1. "VENDORS ESTATE AGENT N/a" is the first heading under the contracts' "Particulars of Sale". The "VENDOR" was stated to be the applicant. Next to "PURCHASERS" was a reference to "KITELL PTY LTD AND/OR NOMINEES with ACN number and address. "DEPOSIT" was "$2,000" and "PRICE" was provided to be "$99,000. No dates were provided for when the DEPOSIT and the PRICE were payable.

Being Lot 101 on unregistered Plan of Subdivision no PS510559A prepared by Richard Dennis Carter Licensed Surveyor and being part of the land described in Certificate of Title Volume Folio (sic)

Description of the land by reference to an unregistered Plan of Subdivision with a registered number should be noted.

14 March 2008 IS THE DATE UPON WHICH THE PURCHASER SHALL BECOME ENTITLED TO VACANT POSSESSION OF THE PROPERTY AND CHATTELS MUST BE PROVIDED NAMELY UPON PAYMENT OF THE INTIAL DEPOSIT MONIES AND APPROVAL OF THE PLAN OF SUBDIVISION

1. "DAY OF SALE" was described as "the earlier of the date of the contract of the acceptance of any prior contract note, manely 14th TH JULY 2007 (sic)".

1. Mr Mondous gave oral evidence to the Tribunal that Kitell Pty Ltd was an "estate agent/broker" controlled by Mr Trikos. In his statement, Mr Mondous described Kitell Pty Ltd as "property builders":

they purchase blocks of land and build houses and land as a package. The margin they make from buying cheap land, low deposit, take possession from deposit (sic) and settlement 12 months from possession allows them to build a house on the land and sell the house and land as a package within that 12 months between taking possession and full settlement on the land gives them the opportunity to maximise their profit . . .

1. In cross-examination by Mr Kotros, Mr Mondous said that Kitell Pty Ltd through the agency of Mr Trikos was an "active estate agent", well-known in Melbourne's south-eastern corridor. He admitted having previous dealings with Mr Trikos, but was insistent that Mr Trikos "is not my friend".

1. Mr Mondous explained in cross-examination that the $2,000 deposits in the contracts also served as a real estate agent's commission due to Kitell Pty Ltd on the sale of each property. He added that "[M]ost estate agents charge 2% on vacant land". Mr Mondous asserted that the $2,000 commission was due to Kitell Pty Ltd even though Kitell Pty Ltd as agent was also the purchaser. Mr Kotros for the respondent drew Mr Mondous's attention to the absence of any date in the contract for when payment of the deposit was due. "It was not important", Mr Mondous responded. "No money changed hands" because the deposit was set off against the agent's commission.

1. Questions were asked of Mr Mondous concerning the date of the contract. First, he confirmed his written statement that the contracts were signed on 14 July 2012. Then Mr Mondous was taken to a statement he made on 11 September 2012, which annexed an email from Bill Trikos dated 28 July 2007. The email stated that the contracts were signed on 28 July 2007. Relevant tax invoices were also annexed. Mr Mondous was unable to locate the tax invoices. In further cross-examination, he admitted that Bill Trikos did not sign the contracts on 14 July 2007, but "took them away" at that time and returned the contracts on 28 July 2007. Only then did Mr Mondous sign some contracts on behalf of the applicant.

1. Mr Mondous in his 11 September 2012 described how Kitell Pty Ltd defaulted under its 24 contracts with the applicant.

I did not receive any notification from Kitell that it was going to default or not proceed with the settlement of the properties prior to 14 March 2008, being the ultimate settlement date. At the time that Kitell defaulted, I tried to contact Trikos by phone to find out when he was going to settle. However, I was unable to make contact with him and I proceeded on the basis that he had ended the contract.

I did not serve a rescission notice on Kitell as I obtained advice at the time that it was preferable to try and sell the properties and then recover the difference instead of taking action for the whole contract price.

1. Also annexed to Mr Mondous's 11 September 2012 statement was a letter addressed to the applicant from "Belleli King & Associates Lawyers and Consultants" dated 5 September 2012. The letter refers to "potential claims" against

Bill Trikos or his corporate entities arising from contracts for the purchase of land by him at Seymour which he has breached.

1. Mr Kotros for the respondent put it to Mr Mondous in cross-examination that the Belleli King letter was worded in a way which suggested that there had been numerous dealings with Mr Trikos over the years in relation to the Seymour land. There had been "numerous discussions", Mr Mondous admitted.

1. Section 8 of the Land Tax Act 2005 ("the Act") provides that the owner of taxable land is liable to pay land tax on that land. A taxpayer is assessed by s36(1) of the Act on the total taxable value of all the taxable land of which the taxpayer was the owner at midnight on 31st of December of the immediately preceding each tax year.

1. As to who is the "owner" of land, the Act provides:

The following persons are the owners of land for the purpose of this Act -

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

(e) a person deemed by this Act to be the owner of land.

(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.

(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 transfer of the land.

(3) The Commissioner may determine that the vendor is deemed not to be the owner of the land despite the fact that 15% of the deposit 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 avoiding land tax; and

(5) If the vendor and the purchaser are both deemed to be owners of the land under this part, there is to be deducted from any land tax payable on the land by the vendor any land tax on the land paid by the purchaser.

1. Sections 13 to 16A of the Act deal with liability for land tax where land is sold or transferred. Either or both of the purchasers and vendors of land are deemed to be the owners of the land in various situations.

1. Pursuant to s-s 16(1), a vendor of land is deemed to be its owner until the purchaser has "taken possession" of the land and at least 15% of the purchase money had been paid.

1. Less than 15% of the purchase money for each of the 24 properties registered in the name of the applicant had been paid by 31 December 2007. This was the evidence of Mr Mondous. It follows that "subject to subsection (3)", the effect of s-s16(1) of the Act was that the applicant as vendor of the properties was liable for land tax as owner of the land on 31 December 2007.

1. The Commissioner has a discretion in s-s 16(3) of the Act to deem the vendor not to be the owner of the land "despite the fact that 15% of the purchase money has not been paid". Sub-section (3) conditions that discretion on the Commissioner's being satisfied about two things. First, the contract of sale must be made in good faith and not for the purpose of avoiding land tax. Secondly, the contract of sale must be still in force.

Sub-section 16(3) discretion conditions not satisfied

1. Both parties agreed that 31 December 2007 was the relevant time for when the contract had to be in force in order to satisfy the condition in paragraph 16(3)(b) of the Act.[1] I accept the evidence of Mr Mondous that none of the 24 contracts for sale of the properties was discharged at 31 December 2007 and find that the condition in paragraph 16(3)(b) was satisfied.

1. The Act's paragraph 16(3)(a) condition requires that each of the 24 contracts "was made in good faith and not for the purpose of evading land tax". This condition imposes a twofold requirement. If either the contracts were not made in good faith or the contracts were made for the purpose of avoiding land tax there is no basis for the exercise of the respondent's discretion.

1. The onus is on the applicant to show both that the contracts were made in good faith and were not made for the purpose of avoiding land tax.[2] I find that the applicant has not established satisfaction of this condition for the following reasons.

1. First, the applicant did not establish an intention to pursue the purpose of the bargain which each contract represented. A sale and transfer of land for valuable consideration is what the parties ostensibly agreed. Mr Mondous admitted that no notice of the purchaser's July 2007 acquisition was served on the respondent or any other relevant authority. Mr Mondous admitted that no attempt was made to enforce the purchaser's performance under the contracts. After the time for the purchaser's performance had passed, no rescission notice was served. Legal proceedings were never threatened - despite the purchaser's default in paying a settlement sum of approximately $2,879,000.

1. Secondly, the 24 contracts of sale contained manifold omissions, errors and informalities. No date for payment of the deposit on the properties was agreed in any contract. Mr Mondous's explanation of why this omission "did not matter" was that each deposit was set off against the agent's commission due to the purchaser as estate agent.

1. Identity of the purchaser and the estate agent was a problematic explanation. It disclosed that Kitell Pty Ltd had been acting in breach of s55 of the Estate Agents Act 1980. Estate agents are prohibited on pain of financial penalty or imprisonment from purchasing interests in the property which they were commissioned to sell. Consequences of this were unexplored in submissions. Depending on construction of the Estate Agents Act 1980, the 24 contracts to sell the properties may from the outset have been void or unenforceable.[3]

1. The "settlement date" provided in the contracts was nonsensical and internally inconsistent. The applicant contended for a construction which ignored the only date in the provision and assumed that the purchaser had paid an "initial deposit" to which the contracts did not refer. Other informalities described above contributed to the Tribunal's impression that the purchaser and the vendor did not rely on the contracts as a source of enforceable legal rights.

1. Thirdly, I am not persuaded that avoidance of land tax was not the point of transactions in which a zero deposit was in substance paid and nothing else was achieved beyond shifting of the applicant's 2008 land tax liability.[4] I do not accept that either of these features are "common for many developers".

1. I confirm that the condition in paragraph 16(3)(a) of the Act has not been satisfied.

1. In making this finding, I have drawn an inference unfavourable to the applicant on account of the applicant's failure to call Mr Bill Trikos, the sole director and shareholder of the purchaser at relevant times.[5] I do not accept, as was submitted, that Mr Trikos was "not in the applicant's camp". Evidently, he and Mr Mondous had a co-operative relationship. As noted, Mr Mondous admitted that there had been numerous "negotiations" with Mr Trikos concerning the Seymour properties and including for an unconventional set-off of deposits payable against agent's commissions.

1. In his reply submission, Mr Kotros for the respondent said that the effect of the Interpretation of Legislation Act 1984 ("the Interpretation Act") was that the word "may" in s-s16(3) of the Act meant that the respondent had a discretion not to exercise the power contained in that subsection, even if the conditions for the power's exercise had been satisfied.[6] In the alternative to alleging that the conditions for the respondent's exercise of the Act's 16(3) power were not satisfied, the respondent said that it had asserted its right not to exercise the power.

1. Subsection 45(1) of the Interpretation Act provides:

Where in this Act or any Act passed or subordinate instrument made on or after the commencement of this Act the word "may" is used in conferring a power, that word shall be construed as meaning that the power so conferred may be exercised, or not, at discretion.

1. On its face, s-s45(1) of the Interpretation of Legislation Act 1984 imposes a rule of law for construction of the "may" word where it appears in Victorian legislation.[7] The word "may" is facilitative and implies a discretion where used in Acts to which the section applies. This includes the Land Tax Act 2005, which commenced after the Interpretation of Legislation Act 1984. In my view, federal taxation precedents cited by Mr Tisher for the applicant do not undermine the existence of the respondent's discretion in situations where the conditions in s-s16(3) of the Act are satisfied.

1. The respondent's decision not to exercise the Act's s-s16(3) discretion is confirmed. Reasons for this refusal are set out in the grounds for denying that the contracts were made in good faith and not for the purpose of evading land tax referred to in paragraphs [27] to [31] of these reasons.

1. The respondent contends that there is a third condition applicable to the Act's s-s16(3) discretion. When s-s16(3) is interpreted as a proviso to paragraph 16(1)(b), the paragraph 16(1)(a) condition continues to apply as a requirement in common with whatever state of affairs the respondent deems under s-16(3). Even though the 15% of the purchase money condition is not insisted on, the purchaser must still have taken possession of the land.

1. This construction was argued to better conform with the structure of the Act than a construction of s-s16(3) which treated the sub-section as a proviso functioning on its own.

1. There are signs that the words "subject to subsection (3)" in paragraph 16(1)(b) of the Act may have been intended to import the paragraph 16(1)(a) condition and make it generally applicable to s-s16(3). Subsection16(3) then requires the purchaser to have taken possession of the land as an additional requirement. Perhaps an ellipsis has occurred.

1. Pearce and Geddes observe in their book at [2.32] in relation to implications to cure ellipses that "[T]here is nothing new about implying meaning from words used in a provision to produce a result considered to be consistent with parliamentary intentions." They give an example of a "reasonable time" being implied in the absence of a time specified for the doing of an act. To imply a paragraph 16(1)(a) condition into s-s16(3) is more substantial. Mere consistency with relevant parliamentary intention is not enough to base an implication as substantial as that for which the respondent contends.

1. Referring to s35 of the Interpretation Act headed "Principles of and aids to interpretation", the respondent argued that its implication was mandated by the Act's direction to courts (and tribunals) that

(a) a construction that would promote the purpose or object underlying the Act or subordinate instrument (whether or not that purpose or object is expressly stated in the Act or subordinate instrument) shall be preferred to a construction that would not promote that purpose or object;[8]

1. The respondent also relied on the decision of the High Court of Australia in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. In that case, the High Court of Australia accepted that the expression "the Australian content of programs" had conflicting meanings in different sections of the Broadcasting Services Act 1992 (Cwth). To overcome this conflict, the majority judgment at [70] held that the purpose of the instrument should be consulted including the hierarchy of provisions and attribution of leading and subordinate status.

1. Application of this analysis to the Act usually requires that some repugnancy, absurdity, incongruity or ambiguity follows from the natural meaning of the Act's words.[9] The Interpretation Act's "purposive overdrive" does not permit the court to ignore the actual words of a statute. Courts (and tribunals) are bound to give effect to the clear language of a statute even if the result is considered to be anomalous or unfair.[10]

1. No repugnancy, absurdity, or ambiguity were argued to attend ss16(3) of the Act. Apparent meaning of the words was clear. The provision contained no internal inconsistency. However, by reference to the Act's preceding section, two "incongruous" results were said to follow from an independent construction of s-s16(3) and its two conditions.

1. The first was that no one was liable for land tax on otherwise taxable land where both the purchaser had not become an owner of land by taking possession under s-s15(1) of the Act and the respondent had deemed the vendor not to be the owner because the s-s16(3) conditions were satisfied.

1. This 'incongruity" can be avoided by the respondent exercising the right which it argued for in this case: namely, the right not to exercise the deeming discretion in inappropriate circumstances.

1. The second argued incongruity was that an independent construction of s-s16(3) raised an unlikely difference in what a land vendor must prove to avoid liability in two situations. If, on the one hand, a vendor has paid at least 15% of the purchase money, the vendor remains liable unless it can prove that the purchaser has taken possession of the land. On the other hand, if the purchaser has paid less than 15% of the purchase money, the vendor does not need to prove that the purchaser has taken possession to avoid liability but must prove instead that the contract was made in good faith and still in force.

1. Certainly it is hard to justify the difference demonstrated by the second incongruity exists. But this is consequential matter. There may be other anomalies in the operation of the Act.. This is a long way short of a patent incongruity between the wording of an independent s-s16(3) in the Act and s-s16(1).

1. It is instructive to compare s16 of the (2005) Act with the corresponding provision of the Land Tax Act 1958 ("the 1958 Act").

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

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

1. The discretion in s-s49(2) of the 1958 Act corresponds with the s-s16(3) discretion in the 2005 Act. Italicized words indicate that in s-s49(2) there was an explicit condition that possession of the land "is delivered" to the purchaser. This correlates with the "possession of the land has been delivered to the purchaser" condition in s-s49(1) of the 1958 Act.

1. The discretion in s-s16(3) of the Act contains no requirement that "the purchaser has taken possession of the land". There is no condition correlating to the purchaser has taken possession condition in paragraph 16(1)(a).

1. Reference to "subject to subsection (3)" in paragraph 16(1)(b) of the Act qualifies the condition in that paragraph and not the s-s 16(3) discretion. "[S]ubject to subsection (3)" does not, in terms, add anything to s-s 16(3).

1. Why do the Acts differ in this respect? Should it be assumed that the omission of a qualifying phrase in the re-enactment of an exempting provision is a policy change, rather than an ellipsis for courts (and tribunals) to supply?

1. Perhaps the person drafting the 2005 legislation meant to replicate the terms of the 1958 Act in different but equivalent language. However, it is doubtful whether it is a legitimate interpretive technique for courts (and tribunals) to "read in" words to legislation where words are believed to be omitted. I am not prepared to interpret s-s16(3) of the Act other than by giving effect to its literal terms.[11]
2. I will also indicate my finding on the question of whether, before 31 December 2007, Kitell Pty Ltd as purchaser of the 24 properties had "taken possession" of the land. For this purpose, but not otherwise, I will assume that the "SETTLEMENT DATE" in the contracts particulars of sale provides as the applicant contends that the purchaser is entitled to vacant possession on "payment" of the deposit by set-off at a date some time in July 2007.
3. Mr Tisher argued that the requirement "the purchaser has taken possession" in paragraph 16(1)(a) of the Act was satisfied when the purchaser became entitled to possession. No physical occupation of the land was said to be required to satisfy "taken possession" in the necessary sense. Several authorities on the point were cited, none of which related to the changed words of the (2005) Act.[12]
4. Mr Kotros contended that the meaning of the expression "the purchaser has taken possession" when used in s-s16(1)(a) of the (2005) Act significantly differs from the sense of "possession of the land has been delivered to the purchaser" when used in s-s49(1) of the 1958 Act. "[T]aken possession" is a participle expressed in the active voice. "[P]ossession of the land been delivered" is a clause expressed in the passive voice.
5. The introduced difference of mood in the verbal provisions of the 2005 Act is significant. Under the s-s16(1)(a) formulation in that Act, a purchaser must do something in order to obtain possession. Becoming entitled to possession cannot suffice. An entitlement can be created in persons who are passive and/or ignorant of the right conferred on them.
6. The Tribunal was advised that the matter is free of authority apart from my finding on this issue in Oakbee Pty Ltd v Commissioner of State Revenue (28 May 2012). Nothing in the Explanatory Memorandum assists in the construction of s-s16(1)(a) of the Act.
7. I refer confirm that the applicant never took possession of the land. Becoming "entitled" to possession was insufficient for the applicant to "take possession" in the sense required by paragraph 16(1)(a) of the Act.

[1] The paragraph makes reference to the time which s-s 37(1) of the Act makes critical for the assessment of an "owner" of the land.

[2] See Tax Administration Act 1997, s98: "On an objection, the objector has the onus of proving the objector's case.

[3] See JW Carter, E Peden and G Tolhurst Contract Law in Australia 5th edn (2007), [25-01]-[25-15].

[4] A species of the "dummy" contracts described in the land tax cases of Highlands Ltd v Deputy Federal Commissioner of Taxes (SA) [1931] HCA 38; (1931) 47 CLR 191 at 196 per Rich J quoting Yule v Commissioner of Taxes [1918] NZGazLawRp 162; [1918] NZLR 890 at 896 per Hosking J and Commissioner of Land Tax v Cam & Sons Pty Ltd [1964-5] NSWR 589 per Sugerman J and 599 per Wallace J.

[5] Relying on "the rule in Jones v Dunkell" : See (1959) 101 CLR 298 and JD Heydon Cross on Evidence 8th Australian edn (2010), at [1215]ff..

[6] Quoting Challenger Listed Investments Ltd v Commissioner of State Revenue [2010] VSC 464 at [33].

[7] See discussion (and criticism) of this provision in DC Pearce and RS Geddes Statutory Interpretation in Australia 6th edn (2006) ("Pearce and Geddes"), at [11.13].

[8] No relevant purposes are set out in s1 "Purposes" of the Act.

[9] See the approach of Davies J in The Shell Company of Australia Ltd v Commissioner of State Revenue [2011] VSC 147 at [24]

[10] See Mills v Meeking [1990] HCA 6; (1990) 169 CLR 214 at 235 per Dawson J;

[11] See Cooper Brooks (Wollongong) Pty Ltd v FCT [1981] HCA 26; (1981) 147 CLR 297 as interpreted in R v Young [1999] NSWCCA 166; (1999) 46 NSWLR 681 at 687-688 per Spigelman CJ; Pearce and Geddes [2.31]-[2.34] and J Spigelman "Statutory interpretation: Identifying the linguistic register" [2000] NewcLawRw 1; (1999) 4 Newcastle L Rev 1.

[12] Namely, Manors of Mosman Pty Ltd v Commissioner of Land Tax (NSW) (1993) 26 ATR 164 at 170 per Smart J, upheld by the NSW Court of Appeal (1994) 34 NSWLR 94, Commissioner of Land Tax v Cam & Sons Pty Ltd [1965] HCA 13; (1965) 112 CLR 139 at 146, per Kitto, Taylor and Owen JJ and Sandhurst Golf Estates Pty Ltd v Commissioner of State Revenue (No 1) [2005] VCAT 549 per Bowman J.