Kameel Pty Ltd v Commissioner of State Revenue [2016] VSCA 83

1 We have had the benefit of reading, in draft form, the reasons of Whelan JA. We agree that the application for leave to appeal should be granted and the appeal allowed.

2 We wish to add some observations of our own on the proposition for which the judgments in Highlands Ltd v Deputy Federal Commissioner of Taxation (SA)[1] stand.[2] In this respect we have the misfortune to disagree with Whelan JA. Nevertheless, we consider that, in the circumstances of the case, the application of the test we adopt would bear the same result as that reached by his Honour, although supported by somewhat different reasons.

The test for 'possession' within the meaning of s 15

3 Section 15 of the Land Tax Act 2005 ('the Act') provides that a purchaser under a contract of sale is deemed to be an owner of the land if it has taken possession:

15 Purchaser of land under contract of sale

(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 The owner of land is liable for land tax, pursuant to s 8 of the Act. Owners of land include those who are deemed to be owners under the Act: s 10(1)(e). There may be multiple owners.

5 Where a purchaser is deemed to be the owner of land it assumes liability for land tax, pursuant to s 8, and the vendor's liability for land tax, as an owner, is proportionately reduced, pursuant to s 16(5). Section 15 is thus a significant section in that it enables a vendor to reduce its tax liability. It also assists a vendor to be free from liability for land tax if the purchaser has relevantly taken possession and either 15 per cent of the purchase price has been paid or the Commissioner exercises his or her discretion to determine that the vendor is deemed not to be the owner where the Commissioner is satisfied that the contract was made in good faith, was not made for the purpose of evading tax, and the contract is still in force: ss 16(1), (3).

6 Section 16 provides:

(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.

7 We agree with Whelan JA that Highlands stands for the two-limbed proposition that a buyer will have taken possession of land for the purposes of s 15 of the Act when the buyer has de facto possession and when it is in that position in intended execution of the agreement for sale of the land.[3] It is the second limb of the test that is contentious. We do not agree that it is irrelevant whether it can be said that the particular actions taken are properly to be seen as pursuant to the provisions of the agreement for the sale of land, or that it does not matter, and it is unnecessary to resolve the question, of what might be the contractual consequences of what has in fact occurred.[4]

8 The critical question is: what is it for the purchaser to take possession in intended execution of an agreement for sale of land?

9 We agree with Whelan JA that this cannot mean that it is necessary for the purchaser to exercise a right under an express contractual term that confers a right to early possession; that is, a right to possession before completion of payment of the full purchase price. We consider that the Tribunal fell into error by misconstruing the test under s 15 and concluding that Yassmin Investment Pty Ltd ('Yassmin') did not take possession within the meaning of s 15 because there was no express or specific contractual term to that effect.[5] The absence of such a term is typically what generates the problem in the first place. But if it does not involve the exercise of such a right, how is one to unpack the notion that the purchaser has acted in intended execution of the agreement?

10 In our view, it is not sufficient to satisfy the second limb of the Highlands test that, as one of the submissions urged by the applicant for leave to appeal, Kameel Pty Ltd ('Kameel'), would have it, a contract of sale remains on foot and is executory, and the purchaser has not purported to repudiate. It is necessary to tie the parties' conduct to the contract.[6] It may be that a contract taken as a whole makes no sense unless a clause can be construed as implicitly conferring a right to early possession. Alternatively, the parties' conduct may reveal that the vendor has waived a pre-condition to a purchaser's entitlement to access, and to control, the land. The parties may have revealed, by their conduct, that they have agreed to a variation of the contract, by the tender and acceptance of substituted performance. When Dixon J remarked in Highlands that it was 'immaterial'[7] which of these alternative analyses one adopted, he was not suggesting that the contract had become immaterial or no longer governed the legal relationship between the parties. On the contrary, he was remarking that a literal interpretation of all the provisions of the contract made no sense and, to give the agreement a sensible operation, it was necessary to construe the contractual arrangements between the parties differently, including, of course, potentially, by an agreed variation of the terms of the contract.

11 The difficulty in the agreement for sale in Highlands was created by the inclusion of a completion clause, cl 5, which provided: 'the purchaser shall be entitled to enter into possession of the said lands or any part thereof on the ninth day of March 1925 provided he shall have completed his purchase in accordance with the terms and conditions herein contained'.[8] The contract was entered into on 9 February 1925 and provided for the purchase money to be distributed into ten equal instalments on 9 March each year, the first instalment to be paid on 9 March 1925. It was apparent that there was an absurdity in treating possession as linked to the completion of the purchase and as requiring that the purchase be completed by 9 March 1925, because that date was the date the first instalment was due, not the date by which all the instalments would have been paid, in ten years' hence. Rich J described the set of provisions in the contract as 'self-contradictory, or almost self-contradictory'.[9]

12 But the contract in Highlands remained the source of the parties' rights and duties. A resolution of the difficulty in Highlands was to re-construe the contractual rights so as to read cl 5 as reflecting a contractual intention to relinquish and assume possession, respectively, on 9 March 1925. The parties' actions then fell to be assessed by reference to those contractual rights and duties, as re-construed. Amongst the alternatives were to accept that there had been a variation or waiver of the original rights and duties.

13 This suggests that when considering whether a purchaser has acted in intended execution of the agreement for sale it is necessary to ask the following question: Is the conclusion that the purchaser has taken possession consistent with the parties' contractual arrangements for the sale of the land, as they have evolved? It may be that, as in the circumstances of Highlands, the conduct of the parties is so clearly consistent with a number of alternative analyses of the contractual arrangements for the sale of land, as they evolved over time, that it is unnecessary to resolve which particular analysis properly applies so long as one can conclude that the parties had the relevant contractual intention at a time when the purchaser also enjoyed de facto possession. It remains the case, even where no particular analysis needs to be chosen as the correct one, that a court should ask, as the Court in Highlands did ask, whether the particular actions taken are properly to be seen as derived from the contractual arrangements between the parties rather than as revealing an entirely separate arrangement, that is, an arrangement 'standing right outside'[10] the contract for the sale of land.

14 To ask whether the parties' conduct is consistent with their contractual arrangements for the sale of land, as evolved, invites attention to exactly what it is both parties have done and the legal effect of what they have done. Close attention may reveal that the conduct of the parties does not support the view that there has been an agreed variation to the contract. A feature of the circumstances may also preclude the inference of waiver on behalf of the vendor. It is only by being alert to the contractual consequences of what has in fact occurred between the parties that a court is in a position to determine whether the de facto possession enjoyed by the purchaser is consistent with the contractual arrangements for the sale of land between the parties, as they have evolved over time. In our view, in circumstances where there is no consistency, a court could not conclude that the purchaser is in possession within the meaning of s 15.

15 Treating the contractual consequences of what has occurred between the parties as irrelevant carries the risk that a different and separate legal relationship may have arisen between the parties which stands outside their contractual arrangements for the sale of the land and which does not amount to possession within the meaning of s 15. This may not be readily apparent without an examination of the parties' conduct together with an understanding of what may be a multiplicity of agreements between them.

16 Being alert to the contractual consequences of the parties' conduct not only reflects the test adopted by Dixon J for the de facto possession to occur 'in intended execution of the agreement of sale' but also mirrors the observation of Rich J in Highlands that the parties there resolved the difficulty created by the ambiguity in the completion clause 'by delivering and accepting possession in intended performance of the stipulation'.[11] It also explains the preference expressed by Starke J for 'the proper interpretation of this clause [the completion clause]'[12] to mean that the purchaser 'was entitled to possession of the land on 9th March 1925 when one-tenth of the purchase-money was paid';[13] 'possession' relevantly meaning 'de facto possession referable to the agreement for the sale of land'.[14] We also take it to be consistent with Stout CJ's emphasis in Rhodes v Commissioner of Taxes (NZ)[15] that the agreement, a deed of lease which provided for a conveyance of the land leased as soon as one-third of the purchase money had been paid, 'must be looked at as a whole, and the clause making them absolute purchasers cannot be ignored as if it were not there'.[16] Similarly, it is consistent with the emphasis given by Hosking J in Yule v Commissioner of Taxes (NZ),[17] in responding to circumstances in which the appellant had entered into a seven year lease that contained a compulsory purchasing clause, that:

[T]he person who has entered into the unqualified obligation to buy is none the less a purchaser. The right under which he is in possession is, I think, to be properly described as a right by virtue of the instrument.[18]

17 The High Court returned to a consideration of the relevant statutory meaning of possession in Cam & Sons Pty Ltd (in vol liq) v Commissioner of Land Tax (NSW).[19] In Cam the purchasers had not taken physical possession of the land or put the land to any use. The land at all relevant times remained vacant and was not used or occupied by anyone. In those circumstances, inevitably the legal focus was drawn to the terms of the contract. The judgments are instructive, however, particularly insofar as they reveal an understanding of the force and effect of the judgments in Highlands.

18 In Cam the vendor, Cam & Sons Pty Ltd (in voluntary liquidation), subdivided a large area of vacant land it owned and entered into a series of contracts for the sale of the various allotments. A deposit was paid upon the signing of the contract and the purchasers agreed to pay the balance of the purchase money by equal monthly instalments over a period of years. Kitto, Taylor and Owen JJ concluded that two clauses of the contract, when read in combination, reflected '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'.[20] The critical clauses were cl 11 and Special Condition 2. Clause 11 provided:

The Vendor shall be entitled to the rents and profits, and shall pay or bear all rates, taxes and outgoings up to the date of [the] Contract on and from which date the Purchaser shall be entitled to or shall pay or bear the same respectively, and any necessary apportionment thereof shall be made and adjusted on completion.

19 Special Condition 2 was an attornment clause.[21] It relevantly provided:[22]

The Purchaser hereby attorns tenant to the Vendor from month to month of the property sold from the date hereof until the balance of the purchase money and interest has been paid in full at a monthly rent of Five Pounds such rent to be paid monthly if demanded but if not then on the days appointed for payment of instalments of Purchase Money. ... All sums paid as rent hereunder shall be accepted in or towards satisfaction of interest and the balance in satisfaction of the Purchase Money. Provided always that the Vendor may at any time determine the tenancy hereby created either by a week's notice in writing to the Purchaser or by entering and taking possession of the said property without notice.

20 Special Condition 2 was included in cl 19 which provided:[23]

Vacant possession of the property sold shall be given on completion or the property is sold subject to the existing tenancies or occupancies, particulars whereof, as to periods of tenancies and rents being, as follows: - [Special Condition 2]'.

21 Sir Maurice Byers QC, for the vendor, argued that the possession of the land was delivered to the purchaser upon the execution of the contract. He submitted that the possession of the purchaser sprung from his relationship with the vendor under the contract; the purchaser obtained possession 'in his character as purchaser, even though he was in possession by virtue of the attornment clause'.[24] Any payments made by the purchaser under the attornment clause were payments made in reduction of the purchase price. Even if the payments were called 'rent' it was, he argued, rent paid to the vendor not beneficially but for the benefit of the purchaser to be credited against his liability for principal and interest.

22 The Solicitor-General for New South Wales,[25] for the Commissioner, argued that the contract allowed the purchaser into possession as a tenant only and not in the character of purchaser. He relied on the opening words of cl 19 which he submitted should be construed as: 'on completion vacant possession of the property sold shall be given but not until completion'.[26] Such an interpretation was argued to confirm the meaning of cl 11 as not intended to bear upon possession but only to relate to the beneficial ownership of rents and profits and the incidents of rates and taxes, the vendor becoming, from the date of the contract, a conditional constructive trustee of the rents and profits for the purchaser.

23 The plurality of the High Court noted that cl 19 provided for two alternatives, one of which was intended to be struck out. In some of the contracts the second alternative was struck out. In other contracts both alternatives were left but with no particulars of tenancies, all the land being vacant, as mentioned above. As Whelan JA notes,[27] Kitto, Taylor and Owen JJ expressed their agreement with Sugerman J in the Full Court of the Supreme Court as to what qualifies as possession in the statutory sense, namely

when the vendor, himself retaining no vestige of possession, has done all that it is necessary 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 such as adverse occupation by a third party, it rests solely with the purchaser to decide whether and when he will do so.[28]

24 The plurality rejected the Solicitor-General's submission, holding that cl 19, when read with cl 11 and Special Condition 2, 'merely defin[ed] the nature of the possession to which the purchaser was to be entitled upon completion'.[29] The plurality accepted that cl 11, read alone, would not confer upon the purchaser any right to possession before completion.[30] As Menzies J said, in a separate judgment, '[i]t was decided nearly sixty years ago that a provision like cl. 11 does not entitle the purchaser to the possession of the land sold: Strahorn v Strahorn'.[31] Windeyer J made a remark to the same effect.[32] For the plurality it was the interplay between cl 11 and Special Condition 2, and especially the need to make sense of Special Condition 2, in the context of the contract as a whole, that provided the foundation for concluding that the purchaser had relevantly obtained possession in the statutory sense. They said:

[W]hen cl 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 cl 11 the special condition would serve no purpose and it must be taken, we think, to have been inserted because it was intended that the purchaser should be entitled under cl 11 to assume possession upon the making of the contract.[33]

25 They considered that the test in Highlands was satisfied by reason of the need to arrive at a sensible construction of various contractual terms. They said:

In these circumstances, the purchaser's possession was 'referable to the agreement for the sale of land': Highlands Ltd v Deputy Federal Commissioner of Taxes (SA), per Starke J. It was a possession 'obtained in intended execution of the agreement of sale', per Dixon J. He obtained possession in the sense earlier described [by the adoption of the remarks of Sugerman J] not merely as a tenant but as a purchaser pursuant to the contract and this is sufficient to satisfy the requirements [under the statute]: Rhodes v Commissioner of Taxes; Yule v Commissioner of Taxes.[34]

26 Windeyer J emphasised the need to read the contract as a whole and with respect to its subject matter as a vacant allotment of land. He considered that a sensible construction of Special Condition 2, in the context of the contract of sale as a whole, must have meant that the purchaser had taken possession immediately upon execution of the contract in order to enable the purchaser then to 'attorn ... tenant'. He said:

Special Condition 2, the attornment clause, seems to me to presuppose that upon the execution of the contract the appellant as vendor delivered possession of the subject allotment to the purchaser. The idea of an attornment seems to me inappropriate, and the clause meaningless unless it depends upon an assumption that upon the execution of the contract possession was to be treated as being delivered to the purchaser who thereupon immediately attorned tenant to the vendor. The purpose of such a clause is, I assume, to enable the vendor if the purchaser makes default to recover the land in his capacity as landlord under the landlord and tenant legislation. But the clause as a whole, and in particular the provision for the vendor entering and taking possession, seems to me incompatible with the proposition that the purchaser had not obtained possession. It seems to me to assume that he obtained possession or a right to possession not as a tenant of the vendor but otherwise by virtue of the contract and that he thereupon acknowledges his vendor to be his landlord on the terms set out. Such a view seems to me necessary to give some meaning to the phrase 'attorns tenant' in this context.[35]

27 Menzies J emphasised that the purchaser became a tenant as part of the carrying out of the contract of sale (by reason of the attornment clause) and that possession of the land had thereby been delivered to the purchaser.[36]

28 We do not consider that if the purchasers had occupied the land the Court would have considered that it was unnecessary to arrive at a consistent and meaningful interpretation of the contract as a whole. Nor do we consider that the conclusion could have been reached that possession was obtained 'in intended execution of the agreement for sale' regardless of the contractual consequences for the parties. In our view, it is apparent from Cam, and would have remained apparent in the face of actual occupation, that to satisfy the test in Highlands the conclusion that the purchaser has taken possession, in the statutory sense, must be consistent with the contractual arrangements between the parties, if necessary as those arrangements have evolved.

29 Cam has since been applied by the New South Wales Court of Appeal in Commissioner of Land Tax (NSW) v Opalfield Pty Ltd[37] where Kirby P, Meagher and Sheller JJA held that the terms of the agreement for sale showed that Opalfield Pty Ltd was the purchaser of the land and it was not to the point that it purchased the property as nominee and held the benefit of the agreement for sale in trust for the parties to the agreement.

30 Cam has also been applied in Commissioner of Land Tax (NSW) v Manors of Mosman Pty Ltd.[38] This concerned the construction and sale of a retirement village. The contractual arrangements provided for possession to be given to the purchasers at the date of completion or in a time and manner stipulated elsewhere in the agreement.[39] Other clauses in the agreement provided for a licence to be entered into between the vendor and the purchaser if the local council granted a certificate of occupancy and the vendor gave relevant notice to the purchaser: Special Condition 44. The licence agreement, in a form annexed to the contract, provided for the taking of possession of the unit by the purchaser. Clause 18 provided that, if before transfer, the purchaser was given the benefit of possession of the property, the purchaser was to keep the unit in good condition and permit the vendor to enter and view the state of repair, at all reasonable times. The date on which the benefit of possession was given was deemed to be substituted, if earlier, for the date of completion.

31 Under the licence agreement the purchaser was obliged to pay the balance of the purchase price within 14 days and the deposit was contemporaneously to be accounted for to the vendor. There was a weekly licence fee of $1. The licence was to terminate on the date of completion of the contract.

32 The local council issued relevant certificates of occupancy. The vendor gave the relevant notice requiring certain purchasers to enter into licence agreements. Purchasers moved into their units. The Commissioner assessed the vendor for land tax in respect of the units claiming that a purchaser's occupation under the licence was not possession under or referable to the agreement for sale. He claimed that the sole source of the purchasers' entitlement to occupy the units was the licence agreement and that this gave rise only to a mere personal right of occupation.

33 Sheller JA (with whom Kirby P and Handley JA agreed), after carefully surveying the authorities, held that the purchasers had obtained possession in the statutory sense because their entitlement to physical occupation had its source in the parties' contractual arrangements. Under the agreement for sale of the land, the purchasers were obliged to enter into licence agreements for the taking of possession upon being given notice by the vendors, and obliged to pay the balance of the purchase price within 14 days of receipt of the notice, the agreement for sale expressly providing for the date on which early possession was given to be substituted for the date of completion. He said:

In the present case it is plain enough that the property was to be sold with the benefit of possession to be given to the purchaser as at the date of completion or at the time and in the manner stipulated elsewhere in the agreement. Clause 18 contemplated the giving of early possession and imposed conditions if that occurred. Clause 44 was another clause whereunder early possession of the unit might be given to the purchaser. It is true that the purchaser had no right to possession under this clause until the vendor gave notice in writing: compare [Cam's case]. However the giving of the vendor's notice bound the purchaser to pay the balance of the purchase price to the vendor and required that the deposit be contemporaneously accounted for to the vendor. Once the notice was given, the licence agreement entered into and the purchaser had gone into occupation, in my opinion, the purchaser had obtained possession within the meaning of s 26(1)(a) [of the Land Tax Management Act 1956 (NSW)] as purchaser. The licence served a similar function to the attornment clause in [Cam's case] and provided a means whereby the vendor could recover possession if the purchaser defaulted.[40]

34 There was no suggestion in Manors of Mosman that it was irrelevant whether it could be said that the particular actions taken by the parties were properly to be seen as pursuant to the provisions of the agreement or that it was unnecessary to resolve the question of what might be the contractual consequences of what had in fact occurred.

35 The approach of identifying whether the de facto possession enjoyed is consistent with the contractual arrangements of the parties for the sale of land is also supported by the decisions in both H C Sleigh Ltd v Commissioner for Land Tax (NSW)[41] and in E Long.[42] In Sleigh, Collins J held that the relevant possession had not been obtained, for the purposes of land tax legislation, when a contract for the sale of land expressly preserved a pre-existing tenancy until completion and completion had not occurred. The tenant was held to have only the status of a lessee. In E Long, Maguire J emphasised the significance of the contract of sale when he held that possession obtained under licences was not 'referable' to the agreements for sale of the land but rather created a separate relationship between the parties.[43]

36 Here the judge analysed s 15, albeit in the context of a discussion of the land the subject of the contract between Kameel and McDonald's Australia Ltd ('the McDonald's land'), and not the land sold by Kameel to Yassmin ('the Yassmin land'). At times he spoke broadly, reflecting his acceptance of Kameel's submission that 'a purchaser who intends to complete the purchase of the land, and takes possession in the interim, obtains possession in intended execution of the agreement for sale'.[44] At other times he appeared to adopt a more stringent test, referring to the authorities and saying that 'possession of the land must be possession 'referable' to an agreement for sale - and referable in a direct rather a general sense (as noted, particularly, in E Long)'.[45] This latter remark suggests that his Honour did not accept that it was sufficient to have an agreement for the sale of land on foot and be the nominated purchaser under that agreement. It may indicate that he considered that the contractual consequences of what occurred between the parties are relevant to a determination of possession under the Act. However, he also concluded that it 'follows that as Yassmin had no right to possession under the contract and had not taken possession under such a right in the capacity of purchaser, s 15 of the Act has no application'.[46] This might be read as implying that s 15 requires the exercise of an express right under the contract. If so, we consider that his Honour misconstrued the test under s 15, just as the Tribunal had done. The judge's analysis of s 15 with respect to the Yassmin land was swift. This was not surprising given that the focus of the proceeding before him (the appeal from the Tribunal), with respect to Yassmin, was s 14 of the Act. Section 15 was raised only by way of a Notice of Contention by Kameel. There is to our mind uncertainty as to the test the judge adopted.

37 We turn now to the issue of applying the Highlands test, as we have endeavoured to explain it, namely by asking the question: Is the conclusion that the purchaser has taken possession consistent with the parties' contractual arrangements for the sale of the Yassmin land, as they have evolved?[47] We agree with Whelan JA that the circumstances here reveal that Yassmin was in possession within the meaning of s 15 of the Act relevantly from at least midnight 31 December 2009 and that the judge was in error in failing to apply s 15 correctly so as to arrive at this conclusion.

Is a finding of possession consistent with the contractual arrangements between the parties?

38 The relevant assessment dates for the Yassmin land are midnight on 31 December of each of 2009, 2010, and 2011.

39 Kameel and Yassmin entered into a contract of sale of real estate providing for the sale by Kameel to Yassmin of the Yassmin land, namely the land at 260 Clyde Road, Berwick, then a lot on an unregistered plan of subdivision.[48] The contract of sale is dated 11 April 2006. It is a standard contract of sale published by the Law Institute of Victoria and the Real Estate Institute of Victoria Ltd ('REIV') incorporating the general conditions in Table A of the Seventh Schedule of the Transfer of Land Act 1958 ('Table A') except where displaced.[49]

40 The 'Particulars of Sale' in the contract of sale expressly linked the contract of sale to a Heads of Agreement document entered into on the same day (11 April 2006) between Kameel, as vendor, Yassmin, as purchaser, and Sofia (Sophia) Pizza House Bistro & Restaurant Pty Ltd and two other guarantors. To understand the contractual arrangements between the parties, it is necessary to see the linkages between many of the rights and obligations created under each instrument.

41 The Heads of Agreement related to the construction of a pizza/pasta restaurant[50] by Yassmin on the Yassmin land, for which Yassmin was to obtain all necessary planning and building approvals, and in respect of which Kameel as vendor was to finance part of the cost of construction by means of a loan. Pursuant to cl 6.1 of the Heads of Agreement, Yassmin undertook an obligation to carry out the 'Purchaser's works' as soon as possible in accordance with the agreement. The 'Purchaser's works' were summarised in the Schedule to the Heads of Agreement as the construction of the pizza/pasta restaurant including car parking assessments and landscaping plans and the carrying out of all fit-out works, plant and equipment including but not limited to chairs, tables, all kitchen fixtures and fittings, cool room fridges, ovens, stoves and benches.

42 Yassmin entered into early occupation of the Yassmin land to carry out the relevant construction, after the contract of sale had been entered into.[51] Construction of the restaurant commenced on or about 13 July 2006 and Yassmin was permitted to occupy the Yassmin land to 'build the building'.[52] The restaurant was completed in April 2008. There was evidence that Yassmin operated Sofia's restaurant shortly after. Yassmin later entered into a lease with PJR Associates Pty Ltd ('PJR') and, after the restaurant was constructed, PJR occupied the Yassmin land exclusively from 1 February 2011 to 1 January 2012 operating the restaurant known as Sofia's Pizza house from the Yassmin land.[53] PJR did not provide Kameel with any rights of entry other than those provided to the public. The Tribunal found, and it was not contested on appeal, that Yassmin had de facto possession at all relevant times.[54]

43 Yassmin paid a significant amount of money to Kameel under the contract of sale.[55] The contract of sale was eventually terminated, either in November 2012 or April 2013, with the balance of the purchase price remaining unpaid.[56]

44 In the contract of sale the 'Settlement Date' was defined[57] as the date of the issue of a building permit:

Settlement Date: 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.

45 It is not in dispute that a building permit was issued on 13 July 2006.

46 The 'Price' under the contract of sale was defined to include the cost of construction of the pizza/pasta restaurant to be contributed by the vendor in accordance with Special Conditions 21 and 22:

$1,475,000.00 Plus GST and the cost of construction to be contributed by the Vendor in accordance with Special Conditions 21 & 22 hereof.

47 The 'Deposit' under the contract of sale was specified as $143,900 'in accordance with Special Condition 20 hereof'.[58]

48 Special Conditions 21 and 22 of the contract of sale relate to the cost of construction provided by the vendor of up to $2,500,000 with instalments to be paid on the total cost of the Yassmin land and the cost of construction at not less than 25 per cent per annum (the total being repaid over four years from the date of issue of the building permit) and interest of 10 per cent per annum from the date of issue of a certificate of practical completion:

1. The Purchaser acknowledges and agrees that the consideration expressed in this contract shall include the construction costs to be provided by the Vendor in accordance with the terms of the Heads of Agreement up to a maximum of $2,500,000 as set out therein. The total price for the land and the cost of construction provided by the Vendor shall be repaid to the Vendor on or before the expiration of four years from the date of issue of a Building Permit together with interest at the rate of 10% per annum adjusted and payable monthly in advance from the date of issue of a certificate of practical completion as set out in the Heads of Agreement. The Vendor shall not be under any obligation to transfer the title to the land to the Purchaser until all monies due to the Vendor, including interest are paid in full.
2. The Purchaser agrees and acknowledges that in addition to the interest payable pursuant to special condition 21 hereof the Purchaser must pay principal installments in reduction of the total cost of the land and construction worth not less than 25% per annum and interest shall abate accordingly.

49 The obligation to pay interest at the rate of 10 per cent per annum from the date of issue of a certificate of practical completion was also reinforced in the Schedule to the Particulars of Sale annexed to the contract of sale:

Item 2 Interest 10% p.a. with monthly rests and payable in advance the first such payment to commence on the date of issue of a Certificate of Practical Completion as set out in the attached Heads of Agreement.

50 Practical Completion was defined in the Heads of Agreement as follows:

'Practical Completion' means 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.

51 A certificate of practical completion appears to have been issued on 11 April 2008 (although the certificate could not be found).[59]

52 The Heads of Agreement also confirmed that interest was to be paid at a rate of 10 per cent per annum from the issue of the certificate of practical completion: clause 9.2. It further provided that the purchaser was to pay interest at a rate of seven per cent per annum from the date of the issue of a building permit:

The Purchaser shall pay interest on the land price and the progress payments made by the Vendor on the value of works referred to in clause 9.5, clause 9.6 and in the Schedule hereto at the rate of 7% per annum payable monthly in advance commencing from the date of the issue of a Building Permit by the relevant authority. Upon the issue of a Certificate of practical completion by the Vendors' architect and upon payment by the Vendor of the last progress payment in accordance with Clause 9.6 hereof the purchaser shall pay interest at the rate of 10% per annum payable monthly in advance from the date of issue of the Certificate of practical completion and in accordance with the provisions of the terms Contract of Sale a copy of which is annexed hereto.

53 Clause 9.1 of the Heads of Agreement provided for a sum of 10 per cent of the value of the Yassmin land to be paid upon the execution of that agreement:

The Purchaser agrees to pay a sum equivalent to 10% of the value of the land as set out in the Schedule (land price) hereto upon the execution of this agreement.

54 The 'Land Value' as set out in the Schedule annexed to the Heads of Agreement was $1,475,000 plus GST. The 'Deposit' under the Heads of Agreement (the sum paid pursuant to cl 9.1) was specified as $147,500.

55 Yassmin acknowledged, pursuant to cl 11 of the Heads of Agreement, that the sum referred to in cl 9.1 was paid in consideration of Kameel entering into the Heads of Agreement and would be retained by Kameel to allocate as a deposit under the contract of sale upon registration of the plan of subdivision. If the plan was not registered, through no fault of Yassmin, the sum paid was to be refunded to Yassmin without deduction. Clause 11 provided:

The Purchaser acknowledges and agrees that the sum referred to in clause 9.1 is paid in consideration of the Vendor entering [into] these heads of agreement and will be released on the signing hereof. The said sum shall be retained by the Vendor. Upon exchange of Contracts of Sale hereinbefore referred to (which Contracts shall be executed simultaneously with the execution of this Agreement) and upon registration of the plan of subdivision referred to in clause 10 and 12 hereof the Vendor shall allocate the said sum as the deposit payable by the Purchaser pursuant to the said Contract of Sale. Provided however that in the event that the plan of subdivision referred to in this Agreement is not registered through no fault on the part of the Purchaser then the sum referred to in Clause 9.1 shall be immediately refunded to the Purchaser without deduction.[60]

56 The 'allocation' of the sum payable under cl 9.1 of the Heads of Agreement into a deposit for the sale of the Yassmin land, upon the registration of the plan of subdivision, was confirmed by Special Condition 20 of the contract of sale.[61] Both cl 9.1 of the Heads of Agreement and Special Condition 20 of the contract of sale are, in our view, critical to an understanding of the parties' contractual intention with respect to Yassmin taking possession of the Yassmin land.

57 Clause 9.5 of the Heads of Agreement obliged the purchaser to enter into an agreement with a builder, approved by both the purchaser and the vendor for the construction of the 'Purchaser's works':[62]

The Purchaser will enter into an agreement with a builder to be approved of by both the Vendor and the Purchaser for the construction of the Purchaser's works and will be responsible for the payment to the builder for the cost of such works. The Vendor and the Purchaser shall, if necessary, call for a minimum of three tenders and the successful tender shall be approved by both the Vendor and the Purchaser. The Vendor agrees to advance the progress payments exclusive of GST to the Builder at the request of the Purchaser upon receipt of a certification from the Vendor's architects and/or draftsman that such progress payments excluding GST are in order.

58 The vendor was to retain a supervisory role over the works. Clause 6.2 of the Heads of Agreement provided:

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.

59 Clause 6.3 of the Heads of Agreement provided that the 'Purchaser shall enter the site and premises at its own risk'.

60 Clause 9.6 of the Heads of Agreement capped the vendor's contribution to the cost of construction as a loan of up to $2,500,000.

The Purchaser acknowledges that the Vendor shall only be obliged to provide a loan of up to a maximum of $2,500,000.00 which includes any GST payable by the Purchaser and the Purchaser is responsible for the payment of any GST applicable for the construction of the works including landscaping, infrastructure works, services, car park contributions and levies. The Purchaser must provide all other amounts over and above the said sum to enable the Purchaser to complete the works pursuant to this agreement.

61 Under Special Condition 20 of the contract of sale, the sum payable under cl 9.1 of the Heads of Agreement was to be allocated as a deposit for the sale of the Yassmin land:

Upon the registration of the said Plan of Subdivision, provided the Purchaser is not in default under the terms of the Heads of Agreement or pursuant to any of its obligations under this Contract of Sale, then the Vendor shall allocate the sum paid by the Purchaser pursuant to Clause 9 of the Heads of Agreement as the deposit payable pursuant to this Contract of Sale.

62 Special Condition 20 recognised that the contract of sale was conditional upon the registration of a plan of subdivision, pursuant to Special Condition 19:

1. This Contract of Sale is conditional upon Plan of Subdivision No. 532752L (subject to any alterations thereto as are hereinafter mentioned) being duly sealed by the Council pursuant to the provisions of the Subdivisions Act and registered at the Office of Titles within 30 days from the date of the issue of a Certificate of Occupancy for the works referred to in the Heads of Agreement PROVIDED ALWAYS that the Vendor reserves the right to make such alterations to the said Plan as may be demanded by the Council or the Registrar of Titles as prerequisites to the sealing and registration of the Plan.

63 The relevant plan of subdivision was registered on 8 January 2008. The Tribunal found the certificate of occupancy to be issued on 1 April 2008.[63]

64 Under the contract of sale, the payment of the balance was due four years from the date of the issue of the certificate of practical completion:

Payment of Balance: 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. 4 years from the 11.4.08.[64]

65 Other relevant clauses of the contract of sale included Special Condition 4 which provided that there was to be no override of the Sale of Land Act 1962 ('the SLA') and that any provision of the contract of sale that purported to override that Act was to be read down to ensure consistency:

It is the understanding and the intent of the parties hereto that no provision of the Contract overrides any of the provisions of the Sale of Land Act. Any provision hereof which but for this special condition might be construed as overriding the provisions of the said Act shall so far as possible be read down and construed in such manner as not to override such last mentioned provisions.

66 Special Condition 4 was relevant because under s 9AD(1) of the SLA a purchaser is not entitled to take possession of a lot on a plan of subdivision before registration of that plan of subdivision. Section 9AD(1) provides:

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.

67 Section 9AD(3) provides:

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.

68 It is clearly within the contemplation of s 9AD(3) that a purchaser may enter onto a lot for purposes connected with the proposed development and use of the lot.

69 Yassmin accepts that the contract of sale is a 'prescribed contract of sale' under the SLA. A 'prescribed contract of sale' is defined to mean a 'contract of sale of a kind referred to in subsection (1) of [s 9AA]'. Section 9AA(1) provides:

A person shall not sell 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 ...[65]

70 The restriction on a purchaser assuming possession before registration does not apply to possession 'in consideration of a payment of an occupation fee': s 9AD(4).

71 The contract of sale shifted the burden of rates and taxes to the purchaser from the date of issue of the building permit, pursuant to Special Condition 7. Special Condition 7 of the contract of sale displaces cl 9 of Table A. We consider that Special Condition 7 operates to exclude or override the application of cl 9 of Table A. Special Condition 7 provides:

Condition 9 of the said Table 'A' shall not apply to this Contract. All rates, taxes, assessments and other outgoings in respect of the said land shall be borne and paid 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. Where separate rate assessments have not been paid for the said land, the Vendor may elect to pay the present assessments and the Purchaser shall allow the Vendor a fair and reasonable proportion. The Vendor may also apply the monthly instalments (if applicable) in payment for any amount due to it by the Purchaser pursuant to this clause.

72 Clause 9 of Table A provided that rates and taxes are to be borne by the purchaser 'as from the date on which he becomes entitled to possession':

All rates taxes assessments fire insurance premiums and other outgoings in respect of the said land shall be borne and paid by the purchaser as from the date on which he becomes entitled to possession and the same shall if necessary be apportioned between the vendor and the purchaser and the rent (if any) shall be apportioned on the same day and the balance paid or received as the case may require. In the case of land tax any such apportionment shall be computed on the basis that the land sold is the only land of which the vendor is the owner within the meaning of the Land Tax Act 2005.

73 In our view, Special Condition 7 makes it clear that the parties agreed that the obligation to assume liability for land tax was not to arise on possession (as would have been the effect of cl 9 of Table A) but, rather, was to arise from the date of issue of a building permit.

74 Having considered the circumstances and the relevant terms of the contract of sale and the Heads of Agreement, it is possible to identify those dates which are likely candidates for the date on which Yassmin took possession, within the meaning of s 15 of the Act, if it did so. They are:

• The date of issue of a building permit (13 July 2006);

• The date of the registration of the plan of subdivision (8 January 2008);

• The date of the issue of a certificate of occupancy (1 April 2008);

• The date of issue of a certificate of practical completion (11 April 2008).

75 It is useful to recall that the Tribunal found that Yassmin was in de facto possession of the Yassmin land at all relevant dates. It is also noteworthy that all the dates that are likely candidates for the date on which Yassmin took possession of the Yassmin land, within the meaning of s 15, predate the first day of the relevant assessment, midnight on 31 December 2009. It follows that it is only if it cannot be concluded that Yassmin took possession on any of those dates that the Commissioner's position should be accepted.

76 The Tribunal rejected the date of settlement (as defined in the contract of sale) as the date on which Yassmin took possession of the Yassmin land because the settlement date particular did not expressly provide for vacant possession to be provided on that date (by contrast with the 'settlement date' particular as specified in the contract of sale for the McDonald's land).[66] The Tribunal held that, in any event, the 'Settlement Date' under the definition, namely, the date on which the building permit was issued (13 July 2006),[67] occurred before the plan of subdivision was registered and noted that it is unlawful under s 9AD(1) of the SLA for possession to be assumed before such registration.[68]

77 With respect to the terms of Special Condition 7 (assumption of liability for rates and taxes by the purchaser from the date of issue of the building permit),[69] the Tribunal appreciated its significance as indicating an intention that the purchaser be liable for land tax from 13 July 2006. However, it took the view that Cam had demonstrated that such a condition on its own (there, cl 11)[70] is not decisive.[71] Moreover, as of 13 July 2006 the vendor retained significant control over the selection of the builder (cl 9.5 of the Heads of Agreement)[72] and the supervision of the works (cl 6.2)[73] which did not sit well with the observation in Cam that the relevant possession arose when the vendor himself retained no vestige of control.[74]

78 The Tribunal rejected the date of registration of the plan of subdivision, 8 January 2008, as the date on which Yassmin took possession on the basis that it would 'not miraculously have converted that [actual or de facto] possession into legally valid possession (no longer in breach of s 9AD of the SLA) from that date'.[75] Furthermore, as it said, 'most importantly, this is because ... the contract did not provide for possession being taken from that date'.[76] In this respect, the Tribunal contrasted the contractual arrangements of the parties with respect to the Yassmin land with those which prevailed in respect of the McDonald's land, where the settlement of the contract of sale was expressly stipulated to take place on registration of the plan.[77]

79 The Tribunal also rejected the date on which the certificate of occupancy was issued (1 April 2008) and the likely date on which the certificate of practical completion was issued (11 April 2008) because, although the legal impediment of s 9AD of the SLA did not apply, there was no specific clause of the contract of sale nor of the Heads of Agreement that clearly provided for a right to take early possession on either of those dates.[78] These observations reflect the error that the Tribunal fell into by mistakenly looking for an express contractual right to early possession and, failing to find one, concluding that possession was not taken before the relevant assessment dates.[79]

80 The Tribunal found it unnecessary to decide if Yassmin occupied the Yassmin land as some kind of informal licensee, and there was no formal licence or lease document entered into between Kameel and Yassmin. The absence of any other character under which Yassmin occupied the Yassmin land did not mean, the Tribunal held, that Yassmin must have occupied the land as purchaser. The lease between Yassmin and PJR was of no consequence because Yassmin could not give more than it had.[80]

81 We accept that the date of 13 July 2006 (the issuing of the building permit) should be rejected as the date on which Yassmin took possession as a purchaser but not for the reasons given by the Tribunal. We consider that, looking at the contractual arrangements as a whole, the parties did not intend for Yassmin to take possession as a purchaser on the date the building permit was issued. On the date the building permit was issued, Yassmin's occupation of the land was solely referable to the need for Yassmin to come onto the land for the purpose of constructing the restaurant.[81] The character of the possession Yassmin enjoyed was solely as an occupier and not as a purchaser. In our view, the effect of the Heads of Agreement was to confer a licence on Yassmin to occupy the land for a specific purpose, namely, to carry out the 'Purchaser's works';[82] as the Tribunal put it, to 'build the building'.[83] The licence arose from a combination of cl 6.1, the obligation on the purchaser to carry out the 'Purchaser's works' (and the summary of the 'Purchaser's works' in the Schedule), together with cl 6.3 of the Heads of Agreement, the permission to enter the site at its own risk, and the necessary implication that flows from the object of the Heads of Agreement.

82 The occupation of the land as a licensee may explain why Special Condition 7 of the contract of sale expressly displaced cl 9 of Table A: because the purchaser agreed to assume liability on a date, namely, the date the building permit was issued, (in our view, while a licensee) before it had taken possession as a purchaser.

83 We consider that this understanding is confirmed by Special Condition 20 of the contract of sale[84] which expressly provided for the sum paid pursuant to cl 9.1 of the Heads of Agreement,[85] namely, 10 per cent of the value of the land (as set out in the schedule to the Heads of Agreement) to be allocated as the deposit for the purchase of the land, pursuant to the contract of sale, on the registration of the plan of subdivision. Thus, the sum paid pursuant to the Heads of Agreement was converted into a deposit for the sale of the land on the date of the registration of the plan.[86] In our view, the character of the sum of money paid pursuant to cl 9.1 of the Heads of Agreement, before the registration of the plan, was an occupancy fee or a licence fee (albeit not described as such in the documentation).[87] As Yassmin's possession of the land as at the date of the building permit was only possession in consideration for the payment of an occupancy or licence fee it was possession that is consistent with s 9AD(1) of the SLA.[88] This is the effect of s 9AD(4).[89] This conclusion is supported by s 9AD(3) with its contemplation that a purchaser may enter onto land for purposes connected with proposed development or use.[90]

84 More importantly, in our view, the effect of Special Condition 20 was to render the date of registration of the plan (8 January 2008) the critical date on which the relevant relationship between the agreement for the construction of a pizza/pasta restaurant (under the Heads of Agreement) and the agreement for the sale and purchase of the land (under the contract of sale) was forged. That is, this was the date on which the use of the land for which the Heads of Agreement provided changed in character from occupancy for the purpose of construction of a restaurant into possession that was in intended execution of the contract of sale. Under the contractual arrangements of the parties, the occupation that was permitted for the purpose of construction of the restaurant would never have become possession in the intended execution of the contract of sale but for the registration of the plan of subdivision. This is apparent from cl 11 of the Heads of Agreement which provided for the return of the sum of money paid pursuant to cl 9.1 of the Heads of Agreement in the event that the plan was never registered through no fault of Yassmin. Special Condition 19 acknowledged that the contract of sale was dependent upon the registration of the plan.[91] In our view, this is the earliest date on which one can conclude that possession within the meaning of s 15 arose consistently with the contractual arrangements between the parties.

85 We consider that the Tribunal was wrong not to appreciate the importance which the parties attributed to the date of registration of the plan of subdivision. There was no need for the registration of the plan to 'miraculously ... convert' de facto possession into legally valid possession consistent with s 9AD(1), a proposition which was dismissed by the Tribunal.[92] This was because the possession that occurred before the registration of the plan was not inconsistent with s 9AD(1) as it was never more than occupancy authorised under the Heads of Agreement for the purpose of constructing the restaurant. What the registration of the plan did convert, however, as we have said, was occupancy authorised by means of a licence under the Heads of Agreement into possession as purchaser under the contract of sale. The 'conversion' of the status of Yassmin, from an authorised occupant, or licensee, to a purchaser, effected by Special Condition 20, also converted occupancy into possession within the meaning of s 15. This was possession taken in intended execution of the contract of sale, in the Highlands sense.

86 In our view, Special Condition 20 effected a relevant conversion in much the way that the attornment clause in Special Condition 2 did in Cam[93] or the way the licence did in Manors of Mosman.[94] The inter-relationship between the Heads of Agreement and the contract of sale provides the key to identifying when it was that Yassmin took possession; as Stout CJ said in Rhodes, the contractual arrangements 'must be looked at as a whole and the clause making them absolute purchasers cannot be ignored as if it were not there'.[95] Similarly, the clause converting the occupancy fee into a deposit for the sale of land cannot be ignored.

87 As was recognised in Highlands, the critical date to determine possession under s 15 is the date of assessment. For a purchaser to be deemed an owner under s 15, it is necessary for the purchaser to be both in de facto possession and to be so in intended execution of the contract of sale on the assessment date. The dates on which each of those circumstances comes into existence may be different from one another, as here. What is relevant is that, on the assessment date, both circumstances are in existence. It is consistent with this understanding that there can be a change in character, or a conversion, from occupation as a licensee to possession as a purchaser under a contract of sale. When Yassmin ceased to be a licensee and took possession as a purchaser in intended execution of the contract of sale upon the registration of the plan of subdivision, the elements required for it to have 'taken possession' within the meaning of s 15 were complete. This occurred on 8 January 2008, some considerable time before the date of the first assessment, at midnight on 31 December 2009.

88 If (contrary to the view we have expressed) the registration of the plan did not have the effect of converting the status of Yassmin from occupier, or licensee, to that of purchaser under the contract of sale, we also consider that, in the alternative, Yassmin took possession of the land, within the meaning of s 15 of the Act, as at the likely date on which the certificate of practical completion was issued (11 April 2008).

89 This is because the payment of interest at 10 per cent arose, under Special Condition 21 of the contract of sale, from the date on which the certificate of practical completion was issued, that is, the date on which the 'Purchaser's works' were substantially completed.[96] This was confirmed by cl 9.2 of the Heads of Agreement[97] which, as noted, also provided for the interest to increase from seven per cent per annum to 10 per cent per annum on the certificate of practical completion. Under the Particulars of Sale the payment of the balance was due four years after the issuing of a certificate of practical completion under the contract of sale.[98] The date of the issue of a certificate of practical completion was clearly a significant event in the contractual arrangements between the parties and a date on which the construction of the restaurant had largely come to an end. This also meant that, on that date, the occupation that was linked to that construction had also come to an end. Arguably, it was from this date that the occupation assumed a different character, namely, that of possession by a purchaser under a contract of sale of land.

90 Both relevant dates, the date of the registration of a plan of subdivision (8 January 2008) and the date of the issue of a certificate of practical completion (11 April 2008), took place before the first date that is relevant to the land tax assessments (as mentioned, at midnight on 31 December 2009). In our view, both dates satisfy the test drawn from Highlands that the conclusion that the purchaser has taken possession on that date is consistent with the parties' contractual arrangements for the sale of the land, as they have evolved.[99]

91 As both dates are consistent with the parties' contractual arrangements, it is open to view either date as the date on which Yassmin took possession within the meaning of s 15. In those circumstances, we consider that it is immaterial which date is preferred as the date on which Yassmin took possession. This is not to say that the contract of sale is immaterial to the question of when Yassmin took possession. Nor is it to accept that the contractual consequences of what the parties did are irrelevant. Rather, it is to conclude, as we consider Dixon J urged in Highlands, that it is immaterial which analysis of the contract one adopts[100] so long as the preferred date is one which is consistent with the parties' contractual arrangements whereby one can conclude that the purchaser assumed possession in intended execution of the contract of sale of the land.

92 With respect to Whelan JA, we consider that it is insufficient to conclude that a person has taken possession of land within the meaning of s 15 in its capacity as a purchaser simply because there is no alternative explanation or justification for the de facto or actual possession.[101] In our view this is tantamount to accepting that s 15 requires only that there be actual possession by a person nominated as the purchaser under a contract of sale, and the contract remain on foot.[102] This does not provide a rigorous criterion for a status that in effect transfers a liability for land tax. The consequence of a finding that a purchaser has taken possession, within the meaning of s 15, is that it becomes liable for land tax and the vendor's liability is proportionately reduced.[103] A finding that a purchaser has taken possession may

also assist a vendor to escape liability altogether.[104] In our view, a criterion that demands little more than the existence of an ongoing contract of sale is insufficient to support such a significant change in the parties' liability for tax; rather, it is necessary to consider whether that change is consistent with the parties' contractual arrangements, as evolved, in the circumstances of the case.

93 In our view the Tribunal misconstrued the test under s 15 of the Act and there is uncertainty as to the construction the judge adopted. We consider that the correct test was not applied below. We consider that the judge was wrong to conclude that Yassmin had no right to possession under the contract and had not taken possession under such a right in the capacity of purchaser. In our view, s 15, properly applied, reveals that Yassmin took possession of the Yassmin land in intended execution of the contract of sale before the earliest relevant date of the assessment for land tax.

94 We would grant Kameel leave to appeal and allow the appeal.

95 Division 1 of Part 2 of the Land Tax Act 2005 ('the Act') imposes an annual tax on the 'owner' of 'taxable land'. Division 2 of Part 2 of the Act contains provisions which specify who is an 'owner' for these purposes. Amongst other provisions, s 14 provides that a purchaser on credit or deferred payment is deemed to be the 'owner', and s 15 provides:

(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.

96 Section 16(1) provides that the vendor of land under a contract of sale is deemed to be the owner (but not to the exclusion of any other person) until the purchaser has taken possession and at least 15 per cent of the purchase money has been paid.[105] Under s 16(5) if both the vendor and the purchaser are deemed to be owners of the land the tax payable by the purchaser is to be deducted from that payable by the vendor.

97 The applicant ('Kameel') owned land in Clyde Road, Berwick. It intended to sub-divide and sell the land.

98 Kameel entered into contractual arrangements concerning the purchase of two portions of the land, respectively referred to as 250 Clyde Road ('the McDonald's land') and 260 Clyde Road ('the Yassmin land'). The arrangements concerning the McDonald's land were with McDonald's Australia Ltd ('McDonald's') and the arrangements concerning the Yassmin land were with Sofia (Sophia) Pizza House Bistro and Restaurant Pty Ltd ('Sofia') until Yassmin Investments Pty Ltd ('Yassmin') was nominated as purchaser.

99 The Commissioner of State Revenue ('the Commissioner') assessed Kameel as being liable to pay land tax on the properties, for the 2010 and 2011 years in the case of the McDonald's land, and for the 2010, 2011 and 2012 years in the case of the Yassmin land. Kameel objected to these assessments which were referred to the Victorian Civil and Administrative Tribunal ('VCAT').[106] In relation to both blocks of land the relevant issue before VCAT was who was the 'owner' on the applicable assessment dates.

100 VCAT determined that McDonald's was the owner of the McDonald's land on the relevant assessment dates, and that both Kameel and Yassmin were the owners of the Yassmin land on the relevant assessment dates. In relation to the McDonald's land VCAT concluded that McDonald's was a purchaser who had taken possession within the meaning of s 15(1) of the Act, and that Kameel was a vendor who was no longer deemed to be the owner pursuant to s 16(1) of the Act. VCAT rejected Kameel's contention that Yassmin was also a purchaser who had taken possession within the meaning of s 15(1), but found that Yassmin was an owner (but not to the exclusion of Kameel) under s 14 of the Act as a purchaser on credit or deferred payment. VCAT ordered that the assessments be varied accordingly.

101 The Commissioner then issued an originating motion in this Court seeking leave to appeal on questions of law pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998. The questions of law raised by the Commissioner concerned VCAT's conclusions on s 15 in relation to McDonald's and the McDonald's land, and on s 14 in relation to Yassmin and the Yassmin land. By a notice of contention Kameel asserted, amongst other things, that VCAT had erred in its construction of s 15 of the Act in relation to Yassmin and that VCAT ought to have found that Yassmin was the owner of the Yassmin land pursuant to s 15(1) of the Act.

102 The proceeding by originating motion was heard in the Trial Division by Croft J in April 2015 and judgment was delivered in May 2015.[107] The judgment deals, almost exclusively, with issues concerning s 15 and the McDonald's land, and with issues concerning s 14 and the Yassmin land. The issue raised by the notice of contention concerning s 15 and the Yassmin land is literally addressed in one sentence. Although similar issues of construction in relation to s 15 of the Act were addressed in relation to the McDonald's land, the factual basis for that consideration was quite different. The trial judge dealt with these issues in a way which reflected the submissions which had been made to him.

103 Croft J granted leave to appeal. He found that there had been no error of law in relation to VCAT's conclusion that McDonald's was the owner of the McDonald's land pursuant to s 15(1) of the Act, but that there had been an error of law in VCAT's conclusion that Yassmin was the owner (but not to the exclusion of Kameel) of the Yassmin land pursuant to s 14 of the Act. The appeal was allowed to that extent.

104 Kameel now seeks leave to appeal on the following proposed grounds:

1. His Honour Croft J erred in finding that section 15 of the Act had no application in relation to the question of whether Yassmin was the deemed owner of the Yassmin Land for purposes of the Act.
2. His Honour Croft J ought to have found that Yassmin was deemed by section 15 of the Act to be the owner of the Yassmin Land at the relevant times.

105 Because of the way in which the matter has evolved, as described above, we are in the position of having to determine the issue raised by the application without the benefit of developed reasons from the first instance judge. The application for leave to appeal was argued on the basis that if leave were granted the appeal would be determined forthwith.

106 In relation to the Yassmin land the assessments in controversy are for the years 2010, 2011 and 2012. The respective applicable assessment dates are 31 December 2009, 31 December 2010, and 31 December 2011.

107 The relevant facts were found by VCAT. Pursuant to a direction of this Court in the course of the application hearing, the parties filed an agreed statement of facts entitled 'Revised Joint Statement of Facts'.

108 Kameel owned the land in Clyde Road, Berwick from 25 May 2000.[108]

109 In April 2006 Kameel and Yassmin entered into contractual arrangements constituted by a contract of sale of land dated 11 April 2006 and another agreement also dated 11 April 2006.[109]

110 Yassmin paid Kameel a deposit of $143,900 on 27 April 2006 and shortly thereafter paid the GST on that sum.[110]

111 Yassmin proposed to construct and operate a pizza/pasta restaurant and take away on the Yassmin land. A planning permit had been issued on 22 March 2005.[111] A building permit was issued on 13 July 2006. The building that was the subject of that permit was described as 'construction of a restaurant all parts', and the project value was estimated at $2,180,000.[112] Construction of the restaurant commenced and Yassmin was permitted to occupy the land.[113]

(a) 'The uncontested evidence was that Yassmin entered early occupation of the land to build the building, after the contract of sale had been entered'.

(b) 'Clearly Yassmin had de facto possession at the relevant times, but that was not enough'.

(c) 'It [Yassmin] clearly took de facto possession or occupation of the land before it had paid the "balance" of the purchase price'.

(d) '[I]t [Yassmin] was entitled under the heads of agreement and the contract [of sale] to access the land, to enter and construct a building, which it did'.

113 On 8 January 2008 the plan of sub-division was registered.[115]

114 By 1 April 2008 the restaurant was completed, a certificate of occupancy was issued, and Yassmin began operating the restaurant shortly afterwards.[116]

115 After Yassmin commenced operating the restaurant both Kameel and Yassmin conducted themselves on the basis that Yassmin was in occupation of the land as its owner.[117]

116 Yassmin paid a significant amount to Kameel under the contractual arrangements.[118]

117 In February 2011 Yassmin purported to lease the restaurant to a company named PJR Associates Pty Ltd ('PJR'). Between 1 February 2011 and 1 January 2012 PJR occupied the land exclusively.[119]

118 Yassmin failed to make payments due to Kameel on the due dates and the contractual arrangements were terminated by Kameel in either November 2012 or April 2013.[120]

Relevant provisions of the contractual arrangements

119 The contract of sale of land dated 11 April 2006 is a Law Institute of Victoria and a Real Estate Institute of Victoria Ltd form of contract containing pro forma general conditions (which incorporate and vary the conditions in Table A of the Seventh Schedule of the Transfer of Land Act 1958), Particulars of Sale, and Special Conditions. In a case of conflict the Special Conditions have priority (General Condition 10). I will call this the 'contract of sale'.

120 The other agreement dated 11 April 2006 is referred to in the contract of sale as the 'Heads of Agreement'. The provisions of the two contracts are expressly inter-related and by their terms it is clear that they were intended to be executed together and to operate together.

121 I begin with the relevant terms of the Heads of Agreement.

122 The Heads of Agreement recites the fact that Yassmin had obtained the necessary planning and building approvals to enable it to construct a pizza/pasta restaurant and take away on the Yassmin land. It also recites Yassmin's desire to buy the land and Kameel's proposal to sub-divide the Yassmin land from the balance of the land it owned. Kameel is called the 'Vendor' and Yassmin is called the 'Purchaser'.

123 In provisions under the heading 'Interpretation' it provides (cl 1.1.9) that the agreement is to be read 'subject to ... the Contract of Sale annexed hereto to the extent of any inconsistency'.

124 The Heads of Agreement defines the 'Purchaser's Works', 'Practical Completion' and 'Certificate of Occupancy'.

125 Clause 3 of the Heads of Agreement reads as follows:

The Vendor agrees to sell and the Purchaser agrees to purchase the Land and the premises in accordance with and upon the terms and conditions contained herein and subject to clause 5.1 hereof and in accordance with the terms of the Contract annexed hereto.

126 The Heads of Agreement contains the following further relevant terms:

5.3 Subject to clause 7 the Purchaser shall cause the carrying out of the works to be completed in a substantial and workmanlike manner within twelve (12) months from the date of issuing of a Building Permit.

5.4 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'.

6.1 The Purchaser shall carry out or cause to be carried out the Purchaser's works:-

6.1.1 as soon as possible in accordance with this agreement;

...

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.

6.3 The Purchaser shall enter the site and the premises at its own risk.

...

1. The Purchaser agrees to purchase the land and improvements on the terms and conditions of Contract of Sale and Section 32 Statement, a copy of which is annexed hereto, to be prepared by the Vendor's solicitors. ...

...

9.1 The Purchaser agrees to pay a sum equivalent to 10% of the value of the land as set out in the Schedule (land price) hereto upon the execution of this agreement.

9.2 The Purchaser shall pay interest on the land price and the progress payments made by the Vendor on the value of works referred to in clause 9.5, clause 9.6 and in the Schedule hereto at the rate of 7% per annum payable monthly in advance commencing from the date of the issue of a Building Permit by the relevant authority. Upon the issue of a Certificate of practical completion by the Vendors architect and upon payment by the Vendor of the last progress payment in accordance with clause 9.6 hereof the purchaser shall pay interest at the rate of 10% per annum payable monthly in advance from the date of issue of the Certificate of practical completion and in accordance with the provisions of the terms Contract of Sale a copy of which is annexed hereto.

...

9.5 The Purchaser will enter into an agreement with a builder to be approved of by both the Vendor and the Purchaser for the construction of the Purchaser's works and will be responsible for the payment to the builder for the cost of such works. ... The Vendor agrees to advance the progress payments exclusive of GST to the Builder at the request of the Purchaser upon receipt of a certification from the Vendor's architects and/or draftsman that such progress payments excluding GST are in order.

9.6 The Purchaser acknowledges that the Vendor shall only be obliged to provide a loan of up to a maximum of $2,500,000.00 which includes any GST payable by the Purchaser and the Purchaser is responsible for the payment of any GST applicable for the construction of the works including landscaping, infrastructure works, services, car park contributions and levies. The Purchaser must provide all other amounts over and above the said sum to enable the Purchaser to complete the works pursuant to this agreement. ...

...

9.8 The Vendor agrees to advance progress payments to the builder at the request of the Purchaser upon receipt of certification from Vendor's architects and/or draftsman that such progress payments are in order.

...

1. The Purchaser acknowledges and agrees that the sum referred to in clause 9.1 is paid in consideration of the Vendor entering to these heads of agreement and will be released on the signing hereof. The said sum shall be retained by the Vendor. Upon exchange of Contracts of Sale hereinbefore referred to (which Contracts shall be executed simultaneously with the execution of this Agreement) and upon registration of the plan of subdivision referred to in clause 10 and 12 hereof the Vendor shall allocate the said sum as the deposit payable by the Purchaser pursuant to the said Contract of Sale. Provided however that in the event that the plan of subdivision referred to in this Agreement is not registered through no fault on the part of the Purchaser then the sum referred to in clause 9.1 shall be immediately refunded to the Purchaser without deduction.
2. The vendor shall obtain approval and registration of Plan of Subdivision 532725L referred to in clause 10 hereof, within thirty days from the date of issue of a Certificate of Occupancy by the relevant authority.

127 Turning then to the relevant provisions of the contract of sale, the pro forma section provides:

The vendor sells and the purchaser buys both the property and the chattels for the price and upon the conditions set out in this contract.

128 The pro forma section also contains general conditions, which include conditions whereby the vendor carries the risk of loss or damage to the property 'until settlement' (General Condition 2.1) and whereby the vendor is required to deliver the property to the purchaser 'at settlement date' (General Condition 2.2).

If the land sold is a lot on an unregistered plan of subdivision then the deposit -

(a) must not exceed 10% of the price, and

(b) must be paid -

(i) to the vendor's solicitor or estate agent to be held by the solicitor or estate agent on trust for the purchaser, or

(ii) if the vendor directs, into a special purpose banking account in Victoria specified by the vendor in the joint names of the purchaser and the vendor

until the registration of the plan.

130 General Condition 9.1 incorporates the conditions in Table A. Other General Conditions vary the application of the conditions in Table A. In particular, General Condition 12 of Table A, concerning the provision by the purchaser of an instrument of transfer, is varied so as to require provision of the instrument of transfer 'at least 10 days prior to the settlement date' (General Condition 13.1).

131 Other relevant conditions in Table A are Condition 9 (subject to a small alteration provided for by the pro forma General Condition 9.3) whereby rates and taxes are to be borne by the purchaser 'as from the date on which he becomes entitled to possession', and Condition 11 which provides that 'after the settlement date', so long as any purchase or other monies remain owing by the purchaser the purchaser is to keep the property insured and the vendor is entitled to enter upon the land twice every year to view the condition of it.

132 The Particulars of Sale specify a purchase price of $1,475,000 'plus GST and the cost of construction to be contributed by the Vendor in accordance with Special Condition 21 & 22 hereof'. The deposit is stated to be $143,900 '[i]n accordance with Special Condition 20 hereof'.

133 Next to the item 'Payment of Balance' the following appears:

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.

134 There is a hand-written addition which reads: '4 years from 11.4.08'.

135 Next to the item 'Settlement Date' the following appears:

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.

136 There is a hand-written addition which reads: 'Namely 13-7-2006'.

137 The contract of sale contains the following relevant Special Conditions:

1. It is the understanding and the intent of the parties hereto that no provision of the Contract overrides any of the provisions of the Sale of Land Act. Any provision hereof which but for this special condition might be construed as overriding the provisions of the said Act shall so far as possible be read down and construed in such manner as not to override such last mentioned provisions.

1. Condition 9 of the said Table 'A' shall not apply to this Contract. All rates, taxes, assessments and other outgoings in respect of the said land shall be borne and paid 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. Where separate rate assessments have not been made for the said land, the Vendor may elect to pay the present assessments and the Purchaser shall allow the Vendor a fair and reasonable proportion. The Vendor may also apply any monthly instalments (if applicable) in payment for any amount due to it by the Purchaser pursuant to this clause.

1. The Purchaser agrees to provide the Vendor with a copy of the Notice of Acquisition upon the approval of the Plan of Subdivision referred to in Special Condition 19 hereof, failure by the Purchaser to provide such notice will constitute a default pursuant to the terms of this contract.
2. The Purchaser hereby covenants and agrees to deliver to the Vendor's Solicitors a Transfer of Land (prepared by the Purchaser's Solicitors) not less than seven (7) days prior to the date for payment of the residue of purchase monies.

1. This Contract of Sale is conditional upon Plan of Subdivision No 532752L (subject to any alterations thereto as are hereinafter mentioned) being duly sealed by the Council pursuant to the provisions of the Subdivisions Act and registered at the Office of titles within 30 days from the date of the issue of a Certificate of Occupancy for the works referred to in the Heads of Agreement ...

1. Upon the registration of the said Plan of Subdivision, provided the Purchaser is not in default under the terms of the Heads of Agreement or pursuant to any of its obligations under this Contract of Sale, then the Vendor shall allocate the sum paid by the Purchaser pursuant to Clause 9 of the Heads of Agreement as the deposit payable pursuant to this Contract of Sale.
2. The Purchaser acknowledges and agrees that the consideration expressed in this contract shall include the construction costs to be provided by the Vendor in accordance with the terms of the Heads Of Agreement up to a maximum of $2,500,00.00 as set out therein. The total price for the land and the cost of construction provided by the Vendor shall be repaid to the Vendor on or before the expiration of four years from the date of issue of a Building Permit together with interest at the rate of 10% per annum adjusted and payable monthly in advance from the date of issue of a certificate of practical completion as set out in the Heads Of Agreement. The Vendor shall not be under any obligation to transfer the title to the land to the Purchaser until all monies due to the Vendor, including interest are paid in full.
3. The Purchaser agrees and acknowledges that in addition to the interest payable pursuant to special condition 21 hereof the Purchaser must pay principal installments in reduction of the total cost of the land and construction works not less than 25 per annum and interest shall abate accordingly.

Analysis of the relevant contractual provisions

138 Yassmin was required by the Heads of Agreement to build the restaurant as soon as possible (cl 6.1) and in any case within 12 months from the date of issue of the building permit (cl 5.3). The building permit was issued on 13 July 2006, so Yassmin had until 13 July 2007 to build the restaurant. The restaurant had to be built by a builder approved by both Yassmin and Kameel (cl 9.5). Yassmin was to enter into the contract with the builder and was responsible for paying the builder (cl 9.5). Kameel would advance Yassmin the funds to pay for the construction up to a maximum of $2.5m (cls 9.5, 9.6 and 9.8). Yassmin was to go onto the land to build the restaurant at its own risk (cl 6.3). Interest on the sum advanced by Kameel was 7 per cent per annum until practical completion and 10 per cent per annum thereafter (cl 9.2). The building works were subject to Kameel's supervision and direction in relation to quality of workmanship and progress payments (cl 6.2). Yassmin was to pay Kameel 10 per cent of the value of the land (cl 9.1) which was to be released and retained by Kameel until registration of the plan of subdivision when it would be allocated as the deposit payable under the contract of sale (cl 11).

139 The portions of the contract of sale which are not pro forma reflect the provisions of the Heads of Agreement.

140 The Particulars of Sale provide for a 'Settlement Date' which is the date of issue of a building permit for the purpose of carrying out the work required by the Heads of Agreement. On this basis the handwritten '13-7-2006' is accurate.

141 Special Condition 7 provides for rates and taxes to be adjusted as at the date of issue of the building permit. That special condition is particularly noteworthy as it overrides Table A Condition 9 which provides for rates and taxes to be borne by the purchaser from the date he becomes entitled to possession.

142 Special Condition 9 of the contract of sale requires Yassmin to give Kameel a notice of acquisition as soon as the plan of subdivision is approved. On that same date Special Condition 20 'allocates' the 10 per cent paid under cl 9.1 of the Heads of Agreement to the deposit under the contract of sale.

143 Special Conditions 21 and 22 reflect the provisions of the Heads of Agreement in relation to the construction loan, as does the entry next to 'Price' in the Particulars of Sale. Special Condition 20 reflects the provisions of the Heads of Agreement concerning 'allocation' of the deposit upon registration of the plan of subdivision.

144 In contrast to the non-standard Special Conditions and Particulars of Sale, the pro forma provisions of the contract of sale (both the General Conditions and the Table A conditions as varied) proceed as if the payment of the full outstanding balance and the transfer and delivery of the property would occur simultaneously.

Sale of Land Act 1962

145 Under s 9AA(1) of the Sale of Land Act 1962 ('SLA'), as it was at the relevant time, the sale of a lot in a plan of subdivision before registration was prohibited unless the contract of sale provided for the deposit monies to be paid to a legal practitioner or a licenced estate agent, or into a special purpose account, and unless the deposit monies payable did not exceed 10 per cent of the purchase price.

146 The contract of sale here included General Condition 6.3, a pro forma condition requiring that any deposit not exceed 10 per cent of the price and be paid as required by the SLA if the land sold was a lot in an unregistered plan of subdivision. At the same time cl 9.1 of the Heads of Agreement required Yassmin to pay Kameel 10 per cent of the value of the land upon execution of the agreement. Clause 11 provided that Yassmin acknowledged and agreed that that sum was paid in consideration of Kameel entering into the Heads of Agreement and that the sum would be released and retained by Kameel. Clause 11 further provided that upon registration of the plan of subdivision Kameel would 'allocate' that sum as the deposit payable under the contract of sale. If the plan of subdivision was not registered through no fault on the part of Yassmin then the cl 9.1 payment would be refunded.

147 In this connection, cl 1.1.9 of the Heads of Agreement and Special Condition 4 of the contract of sale are also relevant. Clause 1.1.9 provides that the Heads of Agreement is to be read subject to the contract of sale to the extent of any inconsistency. Special Condition 4 provides that no provision of the contract 'overrides' any provisions of the SLA and that any provisions construed as 'overriding' the SLA are so far as possible to be read down and construed in a manner as not to 'override' the SLA.

148 As indicated earlier, Yassmin paid Kameel the sum of $143,900 on 27 April 2006 and shortly thereafter paid the GST on that sum.

• Deposit money paid by a purchaser had to be paid to either a legal practitioner or licenced estate agent or into a special purpose account: s 9AA(2).
• A purchaser under a contract of the kind referred to in s 9AA(1), defined as a 'prescribed contract of sale', was not entitled to possession before registration of the plan of subdivision and a vendor under such a prescribed contract of sale could not require the purchaser to take possession: s 9AD(1) and (2).
• A failure to comply with s 9AA entitled the purchaser to rescind the contract at any time before the registration of the plan of subdivision: s 9AE(1).

150 Before VCAT, before Croft J, and on the hearing of the application before us, reference was made to the SLA provisions in the context of the proper construction of the agreements. After the hearing of the application the Court sought further submissions on the following issues:

1. Was the contract of sale, standing alone or in combination with the Heads of Agreement, a 'prescribed contract of sale' within the meaning of s 9AA of the SLA?

2. Did the arrangements made and the steps taken by the parties constitute contravention of s 9AA or s 9AD of the SLA?

3. What consequences were there, if any, for the issues on the application of the conclusions reached on questions 1 and 2?

152 On behalf of Kameel it was submitted that the contract of sale was a 'prescribed contract of sale' and that General Condition 6.3 constituted the provision required by s 9AA(1). As to Special Condition 20 of the contract of sale and cls 9.1 and 11 in the Heads of Agreement, Kameel submitted that cl 11 was 'inconsistent' with General Condition 6.3 if the sum payable under cl 9.1 characterised as a deposit. It was submitted that cl 11 would not be inconsistent if it was correctly characterised as an 'occupation fee'. It was then submitted that by virtue of Special Condition 4 of the contract of sale and cl 1.1.9 of the Heads of Agreement, General Condition 6.3 prevailed, and there had been compliance with s 9AA(1) of the SLA even if the cl 9.1 payment was a deposit.

153 Kameel submitted that if the amount payable under cl 9.1 was correctly characterised as a deposit then s 9AA(2) 'may have been contravened'. The payment (if it was a deposit) had not been applied as required by s 9AA(2) and General Condition 6.3. It was submitted that that possible contravention had no bearing on the issues in the appeal.

154 As to s 9AD, Kameel submitted that those provisions concerned the enforceability of rights and that the sub-sections did not proscribe possession 'by mutual consent'. Further, if the cl 9.1 payment was correctly characterised as an occupation fee rather than a deposit then s 9AD would not apply.

155 In relation to the effect of any contravention Kameel submitted that the only possible contravention was contravention of s 9AA(2) and that the Act provided for a remedy in s 9AE(1), being the purchaser's capacity to rescind the contract at any time before registration of the plan of sub-division. Kameel submitted that that right had not been exercised and that the contract of sale had remained on foot.

156 Kameel submitted that if s 9AD had been contravened, the primary submission being that it had not, the only consequence would have been to render the contractual provisions requiring or entitling the purchaser to take early possession unenforceable.

157 It was submitted on behalf of Kameel that in any event the relevant dates for land tax assessment are all after 8 January 2008 when the relevant plan of subdivision was registered, and that by the earliest relevant assessment date, 31 December 2009, any prior 'irregularities' had become irrelevant.

158 On behalf of the respondent it was submitted that the answers to the questions the Court had posed 'do not impact upon the application.'

159 The respondent submitted that the applicant's primary contention had always been, and remained, that it was 'irrelevant' to the application of s 15 whether Yassmin had had a contractual right to possession. If that were accepted, the respondent submitted, 'it is difficult to see how any issue arises for decision about ss 9AA or 9AD'.

160 On the other hand, the respondent submitted, if VCAT's analysis were adopted, given that VCAT found there was no contractual right to possession there had been no contravention of s 9AD.

161 Finally, it was submitted that as the applicant had accepted that Yassmin had had no right to possession under the contract, there was no issue to be decided concerning the SLA.

162 Thus, both parties to the application submitted that the issue of compliance with the SLA was irrelevant to the application before this Court.

163 In the circumstances, I will not consider the matter further or reach any conclusion as to compliance, save to observe that the contractual arrangements made, and, in particular, the provisions concerning the deposit and its 'allocation' and the absence of unambiguous provisions as to possession, are, in my view, explicable by reference to the need for compliance, or purported compliance, with the SLA.

Relevant authorities on s 15 of the Act

164 Before turning to the conclusions reached by VCAT concerning s 15 of the Act and the Yassmin land, it is useful to review the relevant authorities on what taking possession means in the context of s 15.

165 Before VCAT, before Croft J and in the hearing before us counsel were agreed that the relevant authorities were two early judgments from New Zealand, Rhodes v Commissioner of Taxes ('Rhodes')[121] and Yule v Commissioner of Taxes ('Yule'),[122] two decisions of the High Court, Highlands Ltd v Deputy Federal Commissioner of Taxes (SA) ('Highlands')[123] and Cam & Sons Pty Ltd (in vol liq) v Commissioner of Land Tax ('Cam & Sons'),[124] and two decisions before single judges of the Supreme Court of New South Wales, H C Sleigh Ltd v Commissioner for Land Tax ('Sleigh')[125] and E Long & Co Pty Ltd v Commissioner of Land Tax ('Long').[126]

166 Rhodes and Yule concerned New Zealand legislation relevantly similar to s 15 of the Act. In each case an agreement had been entered into providing for a sale of land at a postponed date with the grant of a leasehold interest to the purchaser in the meantime. The respective legislation applicable at the time both Rhodes and Yule were decided provided that a 'buyer' was deemed to be the owner of the land 'as soon as he has obtained possession'.[127]

167 Rhodes came before Stout CJ on a Special Case Stated. The Commissioner in that case had made a determination that the relevant buyers had taken possession but he wished to resile from that and amend the assessments which had been issued on that basis. The issue to be determined was whether he could amend the assessments or whether his initial determination was final and conclusive. The Commissioner contended that it was important that he should be able to amend the assessments because he contended that the buyers had not taken possession as purchasers but rather had taken possession as lessees. Addressing that second question, Stout CJ rejected the Commissioner's contention. He held that the persons in possession were both purchasers and lessees. There was no doubt in that case that the purchasers/lessees were in actual physical possession of the land.

Can it be said that the relationship of landlord and tenant created by the deed was meant to destroy the relationship of vendor and purchaser? I do not think so.[128]

They are purchasers, and they are in possession; and the fact of their attornment does not, in my opinion, prevent their coming under the provisions of section 16 ... Their possession is under their agreement, and their agreement must be looked at as a whole, and the clause making them absolute purchasers cannot be ignored as if it were not there.[129]

169 The Commissioner contended that the relevant parties were in possession as lessees and not as purchasers. Stout CJ held that they were in possession under their agreement, that the agreement provided for both a lease and a purchase, and that the purchase provisions could not be ignored. Accordingly, they were purchasers who had obtained possession.

170 Hosking J reached the same conclusion on relevantly similar facts in Yule. Again, there was no doubt that the relevant person had obtained physical possession of the land. Again, there was no doubt that he had done so pursuant to an instrument which provided for both a sale at a postponed date and a tenancy in the meantime. Hosking J said:

The right under which he is in possession is, I think, to be properly described as a right by virtue of the instrument. At law if an agreement to purchase is made by a tenant for years already in possession, he is said to have a double right - viz., 'to enforce his bargain for the purchase of the estate and to continue in the meantime to hold it as tenant' .... When a person is spoken of as being in possession 'as a lessee', 'as purchaser', or 'as trustee', or the like, no difference in the nature of the physical possession is intended, the expressions mentioned being but a colloquial method of indicating the particular right under which the physical possession is maintained. To give effect to the object of preventing dummy sales possession ought to be given the wider rather than a narrower meaning which might lead to evasion.[130]

171 Hosking J held that the case before him was not in substance distinguishable from Rhodes.

172 The High Court decision in Highlands is the most important relevant authority on the issue before us.

173 The appellant in Highlands had entered into a contract to purchase land, had sub-divided that land, and had entered into numerous contracts for the sale of the sub-divided allotments. None of the sub-purchasers had taken possession. At the relevant time the land was being used by a tenant of the previous owner for grazing cattle. The relevant issue was whether the appellant was in possession of the land and therefore the owner under s 37 of the Land Tax Assessment Act 1910-1926 (Cth). Section 37 was relevantly in the same terms as the New Zealand legislation considered in Yule and Rhodes in that it deemed a 'buyer' to be the owner of the land 'so soon as he has obtained possession of the land'.[131]

174 It is necessary to consider the separate judgments of the High Court in Highlands.

175 Rich J began by referring to the decision of Hosking J in Yule. On the question of whether the relevant provision should be given a wide or narrow meaning, Rich J said that a wide meaning ought to be adopted:

The wider meaning results under our legislation in the liability of the buyer accruing as soon as he secures that control of the land which enables him to enjoy its profitable use or its returns.[132]

176 Rich J then referred to the factors which created doubt as to whether the appellant was in possession of the land in that particular case. Those factors were: the use of the land for grazing and its acquisition for the purpose of sub-division and on-sale so that it was not likely that the enjoyment of the land would be the same by the sub-purchasers; the provisions of the contract of sale which were said to be 'almost self-contradictory'; and the fact that the previous tenant was permitted to continue exercising grazing rights.

177 The problem with the provisions of the contract of sale was as follows. The contract had been executed on 9 February 1925. It provided that the purchase money was to be paid in 10 equal instalments on 9 March in each year, with the first such instalment to be paid on 9 March 1925. The contract also provided that the purchaser would be entitled to enter into possession of the land on 9 March 1925 'provided he shall have completed his purchase in accordance with the terms and conditions herein contained'.

178 Rich J observed that these provisions revealed a practical inconsistency rather than a logical one. It was logically possible to complete by 9 March 1925 but it was evident upon a consideration of the contract as a whole that it was neither intended nor expected that completion should take place within four weeks of the making of the contract. As to this issue, Rich J said:

Whatever may be the explanation of the statement that the purchaser shall be entitled to enter into possession on 9th March 1925 provided he shall have completed his purchase in accordance with the terms and conditions contained in the contract, the difficulty which it created was one which the parties could resolve for themselves by delivering and accepting possession in intended performance of the stipulation.[133]

179 Rich J then referred to the circumstances indicating that possession had been taken and concluded:

I see no reason to doubt that they were allowed de facto control by the vendor, and intended to exercise it; and this appears to me to amount to obtaining possession within the meaning of sec 37.[134]

180 Starke J set out the terms of the legislation and then observed:

'Possession' here spoken of is a de facto possession referable to the agreement for the sale of land, and not the right to possess, or to have legal possession.[135]

181 He observed that 'de facto' possession might vary depending upon the nature of the item of property in question.

182 Starke J agreed with the construction of the contract which had been adopted by the trial judge whereby the appellant was entitled to possession on 9 March 1925 notwithstanding that only one tenth of the purchase money had been paid. He accordingly held that the appellant was in possession.

183 Dixon J (as he then was) referred to the relevant statutory provision and observed:

The material portion of sec 37 requires that, where an agreement has been made for the sale of land, the buyer shall be deemed to be the owner of the land so soon as he has obtained possession of the land. This appears to me to mean possession as purchaser obtained in intended execution of the agreement of sale, performance of which may, of course, be affected by agreed variations of its terms and by waiver, including the acceptance of substituted times and modes of performance.[136]

184 Dixon J considered that if the contractual provisions were given their usual meaning they would be impossible to reconcile.[137] He then continued:

There can be no doubt that a sensible operation cannot be given to all the provisions of the contract if the expression receives this meaning. But the question whether the vendor would or would not give, and the appellant as purchaser would or would not, take possession on 9th March 1925 was a matter which they necessarily had to determine for themselves at that time. If they conceived that the contract meant that possession should be given on that date and respectively intended to relinquish and to assume possession accordingly, it appears to follow that the appellant obtained possession as purchaser in execution of the agreement for sale. Whether the result is reached by treating the conduct of the parties as an aid to the resolution of the ambiguity or difficulty in the terms of the contract, or by considering the vendor was waiving a condition precedent or potential condition precedent expressed in the proviso about 'completion', or by regarding the parties as tendering and accepting substituted performance of the stipulations as to possession, would seem to be immaterial. In point of fact the parties did intend respectively to relinquish and assume possession on 9th March 1925.[138]

185 Dixon J held that the appellant was in possession as the appellant 'could de facto exercise all the control of which vacant land admits'.[139]

186 Evatt J focused upon the facts and determined the issue on a factual analysis of whether the appellant was physically in possession or not.

187 McTiernan J simply agreed. This may indicate that he saw no significant difference between the reasons of the other four judges.

188 It seems to me that Highlands stands for the proposition that a buyer will have obtained possession of land in the relevant sense when, as a factual matter (de facto), he has all the control which the nature of the land admits, and when he is in that position in intended execution of an agreement for sale of the land, whether it can be said that the particular actions taken are properly to be seen as pursuant to the provisions of that agreement or not. Provided the parties take the relevant actions in intended execution of the agreement it does not matter, and it is unnecessary to resolve the question, of what might be the contractual consequences of what has in fact occurred. In analysing Highlands in this way, I rely in particular upon the judgment of Dixon J, although it seems to me that the other judgments are consistent with his analysis.

189 The next relevant authority chronologically is the decision of Collins J in the Supreme Court of New South Wales in Sleigh.

190 In Sleigh a tenant had entered into a lease in 1951. In 1955 a conditional contract for the sale of the land was entered into by the tenant with the landlord, which was a trustee. The contract was conditional on approval by the beneficiaries, and it expressly preserved the pre-existing tenancy until completion. The tenant purported to on-sell the land before completion. The relevant issue was the liability for land tax before the contract for the sale of land had been completed and whether the tenant was then a 'purchaser' who 'has obtained possession of the land' under s 26(1)(a) of the Land Tax Management Act 1956 (NSW) ('the NSW Act').

191 Collins J referred to the judgments in Highlands and also to the New Zealand cases. He observed, in relation to those authorities:

The emphasis placed on the status acquired by the purchaser who is let into possession under the agreement for sale complements and expands the principle that, for land tax purposes, the possession obtained by the purchaser is to be 'referable' to that agreement.[140]

[T]he status of the purchaser was specifically limited pending completion to the status of lessee, and as previously stated, no further right to possession or no difference in the nature of the possession was conferred on the purchaser by the agreement pending completion.[141]

Where the agreement has been completed by conveyance and the purchaser obtains possession, it is in my view clear that that possession is the kind of possession that the vendor intended ultimately to divest himself of, and invest the purchaser with, when he entered into the agreement of sale. When the purchaser obtains possession before completion, it is possession of the same kind, if the possession is referable to the agreement and in anticipation of completion - 'possession as purchaser obtained in intended execution of the agreement for sale' - as Dixon, CJ, said in Highlands' Case. Such possession differs in kind from the possession obtained merely as lessee and, in my view, possession solely as lessee does not fall within the intendment of s 26(1). The only possession that the appellant had on 31 October 1956 was possession as lessee and, in my opinion, the appellant was not at that date liable to be assessed under s 26(1) for land tax in respect of the subject land.[142]

194 The position in Sleigh was different to what the position had been in the New Zealand cases and in Highlands. In Sleigh the purchaser had obtained possession and was entitled to stay in possession as a tenant pursuant to a lease which long predated the contract of sale. His possession at the relevant time was found not to be 'in intended execution of the agreement for sale'. The agreement for sale merely preserved his pre-existing tenancy.

195 In Yule, Rhodes and Sleigh the relevant issue was whether a person who was undoubtedly in possession was, in the relevant sense, a buyer or purchaser. The issue in Highlands was whether a person who was undoubtedly a purchaser was in possession. In the next authority chronologically, the High Court decision in Cam & Sons, the issue was whether a person who was both a purchaser and a tenant (as in Yule and Rhodes) but who was not in physical possession of the land was nevertheless in possession pursuant to the provisions of the relevant contract.

196 The relevant legislation in Cam & Sons was s 26 of the NSW Act. A contract had been entered into pursuant to which land was sold on terms whereby vacant possession would be given on completion (subject to existing tenancies) and whereby the purchaser was to be the tenant of the vendor from month to month until payment of the balance of the purchase price. The contract of sale provided that the purchaser would be entitled to the rents and profits and should pay and bear all rates, taxes and outgoings from the date of the contract. The land in question at all relevant times 'was not in fact used or occupied by anyone'.[143]

197 Kitto, Taylor and Owen JJ in a joint judgment decided, upon a construction of the relevant contractual terms, that the intention of the parties was that the purchaser/tenant should have the right to assume possession of the land immediately on signing the contract. Their joint judgment concluded:

In these circumstances, the purchaser's possession was 'referable to the agreement for the sale of land': [Highlands per Starke J cited]. It was a possession 'obtained in intended execution of the agreement of sale': [Highlands per Dixon J cited]. He 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): [Rhodes and Yule cited].[144]

198 Kitto, Taylor and Owen JJ adopted a statement of Sugerman J in the Full Court of the New South Wales Supreme Court where he had said:

[W]hen the vendor, himself retaining no vestige of possession, has done all that it is necessary 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 such as adverse occupation by a third party, it rests solely with the purchaser to decide whether and when he will do so. ... When and whether he chooses to enjoy its profitable use or returns are matters entirely for him. He has 'obtained possession', and the vendor has 'delivered possession' to him, in the intended senses of those expressions'.[145]

199 Menzies J held that the attornment clause provided for possession and it was part of the contract of sale and so once the purchaser had become a tenant 'possession of the land has been delivered to the purchasers'.[146] Windeyer J held that the attornment clause presupposed that upon execution of the contract possession was delivered to the purchaser.[147]

200 As there was no-one in physical possession of the land in Cam & Sons, the decision in that case turned upon whether possession had been obtained by the purchaser/tenant by virtue of the provisions in the contract. Cam & Sons does not qualify or vary what was said in Highlands when the issue to be determined is whether a person who is in physical possession falls within the ambit of the applicable legislation.

201 The next authority is the decision of Maguire J in the Supreme Court of New South Wales in Long.

202 The appellants in Long were the owners of 14 lots of land and entered into contracts to sell them with dwelling houses then erected or to be erected on them. Under each contract the vendor was to give the purchaser vacant possession at the date of completion. Each contract was subject to finance. There was delay in obtaining the finance. The purchasers wished to move into the houses pending completion. Agreements were entered into pursuant to which the purchasers were permitted to occupy the houses under licence upon payment of a fee equal to 10 per cent per annum of the balance outstanding under the contract of sale. The licence agreements specifically provided that they did not create the relationship of lessor and lessee. The licences could be terminated on seven days' notice. The licensees could not exclude the owners. The issue, again under s 26 of the NSW Act, was whether the purchasers had obtained possession of the land.

203 Maguire J referred to Highlands and to Cam & Sons. He held that the purchasers had not obtained possession of the land in the relevant sense. His reasons were as follows:

It seems to me that the licence agreements were 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; such possession as was obtained by the licensees was not given to them 'in intended execution of the agreement of sale'; the licence agreements should rather, I consider, be regarded as standing right outside the agreements for sale and as creating a separate relationship pending completion or, indeed, during the period of time which must elapse before it would be known whether or not the purchasers would be able to complete by securing the necessary mortgage finance. In the meantime the purchasers were not in possession of the land 'in the character of purchaser' and the vendors under the contracts of sale retained at the very least a 'vestige of possession' in that they received the licence fees and the licensees were (under cl 10) not entitled to exclude them or other persons authorized by them although the licensees might be completely fulfilling all their contractual obligations.[148]

204 Again, it seems to me that there is nothing in Long which qualifies Highlands' exposition of the approach to be taken where a purchaser is in physical possession in intended execution of (or referable to) an agreement which provides for the sale of land, as opposed to a separate arrangement entered into later granting limited rights of access.

205 During the hearing of the application the Court expressed surprise that there were no decisions of intermediate appellate courts on the issue. Having been told researches had revealed none, the Court directed a further search be undertaken. After the hearing the parties referred the Court to three decisions of the New South Wales Court of Appeal. They are: Commissioner of Land Tax (NSW) v Opalfield Pty Ltd ('Opalfield'),[149] Commissioner of Land Tax (NSW) v Manors of Mosman Pty Ltd ('Manors of Mosman')[150] and Floruit Holdings Pty Ltd v Sebastian - Builders & Developers Pty Ltd ('Floruit').[151]

206 Opalfield concerned an assessment on a company which had bought a property under a contract of sale which provided for vacant possession on completion. The property duly settled. By a separate arrangement the company had agreed that it was merely the 'apparent purchaser' for members of a family who were to hold the beneficial interest in the property. Two of the family members together with the de facto husband of one of them moved into the property. The company received no rent and was said to have no power to deal with the property except in accordance with the directions of the beneficiaries. One issue which then arose was whether the company was a 'purchaser' who had 'obtained possession of the land' within the meaning of s 26(1) of the NSW Act.

207 At first instance Sully J had held that the company had not 'obtained possession'. He relied upon the judgment of Starke J in Highlands, holding that what was meant by the section was de facto possession and not the right to legal possession. On appeal Sheller JA, with whom Kirby P and Meagher JA agreed, held this was an error. The applicable authority was held to be Cam & Sons. The company had obtained possession under, and by virtue of, the provisions of the contract of sale itself. Sheller JA relied upon the High Court's adoption of the passage from Sugerman J, which I quoted earlier.

208 In Manors of Mosman a developer of a retirement village entered into contracts with 31 purchasers. The contracts provided for possession to be given at the date of completion or at a time and in a manner otherwise stipulated in the contract. There was a special condition whereby if an occupancy permit was issued the developer could require the purchaser to enter into a licence agreement whereby upon payment of a small fee the purchaser could take possession. Further provisions were then to apply concerning settlement. The right to occupancy was to determine if the contract did not settle. Before the date on which land tax was assessed (31 December 1988) the 31 purchasers had occupied their units under these licence arrangements. The contracts settled after the assessment date. The issue was whether the 31 purchasers were purchasers who had obtained possession within the meaning of s 26(1) of the NSW Act as at the assessment date.

209 The principal judgment, with whom Kirby P and Handley JA agreed, was again a judgment of Sheller JA. Sheller JA referred to the different connotations of the concept of 'possession' - physical control, legal possession, and the right to possess.[152] He reviewed the decisions in Highlands and in Cam & Sons in some detail.

There is nothing in the case to suggest that a purchaser, who is in physical occupation, has not obtained possession within the meaning of the subsection because the purchaser occupies under the terms of an agreement whereby the right to occupancy will determine if the agreement for sale is not completed.[153]

211 As to the facts of the case before the Court, Sheller JA concluded:

There can, I think be no doubt that each purchaser of a unit, who went into occupation in accordance with the licence agreement, had that physical control and dominion described as de facto possession. The appellant argued that possession as used in s 26(1)(a) must mean exclusive possession ... I do not agree. There is nothing in the language to support this qualification.[154]

212 Sheller JA then referred to Rich J's judgment in Highlands and to Yule. Sheller JA concluded:

Once the notice was given, the licence agreement entered into and the purchaser had gone into occupation, in my opinion, the purchaser had obtained possession within the meaning of s 26(1)(a) as purchaser.[155]

213 Finally, Floruit was a case about the proper construction of a building contract and whether the provision of a particular certificate would have constituted the taking of possession by the owner under a particular provision of that contract. The decisions in Manors of Mosman and Cam & Sons were referred to in submissions but the matter was decided based upon the construction of the terms of that particular contract.

214 Sheller JA's two judgments confirm what was decided in Cam & Sons, namely, that possession can pass pursuant to the contractual terms without there being physical possession (Opalfield), and also confirm what was decided in Highlands, namely, that where there is physical possession the relevant issue is whether that is in intended execution of, or referable to, the sale contract (Manors of Mosman).

215 VCAT held that 'mere de facto possession', without 'a legal right to possession under the contract', was not sufficient to satisfy s 15 of the Act.[156] VCAT found that Yassmin had 'de facto possession' at the relevant times, but held that that was not enough.[157] VCAT analysed the two agreements and found that they contained no 'right to early possession'.[158] Insofar as it was contended that possession had been taken on the date of issue of the building permit, VCAT held that even if that were accepted, that would be a breach of s 9AD of the SLA.[159] Insofar as it was contended that possession had been taken on the date of the certificate of occupancy, VCAT held that neither of the two contractual documents clearly provided for a right to take possession in April 2008.[160] VCAT found it was unnecessary to determine whether Yassmin had occupied the land as a licensee.[161] VCAT accepted the Commissioner's submission that Kameel had, in any event, retained a 'vestige' of possession after 13 July 2006, relying upon Sugerman J's statement adopted by Kitto, Taylor and Owen JJ in Cam & Sons.[162] Finally, VCAT held that the registration of the plan of sub-division on 8 January 2008 (before the first assessment date) 'would not miraculously have converted that possession into legally valid possession (no longer in breach of s 9AD of the Sale of Land Act) from that date'.[163] Accordingly, VCAT held Yassmin was not an owner under s 15(1) of the Act.

216 When considering the McDonald's land the trial judge analysed the judgments in Highlands, and accepted Kameel's submissions that VCAT had misinterpreted them.

217 In a passage which I would respectfully adopt without qualification the trial judge said:

Rich J, in his Honour's judgment, did not see any reason to determine whether the 'self-contradictory, or almost self-contradictory, set of provisions upon which the right to possession depended' afforded the purchaser a contractual right to early possession. All that mattered was the fact that the purchaser, with the vendor's consent, took actual possession. Thus, his Honour concluded:

I see no reason to doubt that ... [the purchasers] were allowed de facto control by the vendor, and intended to exercise it; and this appears to me to amount to obtaining possession within the meaning of ... [s 37 of the Land Tax Assessment Act 1910].

Paraphrasing the words of Hosking J in Yule, Rich J said that 'when a person is spoken of as being in possession as purchaser it is but a colloquial method of indicating the particular right under which possession is maintained.'

This reference was, Kameel contends, cited by the Tribunal in support of its narrow interpretation of Highlands, but the relevant passages in Yule and Highlands do, in my view, as Kameel submits, reveal that the intention of both Hosking J and Rich J was, on the contrary, to give as wide a meaning as possible to the term 'possession'. The cited words in the original context in fact suggest that possession by a purchaser is always possession for the purposes of the legislation, no matter what the 'right' is under which it is maintained, including where, as in Yule, that right arises from a lease, rather than a contract of sale. Thus, in Yule, Hosking J said:

The parties entered into an agreement for sale and purchase (the purchaser going into possession) to be completed at a long-postponed date, and agreed that the intermediate period should be governed by the special incidents imposed by the lease. But the person who has entered into the unqualified obligation to buy is none the less a purchaser. ... When a person is spoken of as being in possession 'as lessee,' 'as purchaser,' or 'as trustee,' or the like, no difference in the nature of the physical possession is intended, the expressions mentioned being but a colloquial method of indicating the particular right under which the physical possession is maintained. To give effect to the object of preventing dummy sales possession ought to be given the wider rather than a narrower meaning which might lead to evasion.

Moreover_,_ immediately after referring to this passage, Rich J made this statement, which it must be accepted, in my view, is unqualified in its meaning:

The wider meaning [of 'possession'] results under our legislation in the liability of the buyer accruing as soon as he secures that control of the land which enables him to enjoy its profitable use or its returns.

This statement also echoes Hosking J's understanding of 'possession' in the same legislative context:

The kind of possession which is necessary to satisfy either section is therefore, in my opinion, the same - namely, possession by a person who is a purchaser.

Starke J, in Highlands, also spoke in terms of de facto possession referable to the contract:

'Possession' here spoken of is a de facto possession referable to the agreement for the sale of land, and not the right to possess, or to have legal possession.

'Referable' is a loose word, and possession of purchased land by its purchaser is possession referable to the contract of sale. I accept that were his Honour referring to possession that arises solely from an express contractual right, as proposed by the Tribunal, he would have described such possession as de jure possession pursuant to and not merely referable to the contract. As Kameel points out in its submissions, according to the Tribunal, Starke J made this statement in the context of clause 5 of the contract of sale. This is not correct. It was, in fact, made in the context of a discussion of the true construction of the relevant legislative provision: 'here' refers to the equivalent of s 15 of the Act, not clause 5 of the contract. Starke J later interpreted clause 5 of the contract at issue in Highlands as affording the purchaser a right to possession, but this had no bearing on his construction of the legislation.

Also in Highlands, Dixon J held that possession, for the purposes of the relevant provision, was 'possession as purchaser obtained in intended execution of the agreement of sale'. In my view, it is clear that the plain meaning of this proposition must be, as Kameel contends, that a purchaser who intends to complete the purchase of the land, and takes possession in the interim, obtains possession in intended execution of the agreement for sale. Whether, in possessing the land, the written contract of sale is performed, modified, or ignored was, for his Honour, immaterial: what counts is that the purchaser and vendor intended, respectively, to 'relinquish and assume possession'. It is, again as contended by Kameel, the reason that Dixon J expressly stated that the question of whether the purchaser took possession does not depend upon the terms of the written contract of sale: giving and taking of possession was a matter the parties determined by their actions. Consequently, it does not matter if the contract did not permit early possession, because the vendor may have implicitly waived conditions preventing the purchaser taking possession. Alternatively, the purchaser may have taken possession independent of the contract entirely, effectively tendering substituted performance of the contract. The vendor's consent to such possession would constitute acceptance of such tender.[164]

218 His Honour referred to Sleigh and to Long, quoting extensively from those judgments. He continued:

As the review of the authorities in HC Sleigh and E Long emphasise, and as I have indicated previously, much depends on the provisions of any agreement for sale and agreement for occupation, whether it be a lease or licence. As these cases demonstrate, the general proposition to be derived from the authorities with respect to corresponding legislation is that possession of the land must be possession 'referable' to an agreement for sale - and referable in a direct rather than a general sense (as noted, particularly, in E Long). Moreover, there is the possibility - depending on the provisions of the agreement for sale and the agreement for occupation - for occupation in 'dual' capacities, both as tenant and purchaser.[165]

Trial judge's application of his s 15 analysis

219 His Honour concluded McDonald's was in possession. In McDonald's case that possession was held to be under a provision of the contract which conferred a right to possession. Thus, although his Honour accepted Kameel's submissions that VCAT had misunderstood Highlands, the conclusion VCAT had reached concerning the McDonald's land was correct nevertheless.

220 In relation to the Yassmin land, his Honour began:

Yassmin contracted to buy from Kameel a lot in a proposed subdivision. The contract of sale to Yassmin did not give it any right to possession before completion, which, in any event, never occurred. Yassmin did, apparently, have an informal licence to access the land; and, additionally, had paid some of the purchase money. The issue, in broad terms, is whether these two facts made Yassmin an owner of the land as a purchaser on credit or deferred payment under s 14 of the Act.[166]

221 His Honour then set out the 'key facts'. These were drawn from the Commissioner's submissions and were said to be uncontroversial. The submissions read:

For present purposes the key facts are:

(1) The Tribunal found that the parties had made an agreement for the sale of land, notwithstanding uncertainty as to the price.

(2) There was another agreement that provided for the defendant to finance the construction of a restaurant on the land.

(3) Yassmin paid a deposit of $143,900 plus GST under the contract of sale. There was evidence that no further part of the purchase money had been paid by Yassmin, albeit that some other amounts said to be 'interest' had been paid. The defendant accepted that less than 15% of the purchase money had been paid.

(4) Yassmin was, as a matter of fact, occupying the land. The Tribunal found that Yassmin was not entitled to possession under the contract of sale, so that ss 15(1) and 16(1)(a) of the ... [Act] were not satisfied. The Tribunal described Yassmin as having 'a right of some kind', possibly as 'an informal licensee', to access or occupy the land.

In short, the findings of the Tribunal were that, at the relevant times for assessment, Yassmin had paid some of the purchase money and had a right of access of some kind.

222 When articulating the issues on the Commissioner's appeal in relation to the Yassmin land, his Honour referred only to the s 14 issue.[167]

223 His Honour dealt with the s 14 issue in detail finding that VCAT had erred in its construction of that section and in its conclusion that Yassmin was an 'owner' within the meaning of s 14.[168] His conclusion on s 14, and his only analysis of s 15 in the context of the Yassmin land, was as follows:

For these reasons, it follows that Yassmin is not an owner liable for land tax under s 14 of the Act. It also follows that as Yassmin had no right to possession under the contract and had not taken possession under such a right in the capacity of purchaser, s 15 of the Act has no application.[169]

Submissions on the application for leave to appeal

224 It was apparent early in the hearing of the application that there was uncertainty as to what were said to be the relevant factual findings made by VCAT. It was for that reason that the parties were directed to prepare the joint statement of facts to which I referred earlier, and the relevant parts of which I have set out.

225 The applicant made submissions as to the proper construction of s 15 on three alternative bases. Its principal submission was that a combination of physical possession and the fact of being a purchaser is sufficient. It relied on Highlands in this respect. Next, it submitted that, if that construction was not adopted, then physical possession by a purchaser which is 'referable' to an agreement for sale is sufficient. Finally, it submitted that, if retention of a 'vestige of control' is relevant, a capacity to approve or supervise the quality of construction would not constitute that 'vestige of control'.

226 The applicant submitted that VCAT had found Yassmin had been in physical possession from when the building permit was issued. It was submitted that VCAT did not make the findings which the trial judge had stated it had made.

227 The applicant relied upon the provisions of both the Heads of Agreement and the contract of sale. The applicant submitted that Yassmin had obtained possession under the terms of those agreements, each of which provided for the sale of the improved land, when the building permit was issued, or, if not then, when the certificate of practical completion was given. It was submitted that once Yassmin had taken over occupation of the land to build the building and then run the restaurant Kameel could not access it in any relevant sense. If it was necessary to establish that this occupation was 'referable' to or 'in intended performance' of an agreement for the sale of land then it is clear from the provisions of the Heads of Agreement and the contract of sale that it was. Indeed, what was done was done pursuant to the terms of those agreements. Any 'vestige of control' retained by Kameel did not interfere with Yassmin's possession and, in any event, did not continue after the certificate of occupancy was issued.

228 The applicant submitted Croft J had imposed too strict a test by requiring that the possession be 'directly' referable to the agreement for sale. In this respect it was submitted that Long was wrongly decided. In any event, the applicant submitted, the possession here was directly referable to the Heads of Agreement and the contract of sale.

229 The applicant submitted that the trial judge's final conclusion on s 15 appeared to adopt a test which was inconsistent with his own earlier analysis of the relevant authorities. The stringent approach apparent in that final conclusion was said to be inconsistent with Highlands.

230 The respondent submitted that the trial judge had correctly construed s 15 in accordance with the applicable authorities and that that correct construction is expressed in the judge's final conclusion. It was submitted that possession must be 'referable' to the agreement for sale in the sense that it must be in exercise of a right provided for by the agreement, which might of course arise by a contractual variation or waiver. It was submitted that under the contract of sale possession passed only on payment of the full balance of the purchase price.

231 The respondent submitted that if the trial judge had correctly construed s 15 in accordance with the authorities but had misapplied the applicable test the appeal should be dismissed as there will have been no relevant error of law.

232 In reply, the applicant submitted that if the Court found the trial judge's final conclusion had applied too strict a test this Court should decide the application of s 15 on the facts, as now clarified, applying the correct test.

233 The analysis of s 15 of the Act and of the applicable authorities by Croft J in the passage I quoted earlier in the context of the McDonald's land was, in my view, correct.

234 In a circumstance where the relevant person or entity is in physical possession of the land, and that physical possession is referable to, or in intended performance of, an agreement for the sale of the land, then that person is a purchaser in possession within the meaning of s 15 of the Act.

235 Croft J's reference to the need for the possession to be 'referable in a direct rather than a general sense', a reference which he specifically related to the decision in Long, does not mean that he was adopting the approach which had been adopted in VCAT whereby it is necessary to find that possession has been obtained pursuant to or in accordance with a contractual provision. Such a conclusion would be inconsistent with Highlands, as Croft J explained in the context of his analysis of the McDonald's land. The reference to being referable in a 'direct' sense is, in my view, merely recognising that an entirely separate arrangement 'standing right outside the agreements for sale'[170] under which a limited licence had been granted, as had been held to be the position in Long, would not be sufficiently 'referable'.

236 Here, Yassmin was in physical possession and that possession was referable to, and in intended performance of, the Heads of Agreement and the contract of sale. There was no separate licence agreement or arrangement here, as had existed in Long. Yassmin was in possession in intended performance of the contractual arrangements pursuant to which it had agreed (amongst other things) to purchase the land. No alternative explanation or justification for its possession existed. While in possession it built a building on the land, it conducted a restaurant from that building, and it rented or purported to rent that restaurant to another party.

237 The focus on s 15 in the context of the McDonald's land and upon s 14 in the context of the Yassmin land before the trial judge meant that inadequate attention was given to the contractual arrangements between Kameel and Yassmin and to the facts as found by VCAT concerning the Yassmin land in the context of s 15.

238 VCAT's analysis of s 15 and the relevant authorities was erroneous for the reasons the trial judge identified in relation to the McDonald's land. VCAT's analysis was erroneous for the same reasons in relation to the Yassmin land.

239 On the basis of the trial judge's analysis of the relevant authorities, as set out in the part of his judgment where he dealt with the McDonald's land, and which in my view was correct, he ought to have dismissed the Commissioner's appeal concerning the Yassmin land on the basis of s 15 of the Act and Kameel's notice of contention.

240 The applicant should have leave to appeal, and the appeal should be heard forthwith and allowed.

[1] [1931] HCA 38; (1931) 47 CLR 191 ('Highlands').

[2] What follows assumes a familiarity with the reasons of Whelan JA.

[3] Whelan JA Reasons [188].

[5] See especially [78]-[79] below. The construction of the test to be applied under s 15 is the primary 'question of law' that arises in the proceeding: see s 148 of the Victorian Civil and Administrative Tribunal Act 1998.

[6] By 'the parties' we mean the parties to the contract of sale.

[7] Highlands [1931] HCA 38; (1931) 47 CLR 191, 204.

[10] E Long & Co Pty Ltd v Commissioner of Land Tax (NSW) [1968] 2 NSWR 143, 147 ('E Long').

[11] Highlands [1931] HCA 38; (1931) 47 CLR 191, 197 (emphasis added).

[15] (1910) 29 NZLR 725 ('Rhodes').

[17] [1918] NZLR 890 ('Yule').

[18] Ibid 896 (emphasis added). It is somewhat unclear what Hosking J in Yule intended by saying that a 'wider rather than a narrower' meaning of possession would give effect to the object of preventing 'dummy sales': Yule [1918] NZLR 890, 896. See Whelan JA Reasons [170]. The easier it is for a purchaser to be deemed an owner the easier it is for a vendor to have its liability reduced. 'Dummy sales' (that is, sales effected to avoid a vendor's liability) would thus be encouraged by a low threshold of what is required for a purchaser to take possession. In any event, now the anti-avoidance provision of the Act (s 102) permits the Commissioner to disregard a tax avoidance scheme and determine what land tax would have been payable but for the scheme.

[19] [1965] HCA 13; (1965) 112 CLR 139 ('Cam').

[21] An attornment is defined as 'the process of recognising a turning over': Peter E Nygh and Peter Butt (eds), Australian Legal Dictionary (Butterworths, 1997). For example, in landlord and tenant relationships, a recognition by the tenant of a change of landlord as where the purchaser buys the reversion from the existing landlord. See Lapham v Orange City Council [1968] 2 NSWR 667.

[24] Cam [1965] HCA 13; (1965) 112 CLR 139, 141.

[26] Cam [1965] HCA 13; (1965) 112 CLR 139, 142.

[27] Whelan JA Reasons [198].

[28] Cam [1965] HCA 13; (1965) 112 CLR 139, 144.

[29] Ibid 146. See also Windeyer J who saw cl 19 as 'quite out of place in this contract' and meant only 'that, whatever occupants there may be when the purchaser takes possession, the vendor will ensure that they are out before the date of completion': Cam [1965] HCA 13; (1965) 112 CLR 139, 150, 151.

[30] Cam [1965] HCA 13; (1965) 112 CLR 139, 146, citing Strahorn v Strahorn [1905] NSWStRp 49; (1905) 5 SR (NSW) 382.

[31] Cam [1965] HCA 13; (1965) 112 CLR 139, 147 (citation omitted).

[37] (1994) 28 ATR 9.

[38] (1994) 34 NSWLR 94. ('Manors of Mosman') (New South Wales Court of Appeal).

[39] The vendor was entitled to the rents and profits and to bear all rates and taxes up until the date of completion: cl 13. This was similar to cl 11 in Cam.

[40] (1994) 34 NSWLR 94, 102.

[41] [1961] NSWR 1132 ('Sleigh').

[42] [1968] 2 NSWR 143.

[44] Commissioner of State Revenue v Kameel Pty Ltd [2015] VSC 229 [54] ('Reasons').

[47] See [13] above.

[48] Kameel had owned the Yassmin land from about 25 May 2000.

[49] In the case of conflict, the contract of sale provided that the general conditions in the contract of sale prevail over the general conditions in legislation and the special conditions in the contract of sale prevail over the general conditions of the contract of sale: General Conditions, cl 10.

[51] Kameel Pty Ltd v Commissioner of State Revenue [2014] VCAT 1260 [196] ('VCAT Reasons'). Revised Joint Statement of Facts 3(a).

[52] VCAT Reasons [196], [251]. Revised Joint Statement of Facts 3(a), 3(d).

[54] VCAT Reasons [218]. Revised Joint Statement of Facts 3(b).

[55] Revised Joint Statement of Facts [8A].

[57] The italicised words were in handwriting.

[58] Special Condition 20 is set out at [61] below.

[61] See [61] below.

[62] See [41] above.

[64] Under the Heads of Agreement, the 'Payment of Balance' was to be 'in accordance with copy Contract of Sale attached hereto'. The italicised words were in handwriting.

[65] There are various conditions a prescribed contract of sale must meet, including the payment of 'deposit' monies to a legal practitioner, conveyancer, or licensed estate agent on trust for the purchaser until the registration of the plan of subdivision. The 'deposit' must also not exceed 10 per cent of the purchase price of the lot.

[67] See [44] above.

[68] Ibid [220]. See [66] above.

[69] See [71] above.

[70] See [18] above.

[71] VCAT Reasons [221]-[223]. See [24] above. The Tribunal also took account of Special Condition 15 which made the Purchaser liable to comply with all notices served after the date of the execution of the contract (11 April 2006) but found that it was inconsistent with Special Condition 7 with respect to the date from which the purchaser should pay land tax and in any event, in conjunction with Special Condition 7, was not decisive.

[72] See [57] above.

[73] See [58] above. VCAT Reasons [231].

[74] See [23] above.

[79] With respect to the McDonald's land, we do not read the Tribunal as insisting upon the identification of an express term of the contract permitting early possession. We consider that the Tribunal was rather concerned to determine whether the myriad rights and duties provided for in the multiple agreements between the parties could be construed, as in Highlands, as having the effect of permitting early possession. The Tribunal held that, with respect to the McDonald's land, cumulatively the various rights and duties could do so. See VCAT Reasons [120]: 'Taking special conditions 11 and 12(c) [of the contract of sale] (and ignoring for present purposes the seemingly inconsistent clause 2.3 of the lease agreement [an agreement for occupation and lease]), 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 [the date on which the plan of subdivision was registered]'. The Tribunal also noted that there was no legal impediment under ss 9AA, 9AD and 9AE of the Sale of Land Act 1962 to McDonald's taking possession on that date: VCAT Reasons [110]. However, when applying the s 15 analysis to the Yassmin land, the Tribunal adopted a more stringent approach. Ultimately the Tribunal rejected Kameel's submissions on the basis that there was no particular clause in the contract under which Yassmin had taken early possession: VCAT Reasons: 'The next question is where was the right to early possession under the contract?' (at [219]); and '[N]either 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' (at [225] (emphasis in original)).

[80] Ibid [229]. The lease was dated 18 February 2011: [185].

[81] See [42] above.

[82] See [41] above.

[84] See [61] above.

[85] See [53]-[54] above.

[86] The deposit specified under the contract of sale was $143,900 while the sum payable under cl 9 of the Heads of Agreement was $147,500 but nothing appears to turn on this discrepancy. It appears that the sum of $143,900 was paid to Kameel on 27 April 2006: see VCAT Reasons [179].

[87] The occupancy or licence fee may also have included the payment of seven per cent interest from the date of the building permit, pursuant to cl 9.2 of the Heads of Agreement. See [52] above.

[88] That is, it was not a type of possession to which Yassmin was not entitled by reason of s 9AD(1) of the SLA. See [66] above.

[89] See [70] above.

[90] See [67] above.

[91] See [62] above.

[92] See [78] above.

[93] See [19] above.

[94] See [33] above.

[95] See [16] above.

[96] See [50] above.

[97] See [52] above.

[98] See [64] above.

[99] See [13] and [37] above.

[100] See [10] above.

[101] Whelan JA Reasons [236].

[102] See [10] above.

[103] Section 16(5). See [6] above.

[104] See [5]-[6] above.

[105] This is subject to a power reposed in the Commissioner of State Revenue under s 16(3) to deem a person not to be the owner.

[106] Commissioner of State Revenue v Kameel Pty Ltd [2014] VCAT 1260 ('VCAT Reasons').

[107] Commissioner of State Revenue v Kameel Pty Ltd [2015] VSC 229 ('Judgment').

[108] VCAT Reasons [7] and Revised Joint Statement of Facts ('RJSF') [1].

[117] This was the uncontested evidence before VCAT which, it seems to me, VCAT accepted. See VCAT Reasons [189], [196], [218], [251].

[121] (1910) 29 NZLR 725.

[122] [1918] NZLR 890.

[123] [1931] HCA 38; (1931) 47 CLR 191.

[124] [1965] HCA 13; (1965) 112 CLR 139.

[125] [1961] NSWR 1132.

[126] [1968] 2 NSWR 143.

[127] Rhodes (1910) 29 NZLR 725, 726-7 and Yule [1918] NZLR 890, 893-4.

[128] Rhodes (1910) 29 NZLR 725, 728.

[130] Yule [1918] NZLR 890, 896 (citation omitted).

[131] Highlands [1931] HCA 38; (1931) 47 CLR 191, 199.

[140] Sleigh [1961] NSWR 1132, 1137.

[143] Cam & Sons [1965] HCA 13; (1965) 112 CLR 139, 143.

[145] Commissioner of Land Tax v Cam & Sons Pty Ltd (1964) 81 WN (Pt 1) (NSW) 429 quoted at ibid 144.

[148] Long [1968] 2 NSWR 143, 147.

[149] (1994) 28 ATR 9.

[150] (1994) 34 NSWLR 94.

[151] [2009] NSWCA 303.

[152] Manors of Mosman (1994) 34 NSWLR 94, 99.

[164] Judgment [51]-[54] (citations omitted).

[170] Long [1968] 2 NSWR 143, 147.