1. The following chronology and facts are taken from the parties' written submissions and evidence, including documents tendered.
2. Since 25 May 2000 the applicant owned the land at Volume 10519 Folio 273, the title from which the land at 250 and 260 Clyde Road was derived. The McDonald's land is at 250 Clyde Road Berwick.
3. On 4 January 2006 a mortgage to the Commonwealth Bank of Australia was registered on the title.[4]
4. On 28 August 2006 the applicant seems to have allowed McDonald's to occupy 'Lot one and the tree reserve on proposed Plan of Subdivision number 543420X', being part of the land comprised in Certificate of Title Volume 10519 Folio 278. This was by virtue of an 'Agreement for Occupation and Lease, Clyde Road Berwick' dated 20 December 2006[5], which stated the occupation date for that property as 28 August 2006.
5. Under clause 2.1 of that agreement, on 28 August 2006 the applicant made that property available to McDonald's 'and will give and McDonald's will take and have legal occupation of the Property ("the Occupation rights") as licensee for the period to the Lease Commencement Date and at the occupation fee set out in Clause 2.2 and on the terms and conditions provided for by this Agreement and as if the lease contemplated by Clause 5 applied to the occupation.'
6. The 'Lease Commencement Date' was defined in the agreement as the date McDonald's commences trading from Lot one on the Plan: clause 1.1.
7. Clause 2.3 provided that from the occupation date of 28 August 2006:

McDonald's must pay all rates and outgoings for the Property which, if not separately rated will be x% of those rates and outgoings with land tax calculated on the basis that the land in the Plan is the only land owned by the Owner and the Owner is not the trustee of a trust. For the first 12 months from the occupation date the owner warrants that the rates and outgoings to be paid by McDonald's will not exceed $5000.00.

1. The agreement provided that as part of the Occupation Rights, McDonald's had the right to proceed with the design and construction of its intended family restaurant facility. Upon completion of that work it was to carry on the business of the McDonald's family restaurant facility on certain conditions, largely that it would comply with applicable permits and be responsible for the construction: clause 2.4. The applicant as owner was to construct on the property certain carriageways, a common car park and roads: schedule 2, clause 4.
2. Under clause 5, there was an agreement to lease whereby on the Lease Commencement Date (defined in clause 1.1 as the date McDonald's commenced trading from Lot one on the Plan) McDonald's was to deliver to the applicant a duly executed lease of the property in the form of the lease in Schedule 5, completed by inserting the Commencement Date and any other details requiring completion: clause 5.1. The applicant was required to execute that lease on receipt and it was deemed to be operative from the Lease Commencement Date, being the date McDonald's commenced trading from Lot one on the Plan: clauses 5.2 and 5.3.
3. Under clause 5.4 it was provided:

Despite the term of the Lease, the Owner and McDonald's agree that if the Plan is registered at the Land Titles Office Settlement under the Contract occurs, the Lease will be surrendered by both parties.

1. 'Plan' was defined in clause 1.1 as 'plan of subdivision number PS 543420X'.
2. Under clause 16:

This Agreement along with the Contract and the Owner's Agreement sets out the entire agreement and understanding between the parties about the subject matter and supersedes all prior agreements, understanding and representations.

1. The 'Contract' was defined as the contract of sale of even date made between the Owner and McDonald's for sale of the property: clause 1.1. The 'Owner's Agreement' does not appear to be defined.
2. The recitals to this Agreement for Occupation and Lease indicated as follows. The applicant had sold the land to McDonald's under the contract of sale of even date (20 December 2006). Settlement of that contract of sale ('Settlement Date') was due to take place on registration of the Plan, but McDonald's was not entitled to vacant possession of the property until that Settlement Date. McDonald's wished to commence construction of its proposed McDonald's family restaurant facility on the property and to carry on the business of a McDonald's family restaurant facility 'and for those purposes to enter upon the Property but requires to have the security of an Agreement for Occupation and Lease as contemplated by this agreement.'
3. Also on 20 December 2006, the parties entered the contract of sale of real estate for the land described above.[6] Under that contract, which is in the standard Real Estate Institute of Victoria form, the Particulars of Sale provide that the 'deposit' payable on signing was $117,000.00, and the 'balance' was the price (price being calculated by a formula set out in the particulars), less the deposit paid. The particulars provided that the 'payment of balance' was 'at the expiration of five years from the date hereof or by earlier mutual agreement.' That meant five years from 20 December 2006, being 20 December 2011. [Mr Korman noted that the contract explicitly provided for deferred payment and a deferred transfer of land.] The 'land' was described in the Particulars as 'Lot one and the Tree Reserve on proposed Plan of Subdivision number 543420X and being part of the land contained in Certificate of Title Volume 10519 Folio 273'.
4. The contract version in the documents, is signed by the vendor only. Mr Mondous gave evidence that it is his signature on this version, and in the normal course the purchaser would have a copy signed by the vendor because the parties exchanged contacts.[7]
5. The 'Settlement Date' was described in the Particulars as:

Is the date upon which the Purchaser shall become entitled to vacant possession of the land, namely upon registration of Plan of Subdivision 543420X.

1. Mr Korman noted that by virtue of this clause, 'settlement' did not mean (as it usually does) final payment, but rather, 'vacant possession'. As discussed below, the applicant relies on this 'Settlement Date' particular.
2. The respondent points out that the reference here to the Plan of Subdivision ending in 'X' is significant, because the 'X' plan was never registered and the parties did not amend this agreement to refer to the plan ending in 'L', being the plan that in fact was registered. Mr Mondous confirms that the X plan was replaced with the L plan.[8]
3. Clause 4 of the General Conditions provided that if this is a terms contract as defined s 2(1) of the Sale of Land Act 1962 (Vic) (SLA), then -
   • (a) the vendor must arrange the discharge of any mortgage affecting the land by the settlement date;
   • (b) all money payable under the contract must be paid to a duly qualified legal practitioner or a licensed estate agent to be applied toward discharging the mortgage;
   • (c) the purchaser must pay interest to the vendor from the settlement date upon the balance then outstanding at the rate, on the days, and with the adjustments set out in Item 2 of the Schedule;
   • (d) the vendor must apply instalments under this contract first to pay interest and then to reduce the balance owing.
4. There is a further Schedule to the Particulars which makes provision in item 2 (in relation to General Condition 4, headed 'Terms Contracts') for interest to be payable. As the respondent points outs, that item is crossed out. Notably also, the reference in item 1 (for General Condition 1) headed 'Encumbrances' crosses out 'Mortgage Nos' under which appear typed the words '(Include Schedule 1 particulars as specified in Section 6(2) of the...[SLA]'. However, no such particulars are specified, perhaps because 'Mortgage Nos' is crossed out.
5. The respondent points to Special Conditions 11 and 12 of the contract. Special Condition 11 provides that:

Upon registration of the Plan of Subdivision referred to in Special Condition 12 hereof the Vendor will obtain a certificate from the State Revenue Office setting out the Land Tax payable on the land herein sold and the Vendor will provide any necessary undertaking as required by the State Revenue Office to pay the Land Tax assessed over the land. The Vendor hereby further undertakes to provide a Release of Charge from the State Revenue Office affecting the land herein sold and provide the same within 14 days from the date of registration of the said Plan of Subdivision.

1. The respondent explains that therefore this is a charge that goes on the title to secure unpaid land tax.
2. Under Special Condition 12(a) the contract of sale is expressed to be:

Conditional upon registration of Plan of Subdivision 543420X at the Land Titles Office within 30 days from the date that the Purchaser commences trading from the land herein sold and the Vendor must use its best endeavours to have the Plan of Subdivision 543420X registered at the Land Titles Office as soon as practicable...

1. The respondent points out the reference here to the Plan of Subdivision ending in 'X', was later varied on 20 December 2007 to refer to the 'L' plan.[9]
2. Under Special Condition 12(b) it was provided that pending registration of the Plan of Subdivision the Vendor shall grant a licence over the land to the Purchaser as and from 28 August 2006 on the terms and conditions of the Occupation and Lease Agreement.
3. Special Condition 12(c) provided that the Purchaser agrees that within 14 days from the date of registration of the Plan of Subdivision it shall lodge a Notice of Acquisition with all relevant authorities and provide a copy thereof to the Vendor. The respondent notes that the Purchaser did not do this until completion.
4. The applicant notes that the Plan of Subdivision (in fact the 'L' plan) was registered on 8 January 2008 such that pursuant to the contract of sale McDonald's then became entitled to vacant possession of the land, as that was the 'settlement date'. It says McDonald's would then become liable for payment of land tax pursuant to Special Condition 11 above and it was then required to lodge a Notice of Acquisition pursuant to Special Condition 12(c).
5. On 21 December 2006, the parties entered a variation of contract of sale of real estate replacing the deposit of $117,000.00 referred to in the Particulars of Sale with 'nil' and amending the wording of 'payment of balance' in those Particulars to read:

$117,000.00 upon registration of the Plan of Subdivision 543420X and the balance less the sum of $117,000.00 at the expiration of 5 years from the date hereof or by earlier mutual agreement.[10]

1. On 30 March 2007 the lease, for an initial term of five years, commenced.[11] From that date on, what was previously apparently McDonald's occupation of the land by licence, became occupation by lease. This is so although the lease itself was actually dated 9 May 2007.
2. On 12 April 2007 the mortgage to the Commonwealth Bank of Australia was discharged.[12]
3. On 20 December 2007 the parties entered a second variation of the contract of sale. In that variation the description of land in the Particulars of Sale was deleted and replaced with a description of the land referring to 'Lot one on proposed plan of subdivision no. PS532725L and being part of the land contained in certificate of title Volume 10519 Folio 273'. Similarly, in Special Conditions 12 and 13, the references to the 'X' plan of subdivision previously cited were deleted and replaced with references to plan of subdivision 532725L.[13] The variation agreement did not amend the reference in 'Settlement Date' of the Particulars of Sale to the 'X' plan instead of the 'L' plan.
4. On 8 January 2008 plan of subdivision PS532725L was registered, subdividing Certificate of Title Volume 10519 Folio 273 into, amongst other titles, Certificate of Title Volume 11047 Folio 771 (for 250 Clyde Road, the McDonald's land).[14]
5. After that date, is the first relevant date for tax purposes for the purposes of these proceedings being 31 December 2009, and later, 31 December 2010.
6. It is accepted by the respondent that for the assessment date of 31 December 2011 McDonald's was the only owner of the McDonald's land. This is because a transfer of land was executed on 20 December 2011 by which the McDonald's land was transferred from the applicant to McDonald's for consideration of $1,351,263.46.[15] That transfer was subsequently registered on 13 January 2012, making McDonald's the registered owner.[16]
7. On 6 and 14 October 2010 the respondent received letters from McDonald's lawyers (Hunt and Hunt) providing a certified copy of the contract of sale and copies of the above variations. They submitted in the letter that it was a cash sale not a terms sale, which was why the parties had entered into a lease and why no notice of acquisition had been lodged.[17]
8. On 13 January 2012 after becoming a registered title owner, McDonald's registered a notice of acquisition of an interest in land form, indicating that the date of possession or transfer was 20 December 2011 and that this was not a terms sale.[18]
9. Mr Mondous, director of the applicant, gave evidence that the applicant in fact filed a notice of disposition with the respondent stating that the purchase was a terms sale and that the date of possession was 8 January 2008.[19] In Mr Mondous's opinion, 'in breach of its contractual obligations, McDonald's filed a notice of acquisition on 13 January 2012 (T58). That notice stated that the purchase was not a terms sale and the date of possession was 20 December 2011.' Mr Korman explained that in the applicant's view McDonald's was required to file its notice of acquisition on 8 January 2008. He asserted the applicant's position that it was in fact a terms sale.
10. Mr Mondous said McDonald's commenced construction shortly after entering into the agreements, in 2007. He gave the following evidence in his statement:

16. McDonalds has been operating a restaurant at 250 Clyde Road Berwick continuously from well before 31 December 2009 to the present. (T24).

17. During that period both Kameel and McDonalds have conducted themselves on the basis that McDonalds owns the land. McDonalds has never given Kameel or Mr Mondous the keys to the restaurant or any other method of gaining access (beyond that which is available to the public). Kameel has never asked to be given access to the land. It has never performed or sought to perform any inspections or acted in any way as the landlord. The lease has always been regarded by both parties as a legal formality securing the sale and the payment of interest on the outstanding balance of the purchase price.

18. In December 2011, McDonalds paid the remainder of the purchase price and Kameel executed a transfer of land. Except for the fact that McDonalds were no longer paying interest to Kameel, there was no change at all in McDonalds' occupation of the land after the title transferred.[20]

1. The respondent in fact says that the so called 'interest' payments were continuing rental payments under the lease agreement which continued and was (it says) not surrendered on the date of registration of the plan of subdivision, being plan 'L'.
2. Mr Mondous reluctantly conceded in cross-examination that he was aware of the provisions of the SLA about selling land on unregistered plans of subdivision, that he was involved in previous cases where those provisions applied. In particular, he conceded he and McDonald's were aware of s 9AD, prohibiting a purchaser from taking possession of a lot on a plan of subdivision before registration of that plan. He said: 'McDonald's wanted to start earlier than registration of title, they wanted to start construction, and asked us to get possession to start construction, and for their and my protection, we have to give them a lease to be able to start construction on our land....my solicitor advised have to give them a lease and we did so, before the plan was registered'. He said the lease was granted for safety and public liability purposes. He was not sure if a licence was granted before the lease.[21]

1. Owners of land (being persons entitled to land for a freehold estate in possession) pay land tax: s 10(1)(a). Under s 10(1)(e) of the Act, a person deemed by the Act to be the owner of land is (and was at the relevant assessment times) also an owner of land for the purposes of the Act.
2. Section 14 of the Act provides (and provided at the relevant assessment times) that for the purposes of this Act, each of the following is deemed to be the owner of land -
   • (a) a purchaser on credit or deferred payment;
   • (b) an assignee or transferee of a purchaser on credit or deferred payment.
3. Section 15 of the Act attracted most argument between the parties, and is the relevant starting point. It provides (and provided at the relevant assessment times):
   • (1) For the purposes of this Act, a purchaser under a contract of sale of land is deemed to be the owner of the land (but not to the exclusion of any other person) if the purchaser has taken possession of the land.
   • (2) Subsection (1) applies whether or not the contract of sale has been completed by the transfer of the land.
4. Section 16 is the corresponding deeming provision for vendors. It provides (and provided at the relevant assessment times):
   • (1) For the purposes of this Act, the vendor of land under a contract of sale of land is deemed to be the owner of the land (but not to the exclusion of any other person) until -
     • (a) the purchaser has taken possession of the land; and
     • (b) subject to subsection (3), at least 15% of the purchase money has been paid.
   • (2) Subsection (1) applies whether or not the contract of sale has been completed by the transfer of the land.
   • (3) The Commissioner may determine that the vendor is deemed not to be the owner of land despite the fact that 15% of the purchase money has not been paid if the Commissioner is satisfied that -
     • (a) the contract of sale was made in good faith and not for the purpose of evading the payment of land tax; and
     • (b) the contract of sale is still in force.
   • (4) In determining the percentage of purchase money that has been paid, the following amounts must be considered to be unpaid purchase money -
     • (a) all money owing by the purchaser to the vendor and secured by a mortgage over the land;
     • (b) all money lent to the purchaser by the vendor;
     • (c) all money owing by the purchaser to any other person that is directly or indirectly guaranteed by the vendor.
   • (5) If the vendor and the purchaser are both deemed to be the owners of land under this Part, there is to be deducted from any land tax payable on the land by the vendor any land tax payable on the land by the purchaser.
5. The SLA also contains some relevant provisions. By way of background, both counsel explained that the kind of contract with McDonald's was entered because of the restrictions under the SLA on what may be done with land pending registration of a plan of subdivision. As Mr Kotros pointed out, the most relevant provision for present purposes is s 9AD, which provides (and provided at the relevant times):
   • (1) The purchaser under a prescribed contract of sale is not entitled to possession of the lot to which the contract relates before the registration of the relevant plan of subdivision.

(2) The vendor under a prescribed contract of sale shall not require the purchaser under the contract to take possession of the lot to which the contract relates before the registration of the relevant plan of subdivision.

• Penalty: 50 penalty units.

(3) The vendor shall allow the purchaser under a prescribed contract of sale reasonable access to the lot for any purpose connected with the proposed development or use of the lot.

(4) This section does not apply to possession of a lot by a purchaser in consideration of a payment of an occupation fee.

1. In s 9AD, the reference to 'prescribed contract of sale' means (and meant at the relevant times) a contract of sale of a kind referred to in s 9AA(1). Section 9AA prohibits sale of a lot in a plan of subdivision (whether certified or not) to anyone except a statutory body or authority if the plan has not been registered by the Registrar, unless certain requirements (as to payment of the deposit monies) are satisfied. Hence those are the kinds of contracts of sale that are 'prescribed'.

1. This case requires detailed analysis of the facts in the context of the relevant legislative provisions and the cases, which themselves are factually intense. Counsel took me to cases considering the predecessor to s 15. It is important to consider them in some detail because it assists in deciding this case.
2. Mr Kotros for the respondent said the cases distinguished between de facto possession on the one hand (not pursuant to the contract of sale) and possession as purchaser under the contract of sale. He argued that because McDonald's was at the relevant dates always in possession as lessee, it did not satisfy the requirement for s 15, of being in possession on those dates as a purchaser, under the contract of sale. He submitted that both de facto possession and a legal entitlement to possession under the contract were required under s 15.
3. In contrast, Mr Korman argued for the applicant that the cases only require de facto possession to satisfy s 15. He submitted it was not necessary also to show a legal entitlement to possession.
4. The leading decision is Highlands Ltd v Deputy Commissioner of Taxes (SA)(Highlands).[22] In Highlands, the High Court considered the then s 37 of the relevant South Australian land tax legislation, which provided (in summary) that where an agreement has been made for the sale of land, whether completed by conveyance or not, (a) the buyer shall be deemed to be the owner of land...so soon as he has obtained possession of the land; and (b) the seller shall be deemed to remain the owner of the land...until possession of the land has been delivered to the purchaser and at least 15% of the purchase money has been paid.
5. I have read Highlands in detail, including the quotations to which both counsel took me. The contract in fact provided in clause 5 that the purchaser was entitled to enter possession of the land on 9 March 1925 'provided he shall have completed his purchase in accordance with the terms and conditions herein contained'.[23]
6. Rich J referred to the purchaser obtaining possession under s 37 'in the character of purchaser', endorsing the view that 'possession as purchaser...is but a colloquial method of indicating the particular right under which possession is maintained'.[24] He referred to the parties resolving an ambiguity about the above contractual right to possession, 'by delivering and accepting possession in intended performance of the stipulation'.[25] That does not mean an entitlement to possession under the contract is not required (which Mr Korman submitted), just that the parties were able to resolve the ambiguity by their actions.
7. Starke J referred to de facto possession, but in the context of clause 5 of the contract.[26] Dixon J referred to s 37 as meaning possession 'as purchaser obtained in intended execution of the agreement of sale...'[27], and it is clear he considered de facto possession in light of the contractual right to possession.[28] Evatt J's broad references to the 'substance' of the matter[29], relied on by Mr Korman as somehow abolishing the requirement to a legal entitlement, do not assist the applicant.
8. I therefore prefer Mr Kotros's interpretation, when the quotations are read in their context and in the context of the decision as a whole. This is so although s 15 refers to 'taken possession' instead of 'obtained' or 'delivered'. Although the change in words might be significant in some way (eg see analysis of Ginnane J below), I do not accept Mr Korman's submission that this changed wording affects the principle for which Highlands stands.
9. I also agree with Mr Kotros that, applying the principles in Highlands, if the source of possession is a lease rather than the contract of sale, this does not satisfy s 15. This follows and was held by Collins J in H. C. Sleigh Ltd v Commissioner of Land Tax,[30] applying a similar provision to s 37 above, where there was both a lease and a contract. Collins J held that the possession obtained for land tax purposes must be 'referable' to the agreement.[31] In that case, his Honour held that 'the status of purchaser was specifically limited pending completion to the status of lessee, and...no further right to possession or no difference in the nature of the possession was conferred on the purchaser by the agreement pending completion'.[32] Because possession as lessee was not intended to attract land tax, the provision did not apply.[33]
10. In Cam & Sons Pty Ltd v Commissioner of Land Tax (Cam)[34], the High Court considered s 26 of the relevant New South Wales legislation, which was in similar terms to s 37 of the SA legislation above. Applying Highlands, the court held on the facts that the purchaser had obtained possession in the sense described by Starke J as 'referable to the contract of sale', and by Dixon J as 'obtained in intended execution of the agreement of sale'. The purchaser here had 'obtained possession in the sense earlier described not merely as a tenant but as a purchaser pursuant to the contract and this is sufficient to satisfy the requirements of s 26(1)(a)...'.[35] This conclusion was based on the provisions of the contract whereby the vendor (Cam) subdivided land and entered a series of contracts for the sale of the allotments.
11. The majority summarised the key contractual clauses as follows:

The sales were made on terms under which the purchaser agreed to pay a deposit upon the signing of the contract and to pay the balance of the purchase money by equal monthly instalments over a period of years. Interest was payable quarterly on the unpaid balance of the purchase money at the rate of 5% p.a. with quarterly rests. In each of the contracts of sale, cl 11 provided that the vendor should be entitled to the rents and profits and should pay all rates, taxes and outgoings up to the date of the contract and that on and from that date the purchaser should be entitled to or should bear the same respectively and that any necessary apportionment thereof should be made or adjusted on completion. Each contract also contained an attornment clause (special condition 2) under which the purchaser attorned tenant to the vendor from month to month from the date of the contract until payment of the balance of the purchase money and interest thereon at a monthly 'rent' equal to the monthly instalments of purchase price payable. The amounts of 'rent' paid were to be accepted 'in or towards satisfaction of interest and the balance in satisfaction of the purchase money'. [The clause provided that the tenancy might be determined by the vendor by a week's notice in writing or by entering and taking possession without notice]. Clause 19 provided two alternatives, one of which was intended to be struck out. It read: 'Vacant possession of the property sold shall be given on completion; or the property is sold subject to the existing tenancies or occupancies...'[36]

1. The court endorsed the observation of Sugerman J in the Full Court that possession has been delivered or obtained in the statutory sense of s 26 'when the vendor himself, retaining no vestige of possession, has done all that it is necessary to for him to do to enable the purchaser to assume actual occupation of the land or receipt of its rents and profits, and when, there being no obstacle in the way, ...it rests solely with the purchaser to decide whether and when he will do so'.[37] I agree with Mr Kotros that the court found factual possession flowing from the legal right of possession
2. Reading clause 19 with clause 11 and special condition 2, the court held that clause 19

must be taken as merely defining the nature of the possession to which the purchaser was to be entitled on completion. And if it were not for special condition 2, clause 11 would not... give any right to the purchaser to assume possession before completion. ...But when clause 11 is read in the light of the special condition, ...the proper conclusion is that it was the intention of the parties that the purchaser should have the right to assume possession of the land immediately upon the signing of the contract. Unless that was the effect of clause 11 the special condition would serve no purpose... and it must be taken to have been inserted because it was intended that the purchaser should be entitled under clause 11 to assume possession upon the making of the contract'.[38]

1. I agree with Mr Kotros that the court found factual possession flowing from the legal right of possession.
2. Mr Kotros submitted that the present case is most factually similar to E. Long & Co Pty Ltd v Commissioner of Land Tax (Long)[39], where s 26 of the NSW legislation was again considered. In that case Maguire J held the purchasers had not obtained or been delivered possession of the land under s 26. The purchasers under contracts of sale of various lots paid a deposit and the contracts provided that the balance of the purchase money should be paid on completion. They also provided that the vendor be entitled to the rents and profits and should pay or bear rates, taxes and outgoings up to the date of completion (clause 11), and that vacant possession of the property sold should be given on completion (clause 19).
3. Each contract was subject to mortgage finance being obtained by the purchaser. There was delay in obtaining finance, and the purchasers wanted possession before the mortgage finance became available to them so they would be able to pay the balance of the purchase price to the vendors. The vendors allowed the purchasers to go into early possession under another agreement (a licence) entered with them.[40]
4. The licence agreement, after reciting the contract of sale and the payment of the deposit, provided that on payment by the purchaser of a further sum (which with the deposit was more than 15% of the purchase price), the purchaser should be entitled to occupy the dwelling pending completion of the contract of sale. It also provided that the licensee should pay the licensor a stated weekly figure and the rates and taxes payable should be apportioned from the date of the licence agreement and not from the date of completion in the contract (this being a variation to clause 11).[41]
5. The licence fee was the weekly equivalent of 10% p.a. on the balance of the money to be found by the purchaser to complete the transaction with the vendors. The purchaser went into occupation after paying the first week's licence fee.
6. Maguire J found the contract provision that the vendor was entitled to the rents and profits up to completion (clause 11) was important and had not been changed by the licence agreement. He also found it significant that vacant possession was given under the contract on completion and the licence agreement did not vary this. He held 'the licence agreements...conferred no right on the licensees, who happened also to be the purchasers under the contracts for sale, to assume possession in the relevant sense'. The licences conferred a privilege to occupy, which could in its terms be revoked by giving seven days' notice. This was inconsistent with being in possession under a contract of sale.[42]
7. The licence agreement were therefore 'not "referable" to the agreements for sale except in the broad and irrelevant sense that the existence of the latter created a situation where it was mutually convenient for the parties to enter into the former'. The licence agreements 'should be regarded as standing right outside' the contracts. The vendors retained a vestige of possession by receiving the licence fees and the licensees were not entitled to exclude them although they might be fulfilling their contractual obligations.
8. His Honour also held it was relevant to consider that under the contracts 'the licence fees were in no way to be taken into consideration in reduction, or as being on account of, the purchase price under the contracts of sale'. On the other hand, the rent payable under the attornment clause under the contracts in Cam were 'in or towards satisfaction of interest and the balance in satisfaction of the purchase money'.[43]
9. Mr Korman relies on the fact the contract and the lease were entered on the same day to indicate they were intertwined and that the lease was referable to the contract of sale. He relies on the analysis in Re Sandhurst Golf Estates Pty Ltd v Commissioner of State Revenue (Sandhurst).[44] However, I agree with Mr Kotros that the analysis in that case is confusing because it does not take into account s 9AD of the SLA in the final decision and it seems to merge possession under the lease with possession under the contract.

Possession and s 15

1. The respondent takes no issue with the existence of a contract for the sale of land between vendor and purchaser that meets the relevant formal requirements.
2. Although he argued that the cases do not require a legal right to possession under the contract, in relation to the McDonald's land, Mr Korman submitted that under the contract of sale McDonald's was entitled to vacant possession of the land (in accordance with the 'settlement date' clause) upon registration of the plan of subdivision, which was on 8 January 2008. He argued that from that date McDonald's took possession under the contract.
3. The definition of 'settlement date' referred to the 'X' plan, which was never in fact registered. The later 'L' plan was the one registered on 8 January 2008. Mr Kotros submitted it was significant that in the variation to the contract[45] replacing references to 'X' with 'L', the reference to 'X' in the settlement date had not been varied to refer to 'L'. He submitted this made the 'settlement date' clause inoperative, so that vacant possession was not taken (or given) on 8 January 2008.
4. Mr Korman submitted that this omission from the variation was most likely an oversight by the parties, and that clearly it was intended that they were now dealing with the 'L' plan. He noted that the Yassmin contract (discussed below, dealing with the same land from which its land was subdivided) refers to the 'L' plan and the lease to McDonald's[46] has both the X and L plans attached to it. For present purposes, I shall assume the failure to vary was most likely an oversight.
5. In light of that, the 'settlement date' particular of the contract appears on its face operative to entitle McDonald's to vacant possession under the contract when the L plan was registered on 8 January 2008. This is so although payment of the balance of the purchase price was not due until five years from 20 December 2006, on 20 December 2011.[47]
6. Mr Korman referred to the Agreement for occupation and lease between the applicant and McDonald's dated 20 December 2006. He pointed to clause 16, which relevantly provides that this agreement and the contract of sale of the same date sets out the entire agreement and understanding between the parties about the subject matter. He therefore submitted that this agreement and the contract of sale should be looked at in conjunction with each other.
7. As noted, both counsel explained that this kind of contract was entered because of the restriction in s 9AD of the SLA, on a purchaser being entitled to possession of a lot on an unregistered plan of subdivision pursuant to a contract of sale for such a lot, before the plan is registered. The exception to this is in s9AD(4), which provides for the purchaser to occupy the land for an occupation fee (such as by licence or lease) until registration of the plan.
8. As Mr Korman explained, a problem would occur if the plan of subdivision was not registered and the contract fell through. This was a problem for McDonald's (and Yassmin - see below) because they had started building before the plan of subdivision was registered, and spent a lot of money with (otherwise) no right to occupy the land. He submitted that the recitals to the agreement for occupation and lease (summarised above) reflected this. They reflected McDonald's wish to commence construction and carry on its business and for those purposes to enter the land but with the 'security' of the agreement for occupation and lease, the lease being provided for in schedule five to that agreement.

1. A lease was provided (and indeed, as noted above, prior to the lease, a licence to occupy was granted), as contemplated by this agreement. The lease commencement date was the date McDonald's commenced trading from the land: clause 1.1 agreement. However, Mr Korman relied on clause 5.4 of this agreement. Under clause 5.4 the parties agreed that, 'despite the term of the lease, if the plan is registered..., settlement under the contract occurs [and]... the lease will be surrendered by both parties'. Thus, he says that pursuant to this clause, the lease (above executed and dated 7 May 2007[48]) was surrendered on 8 January 2008.
2. Hence Mr Korman says that as at the first relevant assessment date of 31 December 2009 (and therefore at the second relevant assessment date of 31 December 2010), McDonald's were 'in exclusive possession of the land'. He says that based on Mr Mondous's evidence at paragraphs 16 to 18 inclusive of his witness statement (quoted above) McDonald's were in exclusive possession from well before 31 December 2009 to the present, and nothing had really changed when the transfer was eventually executed in December 2011.
3. Mr Korman largely relies on the 'settlement date' particular of the contract specifically granting vacant possession upon registration of the plan of subdivision, on 8 January 2008. Assuming it refers to the 'L' plan, that particular appears on its face to have been in force on the relevant assessment dates.
4. Mr Kotros submitted for the respondent that McDonald's did not become the owner of the land for land tax purposes 'until completion of the sale in 2011, albeit that it was allowed into possession from 2006 by means of a licence and then a lease'.[49]
5. He argued that even if the contract gave McDonald's the right to take possession early, McDonald's did not purport to take it pursuant to the contract 'when one looks at the documents and how the parties acted'.[50] He said they kept making payments under the lease, which he asserts the parties never in fact surrendered. Acknowledging clause 5.4 for surrender of the lease, he argued that 'if McDonald's had surrendered the lease, how could it keep making rental payments, because there is no clause in the contract of sale providing for instalment payments? That bit was crossed out....'. This is a reference to the interest for 'terms payment' item being crossed out (see below). Mr Kotros also noted there was no clause in the contract for interest payments. He observed that the contract only provided for the deposit to be paid until completion, noting that McDonald's confirmed that view in their correspondence with the respondent.
6. In this regard, Mr Kotros referred to the letter dated 14 October 2010 from McDonald's lawyers Hunt and Hunt, to the Commissioner.[51] In that letter McDonald's assert they took possession under the lease on 30 March 2007. The parties do not seem to dispute that, at least in relation to how McDonald's took possession at that time. McDonald's also say in that letter that the balance of the price payable under the contract is due on 20 December 2011 and 'the balance of the purchase price can only be calculated by reference to the rent payable under the lease as at the 20th December 2011'. That assertion might be seen as supporting the applicant's case.
7. Mr Kotros also argued that the reference in clause 5.4 to 'plan' was to the 'X' plan (defined as such in clause 1.1) and it had not been varied to refer to the 'L' plan, being the plan that was in fact registered. If the parties had thought this clause were so important, he says they would have varied it to refer to the 'L' plan. However, he says they did not vary it because McDonald's was at all relevant times in early possession under the lease, not under the contract.
8. In contrast, the applicant argued that the lease was surrendered under clause 5.4 by operation of law, whereupon the rental payments became interest payments under the contract. As noted above, Mr Mondous gave evidence that during the period since McDonald's have been in physical possession of the land 'the lease has always been regarded by both parties as a legal formality securing the sale and the payment of interest on the outstanding balance of the purchase price'. Once the remainder of the purchase price was paid and the transfer executed in December 2011, 'except for the fact that McDonalds were no longer paying interest to Kameel, there was no change at all in McDonalds' occupation of the land after the title transferred'.[52]

Parties' intentions - terms contract in breach of SLA?

1. Before deciding the interest payments vs rental payments argument above, I must consider another issue raised by the respondent, also raised by McDonald's in its lawyer's letter of 14 October 2010. They say the contract of sale is not a terms contract, but rather, a cash contract. The significance of this is that if it is categorised as a terms contract, the respondent says it would have breached provisions of the SLA applicable to terms contracts for the sale of mortgaged land. McDonald's say that as a terms contract 'the contract does not comply with s 29O(1) of the SLA nor has the vendor discharged the mortgage in accordance with s 29S of the SLA...The vendor would not intend to give a purchaser the right to avoid the contract under s 29S of the SLA'.
2. The respondent similarly submitted that at the relevant time s 6 of the SLA (the predecessor to the s 29M to 29O provisions noted above) applied to the same effect to regulate terms contracts in respect of mortgaged land. At the relevant time, the definition of a 'terms contract' in s 2(1) of the SLA (now in s 29A of the SLA) provided that a 'terms contract' meant:

an executory contract for the sale and purchase of any land under which the purchaser is-

(a) obliged to make two or more payments to the vendor after the execution of the contract and before he is entitled to a conveyance or transfer of the land; or

(b) entitled to possession or occupation of the land before he becomes entitled to a conveyance or transfer of the land.

1. I attach a full copy of the former s 6 of the SLA as set out in the respondent's submissions, as it is too lengthy to include in these reasons.
2. The respondent also refers to non-compliance with s 32 of the SLA, by which the vendor was required to give a prospective purchaser a signed 'vendor's statement', disclosing certain matters including (for a terms contract as defined) the information set out in Schedule 2, headed 'Details of cost of vendor finance' (s 32(2)(f)). Mr Kotros said that statement was not provided here.
3. The applicant's position is that from 8 January 2008, pursuant to the 'settlement date' clause, and clause 5.4 of the agreement to lease, the monthly rental payments under the lease became interest payments under the contract. If this is accepted, the contract might arguably still fall within the definition of a 'terms contract' under the SLA, as the interest payments would be payments (two or more) that McDonald's was (within (a)) 'obliged to make to the vendor after the execution of the contract and before he is entitled to a conveyance or transfer of the land'. Additionally and independently of those payments, the contract would (also on the applicant's case in relation to the 'settlement date' clause) satisfy (b) of the definition above of a 'terms contract', in that it entitles the purchaser to possession or occupation of the land 'under' the contract before he becomes entitled to a conveyance or transfer of the land.
4. However, these SLA provisions only apply to the sale of mortgaged land. The mortgage over the land was (according to the respondent's chronology) discharged on 12 April 2007, well before the purported settlement date under the contract of 8 January 2008. Confusingly, in their letter of 14 October 2010, Hunt and Hunt refer to there still being a registered mortgage over the property as at that date, and to the vendor not yet having discharged that mortgage. However, I accept (as the respondent does) that discharge occurred on 12 April 2007.
5. Item 1 (for General Condition 1) in the contract of sale headed 'Encumbrances' crosses out 'Mortgage Nos', under which appear typed the words '(Include Schedule 1 particulars as specified in Section 6(2) of the...[SLA]'. No such particulars are specified, probably because 'Mortgage Nos', is crossed out. It seems from these crossed out sections, that although at the time the contract of sale was entered the land was mortgaged, the parties never intended the land would actually be transferred subject to that mortgage.
6. Despite this, strictly speaking, the contract appears at first glance (on the applicant's case) caught by the terms of the former s 6 of the SLA because the mortgagor has 'entered' a contract that is (on its case) a 'terms contract' within the above definition, for mortgaged land. Section 6(2) was therefore engaged to require that 'the contract expressly states that the land is subject to a mortgage...and gives the particulars specified in Schedule 1 of such mortgage...'.
7. It might be said that s 6(1) was not engaged because the references to 'sell' in that subsection are (from its context) references to sale in the sense of a completed sale. It is true however, that if (as is likely) s 6(2) applied, then under s 6(3) the contract would have been voidable by the purchaser at any time before completion of the contract and the vendor 'shall be guilty of an offence against this Act and liable to a penalty of not more than 10 penalty units'.
8. However, the purchaser here did not avoid the contract and in fact completed it. There was no evidence of any prosecution.
9. Further, s 6(4) provides that s 6 does not apply to the sale of land under a terms contract 'where the contract provides' that the mortgage is to be discharged before the purchaser becomes or upon the purchaser becoming entitled to possession under the contract, and that the deposit and all other moneys payable under the contract (other than any money payable in excess of the amount required to so discharge the mortgage) are to be paid to a legal practitioner or a licensed estate agent to be applied by him in or toward so discharging the mortgage. However, it also provides that where the mortgage is 'not discharged within 90 days' of making the contract and the purchaser is not in default under the contract, the contract is voidable by the purchaser at any time before the mortgage is so discharged.
10. Again, the purchaser did not avoid the contract.
11. I do not consider the parties intended for s 6 to be engaged, or relied upon in any way. [Perhaps consistently with this, they crossed out the reference in the Schedule item 2, for interest to be payable pursuant to General Condition 4, being payable on the basis that this was a terms contract as defined in then s 2 of the SLA.] The purchaser did not rely on s 6 to avoid the contract, but instead completed the contract.
12. Nevertheless, on the applicant's case, this was a terms contract. Although the corresponding 'interest' item in the Schedule is crossed out, the applicant now seems to rely on at least some of clause 4 of the General Conditions.
13. This clause is set out in the factual background above. It seems generally directed at complying with the 'out' provision in s 6(4) of the SLA. It requires discharge of the mortgage before settlement (or 'vacant possession'), required by s 6(4)(a). It requires payment to a legal practitioner or licensed estate agent as required by s 6(4)(b). It is not clear whether this occurred. The applicant did discharge the mortgage before settlement within (a) (as I have assumed), not strictly within the 90 days stipulated by s 6(4), but fairly soon after that.
14. The applicant seeks to characterise payments the purchaser says were made under the lease as, from the alleged settlement date of 8 January 2008 'interest' payments, consistently with paragraphs (c) and (d) of this clause. However, that characterisation is (as the respondent says) inconsistent with the parties having crossed out the reference to 'interest' in item 2 of the Schedule. Clause 4 itself was not crossed out.
15. On balance, I find that the parties did not intend for s 6 of the SLA to be engaged in this case, no doubt because the mischief at which s 6 is directed was not engaged. The parties meant for the mortgage to be discharged well before settlement, as it was. This was consistent with General Condition 4, which is generally directed at meeting the 'out' provision in s 6(4). Also consistently with the parties not intending s 6 to apply, McDonald's did not avoid the contract under s 6. Specifically, it did not avoid the contract because the mortgage was not discharged within 90 days, or because the contract did not give the required particulars of the mortgage.
16. For similar reasons, I do not consider it significant that the applicant did not comply with the requirements of s 32 in relation to terms contracts. Indeed, McDonald's did not press this at the time, otherwise it would not have gone on to complete the contract.
17. I have conducted the above analysis based on the terms of the contract to which the parties have taken me, and ss 2 and 6 of the SLA (as they then were) to which the respondent has referred. It is true that counsel did not argue all the detailed points contained in my analysis above. However, in my view such a detailed analysis is necessary to draw the correct conclusions. It follows from my conclusion that I do not accept the respondent's argument that the parties would not have intended this to be a terms contract because s 6 of the SLA would have applied and the contract might be seen as not strictly complying with that provision.

Compliance with ss 9AD to 9AE of SLA

1. I note that there was no legal impediment under ss 9AA, 9AD and 9AE of the SLA to McDonald's taking possession as purchaser under the contract, upon registration of the plan of subdivision on 8 January 2008. Indeed, it seems the contract (in its 'settlement date' clause) and the agreement for lease, (in clause 5.4) were structured to satisfy the requirements of these provisions.

1. Returning to the other terms of the contract, the deposit was payable 'upon registration of the Plan of Subdivision 543420X and the balance less the sum of $117,000.00 at the expiration of 5 years from the date hereof [21 December 2006] or by earlier mutual agreement'.[53]
2. Notably, this varied provision of the contract was not varied to refer to the L plan instead of the X plan. However, McDonald's state in their letter of 14 October 2010 that 'under the variation of contract the deposit sum of $117,000 is treated as paid on registration of plan of subdivision 532725L. That plan of subdivision was registered on 8 January 2008'. It also says in that letter: 'The balance of the price payable under the contract is due on 20 December 2011. The price can only be calculated by reference to the rent payable under the lease as at the 20th December 2011'.
3. The 'balance' is defined in the particulars as 'the price less the deposit paid'. The 'price' is in turn defined in the particulars by reference to a formula. That formula takes into account 'the yearly rental payable by the purchaser to the vendor under the occupation and lease agreement as at the date of payment of the balance of the purchase price'.
4. There was no clear evidence before me about exactly what payments were made until 8 January 2008. However, it seems both parties agreed the price was calculated by reference to the rent paid. In that sense it may not matter whether they are characterised as interest or rental payments.
5. The above formula for calculating the balance of the price by reference to the rent paid is a factor supporting the applicant's argument that the lease was referable to the contract. See the analysis in Cam above, where the court held that special condition 2 was significant in deciding that the purchaser had obtained possession under the contract of sale. Under that clause the purchaser under the contract attorned tenant 'until payment of the balance of the purchase money and interest thereon at a monthly "rent" equal to the monthly instalments of purchase price payable. The amounts of "rent" paid were to be accepted "in or towards satisfaction of interest and the balance in satisfaction of the purchase money"'.
6. Although the lease agreement here is a separate document from the contract, I agree with Mr Korman it is significant that the two agreements were entered on the same day. It is also significant that clause 5.4 of the lease agreement cross-references the contract in providing that '...if the plan is registered..., settlement under the contract occurs [and]... the lease will be surrendered by both parties'. It cross-references the contract not just in a general sense but rather, specifically in relation to the issue of when possession is given under the contract. The lease is to be surrendered when that occurs. The recitals are clear in stating that the agreement is to enable the purchaser to take early possession with the security of an agreement to lease, because it is not entitled to possession under the contract of sale until the settlement date, i.e. registration of the plan.
7. In relation to the fact that both the 'settlement date' clause of the contract and clause 5.4 of the lease agreement have not been varied to refer to the 'L' plan rather than the 'X' plan, I accept Mr Korman's submission that this was most likely an oversight.
8. The court in Cam also took into account clause 11 (not decisively on its own but in light of special condition 2), which provided that from the date of the contract, the purchaser should bear all rates, taxes and outgoings. This supported the conclusion that the purchaser was in possession under the contract once it had been signed.
9. In this case, under clause 2.3 of the lease agreement, it seems McDonald's was (from the original licence occupation date of 28 August 2006) to pay all rates and outgoings and land tax. Special conditions 11 and 12(c) of the contract essentially provide for the purchaser to pay land tax from registration of the plan of subdivision. Clause 12 was later varied to refer to the L plan.
10. Taking special conditions 11 and 12(c), (and ignoring for present purposes the seemingly inconsistent clause 2.3 of the lease agreement), although they are not decisive in their own right, when read with the clause taking rent into account in calculating the price, and when read with the 'settlement date' clause of the contract, and clause 5.4 of the lease agreement, they support the conclusion that the parties intended the purchaser to have possession under the contract from 8 January 2008.
11. In Long, Maguire J held that the purchasers had not obtained or been delivered possession of the land under s 26 of the NSW legislation. However, I disagree with Mr Kotros's submission that that case is similar to the present one. In that case, there was a licence and a contract (both in multiples). The contracts provided that the balance of the purchase money should be paid on completion. However, they also provided that the vendor be entitled to the rents and profits and should pay or bear rates, taxes and outgoings 'up to the date of completion' (clause 11), and that 'vacant possession' of the property sold 'should be given on completion' (clause 19).
12. As noted, Maguire J found the contract provision that the vendor was entitled to the rents and profits up to completion (clause 11) was important and had not been changed by the licence agreement. He also found it significant that vacant possession was given under the contract on completion and the licence agreement did not vary this. These clauses are entirely distinguishable from clause 11 and the 'settlement date' clause of the contract in this case.

1. There are anomalies and inconsistencies in the documents (outlined above) favouring both parties' cases on the question whether McDonald's was entitled to, and took, early possession under the contract. However, on balance and in overall conclusion, I consider that a close analysis of the contract and the lease agreement in this case, in light of the relevant provisions and the case law, reveals that McDonald's was entitled to possession under the contract from 8 January 2008. By virtue of clause 5.4 of the lease agreement, the parties intended that the lease be surrendered automatically on that date, and it was. The fact that the 'interest payments' item of the Schedule to the contract was crossed out, could be seen as consistent with the parties not considering that s 6 of the SLA applied because the mortgage was always to be (and was in fact) discharged early in the overall scheme of events. In contrast, General Condition 4 was not crossed out.
2. There is no doubt (and it was not disputed) on the facts that McDonald's were in de facto possession of the land at the relevant assessment dates. This is clear from Mr Mondous's witness statement. Mr Korman argued that McDonald's were in exclusive possession from well before 31 December 2009 to the present, and nothing had really changed when the transfer was eventually executed in December 2011.
3. I agree with Mr Korman's submission that (contrary to the submission of Mr Kotros) whatever happened before 31 December 2009 is largely irrelevant. The focus of the Act, including s 15, is on the relevant assessment dates of 31 December 2009 and 2010 and how McDonald's has possession as at those dates. Further, there was no legal impediment under the SLA to the purchaser taking possession as at 8 January 2008, upon registration of the plan of subdivision. As at that date, possession was given and taken under the contract. Consistently with this, according to the lease agreement, the lease was surrendered on that date.
4. As noted, the distinction in the cases between de facto possession on the one hand (not pursuant to the contract of sale) and possession as purchaser under the contract of sale, does not assist the respondent here. This is because as at 31 December 2009 and 2010 McDonald's had taken possession 'as purchaser' legally entitled to do so under the contract of sale. The lease was no longer effective.

1. Mr Kotros argued that McDonalds had not 'taken' possession under the contract because it was in occupation as lessee. He referred to consideration of the meaning of 'taken possession' in ss 15 and 16 by Ginnane J in Commissioner of State Revenue v Oakbee Pty Ltd (Oakbee).[54] In that case, his Honour observed that 'many of the dictionary definitions of the word 'take' use some active word such as to seize, grasp, capture or catch...'. His Honour held that those definitions conveyed the sense of 'taken' within s 16(1)(a) of the Act and 'where a conveyance of the vendor's estate in the land to the purchaser has not occurred, some action by the purchaser in relation to the land is required to support a finding that the purchaser has taken possession of it'.[55]
2. There is no reason for Ginnane J's definition of 'taken' not to apply equally to the word as it appears in s 15 (as well as s 16) of the Act. In practice, his Honour observed that:

The nature of the conduct by a purchaser that will suffice to permit the finding that it has taken possession of land will depend on a range of matters. These will include the terms of the contract of sale and the nature of the land. In an appropriate case, something less than a purchaser taking physical possession of the land may satisfy the requirement that the purchaser has 'taken possession of the land'.

A right to possession that a vendor confers on a purchaser pursuant to a term of a contract might well satisfy a requirement that possession be delivered or obtained. However, in the circumstances of this case, it does not satisfy the requirement contained in the...[Act] that the purchaser has taken possession of the land.

In the present case, the purchasers had paid a small part of the purchase prices, settlements had not occurred, the purchasers had a contractual right to possession, but had not exercised it, and they still owed the balance of the purchase prices....

They had not exercised that right to possession by taking any action in connection with the land on or prior to 31 December 2008.[56]

1. Notably, in Oakbee, the contract provided that 'settlement was the date on which the purchaser shall become entitled to vacant possession of the property and chattels must be provided, namely, upon payment of the initial deposit monies and approval of the plan of subdivision'. Just below that on a separate line appear the words: 'Date 29th January 2009 or earlier by agreement'.[57]
2. In Oakbee, also a case in which one of Mr Mondous's companies was vendor/applicant, Mr Mondous argued that the date of possession was the date the contract was signed, in November 2008. One of the purchasers for the relevant property gave evidence that he did not understand he was entitled to enter into possession before January 2009.[58] Consistently with this understanding, there was no evidence from reading the report that the purchasers had in fact taken physical possession of the property before then, and specifically, at the relevant assessment date of 31 December 2008. This contrasts with the uncontested evidence in the present case, where McDonald's took physical possession of the land well before and at the relevant assessment dates. They took it by positive acts of moving in, constructing the restaurant and trading from it.[59]
3. It is artificial to say that because McDonald's originally took physical possession as licensee and then as lessee, that when they did get the legal right to possession under the contract on 8 January 2008, they cannot be said to have 'taken possession' under that right as purchaser, as the cases require. The licence had been replaced by the lease, which in turn was surrendered on 8 January 2008, allowing the legal right under the contract to operate as the sole entitlement to possession from that date. This argument would require McDonald's to move out before and move back into the property on or after 8 January 2008 simply to say that it 'took' possession as purchaser on or after that date. That makes no sense.
4. Mr Kotros also pointed to the opinion of McDonald's expressed in correspondence with the respondent[60], that it did not take possession until the contract of sale was competed in the normal way. He noted that, consistently with that, McDonald's had not lodged a notice of acquisition in land form with the respondent until after it became the registered owner on 13 January 2012, indicating that the date of possession or transfer was 20 December 2011 and that this was not a terms sale.[61]
5. I have addressed that point above in detail. Further, I note that the opinion of McDonald's is not an impartial one and it declined the opportunity to be joined to be heard or to make a submission.
6. In light of my conclusion that s 15 applies I do not need to consider whether s 14 (also argued by the applicant) applies.

Section 16

1. Mr Korman conceded that at the relevant assessment dates McDonalds had not paid 15% of the purchase price such that the requirement in s 16(1)(b) was not satisfied. However, he argued that I should exercise my discretion under s 16(3) and determine that the applicant as vendor is deemed not to be the owner of land as at the relevant assessment dates.
2. In the terms of s 16(3), I can determine this despite the fact that 15% of the purchase money has not been paid. In my view it is obvious from the wording of ss 16(1) and (3)) that for s 16(3) to apply the requirement in s 16(1)(a), that the purchase has taken possession, must first be satisfied. In this interpretation I agree with (and in any event am bound by) the view expressed by Ginnane J in Oakbee.[62] It is a moot point because I have already found above that this requirement is satisfied here.
3. Standing in the shoes of the Commissioner, I may determine that the applicant is deemed not to be the owner of the land despite the fact that 15% of the purchase money has not been paid if I am satisfied that:
   • (a) the contract of sale was made in good faith and not for the purpose of evading the payment of land tax; and
   • (b) the contract of sale is still in force.
4. As noted above, the contract refers in its terms (special conditions 11 and 12 (c)) to land tax, suggesting the purchaser is to pay it from registration of the plan of subdivision. I simply note these provisions as evidencing that the parties clearly did not enter the contract intending to evade the payment of land tax. They addressed it. This is so although they might later have disputed in their correspondence with the respondent (as they did) who was to pay and when.
5. I conclude that I am satisfied the contract was not for the purpose of evading the payment of land tax, and that it was otherwise entered in good faith. It might be said that the contract was structured as it was to avoid application of the provisions of the SLA. However, it was a legally valid structure under those provisions. Before registration of the plan of subdivision, the purchaser only occupied the land as licensee and then lessee, in compliance with s 9AD(1) and (4). The first limb in s 16(3)(a) is met.
6. Under the second limb, in s 16(3)(b), I must be satisfied that 'the contract of sale is still in force'. I agree with Mr Korman that this must mean not that the contract is now still in force, but that, as at the relevant assessment dates, it was still in force. Clearly it was still in force as at 31 December 2009 and 2010. Completion did not occur until December 2011.
7. Although s 16(3) gives me a discretion once the two limbs are met, I think it is appropriate in this case to exercise that discretion to determine that the applicant vendor is deemed not to be the owner of the land at the relevant assessment dates of 31 December 2009 and 2010, despite the fact that (as the applicant concedes) 15% of the purchase money had not been paid as at those dates. I agree with Mr Korman and Mr Kotros that ss 15 and 16 (including 16(3)) is directed at ensuring vendors remain liable for land tax until possession has passed under a genuine and not a 'dummy' sale_._[63] I find this to have been a genuine sale and can think of no other reason here to prevent me from exercising the discretion in favour of the vendor.

1. I shall order that the respondent's assessments dated 12 February 2010 and 11 March 2011 are varied to remove references to land tax payable for the land at 250 Clyde Road Berwick, Victoria.

1. As noted above, since 25 May 2000 the applicant owned the land at Certificate of Title Volume 10519 Folio 273, the title from which the land at 250 and 260 Clyde Road was derived. 260 Clyde Road is the Yassmin land.
2. There is an unsigned agreement, which the applicant describes as a 'heads of agreement'. It is dated '2005' only (although the footer is dated 6 December 2012), between the applicant as vendor, Sofia (Sophia) Pizza House Bistro and Restaurant Pty Ltd (Sophia) as purchaser and Hamid and Rakad Raydan as guarantors.[64] It is in respect of part of the land contained in Certificate of Title Volume 10519 Folio 273, being lot two on proposed plan of subdivision 532725L, the Yassmin land. The respondent notes that this agreement did not refer anywhere to the X plan.
3. It appears a copy of this heads of agreement (this version)[65] was provided to the Commissioner by Pryles & Co, lawyers for Yassmin (and presumably Sophia), by letter dated 2 March 2012.[66] This version is unsigned. In a letter dated 25 June 2013 from Pryles & Co to the Commissioner, they state that their clients cannot locate a counterpart of the executed heads of agreement and that a copy of that document may be in the possession of the lawyers who acted for the applicant, Comito, Iacovino & Co.[67]
4. At the hearing Mr Mondous in fact later produced a copy version of this heads of agreement dated 11 April 2006, signed by the applicant, Yassmin as purchaser and Sophia and the three Raydans referred to above as guarantors, tendered as exhibit five. He gave verbal evidence that he recalls signing a copy of a heads of agreement, that he saw it signed on behalf of Sophia, and saw the guarantors sign it.[68] He said he does not know if he signed the version with Yassmin or Sophia as purchaser, he believes both as the same people are behind both. He says he dealt with Sam Raydan.[69] He noted that the heads of agreement in the earlier version (T71) could have been amended (presumably to lead to a more final version, perhaps that at exhibit five).[70]
5. The two versions of the agreement appear the same except for the different purchasers and guarantors noted above.
6. The recitals state (in summary) as follows. The vendor (applicant) is the registered proprietor of the land described, the purchaser has obtained necessary planning and building approvals for a pizza/pasta restaurant to enable it to construct a building on the land, and wishes to buy the land from the vendor. It has asked the vendor to finance part of the cost of constructing the premises on the land. The vendor proposes to subdivide the land from the balance of the land owned by the vendor in accordance with plan of subdivision 532725L.
7. The agreement refers to the vendor financing the purchaser's construction of a restaurant by a loan of up to $2.5 million.
8. On 22 March 2005 planning permit P529/04 was issued.
9. By letter dated 22 December 2005 it appears that lawyers for Sofia (Sophia) Pizza House Bistro and Restaurant Pty Ltd, named Yassmin as the proposed purchaser.[71]
10. On 4 January 2006 a mortgage to the Commonwealth Bank of Australia was registered on Certificate of Title Volume 10519 Folio 273.[72]
11. Mr Mondous gave evidence that the applicant and Yassmin (presumably, previously Sophia in relation to the heads of agreement) simultaneously entered into the heads of agreement[73] and a contract of sale of real estate[74] in relation to the land at 260 Clyde Road Berwick.[75] That would be consistent with the date of both being 11 April 2006 (see below, for the contract), although he does not recall the date he signed these documents and he cannot say if he signed both on the same date.[76]
12. The contract of sale of real estate is between the applicant as vendor and Yassmin as purchaser, in respect of lot two on proposed plan of subdivision 532725L. There are various versions of this document, but taking one[77], a copy signed by the purchaser, in the particulars of sale for 'date of sale' it is stated 'is the date of this Contract, namely', and then in handwriting is the date '11 April 2006'.
13. Mr Mondous said that going by the document he believes the sale date to be 11 April 2006.[78] However, in cross-examination, it was suggested to him that the contract may have been signed after April 2006 and after the date of the building permit of 13 July 2006 because it refers to the later 'L' plan, not the earlier 'X' plan, and the McDonald's contract was not varied until December 2007 to replace references to 'X' with 'L'. Mr Mondous said he did not think so, because the Council would not have accepted the application for a building permit if the applicant had no contract.[79] That line of cross-examination is merely speculative. There is no reason why the date of 11 April 2006 might not be correct. The later variation of the McDonald's contract may have been simply when the parties to that contract thought to 'tidy up' the references from 'X' to 'L'.
14. This version contains a guarantee apparently executed by Hamid, Rakad and Sam Raydan as guarantors and Sophia. Mr Mondous said he recognised the purchaser's signature on page 1, and the signature of one of the guarantors, as that of Sam Raydan.[80]
15. In re-examination Mr Mondous was taken to the purchaser's signature on the vendor's statement in T72, above which is handwritten the date 11 April 2006. He confirmed he had no reason to believe that the handwritten date of 11 April 2006 throughout (and near Mr Raydan's signature on the vendor's statement and where he signed as guarantor) was not the date Mr Raydan signed the contract.
16. In the particulars of sale, the 'price' of $1,439,000.00 is crossed out and handwritten above it is the price of $1,475,000.00. [Mr Mondous explained that the price was estimated on square meterage and when the plan of subdivision was done 'it was a few metres bigger and the price was adjusted, probably by my solicitor, although I don't recognise this to be my solicitor's handwriting'.[81] Hence it seems this version of the contract with the price increase to $1,475,000.00, is the more recent one.] There is a 'deposit' noted of $143,900.00 and a 'balance' (handwritten in) of $1,331,100.00. The 'settlement date' is noted as:

The date of issue of a Building Permit for the Purchaser for the purpose of carrying out the Purchaser's works in accordance with Heads of Agreement. Namely 13-7-2006.

1. The words 'Namely 13-7-2006' are handwritten. Mr Mondous said he believes from this that the settlement date of the contract was 13 July 2006.[82] He relies on this clause, which he says states that once the purchaser has the building permit, it has the right to possession.[83] Mr Korman pointed out that he does not limit his arguments to this one clause.
2. The 'payment of balance' in the particulars provides (and Mr Korman drew my attention to it in particular):

On or before the expiration of the period of four years from the date of issue of a Certificate of Practical Completion in accordance with the attached Heads of Agreement. Four years from the 11.4.08.

1. The words 'Four years from 11.4.08' are handwritten.
2. As noted above for the McDonald's contract, Mr Korman noted that the contract explicitly provided for deferred payment and a deferred transfer of land.
3. Mr Mondous said he did not make the handwritten notations.[84]
4. Special condition 7 relevantly states that 'all rates, taxes, assessments and other outgoings in respect of the said land shall be borne by the said Purchaser as and from the date of issue of the Building Permit and the same shall if necessary be apportioned between the Vendor and the Purchaser and the balance paid or received as required'.
5. Special condition 15 states:

Subject to the provisions of the heads of agreement executed by the Vendor and the Purchaser, the Purchaser shall at its own expense comply with all notices (other than those relating to adjustable outgoings) served after the date hereof on the Vendor or the Purchaser in respect of or in connection with the said land and shall assume all liability arising therefrom or in connection therewith and the Purchaser hereby agrees to indemnify the Vendor against any such liability.

1. The applicant points out that the contract of sale also provided in special condition 9 that upon registration of the plan of subdivision, Yassmin would provide Kameel with a copy of the notice of acquisition.[85] In fact that clause states that upon approval of the plan of subdivision, Yassmin would provide Kameel with a copy of the notice of acquisition.
2. Mr Mondous says[86] the applicant filed a notice of disposition stating that the purchase was a terms sale and that the date of possession was 13 July 2006,[87] being the date of the building permit. He asserts that (in his opinion) in breach of its contractual obligations, Yassmin has never provided the applicant with a notice of acquisition.
3. Mr Mondous gave evidence that although this copy version[88] of the contract only contains the purchaser's signature (no vendor's signature), he recalls signing it. He says he sent it to his solicitor and it was given to Yassmin. He did not keep a copy.[89] He believes this version of the contract to be accurate and correct.[90]
4. It appears that this version of the contract of sale (T72) was provided to the Commissioner by letter dated 4 February 2011 from Comito, Iacovino & Co, the applicant's lawyers.[91] In that letter the lawyers set out the various payments made under the contract of sale.
5. Mr Mondous conceded in cross-examination that that letter was in response to the Commissioner's letter to Comito, Iacovino & Co dated 21 October 2010, asking for a certified copy of the complete contract of sale.[92]
6. Another version of the contract of sale dated 11 April 2006, and the heads of agreement, was provided to the Commissioner by Pryles & Co, lawyers for Yassmin, by letter dated 2 March 2012.[93] The respondent has confirmed the version of the contract of sale provided under cover of this letter is exhibit B.[94] That version was signed by the purchaser Yassmin, contains no vendor's signature and only a purchaser's signature. It contains no guarantors' signatures.
7. The Commissioner says 'it is said that it was so signed by Sam Raydan, authorised by Yassmin, on or about 11 April 2006. The price stated is $1,439,000.00'.[95] As noted, it seems this document was superseded by the later versions, which crossed out that figure and replaced it with $1,475,000.00.
8. Mr Kotros cross-examined Mr Mondous about the fact that Yassmin had not provided the Commissioner with a copy of the contract signed by Mr Mondous for the applicant, suggesting that no contract had been signed by both parties. Mr Mondous responded asking that without a signed contract, why would Yassmin have built a big building on the site.[96]
9. Following cross-examination at the hearing about failure to produce an original version of the fully executed contract of sale, Mr Mondous produced another version on the next day of the hearing. This version (now exhibit four) appears to have been signed by both vendor and purchaser. It seems in all other respects the same as the version at T72. When asked why this version had not been provided in response to the Commissioner's earlier request for a certified copy of the contract of sale (instead of T72), Mr Mondous said his solicitor had not asked him for it at the time. In any event, he said that T72 was a 'certified copy by Yassmin...We rely on the contract signed by Yassmin and he relies on the contract signed by us...Both sides agree there is a contract...'. Mr Mondous explained that in the court case between he and Yassmin, there is no dispute about the existence of a contract, it is only about Yassmin 'not complying with the settlement'.[97]
10. Exhibit C, containing a further copy of the contract of sale between the applicant and Yassmin, was produced at the hearing by Mr Mondous but tendered by the respondent. Mr Mondous asserted[98] this was the original contract, with his original signatures on it, but clearly it is only a copy. This copy appears the same as exhibit four, although Mr Mondous's signatures appear clearer. He could not explain why his lawyers had not had this fully signed copy of the contract to provide to the Commissioner.
11. Mr Mondous was asked in cross-examination why he had this copy with both signatures on it when he had previously given evidence (above) that he did not have a copy with his original signature on it because he and the purchaser gave each other the copy they had signed. He responded: 'I said the solicitor will have two copies. I sent [one] to the purchaser for signature. The purchaser will sign and send back to his solicitor. Then the solicitor send me copy signed by Yassmin and Yassmin sign my copy. No issue by me or by Yassmin that the document is not correct or have any dispute'.[99]
12. Mr Kotros confirmed (in response to Mr Korman's request) that he was not alleging that the signatures on the heads of agreement and contract provided in exhibit C had been forged. [Mr Mondous had also been cross-examined about his signatures on the heads of agreement version in exhibit C, and he stated that it was his original signature on that document as well.] When asked if the Commissioner was alleging that exhibits four and five were forgeries and not the true agreements, Mr Kotros stated that it was for the applicant to put its case and the respondent says that no original contract of sale has been produced, so the existence of the contract is still in issue. He stated that Yassmin has not been called to give evidence about it and the Tribunal only has copies of the contract. He submitted that in previous cases, the Tribunal has held that copies are not good enough, and that the applicant has not proved its case that there is a contract.[100]
13. The applicant asserts that the agreed purchase price does appear to be $1,475,000.00 as per the handwritten figure (it is working from exhibit four). It notes that that price is mentioned in the schedule as the price in the version of the heads of agreement in exhibit five (above), being the copy version which appears to have been signed by both parties. I do not think anything turns on the precise price and the differences in price between different versions.
14. A deposit of $143,900.00 was paid to the applicant on 27 April 2006[101], and (apparently on 11 May 2006) GST of $14,390.00 on the deposit was paid to the applicant.[102]
15. The building permit was issued on 13 July 2006.[103] The nature of the building work was listed in that document as 'construction of restaurant all parts' and the project estimated value was listed as $2,180,000.00.
16. The mortgage to the Commonwealth Bank was discharged on 12 April 2007.[104]
17. On 8 January 2008 plan of subdivision PS532725L was registered, subdividing Certificate of Title Volume 10519 Folio 273 into, amongst other titles, Certificate of Title Volume 11047 Folio 776 (for the Yassmin land).[105]
18. Mr Mondous gave evidence that the restaurant was built and an occupancy permit was issued by the Council on 1 April 2008.[106] The parties agreed that the occupancy permit was issued on that date. Mr Mondous says he observed that 'Yassmin began operating Sofia's Restaurant shortly after'.[107]
19. Two of the relevant dates for land tax purposes occur after the occupancy permit was issued, on 31 December 2009 and 31 December 2010.
20. A 'lease of real estate' by which the respondent says 'Yassmin purported to lease "premises" described as "248-296 Clyde Road, Berwick" to PJR Associates Pty Ltd (now in liquidation) for five years commencing from 1 February 2011, which document was dated 18 February 2011, was entered.'[108]
21. Mr Punnaka De Zoysa, a former director of PJR Associates Pty Ltd (PJR), gave evidence that from 1 February 2011 to 1 January 2012, continuously, in respect of land at Clyde Road Berwick upon which a restaurant known as Sofias Pizza House had been constructed, PJR occupied the land exclusively. He stated that PJR leased the land from Yassmin pursuant to a written lease, paid rent to Yassmin, had no dealings with the applicant or Mr Mondous, and did not regard the applicant or Mr Mondous as entitled to enter the premises on any other basis than as a member of the public.
22. Mr De Zoysa also stated that PJR did not provide the applicant any rights of entry to the land other than those provided to the public, and operated the restaurant known as Sofia's Pizza House from the premises.[109]
23. The next relevant date for tax purposes is 31 December 2011.
24. Mr Mondous gave evidence as follows:

26. The restaurant has been operating continuously since well before 31 December 2009, until the present day (T82). I became aware that in February 2011, Yassmin leased the property to a tenant, [PJR], who took over the running of the restaurant (DOC 1).

27. I never regarded this as any concern of Kameel's. The land had been sold[110] and the only outstanding matter between Yassmin and Kameel was the monthly interest payments, and the payment of the balance of the purchase price at the conclusion of the five year term.

28. From the time Yassmin commenced operating the restaurant, both Kameel and Yassmin have conducted themselves on the basis that Yassmin occupies the land as its owner. Since the building was complete, some years prior to 31 December 2009, Yassmin has never given Kameel or Mr Mondous the keys to the restaurant or any other method of gaining access (beyond that which is available to the public). In that period, Kameel has never asked to be given access to the land and has never performed any inspections or acted in any way as the landlord. Yassmin did not ask Kameel's permission to lease the land, and Kameel did not expect that such permission would be sought. At no time during the period in question did Kameel object to any party renting the land from Yassmin, or demand or make any other attempt to obtain rent payments from Yassmin or any other party. Neither did any party offer to pay the Applicant rent in relation to the land.

29. Yassmin repaid Kameel $1,559,370.80 up to 11 January 2009. (DOC2).

30. However by 2012 Yassmin was falling behind in making interest payments. In April 2012, Yassmin agreed to transfer rent payments to the Applicant in reduction of the debt that was owed (T83).

31. Kameel terminated the Contract of Sale with Yassmin by...notice dated 15 April 2013 (T86) because Yassmin failed to pay the balance of the purchase price by the due dates or at all.[111]

1. The respondent also notes that on 5 April 2012 'rental' payments (as the respondent describes them), 'said to be receivable by Yassmin from [PJR] were apparently assigned to the applicant on account of monthly "interest" said to be payable by Yassmin to the applicant'.[112]
2. Settlement was apparently due on 10 April 2012.[113]
3. The respondent notes that although the applicant says it terminated the contract with Yassmin by notice dated April 2013, Yassmin says the contract was terminated by agreement in November 2012, the balance of the purchase money not having been paid.[114]
4. Mr Korman asserts that although the contract of sale between the parties was made in good faith with Yassmin spending $1,129,999.00[115] on the purchase of the land, construction of a building and interest payments, ultimately the contract was not completed and on 15 April 2013, Kameel issued a rescission notice to Yassmin. Mr Mondous explained that the applicant has brought legal proceedings against Yassmin for not completing the contract.[116] These payments are set out in a letter from Pryles & Co, Yassmin's lawyer.[117] Pryles & Co characterise them in that letter as interest only payments. The respondent agrees with this characterisation. Mr Mondous disagrees, characterising them as principal and interest payments.[118]

1. Mr Kotros submitted that the applicant's failure to produce the original contract signed by both parties was significant. Instead, several copy versions (outlined above) were produced.
2. Mr Korman submitted it made no difference which version of the contract reflects the final contract between the parties. Their terms are the same except for the price, which he says is not relevant because the applicant does not say the purchasers paid 15% of the purchase price. However, if required to make a choice, he chose exhibit four, signed by Mr Mondous, noting that the Property Law Act 1958 (Vic) requires a written document signed by the vendor for a valid sale of land and it is silent as to when the document is signed. I have generally worked from exhibit four.
3. Unlike in the case of Decleah Investments Pty Ltd v Commissioner of Taxation (Decleah)[119], which also concerned one of Mr Mondous's companies, I do not consider that this issue is significant. The uncontested evidence was that Yassmin entered early occupation of the land to build the building, after the contract of sale had been entered. Yassmin's lawyers (Pryles & Co) in their letter referred to above agree that the contract was probably dated 11 April 2006. Significantly, in that letter they did not take issue with the fact that there was a contract of sale.
4. The applicant asserted that the handwritten notations on the contract are 'immaterial to the facts in issue and it is unnecessary for the Tribunal to decide whether the notations constitute part of the agreement between the parties'.[120] They may be, although he referred to them in his submissions below.

Possession and s 15

1. The applicant relies first on s 15 and failing that, s 14 of the Act to say Yassmin is a deemed owner for land tax purposes.
2. As noted, the applicant says that the contract of sale of real estate and heads of agreement[121] in relation to the Yassmin land, were entered simultaneously.[122] In re-examination of Mr Mondous, Mr Korman pointed to the fact that these two documents reference each other. He noted that the contract refers in the particulars (payment of balance and settlement date) to the heads of agreement. It refers to that agreement in its special conditions (clauses 5 and 15).
3. Mr Korman further noted as follows. The heads of agreement (exhibit five) provided for construction of a building on the land by Yassmin, and the terms of finance to be provided by the applicant. The heads of agreement was expressed to be subordinate to the contract (in clause 1.1.9). The contract was annexed to the heads of agreement 'and both documents referred to the same subject matter, namely the land purchased by Yassmin from Kameel'.[123] He submitted that the heads of agreement and contract of sale reference each other and are one document, covering all arrangements that the parties entered into.
4. The applicant says that Yassmin was in exclusive possession of the land at the critical times of the assessments, 31 December 2009, 2010 and 2011. Mr Korman refers in particular to the evidence of Mr Mondous quoted above at paragraphs [26] to [28] of his witness statement about the restaurant's operation since 31 December 2009, and (in relation to the assessment date of 31 December 2011) the statement of Mr De Zoysa.[124]
5. Mr Korman submitted that two dates were important, the date of issue of the building permit (13 July 2006) and the date of issue of the certificate of occupancy (1 April 2008).
6. He points to the contract of sale providing in the particulars ('settlement date') that settlement would take place on the date of issue of the building permit (which was 13 July 2006).[125] He says that implicitly gave Yassmin the right to vacant possession. Mr Korman conceded that the McDonald's contract explicitly referred to vacant possession being given on a particular date, and that the Yassmin contract did not specifically mention vacant possession.
7. However, he submitted that the fact the agreement and contract said Yassmin could build once it had the building permit, effectively meant vacant possession was given on the date of issue of that permit, being 13 July 2006. It had the right to build the building and obtain the certificate of occupancy 'and implicit in that thereafter is the right to occupy the business. But we say that whether or not that implicit right exists, the parties could resolve it by the applicant giving and Yassmin accepting possession of the land, which is what happened'.[126]
8. In relation to the certificate of occupancy, Mr Korman submitted as follows.
9. The 'payment of balance' particular of the contract reads: 'on or before the expiration of the period of four years from the date of issue of a Certificate of Practical Completion in accordance with the attached Heads of Agreement' after which is handwritten in the words '4 years from the 11.4.08'. Whilst he could not find that certificate, he notes that there is a certificate of occupancy dated 1 April 2008. 'Practical completion' in clause 2.6 of the heads of agreement is defined to mean 'that stage in respect of the Purchaser's Works when such works are substantially completed and are certified as such in writing by the Vendor's Architect/draftsman and/or builder'. He says clause 5.4 of the heads of agreement references that back, by providing:

The premises shall be deemed to be completed by the Purchaser upon the issue by the Purchaser's and/or Vendor's architect/draftsman and/or builder of a Certificate of Practical Completion. The date of such Certificate is hereinafter called 'the date of Completion'.

1. Mr Korman further submitted as follows. Even though in the 'payment of balance' particular in the contract of sale the words '4 years from the 11.4.08' had been handwritten in, this suggested that whoever wrote those words thought the certificate of practical completion was given on 11 April 2008. However, 1 April 2008 is when the certificate of occupancy was granted. Practical completion (11 April 2008) could not pre-date the certificate of occupancy (1 April 2008). He submitted that the certificate of practical completion must and does, post date the certificate of occupancy. He says that from somewhere on or after 1 April 2008, the four year period commenced so the balance was to be paid somewhere from 1 April 2012 onwards, and this is relevant to the issue of whether this was a contract for deferred payment.
2. Mr Korman submitted that the heads of agreement (exhibit five) only deals with the construction of the building and provision of finance from the applicant to Yassmin, so they are the only two matters covered by that agreement. As the building was completed in April 2008, as at the first assessment date of 31 December 2009 this agreement has no relevance. He said:

The building was long ago constructed and occupied by Yassmin, and whatever arrangements were reached in relation to the building of the building are of no relevance. The agreement gives the applicant authority to interfere with the building works and to oversee them, for example, in clause 6.2. The effect of clause 6.2 has no relevance to these proceedings because the building was completed in April 2008 so the extent to which Kameel had control over the land before then is irrelevant. The question is to what extent did the applicant have control over the land on and from 31 December 2009?

1. In summary, Mr Korman submitted that whichever version of the contract of sale is considered (and he takes exhibit four), they all establish that the parties agreed that settlement would be on 13 July 2006 and the balance of the purchase price would be paid in April 2012. He submitted that the only agreement other than the contract which governed the relationship between the parties (the heads of agreement), related to the construction of the building and finance and said nothing about the applicant's rights post completion of the building. The other two facts he relies on are occupation (1 April 2008) and that the contract was entered in good faith. He said the Tribunal should accept the unchallenged evidence of Mr Mondous (above) about exclusive occupation of both the McDonalds and Yassmin land.
2. The applicant also points to the contract of sale providing that Yassmin would become liable for payment of land tax. Special condition 7 makes the purchaser so liable from the date of issue of the building permit. Special condition 15 makes the purchaser generally liable to comply with all notices 'served after the date hereof on the vendor or the purchaser in connection with the land'.[127]
3. As noted, Mr Korman pointed out that although the contract of sale between the parties was made in good faith with Yassmin spending $1,129,999.00[128] on the purchase of the land, construction of a building and interest payments, ultimately the contract was not completed and on 15 April 2013, Kameel issued a rescission notice to Yassmin. He submitted that no question had been raised that the contact of sale was not made in good faith.
4. Mr Kotros submitted for the respondent that its position is that 'Yassmin never completed any purchase and never became the owner, despite the fact that it was apparently allowed into occupation from 2006'.[129]
5. First, he says that neither the contract nor the heads of agreement 'purports to be a terms contract', in that 'neither contains any provision purporting to give Yassmin an entitlement to take possession before payment of the purchase price in full'.[130]
6. Mr Kotros also submitted that the level of control the vendor retained over the land under the heads of agreement (clauses 6.2 and 9.5 of T71) does not permit the conclusion that the vendor has 'retained no vestige of possession', as referred to in Cam above.[131] Under clause 6.2 'all works shall be subject to the supervision of the vendor and the vendor's architect and/or draftsman, and the purchaser shall comply with their instructions and directions regarding quality of workmanship and progress payments'.
7. Clause 9.5 relevantly provides that the purchaser shall enter into an agreement with a builder to be approved by both the vendor and the purchaser for the construction of the purchaser's works, and that the vendor and the purchaser shall, if necessary, call for a minimum of three tenders and the successful tenderer shall be approved by both. It also provides that the vendor agrees to advance the progress payments to the builder at the purchaser's request upon receipt of a certification from the vendor's architects and/or draftsman that such progress payments are in order.
8. Whilst the applicant's case (particularly in relation to Yassmin) was premised on ignoring the SLA provisions, the respondent's case was based on taking them into account in reading the relevant provisions of the Act. The respondent referred to ss 9AA and 9AD, summarised above. Mr Kotros submitted that if I accept the applicant's argument that the purchaser was in possession from the date of issue of the building permit (13 July 2006), then that would infringe the prohibition on early possession in s 9AD of the SLA, because the plan of subdivision was not registered until 8 January 2008.[132]
9. The respondent also says that to the extent the applicant relies on its lease to PJR to indicate that the applicant itself had possession from 1 February 2011, the applicant was not in a position to give more than it had. The respondent says it only had an informal (perhaps unwritten) right to occupy.

1. To the extent Mr Korman argues, as he does in his written submission, that mere de facto possession is sufficient to satisfy s 15, without needing to show a legal right to possession under the contract, I have rejected that argument in the context of considering the McDonald's land. The same reasoning applies here. Clearly Yassmin had de facto possession at the relevant times, but that was not enough.
2. The next question is where was the right to early possession under the contract? Yassmin's case is distinguishable from that of McDonald's, in which the settlement date particular clearly provided for vacant possession upon registration of the plan of subdivision. There is no such clear reference to early possession in the Yassmin contract. The applicant says the contract 'impliedly' gave vacant possession under the settlement date particular on the date of issue of the building permit, 13 July 2006. First, I do not accept that an implication is sufficient to give vacant possession on that date.
3. Secondly, even if I accepted it were, I agree with Mr Kotros that such possession would be before the plan of subdivision was registered and so breach the prohibition in s 9AD of the SLA. This again contrasts with the McDonald's contract, which gives vacant possession on the very date on which the purchaser becomes entitled to vacant possession of the land, namely upon registration of the plan of subdivision.
4. Special condition 7 of the contract makes the purchaser liable for land tax from the date of the issue of the building permit, being 13 July 2006. Special condition 15 makes the purchaser liable to comply with all notices 'served after the date hereof... in connection with the land'. I will assume for present purposes that the 'date hereof' is 11 April 2006, consistently with the exhibit five version of the heads of agreement. If I take the later date of 13 July 2006, consistently with the applicant's case, then these clauses are factors supporting the position that form that date (at least) the parties intended that the purchaser pay land tax.
5. Similar clauses in the McDonald's contract supported my conclusion that it took as purchaser in possession from the date of registration of the plan of subdivision. However, these clauses do not assist Yassmin because, as I indicated above, following the court's analysis in Cam, these clauses are not decisive on their own. Something more is required under the contractual documents to find a right to early possession. In the absence of a clear contractual provision here giving the right to early possession, special conditions 7 and 15 do not assist Yassmin.
6. In any event, as Mr Korman noted, the contract also provides in special condition 9 that upon approval (presumably registration) of the plan of subdivision, Yassmin would provide Kameel with a copy of the notice of acquisition.[133] As noted, the plan was not registered until 8 January 2008. Even if reliance were placed on special conditions 7 and 15, not only are they inconsistent with each other about the date from which the purchaser should pay land tax, they are inconsistent with special condition 9 on that point.
7. In light of my conclusion about the contract not clearly providing for early possession on 13 July 2006, Mr Korman's observations about the contract and heads of agreement being referable to each other and that they should be regarded as one, do not advance the applicant's case. Mr Korman did not point to clauses in the heads of agreement supporting the applicant's right to take early possession. Insofar as he relies on both the contract and the heads of agreement allowing for Yassmin to build once it had the building permit, as allowing vacant possession on 13 July 2006, I have already rejected that argument for the reasons given.
8. To the extent (which is not entirely clear) Mr Korman relied in his arguments above on the date of the certificate of occupancy (1 April 2008) as being significant as an alternative to the 13 July 2006 date for early possession, I also do not accept that the purchaser took possession as purchaser from 1 April 2008, or for that matter from 11 April 2008. Whilst the impediment under s 9AD of the SLA did not operate as at those dates, neither the contract nor the heads of agreement clearly provided for a right to take early 'possession' as purchaser under the contract on or from those April dates. They did not so clearly provide in the clauses to which Mr Korman took me above. Again, reading the two documents as one does not assist the applicant's case on this point either.
9. I also note that s 9AD(3), to which Mr Korman referred, does not assist the applicant's case for possession under the contract. That subsection allows the vendor to give the purchaser 'reasonable access ...for any purpose connected with the proposed redevelopment or use of the land'.[134] It does not refer to possession.
10. Unlike in McDonald's case, there was no formal licence or lease document entered, pursuant to which Yassmin enjoyed its initial occupation of the land. It may be (as Mr Kotros suggested) that Yassmin in fact occupied the land as some kind of informal licensee. However, I do not need to decide this in the context of s 15, nor do I need to decide whether that kind of informal arrangement would also be in breach of s 9AD, as not being occupation for a fee within s 9AD(4), although it might be saved by s 9AD(3). The latter point was not argued.
11. Suffice to say that I do not accept Mr Korman's argument[135] that simply because there was no lease or licence (presumably, of the formal, written kind) it must mean that Yassmin took possession as purchaser under the contract and was in such possession as at the relevant assessment dates. Accepting that argument would be to accept proof of the applicant's case simply by eliminating other alternatives.
12. It follows that I accept the respondent's argument that the applicant cannot rely on its lease to PJR to indicate that the applicant itself had possession from 1 February 2011, as the applicant was not in a position to give more than it had.
13. Consistently with there being no formal lease or licence arrangement, the 'price' particular of the contract simply states the price and does not refer to it being calculated by reference to any rent or occupation fee. This is another point of contrast with McDonald's case.
14. To the extent the applicant argues the purchaser took possession from 13 July 2006, then I accept Mr Kotros's argument that the level of control the vendor retained over the land under the heads of agreement (clauses 6.2 and 9.5 of T71) does not appear consistent with the conclusion that the vendor has 'retained no vestige of possession', as referred to in Cam above.[136] It may be that the building had been built as at the first assessment date of 31 December 2009 such that the heads of agreement had served its purpose by then. However, to the extent the applicant relies on 13 July 2006 (the date of issue of the building permit) as the date of possession under the contract, then it seems inconsistent to say that the purchaser took possession with the vendor having retained no vestige of possession from that date. Clearly, the vendor had significant control under these clauses.
15. Finally, even if I accepted the applicant's argument that the purchaser took possession under the contract from 13 July 2008, the registration of the plan of subdivision on 8 January 2008 would not miraculously have converted that possession into legally valid possession (no longer in breach of s 9AD of the SLA) from that date. Again, most importantly, this is because (as concluded above) the contract did not provide for possession being taken from that date.
16. In conclusion, for the reasons given, s 15 does not apply to assist the applicant in this case.
17. Because I have found that the purchaser did not take possession under the contract of sale at the relevant assessment dates, then s 16(3) is not relevant. The requirement in s 16(1)(a) of the purchaser having taken possession is not satisfied. For that reason, as observed above in considering the McDonald's land, s 16(3) also does not apply to enable me to exercise the discretion in that subsection.

1. In light of my conclusion that s 15 does not apply, I need to consider whether s 14 (also argued by the applicant) applies. The parties were not able to provide any case law to assist in interpreting s 14. The Act does not define the terms 'credit' or 'deferred payment'. The respondent provided an extract from the second reading speech for the original version of s 14, s 44 of the Land Tax Act 1910 (Vic), a copy of which it also provided.[137] In the second reading speech Mr Watt observed that 'clause 44 makes the purchaser of land under deferred payments liable to the tax. This may be regarded as a declaratory clause to catch the beneficial owner'.[138]
2. Was Yassmin a purchaser on credit or deferred payment within s 14 at the relevant assessment times? If it was, then it is deemed to be the owner of land. If so, then s 16(5) seems to apply (see below) because there are two owners of land, the vendor and the purchaser, such that an apportionment needs to occur under that subsection. For the reasons given above, the discretion under s 16(3) is not enlivened so as to enable the vendor to be completely relieved of liability.
3. Mr Korman submitted that the words 'credit or deferred payment...normally refer to a facility whereby a buyer makes payment after delivery of the purchase'. He submitted that this means an arrangement where the purchaser can take possession before the balance of the purchase price has been paid and before title has transferred.
4. At the hearing he submitted it is 'delivery' of possession in the sense of if the purchaser has the right to possession and the contract provides (as it does here, in the 'payment of balance' particular) for deferred payment, i.e. payment after possession. He said s 14 applies 'where a person has a contractual right to occupy land before payment is made, a person can occupy land and pay later, whether or not they in fact do occupy that land. As long as the contract has a provision for deferred payment that's enough, and deferred payment is payment after occupation or possession'.
5. Mr Korman submitted that s 14 is not restricted to a person who has obtained a transfer of land (as the respondent argued), as that construction is too narrow and already caught by s 10(1)(a).
6. In contrast, Mr Kotros argued a transfer was required for s 14 to apply. He contrasted s 14 with ss 15 and 16, noting that the latter two provisions expressly provide that they apply 'whether or not the contract of sale has been completed by the transfer of land', whereas s 14 does not provide this. He said the reference in s 14 to the 'transferee' of a purchaser 'presupposes an original transfer to the purchaser'. He therefore argued that s 14 was not intended to override the requirements of ss 15 and 16 'in the scenario of a contract of sale neither completed by transfer nor conferring early possession'.[139] Mr Kotros also argued this was a cash sale, not one on credit or deferred payment.
7. Mr Korman submitted that the statutory context (of ss 13 to 16) 'supports an interpretation of the statute as referring to possession prior to transfer of title. In certain circumstances - specifically, cases of deferred payment or deferred possession - the Act is wary of collusion by vendor and purchaser to circumvent liability for land tax. It therefore deems both vendor and purchaser to be the owners until the purchaser takes possession and either pays 15% of the purchase price or is relieved of this requirement by an exercise of the Commissioner's discretion'. The respondent agreed with this part of his submission.
8. Mr Kotros said the parties agreed that some form of possession was required under s 14, and the respondent says it is the same possession as a purchaser, such that if Yassmin do not take possession under s 15, it is difficult to see how s 14 could apply.
9. Mr Korman submitted that s14 makes the purchaser liable upon entry into the contract, even before taking possession. He says s14 'captures those who take possession without title de jure. They are deemed owners the moment they obtain the right to take possession (under the contract) - upon becoming purchasers by entering into the contract of sale'. He made this submission in the context of the overall submission that s 15 only requires de facto possession, whereas I have found it also requires a legal right to possession under the contract. He was attempting to show that s 14 does different work from s 15.
10. Mr Kotros submitted there was no de jure possession under the contract at the relevant times.
11. Considering the terms of the contract, Mr Korman said it is a credit or deferred payment contract because it provides in the 'payment of balance' particular, for final payment to be made several years later, and pursuant to the contract payment is made long after the settlement date. As at 31 December 2009, as noted,[140] considerable money had already been paid by Yassmin to the applicant, the building permit had been issued, the building built and occupied by Yassmin. It was a bona fide contract. He submitted that the heads of agreement (which should be read with the contract) provided for Yassmin to construct a building on land well before payment was made (payment being four years after completion), which 'means the contract implicitly provides that Yassmin has a right to occupy land for four years' before final payment.
12. He further submitted that the meaning of 'credit or deferred payment' in s 14 must be read without reference to the meaning of a purchaser on a 'terms' contract under the SLA.[141]

1. I reject the respondent's submission that s 14 only applies if the purchaser already has a transfer of the land. Section 14 does contrast with ss 15 and 16 in its failure to state that it applies whether or not the contract has been completed by transfer. However, it does not need to state that. It is clear from s 14(b) that the assignee or transferee is the assignee or transferee of the 'purchaser' on credit or deferred payment, not the assignee or transferee of the 'vendor'.
2. Further, to accept the respondent's construction on this point would be to give s 14 an extremely narrow sphere of operation. That would be strange given that the discretion in s 16(3) to remove the vendor from liability all together, only applies where a purchaser in possession has taken possession within s 15, given that s 16(1)(a) is a prerequisite to s 16(3) being enlivened.
3. In contrast, s 14 simply makes the purchaser under credit or deferred payment liable 'with the vendor', with liability to be determined between them, presumably under s 16(5). Finding a purchaser caught by s 14 does not enliven the discretion in s 16(3) for the vendor to be removed from liability all together. The fact that the vendor may (presumably) be practically removed from liability after s 16(5) applies, is a different matter. It makes sense in this context that s 14 would in fact operate more broadly, and catch more purchasers, than does s 15.
4. The higher level of test to be met under s 15 is also consistent with s 15 referring to the purchaser in possession as deemed owner 'but not to the exclusion of any other person'. Arguably, s 15 needs to make this reference because otherwise it might be thought that a purchaser who meets its strict requirements of taking de facto possession pursuant to a contractual right to do so, would in doing so exclude (for instance) the vendor from also being regarded as the vendor for the purposes of attracting liability for land tax.
5. In this case Yassmin was a purchaser on credit or deferred payment. It clearly took de facto possession or occupation of the land before it had paid the 'balance' of the purchase price. For the reasons given, that possession or occupation did not meet the strict requirements of 'possession as purchaser under the contract'. However, it was entitled under the heads of agreement and the contract to access the land, to enter and construct a building, which it did. It may be that this is regarded as the right of an informal licensee, a right supported by s 9DA(3) of the SLA, to reasonable access to the lot for any purpose connected with its proposed development or use. Whilst it is not possession as purchaser under the contract, it is a right of some kind.
6. Although at the relevant times it had not made the final payment (and in fact it never did), Yassmin paid a significant amount of money under the contract, as set out in the letter from its lawyers, Pryles & Co. Whether these payments are characterised as interest or interest and principal payments, is not particularly significant for the purposes of s 14. It is significant that in making such payments Yassmin kept the contract on foot and acquired a beneficial interest which, coupled with the right to complete the contract on making the final payment, could be said to attract the label of a 'beneficial owner' contemplated in the second reading speech. More importantly, it also attracts the wording of s 14.
7. In light of my conclusion, I do not need to consider all of the submissions made by counsel above about the full scope of s 14. I have not referred to the definition of 'terms contract' in the SLA because I agree with Mr Korman that this definition is not relevant to considering the meaning of the different phrase 'purchaser on credit or deferred payment' in s 14.
8. Because s 14 applies to deem Yassmin to be an owner, then as both the applicant and the purchaser are owners, their respective liabilities need to be determined. I note in passing that s 16(5) refers to where the vendor and purchaser are both 'deemed' to be the owners of land under this Part. Strictly, the vendor falls within s 10(1)(a) at the relevant times and so has not been 'deemed', as under s 10(1)(e) to be the owner of land. However, both parties seemed to accept that s 16(5) applies if I find (as I have done) that both vendor and purchaser are owners for the purposes of the Act.

1. I shall order that the respondent's assessments dated 12 February 2010, 11 March 2011 and 3 February 2012 are varied to remove references to land tax payable for the land at 260 Clyde Road Berwick, Victoria. I shall also order that these determinations are remitted to the respondent for reassessment in accordance with the findings and determinations made in these reasons in relation to 260 Clyde Road Berwick.

Section 6 of Sale of Land Act 1962 (Vic) as quoted in the respondent's written submissions dated 13 June 2014:

1. Restrictions on sale of land subject to a mortgage
   • (1) Where land is subject to a mortgage the mortgagor shall not sell the land under a terms contract unless the mortgage relates only to that land and the contract provides that the consideration for the sale of the land shall be satisfied, to the extent of any mortgage money owing at the date upon which the purchaser is entitled to possession or receipt of the rents and profits of the land sold, by the purchaser assuming as from that date the obligations of the mortgagor under the mortgage.
   • (2) Where land is subject to a mortgage, the mortgagor shall not enter into a terms contract which relates to that land unless the contract expressly states that the land is subject to a mortgage or mortgages and gives the particulars specified in Schedule 1 of such mortgage or mortgages.
   • (3) Any terms contract entered into in contravention of any of the provisions of this section shall be voidable by the purchaser at any time before the completion of the contract and the vendor shall be guilty of an offence against this Act and liable to a penalty of not more than 10 penalty units.
   • (4) The provisions of this section shall not apply to the sale of land under a terms contract where the contract provides that-
     • (a) any mortgage affecting the land sold is to be discharged as to that land before the purchaser becomes or upon the purchaser becoming entitled to possession or to the receipt of the rents and profits under the contract; and
     • (b) the deposit and all other moneys payable under the contract (other than any money payable in excess of the amount required to so discharge the mortgage) are to be paid to a legal practitioner or a person who is a licensed estate agent to be applied by him in or towards so discharging the mortgage-

but where the mortgage is not discharged as to that land within ninety days of the making of the contract and the purchaser is not in default under the contract the contract shall be voidable by the purchaser at any time before the mortgage is so discharged and the purchaser shall be entitled to recover all moneys paid under the contract.

[1] The referrals are made pursuant to s 106 of the Taxation Administration Act 1997 (Vic).

[2] Section 36(1) of the Act.

[3] Appearing at T72 of the T documents, albeit with this date of 11 April 2006 in handwriting in the Particulars of Sale for 'Day of sale'. The respondent takes issue with this as the date of sale.

[6] T49, the copy of which is only signed by the vendor.

[8] Mr Mondous's witness statement dated 22 July 2014, adopted by him as his evidence at the hearing, minus paragraphs 12(c), 23 and 24 (exhibit 3) (Mondous statement), paragraph 6.

[9] T55, Variation of contract of sale of real estate dated 20 December 2007.

[11] T54 lease document for Clyde Road Berwick between the parties, with item 1 of the schedule indicating a five year term commencing 30 March 2007.

[15] T57, making it a deemed owner in equity under s 10(1)(e).

[16] T57 and T59, making it the legal owner under s 10(1)(a).

[20] Mondous statement paragraphs 17 and 18.

[22] [1931] HCA 38; (1931) 47 CLR 191.

[30] [1961] NSWR 1132 at 1135.

[34] [1965] HCA 13; (1965) 112 CLR 139.

[35] Kitto, Taylor and Owen JJ at page 146.

[39] [1968] 2 NSWLR 143.

[44] [2005] VCAT 549.

[47] The variation to the contract dated 21 December 2006 did not change that ultimate date (of 20 December 2011) for payment of the balance.

[49] Respondent's written contentions dated 13 June 2014 (respondent's contentions) paragraph 5.

[50] Respondent's contentions, paragraph 33.

[52] Mondous statement, paragraphs 17 and 18.

[53] T51, Deed of Variation dated 21 December 2006.

[54] [2013] VSC 672.

[59] Evidence of Mr Mondous noted above about McDonald's starting construction in 2007 and operating a restaurant from well before 31 December 2009 to the present. The respondent actually referred to 2006 as the date when McDonald's took possession as licensee.

[60] In particular in T24, a letter dated 14 October 2010 from McDonald's then lawyers, Hunt and Hunt, to the respondent explaining why it was not at that time required to lodge a notice of acquisition.

[62] [2013] VSC 672 at [26].

[63] Respondent contentions, paragraph 19 and the footnote of cases cited in it.

[70] Rexn. Exhibit C (discussed below) contains a copy of the heads of agreement which is the same as exhibit 5.

[91] T25, and T46 refers to them acting for the applicant. The respondent's chronology at page 8 notes T72 as being provided by the applicant's lawyers, and refers to the letter in T25, with T72. It also confirms that T72 was provided under cover of T25, in a letter to the Tribunal dated 13 June 2014.

[94] The respondent confirmed this in its letter to the Tribunal dated 13 June 2014.

[95] See respondent's chronology in respondent contentions at page 8 although the T document it is referring to, being the precise version of the contract, is not cited.

[100] Mr Korman challenged whether this 'no contract' argument was within the terms of the original referral as the respondent had not raised it in his letter dated 14 January 2013 determining the objection, but I ruled it was as it goes to the overall issue (which was raised) of whether there was a 'sale': applicant's objection dated 8 April 2010 referred to 260 Clyde Road having been 'sold before 31 December 2009'. See T documents 3 and 4 in Z81/2014.

[102] T76, T74. Both these facts come from the respondent's chronology at respondent contentions page 8.

[103] T77, being permit number 200620645/0.

[108] Applicant's document one in bundle of further documents provided by the applicant, forming part of exhibit one.

[109] Statement of Mr De Zoysa dated 24 July 2014, tendered into evidence as exhibit two, without Mr De Zoysa appearing and by consent of the parties.

[110] By this he seems to mean that the contract of sale had been entered.

[119] [2013] VCAT 1002.

[120] Applicant's written closing submissions (applicant's submissions) paragraph 16.

[121] T72 and T71 respectively, exhibits four and five.

[123] Applicant's submissions paragraph 19.

[124] Applicant's submissions footnote 12.

[125] T72 version, particulars of sale.

[127] T72, special conditions 7 and 15.

[129] Respondent's contentions, paragraph 7.

[130] Respondent's contentions paragraph 39.

[131] Respondent's contentions paragraph 42.

[132] Respondent's contentions paragraph 40.

[135] Applicant's submissions paragraph 30.

[136] Respondent's contentions paragraph 42. It might be said that these clauses would still be consistent with the applicant remaining vendor in the capacity of landlord, but there was no lease between the parties here.

[137] Section 44 of that Act provided that 'Except as hereinafter provided every purchaser of land on credit or deferred payment and the assignee or transferee of any such purchaser shall be deemed to be the owner of such land and shall be liable to assessment and taxation in respect thereof'.

[139] Respondent's contentions paragraph 28.

[141] All these submissions are in the applicant's submissions.