise arrangement - the unencumbered value of the Crown lease of the land in relation to which the long-term lease or franchise arrangement is granted;

(ii) for any other dutiable property - the unencumbered value of the dutiable property.

(2) However, the dutiable value of a dutiable transaction that is a purchase agreement for a declared affordable house and land package, is the lesser of -

(a) the value of the land component of the package on the date of the agreement; and

(b) the value of the land component of the package on the date the liability for duty arises under section 16A(1).

21. Section 22 of the Act defines the 'unencumbered value' of dutiable property. It provides:

(1) The unencumbered value of dutiable property is the value of the property determined without regard to any encumbrance to which the property is subject.

(2) If, before land is transferred to a transferee, the transferee has made improvements to the land, the unencumbered value of the land is to be determined as if those improvements had not been made.

22. The appellant put forward multiple constructions of the transaction to the primary judge, each with the result that the dutiable value of the transaction was to include both the value of the land under the land sale contract and the value of the house under the building contract: see Commissioner for ACT Revenue v Roozbeh Araghi and Luke Jonathon Dorsett [2013] ACTSC 43 ('the primary judgment') at [48]-[50]. One such construction relied upon the transaction being construed to be an 'off the plan' purchase agreement under s 16A of the Act, however the primary judge held that this was irrelevant for determining the relevant dutiable value: [77]-[78].

23. Having referred to the facts and issues before her, the primary judge considered it necessary to formulate a question of law to be determined: [39]-[40]. The question was framed as follows:

Under the Duties Act, what value is to be considered in the assessment for duty of an agreement for the sale of a Crown lease by the Land Development Agency, being an agreement under which the buyer is required, before the transfer of the lease is required or able to be completed, to complete a separate contract with a different party for construction of a building on the land subject to the lease?

24. The primary judge concluded that the transaction involved two separate and distinct contracts and that the building contract did not attract duty as a monetary consideration under the Act: [119]. Her Honour left open the question whether the value of the building contract constituted a non-monetary consideration. However, she found on the material before her that she could not determine what that value would be: [129]. These findings are reflected in the primary judge's answer to the question of law posed by her, set out as follows at [143]:

(a) the dutiable transaction is the contract for the transfer by the LDA of a specified Crown lease to the buyer;

(b) the dutiable value is the consideration for that contract;

(c) the monetary consideration is the price specified for the transfer of the Crown lease;

(d) there may be non-monetary consideration consisting of the buyer's agreement to perform, or the performance by the buyer of, actions that enable the LDA to comply with relevant legislation and to perform its obligations under the land sale contract;

(e) the value of any such non-monetary consideration cannot be determined on the materials and argument put before me; but

(f) there is no basis on which to find that the value of that non-monetary consideration is the price of the building contract.

25. Accordingly the issues arising on this appeal are:

What comprises the "consideration for the dutiable transaction" within section 20(1)(a) of the Act? More specifically, in relation to the land sale contract, was there any consideration over and above the $81,000 sale price of the land ('the dutiable value issue')?
What is the nature of the appeal to the Supreme Court following removal to that Court pursuant to s 83 of the ACAT Act ('the nature of the appeal issue')?

26. Despite the extensive submissions before the primary judge, the dispute between the parties is relatively narrow in scope. By virtue of s 20 of the Act, the dutiable value of the land sale contract in the present circumstances is the greater of either the consideration for the land sale contract (s 20(1)(a)), or the unencumbered value of the land the subject of the land sale contract (s 20(1)(b)(ii)). By operation of s 22(2), the unencumbered value of the land was $81,000, being the sale price of the land sale contract. This is accepted by the appellant.

27. The appellant therefore relies on s 20(1)(a), and submits that the consideration for the land sale contract included the value of the house under the building contract. This is argued to be the case due to the interdependence of the land sale contract and the building contract; put simply, but for the construction of the house, the land sale contract would never have been completed. The appellant contends that the respondents promised to pay not only the purchase price of the land but also to improve the land by entering the building contract with Crace. Whilst the respondents obviously received a benefit in the house being built, the appellant submits that so too did the LDA. This is because the effect of s 180 of the Land (Planning and Environment) Act 1991 (ACT) was such that the LDA could not transfer the land before at least $60,000 was expended on a dwelling on the land as per the memorandum.

28. The appellant also contends that pursuant to the Planning and Development Act 2007 (ACT), statutory obligations are imposed upon the LDA by s 32(1) to 'develop land', 'carry out works for the development and enhancement of land' and to 'carry out strategic or complex urban development projects'. Pursuant to s 32(4), the LDA is required to exercise its functions in accordance with the objects of the Territory Plan and in accordance with the latest statement of intent applicable to the LDA. By virtue of ss 51(1), 92 and 93, the Territory Plan includes concept plans which apply principles and policies of future urban areas. The land that is the subject of the land sale contract formed part of the area under the Crace Concept Plan. Such Plan required 'a dwelling yield of 1,200 dwellings' to be provided, including 'a mix of small scale blocks (e.g. terrace housing) and multi-unit dwellings'. The appellant submits that the land sale contract and the building contract were made in part to implement the Crace Concept Plan. Accordingly the LDA received a benefit from the construction of the house by virtue of the respondents' contract with Crace.

29. To make good these submissions, the appellant submits that 'consideration' in s 20(1)(a) should be construed in the manner considered by Dixon J in Archibald Howie Proprietary Limited v Commissioner of Stamp Duties (New South Wales) [1948] HCA 28; (1948) 77 CLR 143 at 152 ('Archibald Howie'), which is more fully considered hereunder. In short however, 'consideration' should be equated to that which 'moves the conveyance'.

30. The appellant also relies on the decision in Bambro (No 2) Pty Ltd v Commissioner of Stamp Duties [1963] SR (NSW) 522 ('Bambro') in which the Full Court of the Supreme Court of New South Wales said at 528-529:

[T]he ascertainment of the ... duty to be charged is to be by reference to the property agreed to be sold or conveyed regarded as that which, viewing the matter as at the date of the agreement, will be, under the terms of the agreement, the subject of conveyance, at the time when, under the terms of the agreement, the conveyance is to be executed.

... if the whole building is to be completed before conveyance, then the dutiable "matter", in the form of an agreement for the sale or conveyance of property, which is contained in the instrument is constituted by an agreement for the sale or conveyance of the land with the building upon it; and consideration and unencumbered value for the purpose of assessing ... duty are to be assessed accordingly.

...The crucial feature, for stamp duty purposes, of this agreement is that conveyance is to precede building and the subject matter of conveyance is, therefore, to be the land alone.

31. The respondents' primary submission may be put shortly. They emphasised the need to identify the promises of each of the parties in what they described as the 'composite' transaction, being:

a. The LDA's promise to transfer the land with a house on it to the respondents;

b. The respondents' promise to pay $81,000 to the LDA;

c. The mutual promises or agreement of the LDA and the respondents on one hand, and of Crace and the respondents on the other, designed to coordinate the two transactions, in particular to construct a dwelling that complied with cl 2.3 of the memorandum before the LDA transferred the land to the respondents;

d. Crace's promise to the respondents to build the house; and

e. The respondents' promise to Crace to pay $352,900.

32. The respondents submit that the approach contended for by the appellant inappropriately subsumes 'all of the consideration that moved the arrangement [or composite transaction] into the consideration that moved the transfer of the land': Lend Lease Development Pty Ltd v Commissioner of State Revenue [2013] VSCA 207 ('Lend Lease') at [204].

33. In Archibald Howie the High Court was required to determine under which one of several categories in s 66 of the Stamp Duties Act 1920-1940 (NSW) certain transfers of shares were to be assessed. At 152, construing the word 'consideration', Dixon J said:

In the context I think that the word "consideration" should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts. The difference is perhaps not very material because the consideration must be in money or money's worth. But in the law of simple contracts it is involved with offer and acceptance: indeed properly understood it is perhaps merely a consequence or aspect of offer and acceptance. Under s. 66 the consideration is rather the money or value passing which moves the conveyance or transfer.

34. Such approach shows that in interpreting the term 'consideration' it is necessary to encompass more than mere offer and acceptance in contract law. That is, attention must be directed to whatever moves from the transferee to the transferor to secure the dutiable property. So construed, it requires, in the present circumstances, consideration of the content of the whole of the dealings between the parties which involved the transfer of the land.

35. In Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3; (2005) 221 CLR 496 ('Dick Smith'), the High Court considered, pursuant to the Duties Act 1997 (NSW), an agreement for the sale of the shares in a company, namely InterTAN Australia Ltd ('InterTAN Australia') to Dick Smith Electronics Holdings Pty Ltd ('the purchaser'). The shares in InterTAN Australia were owned in two separate lots by an American company and a Canadian company, being the first and second vendor respectively. In order to reduce the price of the shares, the first and second vendors, by arrangement with the purchaser, caused a dividend to be declared by InterTAN Australia prior to completion. The agreement provided that:

a. the purchaser would pay the vendors the value of the shares ex dividend at completion;

b. immediately after completion, the purchaser would pay into InterTAN Australia the value of the declared dividend; and

c. the parties would then cause InterTAN Australia to pay the dividend.

36. The question therefore arose whether the dividend amount should be included in the value of the sale of the shares for the purposes of assessment of duty. The primary judge found duty should be assessed only on value of the shares ex dividend, and his Honour's decision was upheld by the New South Wales Supreme Court of Appeal. The High Court reversed such finding, holding that the value of the dividend should be included in the assessment of the duty. The joint judgment of Gummow, Kirby and Hayne JJ referred to the need to take into account the whole of what was received by the vendors in the transaction. At [72] their Honours said:

To adapt what was said by Lord Wilberforce of other stamp duty legislation:

"In the first place, the phrase 'consideration for the transfer or conveyance' seems to me to refer clearly and naturally to that which passed to the transferor company 'for' the transferred properties."

The criterion in the Act of consideration "for" the transaction, being the Agreement for the sale and transfer of the Shares to the Purchaser, upon whom s 13 imposes the liability to pay the duty, looks to what was received by the Vendors so as to move the transfers to the Purchaser as stipulated in the Agreement.

[Footnotes removed]

37. In Bambro a purchaser agreed to pay £600,000 for the purchase of land on which the vendor, for consideration of £1,405,000, agreed to erect buildings for fit out as a shopping centre. Accordingly, the issue was whether the duty should have been calculated at £2,005,000 being the price of the land plus the total consideration for the erection of the shopping centre, or £600,000 being the land price only.

38. The Full Court of the Supreme Court of New South Wales referred to the fact that the transactions were to be separate. The land was to be paid for in parcels as it was conveyed, and the building and associated work to be paid for in stages as it was effected. At 526, Sugerman J, with Collins and Macfarlan JJ agreeing, said:

[T]he two parts of the transaction were to be separate. The land was to be paid for in parcels as it was conveyed, and the building and associated work in stages as it was effected. Moreover, the agreement contemplated conveyance of the land at times when nothing, or at any rate little, of the building and associated work upon the parcel conveyed would have been done. But it is true to say, none the less, that the two parts - sale of site and erection of Centre - were intended as parts of one integrated and indivisible transaction. ... A few instances will suffice to demonstrate the single and integrated character of the whole transaction. The whole agreement - sale as well as building - was to be dependent upon the obtaining of the consents and approvals required for the erection of the Centre on the site. It was made of the essence of the whole that the site should be appropriately zoned under town-planning legislation, and the vendor ... undertook to procure this before the date appointed for completion of the Centre with a right in Bambro ... to determine the agreement in the event of default. The rights given to each party in the event of default by the other ... indicate a mutual acceptance of the whole as one transaction which should be terminable in its entirety at the election of the party not in default should default occur on either side. The sum of £73,000, part of the purchase-price of the site which Bambro was at liberty to retain, might be treated as part of the "retention fund" provided for in the terms of payment of the consideration for the erection of the Centre.

[Footnote removed]

39. The Full Court found that duty was to be assessed on the purchase price for the land only. Despite the interlocking arrangements, and the contractual obligation by the purchaser to pay for the erection of the supermarket, no duty was payable in respect of the value of the proposed construction.

40. Lend Lease was decided subsequently to the decision of the primary judge now appealed. In that case, the question arose whether the Commissioner had properly assessed stamp duty in respect of the transfer of several parcels of land in the area of Victoria Harbour in Docklands of Melbourne to Lend Lease Development Pty Limited ('LLD') and associated companies. The transfers were to take place in stages. A development agreement between the vendor and LLD required LLD to make contribution payments for other infrastructure and development works ('the infrastructure') on land outside the boundary of the land which LLD was acquiring. The Commissioner issued duty assessments calculated on the basis that the consideration for the transfer of the land included LLD's obligation to make payments towards the infrastructure as well as for the purchase of the land.

41. Section 20(1) of the Duties Act 2000 (Vic) is essentially identical to s 20(1) of the Act. The primary judge found that all of the payments made by LLD for the land and for the infrastructure comprised 'part of the consideration for the land acquired' and was thus assessable in relation to duty. The Court of Appeal of the Supreme Court of Victoria reversed such finding. Significantly, Tate JA said at [133], after considering the observations of the High Court in Archibald Howie referred to above:

To say, however, that the 'consideration' for a dutiable transaction is not confined by the principles that apply to the consideration that must extend from the promisee in a contract to render the contract enforceable, is not to say that there is no need for a linkage or nexus to be found between the money or money's worth and the dutiable transaction. It is not sufficient that there be merely some connection between the consideration and the transfer. The required connection lies in the passing of the money or money's worth being that which moves the transfer.

42. At [145] of her Honour's judgment, Tate JA set out various principles derived from Bambro for the assessment of duty where a conveyance of land is completed before a building is commenced. Her Honour recognised, relevantly that the 'single, integrated and indivisible character of a transaction does not preclude the transaction from containing or relating to several distinct 'matters' only one of which may attract duty', and that an 'interdependence of mutual promises is not sufficient to determine whether a payment was for a dutiable transaction'. The Court decided that duty was not payable in respect of the purchaser's contractual obligations for two main reasons: first, those obligations were ancillary to the subject matter of the land sale contract; secondly because none of those obligations were for development on the land being conveyed.

43. The decision in Lend Lease is illuminating, particularly because of the references in the decision of Tate JA to the fact that mere interdependence of the agreements for sale and development is not conclusive that the consideration under each agreement should be viewed together. Her Honour said at [204] in respect of the nature of the dutiable property:

In order to identify the consideration that moves the transfer it is necessary to keep constantly in mind what property was involved in the transfer. This is all the more important when the transfer of dutiable property takes place within a composite arrangement where there are multiple forms of exchange. In those cases, it may be necessary to separate each strand of the arrangement to ensure that one does not inappropriately subsume all of the consideration that moved the arrangement into the consideration that moved the transfer of the land. As Sugerman J in Bambro made plain, for each promise made under a composite arrangement, one must ask: What was obtained for that promise? Was it for an exchange that is separate and distinct from the transfer of the land? Were there separate 'matters' dealt with by the transaction? Alternatively, was the promise part of the consideration that moved the transfer of the land?

44. Unlike the factual position in Lend Lease, in the present appeal the development proposed, being the house, was wholly within the confines of the land. The appellant points to the fact that the transfer of the land is only to occur following construction of the house and that in this respect, the respondents will have both a house and land. The appellant submits that in these circumstances, Bambro must be followed.

45. In Bambro, Sugerman J observed at 529, with Collins and Macfarlan agreeing, that if the buildings had been completed before the transfer, then duty would be payable on the improved land. Other factors however differentiate the present circumstances from those in Bambro. First, the parties to the building contract were the respondents and Crace. There was no privity of contract between the LDA and the respondents with respect to the building contract. This is a critical distinguishing fact to Bambro, in which the building contract was with the land vendor. In the present appeal, Crace assumed the contractual obligation to construct the house and the respondents were obligated under that contract to pay consideration for the construction of the house wholly to Crace.

46. Secondly, the reliance of the appellant on the interdependence of the land sale contract and the building contract is misplaced. It is irrelevant that had the LDA entered into a contract for the construction of the house with Crace and then transferred the developed land to the respondents, duty on the developed land would have been payable. The relevant clauses of the contracts, as set out at [5]-[11] above, required that the land sale contract be completed once the house had been constructed on the land pursuant to the building contract. This does not mean however that the construction of the house 'moved' the conveyance in the Archibald Howie sense. Rather, the construction of the house in effect operated as no more than a pre-condition to the transfer of the land.

47. Dick Smith is also distinguishable from the present circumstances. In Dick Smith the purchaser was, pursuant to its agreement with the vendors, obligated to not only pay to the vendors the value of the ex-dividend shares being sold, but also to, in effect, fund the debt created by the declaration of the dividend. Although the majority of the High Court at [74] described the transaction in Dick Smith as involving a 'tripartite element' due to monies being paid into InterTAN Australia, the focus rested upon the overall consideration received by the vendors.

48. In the present circumstances the promise by the respondents was to pay the consideration for the land, and to enter into a building contract. For the reasons expressed by Tate JA in Lend Lease at [218] however, the building contract was separate. Her Honour said:

In my view, the judge fell into error because he began his analysis with the obligations under the Development Agreement rather than with each Land Sale Contract and, while he stated that the Development Agreement did not itself effect the dutiable transaction, he gave the Development Agreement such primacy that he came close to treating all the obligations it imposed, with respect to the making of the contribution payments, as of equal force to the promise to pay the Stage Land Payment in identifying the consideration for the transfer of the land. Ultimately, the analysis adopted by the judge, and his emphasis upon the inclusion of the 'total basket of rights and obligations between the parties', was almost tantamount to treating the Development Agreement as the instrument that effected the dutiable transaction.

[Footnote removed]

49. We respectfully adopt the observations of Tate JA where her Honour found at [258] that the primary judge in that matter erred by failing to recognise that the contribution payments for the development were for matters that were 'separate and distinct from the transfer of land. He ought to have held that each of the contribution payments was 'for' something other than the transfer of land and that the consideration 'for' the dutiable transaction was solely that which moved the part of the composite whole comprising the transfer of the land'.

50. Tate JA referred at [211] to a submission which is to similar effect to that being made to us. Her Honour said:

The submission of the Commissioner that LLD must be taken to have been aware that VicUrban could not, consistent with its statutory obligations, have transferred the land simpliciter but only in the context of the development of the Docklands can be accepted. But it does not meet the point that the judge went further than acknowledging that the land was transferred in the context of the development of the Docklands area; rather, he went so far as to include within the consideration for the land the enhanced value that the land would have upon sale by reason of the works for which the contribution payments were made.

[Footnote removed]

51. Any benefit which might have accrued to the LDA due to the part implementation of the Crace Concept Plan did not 'move the conveyance' and could not therefore constitute consideration which became dutiable under s 20 of the Act. We also reject the submission that the LDA obtained non-monetary consideration by the construction of the house due to the fact that such construction operated as a pre-condition to the transfer of the Crown Lease. The error of the primary judge in Lend Lease was explained by Tate JA at [226] as 'a failure to appreciate that an interdependence of mutual promises is not sufficient to determine whether a payment was made 'for' a dutiable transaction'. That is precisely the error in the appellant's submissions in the appeal now before us.

52. We agree with the finding of the primary judge at [126] that there is no justification for concluding that 'the value of the monetary consideration constituted by the respondents' performance of the building contract could be equated to the cost of that contract to the respondents'. To the extent that her Honour left open the question of whether non-monetary consideration under the building contract would be dutiable, but could not assess the value of such consideration on the material before her, we disagree with her Honour. That is because any such consideration did not 'move' the conveyance, and as such was not relevant for considering the duty to be assessed under s 20 of the Act.

53. The appellant submits that the primary judge erred in concluding that the subject matter of the proceedings before her was confined to a question of law and was therefore required to be posed or stated as a 'question of law' before the jurisdiction conferred by ss 79 and 83 of the ACAT Act was invoked. This submission was not opposed by the respondents.

54. Section 79 of the ACAT Act relevantly provides:

Appeals within tribunal

...

(3) A party to the original application may, by application, appeal the decision to the tribunal on a question of fact or law.

Removal of applications from tribunal to Supreme Court

(1) If the parties to an application or an appeal (a matter) jointly apply to have the matter removed to the Supreme Court, the tribunal must order that the matter be removed to the Supreme Court.

(2) If a party to a matter applies to have the matter removed to the Supreme Court, the tribunal may, if it considers it appropriate, order that the matter be removed to the Supreme Court.

[Emphasis in original]

56. ACAT ordered that the proceedings be referred to the Supreme Court under s 83. Such a referral does not affect the nature of the application as defined by s 79, that is that the appeal against a decision was 'on a question of fact or law': B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar [2013] ACTSC 219 at [11]; Appellants v Council of the Law Society of the ACT (2011) 252 FLR 209 at [14]-[17]. This was recognised by the primary judge. Her Honour stated at [5] of her decision:

Under s 79 of the ACAT Act_, an appeal within ACAT lies on "a question of fact or law". No question of fact appears to arise in this case. Nor has any question of law been identified as such, and certainly none was identified in the notice of appeal from ACAT's decision, despite the requirement set out in the ACAT approved form for a notice of appeal for the appellant to "state ... any questions of law or fact involved"._

57. The primary judge then went on to formulate a question of law at [39] of her decision (set out at [23] above). Her Honour appears to have done so under the misapprehension that in the absence of a question of fact, there necessarily had to be a question of law for the jurisdiction of the Court to be properly invoked under ss 79 and 83 of the ACAT Act. This is incorrect; rather, it is the appeal itself which is the matter before the Court rather than a question of fact or a question of law. Given that the first order of the primary judge is framed in reference to the question of law posed by her Honour, it must be set aside.

58. The substance of the first order of the primary judge to the effect that the duty to be assessed was based on the purchase price of the land sale contract only is correct. Orders and declarations which have the same consequence to those of the primary judge will be made. As the appellant has lost on the substantive issue on appeal, it should pay the costs of the respondents.

I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Cowdroy.

Counsel for the Appellant: Mr AH Slater QC with Ms K Katavic

Solicitor for the Appellant: ACT Government Solicitor

Solicitor for the Respondent: Nelson & Co Solicitors

Civil and Administrative Tribunal Act 2008(ACT)

Land (Planning and Environment) Act 1991(ACT)

(Planning and Environment) Act 1991

Development Act 2007

Stamp Duties Act 1920

Commissioner for ACT Revenue v Araghi & Anor. [2013] ACTCA 54

At a glance

Court

Decision date

Before

Source

Judgment (133 paragraphs)

Commissioner for ACT Revenue v Araghi & Anor. [2013] ACTCA 54 (20 December 2013)

Parties

Legislation Cited (6)

Cases Cited (3)