1. He referred also to Affinity Health Limited v Chief Commissioner of State Revenue [2005] NSWSC 663 and the Western Australian Court of Appeal, Commissioner of State Revenue v Artistic Pty Ltd [2008] WASCA 24 where the Court spoke of the breadth of the discretion. In the present instance he said that any acquisitions in the unit trust during February 2004 to January 2005 arose:

Solely from the attempt to bring the formal unit holdings into line with that which all parties accepted prior to the acquisition.

1. There was no intention to evade stamp duty and the liability arose from a mistakenly drafted trust deed rather than any underlying shift in beneficial interest. The mistakes 'arose through no fault of J & E Agosta'.
2. Mr Tisher then proceeded to make some submissions based on transitional provisions in the Duties Act based upon some permutations and combinations of factual findings. It is appropriate to put them aside for the moment and proceed first to consider the primary factual issue. The same goes I think for the submissions as to whether any liability of the taxpayers here should be joint and several or confined only to J & E Agosta as the acquiring party. Likewise the submissions on penalty can be put to one side pending the decision of the main issue.

1. In this proceeding the taxpayers carry the burden of proof. Taxation Administration Act 1997 Section 98. The narrative so far indicates that the diary note produced by Mr P. at a conference which he said he had with Mr Agosta at Mr Agosta's home on 18 June 2003 is of central significance.
2. I am satisfied that this diary note is bogus. It is either a complete fabrication or at the very least a genuine note that has been materially altered either as to its date or as to its content or both.
3. There are a number of general observations to be made at the outset. First, the original of this pivotal note has never been produced. Mr Ginsbourg who carried out the cross-examination of Mr P. for the Commissioner, called for its production on a number of occasions. There was no very clear response. I gained the distinct impression that the call was ignored in the hope that it would be forgotten. Ultimately under continuing pressure from Mr Ginsbourg, Mr Tisher advised that his instructing solicitor had concluded investigations and determined the original of the note could not be found. A large number of boxes of material were delivered by Mr P to a law firm with a view to being on-forwarded to a new accountant in May this year. There was apparently some dispute as to fees between Mr P. and the Agosta interests. Mr Ginsbourg however stated that all documents relevant to the present assessment which would have included the original of the diary note were subpoenaed in February of this year by the Commissioner and that the material produced did not include the original of this diary note. Mr P. did not deny this. Accordingly, wherever the original of the diary note has gone it was not to the new accountant. Mr P. said that he forwarded the original to a law firm acting for Laverton in 2007 while the Commissioner was carrying out an investigation. In the course of that investigation Mr P. made a statutory declaration. A copy of the diary note is an exhibit to that declaration. The copy is shown to have been faxed twice, once by Jace and secondly by the office of a barrister's clerk. Mr P. at this time was sharing facilities with the Agosta group. He used the same facsimile machine as Jace. Hence he agreed with me in cross-examination, it was likely that what was forwarded to assist in the preparation of the statutory declaration was not the original but rather that a copy was conveyed by facsimile transmission.
4. The other general matter is that given that the deed was sealed on 19 June 2003 it seems a coincidence, or too neat that the conference at Mr Agosta's house should take place the very day before. On the applicant's account, Mr P. was not controlling the input as to the identity of the unit holders. This was in the hands of Mr Benvenuto and Mr Amato who gave instructions to the Sydney law firm. Given that Mr P. was not on the taxpayer's account on this point tasked to instruct on these matters it would be a mere coincidence that this happened the day before the deed was executed or the day before the deed bore date. These two matters create a general feeling of unease as to the genuineness of the note.
5. There were further reasons for unease. Mr P. said that he was appointed as accountant to the unit trust only some months later. Why then was he taking instructions in June on matters which would clearly be vital if he were providing accounting services to the unit trust but were merely someone else's concern if he were not. Having received those instructions why did he not convey them to Messrs Benvenuto and Amato or Rizzo and Associates? Mr P.'s account was that he took these instructions as accountant for Mr Agosta and his company and Mr Zeniou and his company. Having received this information why did he not insist on seeing the deed to ensure that it reflected the instructions that he has just taken?
6. On Mr P.'s account it was a matter of happenstance that some months later he was appointed accountant to the unit trust and then became aware of the error. Next, there is a notation at the top of the copy diary note 'file - Laverton'. Mr P. said that he had a file for the unit trust entitled 'Laverton 99'. The 99 appears to have been the file number in his own filing system, not an indication that the file was opened in 1999. Again one would expect that this file would be opened when Mr P. became accountant to the unit trust. Mr P. observed that he had done a great deal of work for Mr Agosta in the past and that Mr Agosta and his companies had been working on Laverton for some months. So much may be accepted but a file of that type would be designated by reference so to J & E Agosta Pty Ltd rather than 'Laverton'.
7. The most telling point of all however, is that this note refers to a total of 300 units. It will be recalled that on Mr P.'s own account the question of having 300 units rather than 100 units issued under this trust arose only in the period November to December 2003 when Mr P. was considering strategies to rectify the alleged error in the allocation of units. Three hundred would not be a number which one would readily adopt. One hundred units has the advantage and ease that the number of units held by each unit holder would also represent that unit holder's percentage entitlements under the deed. Three hundred is a figure which would be apt to be confusing on this point and would only be adopted for some reason such as Mr P. gave, namely to realign interests which had been created under a smaller number of units on issue. As Mr Ginsbourg cross-examining rather flamboyantly said, to have 300 units being mentioned in June when the proposal to have 300 units issued emerged only in November or December was the equivalent of having Galileo talk about a light bulb.
8. The finding that this key diary note is bogus carries much else with it. It means the evidence of Mr P. and indeed the entire case mounted by the applicants cannot uncritically be accepted as truthful.
9. Even if one were to regard the document which purports to be a diary note of a meeting occurring on 18 June 2003 as bogus but only 'corroborating evidence to add artistic verisimilitude to an otherwise bald and unconvincing narrative' as Pooh Bah, the Lord High Everything Else in Gilbert and Sullivan's The Mikado put it, there is much else in the applicants' account of events which would lead one to reject it.
10. There are other implausibilities in the applicants' account. Neither Mr Borzillo nor Mr Zeniou was prepared to concede that they were 'out' of the unit trust before 1 July. Mr Tisher challenged them in cross-examination to say why if that were the case they had not pursued what were on the face of it very valuable entitlements. It may be accepted that their failure to press any such claims is an embarrassment to their credibility. The matter can be looked at in another way however, why if these individuals give no indication of pressing claims for entitlement to interests in the unit trust do they not simply agree with the views and narrative advanced by Mr Agosta? They deny having signed the transfers prepared by Mr P. In Mr Borzillo's case he is downright in his assertion that he received no such transfers and received no letter from Mr P. dated 1 December 2003. There might I suppose be some element of spite. It is clear that Mr Agosta and these individuals are no longer on good terms.
11. Laverton relies on the evidence of Mr Benvenuto as to Mr Borzillo's situation. It was suggested as I understand it, that before the acquisition of the Laverton land on 1 July 2003, Mr Borzillo was sued by Koukourou Pty Ltd, accordingly he 'pulled out' of involvement as an equity participant in the unit trust and informed Mr Agosta that the engineering services to be provided by Koukourou would have to be paid for rather than treated as 'sweat equity' credited to him. According to this view of things Mr Borzillo was presented with an election:

(a) provide engineering services as 'sweat equity' and render no bills and be an equity participant; or

(b) render ordinary invoices for engineering services and take no equity position.

1. According to Laverton's case and the evidence of Messrs Agosta and Benvenuto, Mr Borzillo elected to take the latter course.
2. Mr Borzillo said that his involvement with the project entailed the provision of project management services not specialist engineering services. As a project manager he would engage consultants to carry out a variety of specialist work including engineering work, accordingly work done by Koukourou was to be invoiced in any event. Mr Borzillo agreed that this was a matter of debate and contention. In any event says Mr Borzillo he was not sued by Koukourou in 2003 rather he was added as seventh defendant at a later stage in the proceeding. He said he had in any event tendered his resignation from Koukourou in October 2003 and was due to leave in January 2004. Koukourou asked him to accelerate his departure and he left in December 2003. Mr Borzillo said that it was industry practice to give a project manager a 10% interest. He believed the allocation of 15% of the unit to him was an exercise in generosity by Mr Agosta.
3. Mr Borzillo said that the proceeding brought against him by Koukourou had been settled. He denied that the settlement entailed him paying any damages.
4. Mr Tisher produced a pleading styled 'Second Further Amended Statement of Claim' which was filed by Koukourou pursuant to an order of Master Evans made 2 February 2006 in Proceeding No. 8829 of 2003. The proceeding number would suggest that the matter was commenced in late 2003. The claims against Mr Borzillo are underlined which supports his evidence that he was added as a party at a later stage. A particular to paragraph 35 of the pleading alleges against Mr Borzillo that:

He failed to disclose to [Koukourou] that he had a 15% share of a development known as the Wilton Estate Development in Laverton [that is the development the subject of this proceeding] being a development upon which the plaintiff was engaged to provide engineering services.

1. I pointed out to Mr Tisher that the date on which the proceedings were commenced could be established with certainty as could the date upon which Mr Borzillo was joined as a party. No further documents were produced however. Clearly it would be a relatively easy step for me to have investigations made in the Supreme Court file to get to the bottom of these matters. It is tempting to do so. Ultimately however I believe it would be as much a breach of natural justice for me to pursue those enquiries outside the framework of a hearing where both parties are represented as it was for the Drainage Tribunal to draw upon the expertise of its own members outside the framework of an open hearing in Keller v Drainage Tribunal [1980] VicRp 43; [1980] VR 449. Many aspects of the Koukourou litigation must therefore remain uncertain.
2. Ultimately I regard Mr Borzillo's account as more plausible than the one given by Mr Benvenuto and Mr Agosta. There is no doubt that it was Mr Borzillo who obtained the planning permit for the subdivision. Mr Agosta remains highly critical of what he did in this regard to this day. Mr Borzillo said he did that in his role as project manager. As project manger he had engaged Koukourou to undertake certain other purely engineering functions. The function of obtaining a planning permit is protean. It can properly be regarded as legal work if it is undertaken by a lawyer, as planning work if undertaken by a planning consultant. No doubt a planning permit can be arranged by an engineer and such permits frequently are. If Koukourou obtained the planning permit and invoiced for it as the applicants' case would have it, the invoice in question could have been produced and put into evidence. Here the only evidence of payments to Koukourou comes from the record of the disbursement of the forfeited Tremaine deposit, an event which occurred before any bill could appropriately have been rendered by Koukourou for obtaining the planning permit. Again, if Mr Benvenuto and Mr Agosta were right and Koukourou rendered fees for all of Mr Borzillo's activity relative to the Laverton development, the allegation at Particular (ix) of Paragraph 35 of the pleading alleging that Borzillo:

Neglected his duties with [Koukourou] by attending on personal projects, including the Wilton Estate development ...

1. Mr Borzillo said the engineering work for Laverton was done by Mr Laguda. Paragraph 35 of the pleading Particular (x) alleges that Borzillo:

Failed to render invoice to [Koukourou's] clients for work performed by him and an employee, Laguda, thereby depriving [Koukourou] of fees.

1. There is then the fact that Mr Agosta and Mr P. and those acting for Laverton have presented the document dated 19 June 2003 as a valid unit trust and the unit holding disclosed therein as the actual unit holding to the deed has been presented as genuine to the current financier, National Australia Bank Limited as well as its previous financier Bankwest. The truth according to Mr Agosta and Mr P. however is that Bankwest was given a mortgage over in effect, non-existent units that were not owned by parties who had been negotiated out of the deal before the land was acquired and six months before the Bankwest documents were even entered into. Again, the same story appeared on the face of the redemption agreement entered into two months later on. Mr Tisher submitted that since this redemption agreement referred to 'the facility' which was defined to be the facility granted by Bankwest, it was necessarily in conformity with the Bankwest security documents. I am not sure that this follows by any means, however insofar as units were being redeemed over which Bankwest apparently had security, it is reasonable to suppose that Bankwest had to give its consent to the redemption arrangements.
2. I agree that Mr Agosta's signature on what purports to be the unit trust deed is somewhat dissimilar from other examples of his signature, for instance on the redemption agreement. The view that the signature on the unit trust deed is a forgery or rather the two signatures are a forgery, suffers from the following difficulties: the document has been presented to a number of persons by Mr Agosta as 'genuine' and therefore not a forgery. There is a complete lack of any plausible candidate for the role of forger. Those involved in the preparation of the deed were Mr Benvenuto and Mr Amato. These gentlemen were presented by the applicants as witnesses of truth. Nothing was suggested to them in their evidence and no submission was made on behalf of the applicants suggesting that either of these gentlemen could have been the forger. Mr Benvenuto said that in the early days where documents needed to be executed Mr Agosta acted as 'postman' meaning he collected them, took them to the person needing to sign and returned them. The identity of the forger and the opportunity for this unnamed person to forge the deed are unclear. Even more obscure is the motive which any such person might have. I reject the contention that the unit trust deed is a forgery.
3. One final matter which creates a deep sense of unease relative to the case put by the applicants as to the execution of documents is the unexplained failure to produce not only the original of the pivotal diary note but also the original of any of the other documents whatsoever.
4. I accept the evidence of Mr Borzillo that he executed a transfer of his units to J & E Agosta Pty Ltd, the second applicant in the period August to October 2004.
5. Mr Zeniou and Mr Agosta or their interests controlled Jace Development. In 2005 there was a dispute between Mr Zeniou and Mr Agosta. Mr Zeniou told me that he had to 'get out' in the interests of his mental health. He said he 'walked away' receiving no payment other than the payment of $100,000, repayment of a loan made by him or his company, Procon Group Pty Ltd, to Jace Developments. Mr Zeniou said he was threatened with the loss of his house. It was essential for him to recover the $100,000 loan capital he or Procon had provided to Jace. A document apparently prepared by Mr P. records the payment of $100,000 as the consideration for the transfer of 25 ordinary units in the Laverton Properties Development Unit Trust from Procon Group Pty Ltd to J & E Agosta Pty Ltd. This transfer is dated 26 January 2005. Mr Tisher submitted that this form should be regarded as properly applicable to the Jace Developments Trust with the heading referring to Laverton Properties Developments Unit Trust being a mistake. Even if this were true, it is difficult to see how this would be a proper 'booking' of Jace's repaying a $100,000 loan to Procon Group Pty Ltd.
6. Mr Zeniou's evidence was somewhat uncertain. I took it to mean however that he quit the Laverton Unit Trust when he 'walked away' from Mr Agosta. Therefore this would have occurred at the same time as the $100,000 loan was repaid by Jace. Since on this view the $100,000 payment was the cost of Mr Zeniou's 'waking away' it could be regarded as the consideration for his transfer of his and Procon's units in the unit trust. At page 25 of the transcript of an examination conducted on behalf of the Commissioner of Mr Zeniou on 17 May 2006 he was inclined to put these events as at 28 June 2005. For revenue purposes there appears to be no material distinction to be drawn between January and June 2005. Materially different land rich land holder provisions under the Duties Act applied until May 2004. Mr Tisher put some arguments based upon the possibility of findings of fact which would have some of the transfers occurring before that date. The result of my findings is that all acquisitions aside from the redemption of Mr Benvenuto's units occurred after the change in the law. In the case of the units owned by Robant, Mr Benvenuto's company, the redemption seems to have occurred in late 2004 but in pursuance of an arrangement entered into in February of that year.
7. Mr Amato's evidence is not upon analysis supportive of Mr P's account. Mr Amato said he was contacted by a complaining Mr P shortly after the Trust Deed was sealed. This is inconsistent with Mr P's account that he (Mr P) did not realise there was a problem with the Deed until 29 November 2003 - five months later. Mr P's witness statement makes no reference to his having contacted Mr Amato. On his account he set about rectifying matters himself. If Mr P did contact Mr Amato it may have been about some other issue. Mr Agosta in his evidence complained that the deed 'doubled up' Mr Zeniou's holdings giving both him and his company Procon no allocation of units.

1. My findings of fact seem to be entirely destructive of the contentions put on behalf of the taxpayers. On these findings there was no arrangement whereby Zeniou, Procon and Borzillo agreed to transfer their units to J & E Agosta Pty Ltd. Since there was no agreement there could be no unconscionability in these parties retaining their units at least until a later date. Since it was never agreed between the parties that the apparent allocation of units to Zeniou, Procon and Borzillo was a mistake, there never was any basis for the 'rectification' process that Mr P. claimed he put in train in December 2003.
2. The unit trust is established by the stamped deed and not by some oral arrangement. There was never any intention by relevant parties to establish a unit trust which excluded Zeniou, Borzillo and Procon.

1. The present assessment made under the Duties Act as amended with effect from May 2004 by the State Taxation (Tax Reform) Act 2004 attaches liability both to the acquirer, J & E Agosta Pty Ltd and the trustee. Mr Tisher has pointed out that the relevant provisions in force before May 2004 did not attach liability to the trustee Laverton. Sub-clause (6) of Clause 20, Schedule 2 of the Duties Act 2004 dealing with the transition to the 2004 version of the relevant provisions provides:

This Act, as in force immediately before the commencement day, continues to apply in respect of any transactions occurring on or after that day that resulted from a written agreement made before that day.

1. The completion of the redemption of Robant's units took place as best I can ascertain, in late 2004 but it was done in pursuance of a written agreement entered into in February 2004. The result then seems to be that the Robant acquisition occurred before the commencement of the 2004 provisions and by virtue of the transitional provisions must be taxed and treated in accordance with the old law.

1. Mr Tisher submitted that even were I to find that the second applicant, J & E Agosta:

Made relevant acquisitions in the [unit trust] during February 2004 to January 2005, it is submitted that it would not be just and reasonable to apply the relevant part of the Act to the acquisition.

1. The relevant provision, Section 84(2) in the old version and Section 85(2) in the 2004 version of the Act (which I pause to note has been rejigged yet again in 2007) provides for an exemption if the Commissioner and on review the Tribunal be satisfied:

That the application of this Part to the acquisition in the particular case would not be just and reasonable.

1. Mr Tisher referred to Chief Commissioner of State Revenue v Lee (2000) 35 ATR 130; Affinity Health Limited v Chief Commissioner of State Revenue [2005] NSWSC 663 and Commissioner of State Revenue v Artistic Pty Ltd [2008] WASCA 24. As to the breadth of the discretion, he said that the Commissioner's Practice Note confining the discretionary exemption to assessments based on anomaly and indented consequences or harsh consequences was inappropriately narrow. The matters which Mr Tisher urged were as follows:

(a) The acquisition arose solely from the attempt to bring the former unit holdings into line with that which all parties accepted existed prior to the acquisition of the property by the unit trust;

(b) As was the case in Lee, at no stage was there any intention to evade stamp duty; indeed ad valorem duty was paid on the purchase of the property; and

(c) The liability for duty ultimately arose from the mistakenly drafted trust deed rather than any underlying shift in beneficial interest. The mistakes arose through no fault of J & E Agosta.

1. The findings of fact which I have made necessarily exclude acceptance of either proposition (a) or proposition (c). Reliance on proposition (b) is problematic. Does it mean for instance that a land rich land holder and its owners that engaged in a series of transactions oblivious to the operation of the land rich land holder part of the Duties Act would be entitled to exemption simply for that reason? The revenue law applies to taxpayers whether they are aware of it or not.
2. The objective of the ever more onerous provisions relative to land rich land holder companies and private unit trust is the same as it was when the much less elaborate provisions were introduced for the first time into the Stamps Act 1958 as long ago as 1987. That objective is to bring to charge at conveyance rates changes in ownership of Victorian real estate which are effected indirectly through acquisitions of share capital or units in a private unit trusts. The present imposts are squarely within that objective. The fact that Laverton paid stamp duty when it acquired the property in 2003 seems to be neither here nor there. If John bought Blackacre in 2003 and paid ad valorem stamp duty on the transfer, that would provide no ground for exempting a transfer to Jim in 2004 or 2005 from the ad valorem duty. I agree that authorities such as Lee give a very wide travel to the relevant discretion. I cannot think however that it is intended to go as wide as to cover this situation.

1. Mr Tisher said that it was inappropriate for the Commissioner to levy penalties on the taxpayers on the basis that they hindered the revenue. He said:

The inaccuracies in the loan applications, redemption agreement and trust deed could not be construed as conduct designed to conceal tax defaults and hinder investigation. The correspondence trail shows that all requests for information by the SRO were met.

1. I cannot agree. On my findings here were no inaccuracies in the loan applications or the redemption agreement. The case mounted by the applicants is based on bogus documents including bogus backdated transfers and a bogus diary note prepared by Mr P. I cannot accept that in light of these findings the taxpayer was acting in good faith. There is no ground for remitting any penalty.

1. The Tribunal's powers in a proceeding such as this are set out at Section 111(1) of the Taxation Administration Act 1997. Sub-section (3) makes special provision for the Tribunal to have powers under the Valuation of Land Act 1960 in proceedings which relate to valuations by the Valuer General. Sub-section (4) states:

The powers of the Tribunal under subsection (3) are in addition to its powers and functions under this Act and the Victorian Civil and Administrative Tribunal Act 1998.

1. It is noteworthy that the section does not state that the powers under Sub-section (1) are in addition to those which the Tribunal would otherwise have under the Victorian Civil and Administrative Tribunal Act 1998. The maxim of construction expressio unius est exclusio alterius however has been said many times to be one to be employed only with great care. In my view therefore there should be no negative implication drawn that the Tribunal's general powers on administrative reviews as set out in Section 51(2) of the Victorian Civil and Administrative Tribunal Act 1998 are regarded as excluded. In similar circumstances in Rumpf v Mornington Peninsula Shire Council (2000) 3 VR 69, 106 [128] - [ 132] Balmford J considered that the specific powers on review set out in the Planning and Environment Act 1987 in the circumstances before her could and should be supplemented by reference to Section 51(2).
2. The conclusion I have reached as to the operation of the transitional provisions relative to the Robant redemption renders it appropriate that I set aside the Commissioner's assessment and remit it to the Commissioner for reconsideration with a direction that the acquisition of units in the Laverton Properties Developments Unit Trust should be treated as having occurred on 27 February 2004 but that the assessment should otherwise stand as made.