15.1 The Trustee shall keep a register of Unit Holders in the State of Victoria which shall be designated "the principal register" in which there shall be entered the following particulars:

(a) the names and addresses and description of the Unit Holders;

(b) the number and class of Units in respect of which they are registered and the distinctive numbers of letters of the Certificates held by them respectively;

(c) the date at which the name of every Unit Holder was entered in the register in respect of Units standing in his name; and

(d) any other details considered necessary by the Trustee...

16.2 Unless a written instrument of transfer of Units is required by law a transfer of Units may at the Trustees discretion but subject always to the provisions thereof be effected without a written instrument of transfer being submitted and in that event an entry made in the register of Unit Holders with the approval of the Trustee shall if the transfer is not contrary to the provisions of this Deed be effective as evidence of the right to the Units so transferred...

1. The original unit holder of the Freehold Trust was a company called M & M Hospitality International Proprietary Limited in its capacity as trustee for the Hospitality Trust. The hospitality trust was issued with a unit certificate which stated that it held 100 units in the Freehold Trust on and from 16 August 2002.
2. On 16 June 2003, the Freehold Trust acquired the Diamond Creek Tavern, land and business for which it paid a consideration of $4,140,000 for the relevant land.
3. In or around 30 June 2003, it was decided that there would be a restructuring of the trust arrangements. As a result, on that date the Hospitality Trust transferred 50 of its units in the Freehold Trust to the Magdziarz Trust and the remaining 50 units to the Aquila Trust. Therefore, after the transfer, the Hospitality Trust did not hold any units in the Freehold Trust.
4. On or around 13 May 2005, the applicant entered into a contract of sale in relation to the land on which the Diamond Creek Tavern stood. The sale price was $7m.
5. On 16 November 2006, the applicant was informed that the respondent was investigating this in relation to the transfers that took place in 2003. The investigation was to assess whether the applicant complied with the land rich provisions contained in Part 2 Chapter 3 of s.79 of the Act.
6. In March 2007, the respondent advised the applicant's accountant, Mr Beed, from Grinwald Beed & Associates that it had determined that the acquisition on 20 September 2004 of 100% interest by Messrs Magdziarz and Macocci of shares in Diamond Creek Pty Ltd was not subject to duty under the land rich provisions of the Victorian Duties Act 2000. I note that during the course of the investigation, it was disclosed that:

On 30 June 2003 there was a change of 100% of the unit holdings in the M & M Diamond Creek Freehold Unit Trust. It is considered that that change of unit holdings was potentially liable for duty. However the matter will not be pursued further as it is outside the Office's three-year retrospectivity policy.

1. On 18 June 2007, the applicant took possession of land known as and situated at 207 - 209 and 2013 Newlands Road, Coburg North for which it paid a total consideration of $2,790,000. Then approximately one year later on 20 June 2008 it took possession of land being 205 Newlands Road, Coburg North for which it paid a consideration of $1,270,000. I will refer to the entire land in Newlands Road, Coburg North as "the Coburg Land". The applicant still holds the Coburg Land.
2. Around the end of 2010 Mr Magdziarz informed Mr Macocci that he wished to exit his share of 50 units in the Freehold Trust. Put a different way, he wished to sell the interest of the Magdziarz Trust. As a result, the financial controller for the Macocci Group Organisation, Mr Vuong, prepared three documents; which three documents included:
   • (a) A standard Unit Transfer Form dated 17 December 2010 whereby the Hospitality Trust purported to transfer the 100 units in the Freehold Trust to Lou Nominees Pty Ltd as trustee for the Aquila Trust.
3. Mr Magdziarz signed the form on behalf of the Hospitality Trust and Mr Mracocci signed the form on behalf of the Aquila Trust. It is in relation to this transfer document (the Transfer Document) that the respondent purported to charge the applicant duty.
4. The crux of the issue before me arises from the transfer document. That is, whether at the time of the execution of the document the Hospitality Trust was capable of transferring units in the Freehold Trust to the Aquila Trust. The applicant stated that the Hospitality Trust was not as it had no interest in the Aquila Trust nor the Magdziarz Trust. On the other hand, the respondent relying upon s.110 of the Taxation Administration Act 1997 says that the applicant had not provided any proof of that. Between 30 June 2003 and 17 December 2010, neither the Magdziarz Trust nor the Aquila Trust created or executed any documents for the purpose of transferring units in the Freehold Trust to the Hospitality Trust.
5. In support of its case, the applicant states:
   • (a) The Freehold Trust lodged income tax returns for the years of income ending 30 June 2004, 2005 and 2006;
   • (b) The Freehold Trust had income and a capital gain that were accessible in the hands of its beneficiaries;
   • (c) The beneficiaries of the Freehold Trust were the Magdziarz Trust and the Aquila Trust; and
   • (d) Each of the Magdziarz Trust and the Aquila Trust received distributions of one half of the income of the Freehold Trust.
   • (e) For the years of income 30 June 2007 to 2011 inclusive, the income tax returns of the Freehold Trust stated that that Trust had no income to distribute to its beneficiaries.

At all relevant times the Coburg land was vacant land.

1. It should be noted that the Legislative Provisions to which I shall be referring are those which were in vogue at 17 December 2010.
2. Chapter 3, at the relevant time, charged duty on transfers of interest in a land rich holding. Pursuant to s.71(1):

(1) For the purposes of this Part, a landholder is any of the following-

1. The landholder was 'land rich' if it had holdings in Victoria for total unencumbered value of $1m or more and its landholdings in all places comprised 60% or more of the unencumbered value of its property (s.71(2)).
2. It was conceded by all parties, that the Freehold Trust was at all relevant times a 'land rich holder' for the purpose of the legislation.
3. Pursuant to s.78 of the Act 'a liability for duty arose when a person made a 'relevant acquisition'. Pursuant to s.79(1)(a) a person made a 'relevant acquisition' if the person acquired an interest in a landholder that was of itself a significant interest landholder. Pursuant to s.82(1) the person who made the acquisition and the trustee in the unit trust scheme, that is the landholder, were jointly and severally liable to pay the duty. It is on this basis that the unit trust has been assessed with duty.
4. Pursuant to s.76(1) a person had an interest in a landholder if the person had an entitlement (otherwise as a creditor or other person to whom the landholder was liable), whether directly through another person, to a distribution of property from the landholder on winding up of the landholding. Pursuant to s.76(2)(b) a person had a significant interest in a landholder in the case of a private unit trust scheme if the person, in the event of a distribution of all the property of the landholder, means to be after the interest was acquired, would have been entitled to 20% or more of the property.
5. Pursuant to s.77(1) a person acquired an interest in a land rich landholder if the person obtained interest beneficially including if the person's interest increased, in the landholder, regardless of how it was obtained or increased. Pursuant to s.72(2)(AA) a person is taken to have obtained an interest beneficially if the person obtained the interest as trustee of a trust.
6. Section 85(2) of the Act gives the Commissioner a discretion, and the Tribunal a discretion, "standing in the shoes of the Commissioner", to exempt from duty, if it is satisfied that the application of the relevant part of the Act to the acquisition of a particular case would not be just and reasonable.
7. Pursuant to s.110 of the Taxation Administration Act 1997, the applicant in this particular proceeding has the onus of proving its case.
8. Section 30 of the Taxation Administration Act 1997, fixes the amount of tax payable at a penalty at 25% in respect of the amount of tax unpaid.
9. The amount of 25% is increased pursuant to s.32 of the Taxation Administration Act 1997 by 20% if after the Commissioner commences his investigation, the taxpayer 'took steps to prevent or hinder the Commissioner from becoming aware of the nature and extent of the default in whole or in part' and, for the purposes of this section, s.30(2)(b) provides that the taxpayer takes steps to prevent or hinder the Commissioner the taxpayer without 'reasonable excuse refuses or fails to comply with the requirement made by the Commissioner under Division 2 of Part 9 for the purposes of determining the taxpayer's liability or hinders or obstructs an authorised officer exercising functions under that Division' for that purpose.
10. It was a result of the provisions of s.32 that the penalty of 25% imposed by the respondent was lifted to 30%. (5% being 20% of 25%).
11. Section 76 of the Act relevantly reads:

76 What are interests and significant interests in landholders?

(1) A person has an interest in a landholder if the person has an entitlement (otherwise than as a creditor or other person to whom the landholder is liable), whether directly or through another person, to a distribution of property from the landholder on a winding up of the landholder...

1. Section 77 of the Act relevantly reads:

(1) A person acquires an interest in a land rich landholder if the person obtains an interest beneficially, including if the person's interest increases, in the landholder regardless of how it is obtained or increased.

1. Section 78 of the Act provides:

A liability for duty charged by this Part arises when a relevant acquisition is made.

1. Section 79(1) of the Act relevantly provides:

(1) For the purposes of this Part, a person makes a relevant acquisition if-

(a) the person acquires an interest in a land rich landholder-

(i) that is of itself a significant interest in the landholder; or...

1. The applicant called three witnesses to support its case. Mr Vuong, Mr Magdziarz and Mr Marcocci. Mr Marcocci was a businessman who, for the purposes of the Diamond Creek Tavern and the Coburg land, up until, 2010 was in what is loosely described as a '50/50 partnership' with Mr Magdziarz (although that is not the true structure of their arrangement which was through a number of trusts). They owned their interest through the Aquila Trust in the case of Mr Marcocci and the Magdziarz Trust in the case of Mr Magdziarz. Mr Vuong was the financial controller, since late 2007, of numerous Marcocci enterprises and he also looked after those enterprises where Mr Magdziarz had an interest with Mr Marcocci.
2. At all relevant times, both Mr Marcocci and Mr Magdziarz employed an external accountant, a Mr Beed, who was not called to give evidence and there was no explanation as to why he was not so called.

1. Ms Neskovcin, SC Counsel for the respondent, criticised Mr Magdziarz's evidence for not producing emails sent to him by Mr Vuong. At paragraph [30] of Mr Magdziarz's statement, he refers to those emails. Mr Magdziarz stated in his evidence that one email concerned the amount that he would be receiving from Mr Marcocci as a result of Mr Magdziarz exiting the arrangement. There was a calculation that needed to be made that took into account the value of the Coburg land, less some side loan that had been made by Mr Marcocci to Mr Magdziarz and, a bank bill for which both trusts were jointly liable which was secured by mortgage on the land. There was a further email, which Mr Magdziarz said simply enclosed the relevant documents that were to be signed.
2. While it would have been desirable for Mr Magdziarz to have disclosed these documents, I find Mr Magdziarz to be a witness of truth, and therefore, I have no reason to disbelieve what he stated to be the contents of those email documents.
3. Ms Neskovcin criticised Mr Magdziarz for saying in his evidence that he did not recall the contents of the emails. However, I took that to mean not that he did recall the emails as such or basically what they said, but he could not recall what they said 'word-for-word' which is hardly surprising. Ms Neskovcin also stated that when it was put to Mr Magdziarz that there was only one email stated by Mr Vuong, he backed away from what was stated. However, it is clear from paragraphs [10] and [11] of Mr Vuong's statement that there were in fact two emails, with only the second one enclosing the documents being relevant to this proceeding.
4. Ms Neskovcin also placed great reliance on a series of questions, which she suggested that Mr Magdziarz backed away from his original statement. Mr Magdziarz was asked by Ms Neskovcin in cross-examination words to the effect "on whose behalf did you sign the transfer form"; to which Mr Magdziarz replied "the Trust".

1. I do not takes this line of questioning to be that Mr Magdziarz was backing away from his answer that he signed the transfer on behalf of the Trust, what he did not recall was the particulars of which Trust he signed on behalf of. It is not surprising because the situation became very confusing.
2. Mr Magdziarz, gave evidence that he was familiar with the structure and that it was his normal practice to look at the documents that he was signing. However, he did not read the document of transfer dated 17 December 2010. He said that, in this particular instance, he relied on Mr Vuong to prepare the document quickly and relied on Mr Beed. He said that he had signed many documents over the years, but if he had signed a document severing the relationship between himself and Mr Marcocci prior to 2010 he definitely would have remembered it. Further, he stated that he did not remember any other transfers than the one signed 17 December 2010.
3. Mr Magdziarz was certain that if there had been a change in structure between 2003 and 2010, then he would have known about it. He said he paid considerable attention to these matters.

I cannot recall specific details about each business such as how it is structured and the precise percentages that each partner owned in a business through the structure. In that sense I rely on my advisers such as lawyers and accountants and Clarence Vuong, who is now the financial controller of my businesses...

...Robert (Mr Magdziarz) and I were each 50/50 owners of the Applicant although I was not precisely sure how our ownership was structured. When Robert exited the business I would have relied on the documents that Clarence prepared and assumed that what Clarence had prepared was correct. Apart from Robert exiting the business in 2010 I do not remember there being any other transactions after 2003 that involved changing either my or Robert's ownership of the Applicant.

1. Mr Marcocci clearly took care of the business side of the affairs of his organisation. He relied on others, such as Mr Vuong, and Mr Beed in relation to administration to ensure that "everything was in order".
2. Mr Marcocci was adamant that he should only have to pay for 50% of the dutiable transaction relating to the Coburg land in 2010, because "he already owned 50%". He was "buying out Mr Magdziarz's interest which was 50%" and it was on that interest that he should be paying duty.
3. Mr Marcocci was asked by Ms Neskovcin whether he spoke to Mr Beed, in relation to the duty that would have to be paid. Mr Marcocci said that Mr Beed told him that he would have to pay 100% duty. Ms Neskovcin said that I should interpret this statement to mean that Mr Marcocci and Mr Beed were aware, that the Hospitality Trust owned the Coburg land in 2010 and that was why 100% duty would have to be paid.
4. I do not share, Ms Neskovcin's view of the evidence given by Mr Marcocci. In my view, what Mr Marcocci was probably saying about the conversation he had with Mr Beed was that (after the mistake in relation to the transfer was realised) he would then have to pay 100% duty. It was not made clear either in the answer nor the question as to whether the alleged conversation between Mr Marcocci and Mr Beed took place prior to the singing of the transfer or at some time afterwards. In my view, it is likely that it would have taken place sometime afterwards. Particularly in light of Mr Marcocci's evidence that he always believed that he would only have to pay duty on the value of 50% of the Coburg land.

1. Mr Vuong stated that he began as financial controller with Mr Marcocci and also did the joint ventures with Mr Magdziarz from late 2007 onwards.
2. What Mr Vuong stated that he had examined some documents prior to 2007 but that he could only speak as to what happened since he was the financial controller. Further, Mr Vuong agreed that it was likely Mr Beed had prepared any transfers that may have been needed prior to him starting as the financial controller.
3. Again, Ms Neskovcin relied on the non-production of the emails that Mr Vuong sent to MrMagdziarz and Mr Marcocci. I have already mentioned the contents of those emails.
4. While it would have been desirable for those emails to be produced, I do not believe there are any grounds for thinking that the emails are other than precisely as described by the various witnesses.
5. Ms Neskovcin suggested that by the emails not being produced it led to a gap in the evidence. While the applicant clearly has the onus of proof in these matters it is not for it to go down and search out every "nook and cranny". That would place a far too great a burden on it. In this particular instance, not only Mr Vuong but the other witnesses called on behalf of the applicant in my view were witnesses of truth. Given that important fact, I do not have any reason to disbelieve what I was told by them.

1. Mr Beed was not called to give evidence in this case and there was no given reason why he could not have been called.
2. Mr Flynn QC with Mr Diaz stated, that the reason that Mr Beed was not called was that the directors knew what was going on and that they were the ones who, in fact, executed the transfer. Mr Beed could have been called to give evidence that I believe may have been relevant. No reason was given why he could not have been called. Thus I make the inference that his evidence would not have helped the applicant. See Jones v Dunkel (1959) 101 CLR 298 at [312] and [319].

1. Ms Neskovcin states that the fact that the 2010 transfer was in fact prepared and signed, on its face shows that the Hospitality Trust did own the land in 2010 and there must have been some transfer to it between 2003 and 2010.
2. However, the tax records of the Freehold Trust up to 30 June 2006 clearly indicate, that the Trust property was jointly held by the Aquila Trust and the Magdziarz Trust with the Lou Nominees Pty Ltd and Magdziarz Investment Proprietary Limited being trustees respectively.
3. While, there is a gap of approximately 18 months between the last tax record and the employment of Mr Vuong as a financial controller, I am nonetheless satisfied, that on the balance of probabilities, no transfer took place in that time or at any other time between 2003 and 2010 to vest the Hospitality Trust with the Coburg land. This satisfaction comes from the fact that not only do I accept Mr Vuong's evidence that he made a mistake when preparing the transfer document, but I also accept the evidence of Mr Magdziarz and Mr Marcocci that if there had been a transfer between 2003 and 2010 they would have known about it. Further, Mr Magdziarz said that he kept a close eye on these matters.
4. Ms Neskovcin also referred to the applicant's Notice of Objection. She referred to paragraph [2] on page 2 of the Notice, page 3 paragraph [9] and page 4 paragraphs [14] - [17] inclusive. She stated that I should draw from these paragraphs that the Hospitality Trust considered that it owned the units and that therefore the transfer was legal and not a nullity.
5. However, I do not believe it is as "black and white" as Ms Neskovcin submitted. In paragraph [12] of the Notice of Objection it is stated:

[12] From this date (30 June 2003), Lou Nominees Pty Ltd and Magdziarz Consulting Pty Ltd (in their respective trustee capacities) were regarded by M & M Diamond Creek Pty Ltd, as trustee of the Freehold Unit Trust, as 50% unitholders in the Freehold Unit Trust. The transfer documents dated 30 June 2003 and the income tax returns of the Freehold Unit Trust for the 2004, 2005 and 2006 tax years confirm this.

1. Also I note, in paragraphs [16] and [17] of the Notice of Objection it is stated:

[16] ...the transfer failed. It failed in its legal effect because it was executed by the parties on a fundamental misunderstanding as to the ownership of the relevant property.

[17] The transfer instrument of 17 December 2010 states on its face - and the parties appear to have accepted - that M & M Hospitality International Pty Ltd held the units 'as trustee for the M & M Hospitality International Unit Trust" and was disposing of the units in this capacity. It goes without saying that no 'due diligence' was undertaken by the purchaser - had it done so, it would have uncovered the previous transfers in 2003, together with the relevant trust distributions to Lou Nominees Pty Ltd and Magdziarz Pty Ltd (in their respective trustee capacities) in the 2004, 2005 and 2006 tax years.

1. On an examination of all the evidence before me, I have come to the conclusion that on 17 December 2010, the Hospitality Trust had no property. As a result, the purported transfer by the Hospitality Trust of the 100 shares in the Freehold Trust to the Aquila Trust must have been a nullity. The Hospitality Trust could not transfer what it did not own. There is reasonable explanation, which I have stated, in spite of Ms Nescovcin submitting these were flaws in the applicant's case. In particular, I note, that it is not surprising that at the time that Mr Magdziarz signed the transfer in 2010 he did not read it, because he like many sellers were basically interested in obtaining their money. He did not believe he had any rights to protect. The fact that Ms Neskovcin suggested that he may have had still some "partnership" with Mr Marcocci in some sort of construction business, in my view takes it no further. The fact that, I made a 'Jones v Dunkel' inference, into not calling Mr Beed, in my view in the light of the evidence does not mean that I cannot accept the applicant's case. I accepted the applicant's witnesses as witnesses of truth and as a result, it necessarily follows that if there had been any transfer to the Hospitality Trust between 2003 and 2010, they would have remembered it. Particularly Mr Magdziarz who said he had a knowledge of what was going on. Further, the tax returns to June 2006 and Mr Vuong's evidence subsequent to late 2007, tend to support the fact that there was no transfer of property to the Hospitality Trust. While it is possible that something was transferred between 30 June 2006 and when Mr Vuong started as financial controller in late 2007, on the balance of probabilities it is most unlikely. Thus I accept that the transfer prepared by Mr Vuong was a mistake.
2. Given the findings I have made above, it necessarily follows that the assessment and determination by the respondent should be set aside.
3. It is appropriate in this case that the matter should be remitted to the respondent to make a further assessment in accordance with my reasons.
4. In light of the findings I have made above, it is unnecessary for me to consider a matter of discretion pursuant to s.85(2) of the Act and it is also unnecessary for me to consider questions of penalty and interest pursuant to the Tax Act.