1. On 12 October 1990, the land in contention (the 'Land') was created by registration of a plan of subdivision.[4] The Applicant was the registered proprietor of the Land. The Mondous family home, since its construction in about 1991, sits on a small area (approximately 12%) of the Land.[5]
2. In 1991, the Respondent was given a 'Notice of Disposition of an Interest in Land'[6] notifying that the Applicant had disposed of the Land to Mr and Mrs Mondous, pursuant to an Instrument of Transfer of Land dated 28 December 1990 (the 'First Transfer'), for no monetary consideration; and that possession had been delivered on that day. The First Transfer[7] stated that the consideration for the transfer was:

The Transferee entitlement [sic] to a distribution of corpus pursuant to The Mondous Family Trust Deed dated the 21st September 1986.

1. The First Transfer was stamped accordingly with nominal duty. However, the First Transfer was never registered.
2. In reliance on the Notice of Disposition, the Respondent assessed the Land for land tax from 1991 to 1997, in the ownership of Mr and Mrs Mondous. Significantly less land tax was thereby payable than if the Land had remained in the ownership of the Applicant, because the Applicant, unlike the individuals, owned many other properties, thereby attracting a higher marginal rate of tax under the second schedule of the Land Tax Act 1958.
3. The Respondent later discovered that the Applicant remained registered on title. On 10 February 1999, the Respondent wrote to the Applicant and Mr and Mrs Mondous seeking certain information.[8]
4. In response, on 9 March 1999, Mr Mondous produced a contract of sale bearing the date of 28 December 1989,[9] by which the Applicant purportedly sold the Land to Mr and Mrs Mondous for $120,000.
5. Shortly after the contract of sale was produced, a further Instrument of Transfer of Land dated 4 June 1999[10] was executed (the 'Second Transfer'), transferring the Land from the Applicant to Mr and Mrs Mondous for a consideration of $120,000. The Second Transfer was stamped accordingly and registered on 9 August 1999.
6. The parties have engaged in much correspondence regarding the Applicant's claim that it should not be assessed for land tax on the Land for the 1991 to 1999 tax years.
7. The Applicant's position may be summarised as follows:
   • (a) The Applicant relies upon the First Transfer to convey an equitable interest to Mr and Mrs Mondous; and pursuant to ss 51 and 52 of the Land Tax Act 1958, the transferee is relieved of any land tax liability;
   • (b) Alternatively, the Applicant relies upon the contract of sale and Second Transfer and contends that it sold the Land to Mr and Mrs Mondous on 20 December 1989; that possession was delivered on that day; and that at least 15% of the purchase money has been paid. Pursuant to s 49, the Applicant is not liable to land tax on the Land.
8. The Respondent contends that:[11]
   • (a) to the extent that the Applicant relies upon the First Transfer to convey an equitable interest, s 52 does not apply and the Applicant remains liable for land tax; and
   • (b) to the extent that the Applicant relies upon the contract of sale, then s 49 does not apply, either because:
     • (i) the purchasers have not taken possession pursuant to a valid contract; or
     • (ii) the Applicant has not proven that at least 15% of the purchase money was paid; and the Respondent has declined to exercise his discretion so as to waive compliance with that requirement.

Land Tax Act 1958

1. Land tax is an annual tax payable by each owner of taxable land in Victoria in respect of all land owned at midnight on 31 December of the year immediately preceding the land tax year.[12]
2. The definition of 'owner' so far as it is relevant to this application, includes:

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

And includes every person who by virtue of this Act is deemed to be an owner.

1. Land that is the subject of a contract for sale is dealt with by ss 48 and 49 of the Land Tax Act 1958:

Subject to the next succeeding section where any agreement has been made for the sale of land, whether before or after the commencement of this Act, the buyer shall be deemed to be the owner of the land for the purposes of this Act (though not to the exclusion of the liability of any other person) so soon as he has obtained possession of the land so purchased whether the agreement has been completed by transfer or conveyance or not.

49. Seller to remain liable until certain conditions fulfilled

(1) When any agreement has been made for the sale of land, whether before or after the commencement of this Act, and whether the same has been completed by transfer or conveyance or not, the seller shall be deemed to remain the owner of the land for the purposes of this Act (though not to the exclusion of the liability of any other person) until possession of the land has been delivered to the purchaser and at least Fifteen per centum of the purchase money has been paid.

(2) Where in any case in which possession has been so delivered, less than Fifteen per centum of the purchase money has been paid, the Commissioner may exempt the seller from the provisions of this section if the Commissioner is satisfied that the said agreement for sale has been made in good faith, and not for the purpose of evading the payment of tax, and that the said agreement is still in force. In any such case the decision of the Commissioner shall be final and conclusive.

(4) When by virtue of this and the last preceding section the buyer and seller of land are both liable for tax in respect thereof, there shall be deducted from the tax so payable by the seller in respect of the said land the amount of the said tax payable in respect thereof by the buyer.

1. Applicant's Counsel submitted that ss 49 and 50 are not applicable to this case and sought to invoke ss 51 and 52, which provide as follows:
   1. Equitable owners to be liable as if legal owners subject to deduction of any tax paid by legal owner

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

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

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

1. The Land Tax Act 1958 provides to the following effect:
   • (a) The production of an assessment by the Respondent shall be conclusive evidence of the due making of such assessment; and conclusive evidence that the amount and particulars are correct, except in proceedings on review or appeal against the assessment, when it shall be prima facie evidence only;[13] and
   • (b) Upon any review or appeal, the burden of proving that the assessment is excessive shall lie upon the taxpayer.[14]

1. Mr Souhail Mondous gave evidence for the Applicant. He is a director of the Applicant and described himself as a land developer.
2. Mr Mondous presented as a somewhat difficult witness. He frequently gave non-responsive or evasive answers and was inclined to become argumentative with Respondent's Counsel, even where he had no factual dispute. The following represents an overview of his evidence, including a summary of documents produced to the Tribunal.
3. The Land, which is now contained in two certificates of title and is also referred to as Lot 28 and Lot C on the original subdivision, was fenced in about 1988. The construction of a family home commenced in 1989 and upon completion, in about July 1990, Mr and Mrs Mondous assumed occupation and regarded themselves as the owners.
4. Mr Mondous contended that the occupation of the family home, which is constructed on Lot 28 only, also amounts to possession of Lot C. Mr Mondous gave extensive evidence which sought to establish that Lot C was effectively landlocked and could only be accessed via Lot 28. For the purpose of this application, the Tribunal does not need to determine this matter.[15] However, it is noted from documents produced to the Tribunal, that the relevant Plan of Subdivision and aerial photograph do not, on their face, support the evidence of Mr Mondous.
5. After discussions with his solicitor, the First Transfer, dated 28 December 1990, was signed, submitted to the State Revenue Office and duly stamped in April 1991. The consideration for the First Transfer was a distribution in specie under a Trust Deed.
6. By Notice of Disposition dated 27 February 1991, reference is made to the First Transfer dated 28 December 1990 and a contract of sale of the same date. Mr Mondous stated that this was intended to reflect the First Transfer, based upon the trust distribution.
7. In early 1991, when the First Transfer came to the attention of his accountant, Mr Mondous was given different advice. Specifically, he was advised that the Applicant has to show an income, evidenced by a reduction in the loan account standing to the credit of himself and his wife. Mr Mondous insisted to the effect that this new transaction merely addressed or rectified accounting issues and did not otherwise affect the objective of the First Transfer, which was to convey ownership of the Land from the Applicant to Mr and Mrs Mondous.
8. To give effect to the accountant's advice, a contract of sale was prepared and signed in early 1991, but dated 28 December 1989, to reflect the date when his family took possession.[16]
9. Mr Mondous admitted that the contract of sale:
   • (a) showed a purchase price of $120,000;
   • (b) showed a deposit payable of $12,000, which Mr Mondous stated was the standard 10% provided in all of his contracts of sale;
   • (c) bears the signatures of himself and his wife as Purchaser only, that is, the contract has not been executed on behalf of the Applicant; and
   • (d) was varied in 1995 and 1997 to defer payment of the purchase price.
10. The Second Transfer, dated 19 March 1999, was submitted to the State Revenue Office, duly stamped and subsequently registered in June 1999, upon completion of payment under the contract of sale.
11. The First Transfer and subsequently executed contract of sale were both designed to give effect to the original agreement between the parties, namely to convey ownership of the land to Mr and Mrs Mondous. Accordingly, there was never any intention to avoid land tax by changing the form in which the transaction was documented, for accounting purposes and indeed the Second Transfer attracted a higher rate of stamp duty than the First Transfer.
12. In summary, the Applicant relies upon:
    • (a) the First Transfer to transfer a beneficial interest in the land;
    • (b) the contract of sale to transfer possession; and
    • (c) the Second Transfer to transfer legal interest, which remained unregistered until 1999.

1. Counsel conceded, not surprisingly, that the legal understanding of Mr Mondous as to the status of ownership of the Land, between 1988 and 28 December 1990 was somewhat confused. However, it was submitted that Mr Mondous, on behalf the Applicant, clearly understood and intended that:
   • (a) he and his wife were beneficiaries under a trust;[17]
   • (b) he and his wife controlled the trust; and
   • (c) the Land had been transferred to them pursuant to the First Transfer dated 28 December 1990 and stamped on 18 April 1991.[18]
2. Accordingly, Counsel submitted that as at 28 December 1990, an equitable interest in the land was held by Mr and Mrs Mondous, either:
   • (a) as the beneficiary of a trust distribution; or
   • (b) as the result of the transferor [Applicant] putting into the possession of the transferee (Mr and Mrs Mondous) a signed transfer, thus doing all that it was required to do to transfer the Land;[19] or both.
3. In characterising the First Transfer as affecting an equitable transfer to Mr and Mrs Mondous, Counsel then relied upon s 51 of the Land Tax Act 1958 as applying to render the transferees liable to land tax, subject to any credit for tax paid by the transferor.
4. Counsel referred to Arjon Pty Ltd v Commissioner of State Revenue[20] which concerned an assessment made by the Commissioner pursuant to s 51. The registered proprietor of certain land in question held as bare trustee for the applicant, which in turn was the trustee of three family trusts. The Tribunal, comprising His Honour Justice Kellam, then President, and then Deputy President Macnamara, observed as follows:

What then is the situation of Arjon with respect to the Chadstone and Frankston land? First, its interest however characterised, is one in equity and not a legal interest. The legal interest remains with the registered proprietors; nevertheless the definition of 'land' in the statute encompasses both legal and equitable estates or interests so the fact that Arjon's interest is equitable only, does not exclude the possibility of it being an 'owner' within the meaning of the Act...

If a beneficiary holding a fee simple interest in equity in an undivided half share of a piece of land which is the subject of a trust can be regarded as having an interest 'in possession' in that land, we are unable to see why a beneficiary, whose interest is in the complement of a piece of realty after deducting the amount of the trustee's liabilities for which he is entitled to recoupment or exoneration, is not likewise to be regarded as having an interest 'in possession'.

1. Counsel made a further alternative submission, relying upon s 52, on the basis that:
   • (a) the land is held by the Applicant as Trustee;
   • (b) the equitable title is vested in Mr and Mrs Mondous;[21]
   • (c) the Applicant, as Trustee, has a right of indemnity for any tax paid from the trust fund;
   • (d) tax liability for the land now held on trust for Mr and Mrs Mondous specifically, must be calculated separately from all other land holdings which are held on trust for the discretionary beneficiaries under the discretionary trust; and
   • (e) if s 52 applies then the land tax must be calculated separately for Lot 28 and Lot C.
2. Counsel submitted that if an equitable interest in the Land is taken to have been transferred pursuant to the First Transfer, then the question of possession does not arise. It is only if the transfer is effected pursuant to a contract of sale that the question of whether Mr and Mrs Mondous obtained possession of the land becomes relevant.
3. Counsel further submitted that a decision was taken, at the instigation of the Applicant's accountant, at some time during 1990 or 1991 [but not later than 18 November 1991] not to register the First Transfer [based upon a trust distribution] but to transfer ownership by way of sale. At the same time, a decision was taken to pay $40,000 by offsetting amounts to the credit of Mr and Mrs Mondous in the trust accounts, in respect of the years 1989/1990 and 1990/1991. Accordingly, Counsel submitted that, possibly from 1991 and definitely from 1992, ss 48 and 49 of the Land Tax Act 1958 applied. The fact that the title was not registered until 1999, is not, it was submitted, relevant to assessment of land tax. The 1999 registration of the Second Transfer was the natural consequence of the terms of the contract of sale, as varied, governing the transaction.
4. In relation to Lot 28, Counsel submitted that the Respondent does not dispute that Mr and Mrs Mondous occupied their completed home and were in possession of the Land prior to 31 December 1990.
5. In relation to Lot C, Counsel submitted that the question of possession had never been contested prior to the hearing. In any event, Mr Mondous gave evidence to the effect that Lot C was contiguous with Lot 28 and treated as part of the same occupied land.
6. Counsel conceded that the advice allegedly given by the Applicant's accountant was 'highly questionable'.[22] However, Counsel submitted that no adverse inference should be drawn against the Applicant for its inability to produce records more than 7 years old.
7. In the Tribunal's view, for reasons more fully developed below, the submissions made on behalf of the Applicant have no proper factual or legal basis.
8. The failure of the Applicant and Mr Mondous to supply information in a timely manner, as requested by the Respondent; and the subsequent disposal of relevant financial records of the Applicant, will be addressed below.

1. The Respondent submits that the following legal framework flows from an application of the relevant statutory provisions.
2. First, the provisions in ss 48 and 49 operate where, on or before the taxing date, an 'agreement has been made for the sale of land' between a 'seller' and 'buyer'.[23] This does not mean that there has to be a registered transfer, as ss 48 and 49 both provide 'whether the agreement has been completed by transfer...'. However, there must be an agreement and an agreement for the sale of land generally must be in writing.[24] This requirement was not satisfied in respect of any of the 1991-1999 tax years by reason that the Applicant did not produce an enforceable contract signed by or on behalf of both parties. The Applicant does not get to first base.
3. Respondent's Counsel also confirmed that there is no dispute that Mr and Mrs Mondous occupied at least Lot 28, when their house was built. However, the real question was whether they acquired a right to possess the land as purchaser under the contract of sale and that their occupation was pursuant to that right.
4. Respondent's Counsel further confirmed that, in relation to the Applicant's reliance upon the First Transfer to convey an equitable interest, in order for the Applicant to be relieved entirely of liability to land tax, the transfer of land must be effected to the transferee solely. If both transferor and transferee are owners for land tax purposes, which is envisaged under the Act, then the Applicant will remain liable for land tax and assessed on the basis of the Land being aggregated with other land holdings.
5. Counsel for the Applicant submitted that there was clearly an agreement to sell the land, albeit that the relevant contract of sale was not actually drawn up and signed until a later date. Furthermore, payments were made under that agreement. Accordingly, the terms of s 48 are satisfied in that, an agreement for the sale of land had been made and the purchaser was in possession, notwithstanding that the transfer was not registered until a later date.
6. For reasons more fully developed below, the Tribunal accepts the analysis of the Respondent.
7. Secondly, the purpose of ss 48 and 49 is that the vendor should remain liable until possession has passed to the purchaser under a genuine and not a 'dummy'[25] contract. Hence, the requirement that at least 15% of the purchase money be paid, which is directed primarily at:[26]

the prevention of nominal sales by a large landholder for the purpose of escaping the higher rate of taxation. If the seller was a large landholder, then he is deemed to remain the owner of the land... not only until possession has been obtained by the purchaser... but until at least 15 per centum of the purchase money has been paid.

1. The Respondent submitted that recognition of this legislative purpose is particularly important in a case such as the present, which involves an alleged sale between a large landholder family company and the family.
2. The Tribunal agrees. Both Mr Mondous and his Counsel appear to confuse occupation and possession, which are not the same, for the purpose of liability to land tax. The Respondent has not disputed that Mr and Mrs Mondous resided in their family home from sometime in 1990. However, for reasons more fully developed below, the Tribunal does not accept that Mr and Mrs Mondous 'obtained possession' of the Land for the purpose of s 48 by any of the relevant dates.
3. In relation to the payment of a 15% deposit, Applicant's Counsel referred to the evidence of Mr Mondous as to the trust account entries giving effect to two payments of $20,000, one such payment being prior to 31 December 1990. Counsel acknowledged that the entries could not have in fact been made until sometime during 1991, after the contract of sale was in fact signed. Accordingly, at the very least, Counsel submitted that the Tribunal should accept that the 15% deposit threshold was satisfied, for the purpose of land tax assessments, for 1992 onwards.[27]
4. Again, for reasons more fully developed below, the Tribunal does not accept that the Applicant has proven payment of the threshold deposit.
5. Thirdly, where 15% of the purchase money has not been paid, the Respondent has a discretion to exempt the seller. The Respondent's decision is 'final and conclusive'.[28] Hence, where:[29]

[t]here has been no favourable exercise of the Commissioner's discretion in the circumstances the Tribunal is precluded from re-exercising that discretion.

1. Applicant's Counsel did not seek to rely upon the exercise of the Commissioner's discretion, on the basis that the 15% deposit had been paid.
2. Fourthly, it is implied that possession must be obtained by the purchaser 'as purchaser'; that is, 'pursuant to the contract of sale'.[30]

[W]hen a person is spoken of as being in possession as purchaser it is but a colloquial method of indicating the particular right under which possession is maintained.[31]

1. Applicant's Counsel distinguished between the equitable transfer effected pursuant to the First Transfer, which does not invoke any concept of possession; and the possession effected under the contract of sale. Counsel referred to the authority of Highlands Limited v The Deputy Federal Commissioner of Taxes for South Australia[32] and invited the Tribunal to imply into the contract of sale such terms of waiver or acquiescence consistent with the factual circumstances as disclosed by Mr Mondous.[33]
2. The Tribunal rejects this analysis. Applicant's Counsel appears to be inviting the Tribunal to interpret the contract of sale as a moving feast, not only incorporating terms retrospectively but also implying terms prospectively.
3. Fifthly, s 9AD of the Sale of Land Act 1962 provides that the purchaser under a contract to buy a lot on an unregistered plan of subdivision is not entitled to possession of the lot before registration of the plan. Furthermore, the vendor under such contract of sale shall not require the purchaser to take possession of the lot before the registration of the relevant plan of subdivision. Such a purchaser therefore will not be deemed to be the owner of the lot before registration of the plan. In this case, the relevant plan of subdivision was registered on 12 October 1990.[34]
4. Applicant's Counsel submitted that the relevant date for determining possession, for the purpose of the land tax assessments for 1991 onwards, is a date on or before 31 December 1990. The contract of sale provides that 'possession shall be given on the 28th December, 1990.'
5. Sixthly, in the absence of any provision to the contrary in the contract of sale, the purchaser is not entitled to possession until payment of the purchase price in full.[35]
6. Applicant's Counsel submitted that the contract did not contain all of the relevant terms as the parties had clearly agreed that the sale, whenever it took place, confirmed that there had been an earlier right of possession as reflected in the contract. Although acknowledging a different factual circumstance, Counsel again sought to rely upon Highlands case.[36] In the Tribunal's view that case, referred to below, does not afford any support for the Applicant's position.

1. The Respondent submitted that the contract of sale, first produced to the Respondent in 1999 but dated 28 December 1989, was back-dated, that is, the contract was signed on a date subsequent to the date which the contract bears. It could not have been executed on 28 December 1989, because the title particulars to which the contract referred were not known at the time.[37]
2. In any case, in 1990 the Land was transferred to Mr and Mrs Mondous as a trust distribution, not a sale, and according to the Applicant it was only afterwards that the accountant suggested that the disposition should have been structured instead as a sale.[38]
3. On 10 February 1999, the Respondent wrote to the Applicant[39] notifying that the Respondent had discovered that the Applicant was still on title and that it would be assessed for land tax accordingly, subject to any evidence to the contrary that the Applicant was able to produce. It was at about this time that the Applicant executed the Second Transfer[40] transferring the land to Mr and Mrs Mondous for $120,000. Counsel submitted that the circumstances strongly suggest that the contract of sale for $120,000 was probably created at around the same time by reason that Mr and Mrs Mondous and the Applicant had no need for it until the Respondent started asking questions.
4. In any case, the contract of sale was not executed by the Applicant vendor. Accordingly, the Applicant does not have a validly executed contract of sale in any event.
5. In consequence, ss 48 and 49 of the Land Tax Act 1958 do not apply and so no deduction is available to the Applicant under sub-s 49(4). The Applicant's assessments will need to be amended accordingly (that is, so as to remove the deduction). Mr and Mrs Mondous will not be liable as individuals in respect of the property.
6. In response, Applicant's Counsel contended that even if the Tribunal found that the contract of sale was defective on its face and did not amount to a validly executed contract, this did not change the fact that there was an agreement for the sale of the land which was effective for land tax purposes. No authority was advanced for this proposition.
7. Applicant's Counsel referred to the copy letters of the Applicant's accountant which purport to verify instructions having been received and entries having been made to the loan accounts within the trust, reflecting payments of $20,000 on 28 December 1989 and 28 December 1990. Counsel submitted that the Tribunal should accept that, while the accountant clearly got the date wrong, he was endeavouring to recall events many years later and that the payments referred to were otherwise verified in the evidence of Mr Mondous.
8. In the Tribunal's view, no weight can be given to the copy letters from the accountant, who was otherwise not called to give any evidence on the Applicant's behalf.
9. Applicant's Counsel further submitted that the Tribunal should accept that the only logical reason why the Applicant ultimately structured the sale in the way that it did, was to reflect an 'arms-length' transaction, where the Applicant could show receipt of valuable consideration for the transfer of the Land to Mr and Mrs Mondous. The land tax consequence was the same whether the Applicant transferred the Land by way of trust distribution in specie or by way of contract of sale.
10. As indicated during the course of the hearing, no evidence was forthcoming from the Applicant's accountant as to what if any adverse tax consequences would befall the Applicant and/or Mr and Mrs Mondous in pursuing the trust distribution route. In any event, the apparent change of direction in purporting to document an entirely different kind of legal transaction, does not derive validity from the proposition that upon registration of a transfer under either scenario, the land tax consequence for Mr and Mrs Mondous would be the same.

Alternatively, at least 15% of the purchase money was not paid

1. Alternatively, if the Tribunal holds that there was a contract of sale in existence at any time relevant to the 1991 to 1999 tax years, then the Respondent submitted that the Applicant has not proven its claim that at least 15% of the purchase money had been paid.[41] The best evidence the Applicant has been able to produce since it was first asked on 12 March 1999,[42] for evidence of any payments made, is a letter from its accountant[43] suggesting that $20,000 was paid on 28 December 1989 and another $20,000 on 28 December 1990. The Respondent contended that such suggestion is absurd. The contract shows a deposit of $12,000, the two purported variations of contract[44] also contradict the suggestion and, in any case, it was not until after the First Transfer [dated 28 December 1990] that the accountant advised that a sale rather than a trust distribution should have taken place.[45]
2. The Respondent's decision to exercise the discretion given to him by sub-s 49(1) of the Land Tax Act 1958 so as not to waive compliance with the 15% requirement, is not reviewable by the Tribunal.[46]

1. If it is accepted that the First Transfer, although not registered, gives rise to a constructive trust, in that the transferee has acquired a right in equity, then it is appropriate to consider whether ss 51 and 52 apply. Respondent's Counsel submitted, correctly in the Tribunal's view, that such a scenario does not relieve the Applicant from liability to land tax. As long as the First Transfer remained unregistered, both vendor and purchaser are assessable, but the equitable owner gets a deduction for the tax paid by the trustee. Mr and Mrs Mondous are evidently not registered as owners of other real estate, accordingly their liability would be extinguished by the tax payable by the Applicant.
2. If the first proviso in sub-s 52(1) applies, that is where there are different beneficial owners, then there is a dis-aggregation of the lands which are then assessed separately, although the trustee is the common legal owner. However in this case, Counsel submitted that the first proviso in sub-s 52(1) does not apply to the Applicant by reason that other land held by the Applicant, according to Applicant's Counsel, is held under a discretionary family trust where the beneficial owners cannot be identified. In Commissioner v Famajohn[47] a similar factual scenario existed to the present case. The taxpayer was the registered proprietor of lands formerly held under two freehold titles, as trustee for two separate trusts, one trust for Mr Fast and the other trust for his family's discretionary trust. The two titles were subsequently consolidated and a land tax assessment was issued on the basis that the taxpayer was now the owner of the land under the one title. The Commissioner's appeal was allowed by the Supreme Court. Balmford J held that although the taxpayer continued to hold the lands as two separate lands held on different trusts, those lands were not held in trust by the taxpayer for different beneficial owners, since the family discretionary trust had no beneficiary with a vested beneficial interest in the trust fund.
3. This approach was further endorsed by the Court of Appeal in Lygon Nominees Pty Ltd v Commissioner of State Revenue.[48] In Lygon's case the taxpayer was the trustee of 11 discretionary trusts and of a unit trust; and in one or other of those capacities held various parcels of land in severalty. The Commissioner assessed land tax on the aggregate value of all the land held. In dismissing the appeal of the taxpayer, the Court of Appeal held that the phrase 'beneficial owners' in s 52 has the same meaning as 'the owner of an equitable estate or interest' in s 51. Furthermore:[49]

The suggested intention that aggregation should only occur where the land is held for the same beneficial owners is not reflected in the language of the Act. Sections 8 and 52 premise aggregation subject to the exceptions. Unless there are different beneficial owners of the various trust lands each of whom may be assessed for tax, the aggregation provision is to apply. They may only be assessed for and liable to pay tax if they have a right to possession. The beneficial owner must have a taxable interest which is capable of quantification before such land becomes exempt from aggregation. The construction which is consistent with the purpose of the Act as revealed by the charging provisions, the deeming provisions and ss 51 and 52 is that 'beneficial owner' means a person who falls within the definition of owner and who is presently entitled to an equitable estate or interest in the land.

The term 'beneficial owner' as used in the Act is intended to provide a measurable taxable interest in the trust property. The purpose and the scope of the exemption under s 52 of the aggregation of the beneficial owners other interests would be defeated were lands, in which the beneficiary held no more than a mere expectancy under a discretionary trust, to be so exempt. Land would be exempted, not because there was a different beneficial owner, but because there was no beneficial owner.

1. In conclusion, Respondent's Counsel contended that the Applicant remained the sole owner of the land at all relevant times. However, the Respondent made the subject assessments of land tax on the basis that the Applicant and Mr and Mrs Mondous were both owners and a deduction in accordance with sub-s 49(4) was given in the assessments on that basis.
2. Counsel pointed out that, even if the First Transfer gave rise to a constructive trust in favour of Mr and Mrs Mondous, at least for the 1991 land tax assessment, for practical purposes, the end result is the same.

1. The Respondent seeks orders of the Tribunal pursuant to sub-s 51(2) of the Victorian Civil and Administrative Tribunal Act 1998 to the effect that the Respondent's decision dated 30 December 2005 is varied to the extent that there be no deduction from the Applicant's 1991 to 1999 land tax assessments under sub-s 49(4) of the Land Tax Act 1958.
2. The Respondent will then be obliged to amend the Applicant's assessments accordingly.

1. The evidence of Mr Mondous revealed inconsistencies in the documents relied upon and significant concerns as to his credibility.

1. The circumstances surrounding the First Transfer raise the following concerns:
   • (a) The Notice of Disposition dated 27 February 1991,[50] refers to a contract dated 28.12.90, which was not produced. Mr Mondous could not explain this reference;
   • (b) Mr Mondous agreed that the original Notice of Disposition dated 1990 was lodged by his solicitors; however, he could not explain why a notice of acquisition was never lodged, variously claiming: that he did not need to; he was unaware of why it was not lodged; and he merely relied upon his solicitors;
   • (c) Mr Mondous insisted to the effect that the First Transfer 'remains alive' until the Second Transfer was registered. However, the First Transfer and the contract of sale are predicated upon entirely different transactions and cannot logically or legally co-exist; and
   • (d) There has been no document produced upon which the First Transfer was predicated. Furthermore, there has been no document produced which evidences a decision of the Applicant, as corporate trustee, to distribute corpus to Mr and Mrs Mondous, by way of transfer of land.

1. The circumstances surrounding the contract of sale raise the following concerns:
   • (a) The contract of sale does not bear a signature on behalf of the Applicant vendor;
   • (b) The particulars of certificates of title recorded in the contract of sale bearing date 28 December 1989, were not in existence as at the purported contract date and were only created on 12 October 1990, when the relevant plan of subdivision was registered;
   • (c) The contract of sale provides for a deposit of $12,000, representing 10% of the purchase price, payable on signing, with the payment of residue on 28 December 1990, being the same date as the First Transfer. Mr Mondous conceded that neither payment of the deposit nor balance of purchase price was made in accordance with the terms stated in the contract;
   • (d) Mr Mondous conceded that the contract of sale was prepared and signed sometime early 1991 notwithstanding that it bears an earlier date;
   • (e) Subsequent correspondence between the Applicant's solicitors and its Mortgagee Bank, between October and November 1991,[51] wherein the Applicant requests the Bank to endorse an order to register on the First Transfer and then requests the Bank to return the Transfer as the Applicant is not proceeding [with the transfer], is not consistent with a contract of sale having been created and signed in early 1991;
   • (f) Provision of the contract of sale followed letters from the Respondent to the Applicant and Mr and Mrs Mondous each dated 10 February 1999, requesting the contract of sale dated 28 December 1990, referred to in the Notice of Disposition;
   • (g) Mr Mondous eventually agreed, after initially stating he could not remember, that he first provided notification of the contract of sale dated 28 December 1989 and variation of contract of sale dated 21 December 1997, under cover of a facsimile to the Respondent dated 9 March 1999;
   • (h) By letter dated 12 March 1999,[52] the Respondent confirmed the advice of Mr Mondous to the effect that the Applicant continued to be the owner of the Land but that Mr and Mrs Mondous rely upon the contract of sale to claim ownership for land tax purposes; and
   • (i) Mr Mondous acknowledged that he knew that stamp duty was payable on a transfer by reference to the date of the contract of sale; and that the value of the land may vary significantly over time.

1. The circumstances surrounding the variations to the contract of sale raise the following concerns:
   • (a) Mr Mondous had produced two variations to the contract of sale:
     • (i) the first variation bears the incomplete date of 1995 only, and extends the date for payment of 'purchase moneys' to 28 December 1997;[53] and
     • (ii) the second variation dated 21 December 1997, extends the date for payment of the 'purchase moneys' to 28 December 1999;
   • (b) Mr Mondous could not explain why neither of the variation documents refer to the balance of residue of purchase money, but insisted that this is what they meant; and
   • (c) Neither of the variation of contract documents refer to two payments of $20,000 having already been made.
2. In the Tribunal's view, the purported contract of sale is a sham for the following reasons:
   • (a) Mr Mondous appeared to rely upon the quaint notion that contractual relations can be made retrospectively - they cannot;
   • (b) The copy contract of sale produced on behalf of the Applicant has not been signed on behalf the Applicant and at most, on its face, can only amount to an offer by the purchasers;
   • (c) There is no basis to allege that a legally enforceable contract of sale is not required for land tax purposes;
   • (d) Mr Mondous conceded that the contract of sale was not [and indeed could not have been] signed on the date which it bears;
   • (e) Payment of the 10% deposit, on the signing of the contract of sale, did not take place either upon the date which the contract bears or upon whichever date the contract was in fact signed or upon any other date;
   • (f) No documentary evidence was produced evidencing any payment of deposit;
   • (g) No documentary evidence was produced evidencing any payment of the balance of purchase price;
   • (h) No plausible explanation was given by Mr Mondous as to why a deposit of at least 15% was allegedly paid rather than the deposit provided for in the contract; and
   • (i) No plausible explanation was given as to why the accounts of the relevant Trust allegedly had amounts of $20,000 recorded as offsets against the loan accounts of Mr and Mrs Mondous, in each of the financial years for 1989 and 1990.
3. In relation to the alleged payments under the contract of sale:
   • (a) The relevant Trust entries were not produced; and
   • (b) Correspondence produced from the Applicant's accountants purport to contain matters which could not have taken place. In particular:

(i) By letter dated 18 August 1999, the accountants purport to confirm a record of entries which could not have been made as stated. The correspondence reads:

...we hereby confirm that the sum of $20,000 was deducted from the loan account of Kameel Pty Ltd on the 28 December 1989 (as per your written request) and a further $20,000 was deducted on 28 December 1990; and

(ii) By letter dated 29 October 2004, the accountants purport to confirm receipt of instructions which could not have occurred on the date indicated. The correspondence reads:

in 1989 Mr Mondous gave written instructions to debit his and his wife beneficiary loan account in the account of Mondous Family Trust (Kameel Pty Ltd being the trustee).

The entries were to reflect the purchase of the land by himself and his wife. These entries were done.

1. In relation to the Applicant's failure to produce relevant financial records, as requested, in support of its objection, the following sequence of correspondence indicates that instructions were given on behalf of the Applicant for the destruction of such records after multiple requests had been made by the Respondent for their production:
   • (a) By letter dated 10 February 1999, to the Applicant, the Respondent first made enquiry of the Applicant, requesting copies of all material upon which it relied in support of its claim that it had transferred the Land to Mr and Mrs Mondous. An equivalent letter was sent to Mr and Mrs Mondous;[54]
   • (b) By letter dated 12 March 1999 to Mr and Mrs Mondous,[55] the Respondent requested information relating to all payments made pursuant to the contract of sale to the Applicant and the dates on which such payments were made;
   • (c) By letter dated 20 March 2001,[56] Comito and Co solicitors first mention the sum of $20,000 by way of deposit, having been offset against the loan accounts 'on or before signing the contract'. In the documents provided with that letter there were no documents evidencing any payment under the contract;
   • (d) By letter dated 27 August 2004 to Comito and Co,[57] and letter dated 11 January 2005 to the parties' accountant, the Respondent again requested, inter alia, documentary evidence of payments under the contract; and
   • (e) On 20 October 2004, instructions were received by AUSDOC (either from the Applicant or the Applicant's accountant) to destroy financial records of the Applicant relevant to 1998 and earlier.
2. In the circumstances, the Tribunal draws the only reasonable inference, namely that the financial records which the Applicant failed to produce would not have assisted its objections.

1. The Applicant purports to characterise the First Transfer as a document which conveyed an equitable interest, which remained extant, until the Second Transfer, purportedly based upon an entirely different transaction, conveyed legal title. In the Tribunal's view, such characterisation cannot be sustained upon any legal analysis.
2. If the First Transfer is taken to have been effected at least by the date upon which it was stamped, namely April 1991, then it may be accepted as effective to convey an equitable interest to the purchasers with effect from the 1992 land tax year. However, by no later than 11 November 1991, the purchasers had evidenced an intention not to proceed with the First Transfer and at no future time was the First Transfer again referred to.
3. In these circumstances, and in the absence of any objective evidence that the distribution in specie was otherwise effected in the accounts of the trust for the relevant financial year, the Tribunal treats the First Transfer as having been revoked by the parties. Accordingly, the Applicant remains the owner of the Land.
4. Even if the First Transfer were effective for any period, the Tribunal accepts the analysis made by the Respondent under s 51 and s 52. That is, for the purpose of s 51, while the First Transfer remained unregistered, both vendor and purchaser remain liable for land tax. Furthermore, the Applicant vendor/trustee, does not qualify for a separate calculation of land tax on the land, disaggregated from other land holdings, by reason that there is no identified beneficiary who has acquired a vested interest in such holdings. The authorities to which the Tribunal was referred are directly on point.

Buyer in Possession - Effect of the Contract of Sale

1. The expression in s 48 'has obtained possession of the land' does not require physical occupation by the purchaser but equally does not equate to mere occupation. These two scenarios are clearly demonstrated in the following two cases.
2. In the Highlands case, the appellant was, on a construction of the contract which the parties acted upon, entitled to possession of the land before a certain date. The issue in the case was whether the appellant purchaser under the contract, had obtained possession of the land, notwithstanding that it was still used for grazing by the vendor's tenant.
3. In that case, the tenant's lease agreement had expired before the relevant date but continued to roll over on a month to month basis until such time as the grazier was asked to leave by the appellant. Despite not occupying the land, the appellant had exercised dominion and control by erecting signs advertising the land for sale, registering the subdivision with council and had sold a number of the lots. The case merely acknowledged that possession of the land extended to a buyer who obtains entitlement to receipt of the rents and profits. In this case, the issue is a more fundamental one, namely whether there ever was in fact a legally enforceable contract.
4. In Sandhurst Golf Estates Pty Ltd v Commissioner of State Revenue,[58] His Honour Judge Bowman made a concise analysis of the phrase 'buyer in possession.' In that case, while a contract of sale had been signed, the plan of subdivision was not registered; the contract had not settled; and a transfer had not been signed.
5. Nevertheless, the vendor and purchaser agreed that, at the relevant time, the purchaser had taken possession under a separate lease agreement. The facts,[59] which were not disputed, were that contemporaneously with the execution of the contract of sale the appellant entered into a lease with SHA in respect of the golf course land. The lease commenced on the date of the contract of sale, and continued until the date the land was transferred to SHA, or the contract of sale was otherwise terminated. Again, contemporaneously with the execution of the contract of sale, SHA entered into a construction agreement in relation to buildings on the golf course land with two companies and an agreement for lease with Sandhurst Club Limited, whereby SHA would become the owner or lessee of the land and carry out construction works and, upon completion of the works, the parties agreed to enter into a lease of the land.
6. His Honour noted:

24 The fundamental principle which has existed at least since the decision of the High Court of Australia in Highlands is that, for the purposes of the relevant provisions of the Act, possession must be possession in the character of purchaser pursuant to a contract of sale. In Highlands Starke J expressed the view that the possession required was de facto possession referrable to the agreement for the sale of land. Dixon J interpreted it as possession as purchaser obtained in intended execution of the agreement of sale. A similar approach was adopted in Cam & Sons.

25 In the present case, the fact that SHA entered into possession is the starting point of enquiries and not the conclusion. The question of fact to be determined is "What was the true intent of the documents executed by the parties?"

1. Pausing at this point, the purpose and intent of the contract of sale produced to the Tribunal, in the circumstances in which it came into existence, could not retrospectively give possession pursuant to such contract.

35 The key question is whether possession has been provided to the purchaser pursuant to the provisions of ss 48 and 49 of the Act. The cases establish that this is a question of fact. They also establish that the enjoyment of the land, being referrable [sic] to a contract of sale, is the enjoyment that would be expected by an owner, and not simply by a lessee in an ordinary lessor/lessee situation. That applies in the present case. There will only be the dominion and control of an owner if there is some relevant relationship as purchaser and vendor, and something more than a lessor/lessee relationship. SHA has de facto possession and is exercising that dominion.

1. His Honour found that the contract and the lease were inextricably linked:

45 In summary, I am quite satisfied that SHA has de facto possession of the land and that such possession is referable to the agreement for the sale of the land and that SHA has been enjoying that control of the land that one would expect to be enjoyed by an owner.

1. The Tribunal endorses His Honour's analysis. The reference to 'the agreement for sale of the land or any intended execution thereof' contemplates a valid contract of sale for land where the possession is taken pursuant to or, as in Sandhurst's case, otherwise consistent with and as a consequence of, the terms of the contract. The contractual arrangements for the sale, lease and construction were all entered into on the one day, in contemplation of each other.
2. In the current case, there was no contract of sale executed by both parties at any stage, pursuant to which the purchasers obtained possession of the Land.
3. Even if the contract were taken to have been validly executed, the purchasers did not, at any stage, comply with its express terms. In particular:
   • (a) The day of sale was not the date which the contract purported to bear;
   • (b) A 10% deposit was not paid on the signing of the contract;
   • (c) The date upon which the contract was in fact signed has not been proven; and
   • (d) The alleged trust account entries on account of payment of deposit and balance of purchase price, have not been proven.
4. Accordingly, the buyer has not 'obtained possession of the land' pursuant to an 'agreement...made for the sale of land' and accordingly cannot 'be deemed to be the owner of the land for the purposes of [the Land Tax Act 1958]'.

1. On the basis of the findings made and reasons given, the Applicant is deemed to remain the owner of the Land for the purposes of the Land Tax Act 1958, for the years 1991 to 1999 inclusive.
2. The objections, the subject of the applications for review, will be dismissed.
3. The assessments otherwise made by the Respondent will be varied in the manner sought.

[4] The land in contention is known as 18-22 Leemak Crescent, Berwick and is comprised of two certificates of title: C/T Volume 09981 Folio 666 (8502 sqm), being Lot 28 on PS 219719T, and C/T Volume 09981 Folio 667 (4.177 ha), being Lot C on the said plan (the 'Land').

[5] R2 and R3, being documents no 2 and 3 of the folder of documents filed with the Tribunal and relied upon by the Respondent.

[12] See sub-s 3(1) definition of 'owner'; and ss 6 and 8 of the Land Tax Act 1958.

[15] In final submissions, Respondent Counsel noted that at no stage has Mr and Mrs Mondous sought to rely upon the principal place of residence exemption from land tax, which came into operation in 1998.

[19] Counsel relied on Corin v Patton (1990) 169 CLR 540 per Deane J at [10] and [20].

[20] [2002] VCAT 249 at [35] and [36].

[23] The agreement must exist at the taxing date: see Penner v Green [1980] VicRp 16; [1980] VR 136 at 139 lines 7-44 per Lush J. See also Rowe v FCT (1982) 82 ATC 4243 at 4245 per Deane, Fisher and Davies JJ.

[24] Section 53(1)(a) Property Law 1958.

[25] See Highlands Ltd v Deputy Federal Commissioner of Taxes (SA) [1931] HCA 38; (1931) 47 CLR 191 at 196 per Rich J, quoting Yule v Commissioner of Taxes [1918] NZGazLawRp 162; [1918] NZLR 890 at 894, 896 per Hosking J; Second Reading, Land Tax Bill 1910 (Cth), Mr Watt, Treasurer, 22 November 1910, Hansard, p 2464; Commissioner of Land Tax v Cam & Sons Pty Ltd [1964- 5] NSWR 589 at 592 per Sugerman J; K M Developments Pty Ltd v Commissioner of State Revenue (VCAT, Glover M, 16 October 2012) at [32].

[26] Yule v Commissioner of Taxes [1918] NZGazLawRp 162; [1918] NZLR 890 at 894.

[29] Landro Pty Ltd v Commissioner of State Revenue (2004) 56 ATR 363; [2004] VCAT 1337 at [37], approved in Kameel Pty Ltd v Commissioner of State Revenue (VCAT, Dr Glover, 22 January 2013) at [7]-[8].

[30] Cam & Sons Pty Ltd v Commissioner of Land Tax [1965] HCA 13; (1965) 112 CLR 139 at 146 per Kitto, Taylor and Owen JJ, at 148 per Menzies J ('possession under the contract of sale'), at 150 per Windeyer J ('possession... by virtue of the contract').

[31] Highlands Limited v Deputy Federal Commissioner of Taxes (SA) [1931] HCA 38; (1931) 47 CLR 191 at 196 per Rich J (see also Dixon J at 201).

[32] [1931] HCA 38; 47 CLR 191 at 201 per Dixon J.

[35] Cam & Sons Pty Ltd v Commissioner of Land Tax [1965] HCA 13; (1965) 112 CLR 139 at 147-8 per Menzies J citing Strahorn v Strahorn [1905] NSWStRp 49; (1905) 5 SR (NSW) 382 and Lysaght v Edwards (1876) 2 Ch D 499; see also at 149 per Windeyer J and at 146 per Kitto, Taylor and Owen JJ.

[36] [1931] HCA 38; 47 CLR 191 at 201 per Dixon J.

[41] The Applicant carries the burden of proof: paragraphs 26(1)(b) and 20(1)(b) of the Land Tax Act 1958.

[45] See further the points made at paragraph 25 of the Commissioner's decision (T4).

[46] Sub-s 49(2), see also Landro Pty Ltd v Commissioner of State Revenue [2004] VCAT 1337 per DP Macnamara at 37.

[47] 43 ATR 29 per Balmford J.

[48] [2007] VSCA 140.

[58] [2005] VCAT 549 per Vice President Judge Bowman.