Oliver Hume Property Funds (Broad Gully Rd) Diamond Creek Pty Ltd

Oliver Hume Property Funds (Broad Gully Rd) Diamond Creek Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2023] VCAT 634

The Commissioner's assessment is confirmed.

Mr M T Flynn KC and Mr C Sievers, instructed by Pitcher Partners

Mr D J Williams AM KC and Ms C M Pierce, instructed by the State Revenue Office

1. According to Mr David Rogers, Managing Director of the applicant company which is part of the Oliver Hume Property Funds Group, the Group:

Specialises in the delivery of new residential property developments throughout Australia, with over 65 years' experience in the Australian property market.[1]

1. It is part of the wider Oliver Hume Group. According to Mr Rogers the Funds Group 'provides a funds management vehicle with the objective of generating returns for investors from property development activities.'[2] He said:
   1. The following OHPFG entities are typically involved in a capital raise transaction:
      1. Oliver Hume Property Funds Ltd (formerly Synergy Funds Management Pty Ltd), which manages the capital raising process. Oliver Hume Property Funds Ltd holds an Australian Financial Services Licence ("AFSL") and I currently oversee and manage this AFSL.
      2. Oliver Hume Property Syndications Pty Ltd, which handles asset management and provides project management services in respect of our property developments.
      3. Oliver Hume Real Estate Group Pty Ltd, which leads the sales and marketing of a project in conjunction with a local estate agent.
      4. Special purpose vehicle entities, which issue securities to raise the necessary capital for development projects. The Applicant was one of these special purpose vehicle companies, being established for the purposes of the Diamond Grove project at Diamond Creek.[3]
2. Mr Rogers said that the development process which he referred to 'generally' involves five stages:
   1. Stage 1 - Identify an appropriate site for development purposes and conduct the necessary due diligence. This stage typically involves completing a feasibility study and monitoring market opportunities.
   2. Stage 2 - Acquire the site and obtain approval from the Funds Investment Committee on the property acquisition.
   3. Stage 3 - Organise funding. To fund the development opportunities by syndication, Oliver Hume relies on a combination of external debt funding from financial institutions in the form of construction bank loans, and equity funding from investors.
   4. Stage 4 - Obtain planning approvals and deliver the project. Plans of the property are submitted to local council to acquire a planning and development permit.
   5. Stage 5- Return of capital and dividends. At completion of project and sale of all lots on a property, bank debt is ordinarily settled first. Where projects are also funded by equity from investors, invested capital is returned back to each investor and any excess over the capital component of the investment is made available as a dividend paid to the shareholders out of the company profits.[4]
3. Mr Rogers gave details of some 18 projects which the Funds Group had implemented described impressive returns to investors. He said 'In all but two cases, the actual rate of return was equal to or higher than the target rate.'[5]
4. He said that upon identification of a new project, the Funds Group incorporates 'a special purpose entity' to acquire and hold the real estate. The applicant in this proceeding is such a special purpose entity. The process of raising investor subscription entails the issue of an 'Information Memorandum', as was the case for this applicant company to which I will refer as 'Diamond Creek'.
5. Mr Rogers said that the shares in the special purpose entity could be offered only to those defined in the Corporations Act as 'sophisticated investors' and that the various projects 'marketed in a manner that sought to more efficiently target sophisticated investors'. Rather than 'broad based advertising' is to the general public.[6] The Information Memorandum for the various projects and the Diamond Creek project in particular were distributed to investors appearing on the Group's database 'who had made enquiries regarding, or had invested in, previous projects'.[7] Additionally, the Memoranda were distributed as part of consultancy and referral agreements entered into with third parties. As to the Diamond Creek project, Mr Rogers said:
   1. The project and Information Memorandum were marketed by Property Investment Research Pty Ltd ("PIR"), a property research group. PIR promoted itself as having a large database through which we [the Funds Management Group] could promote projects by doing research on the project and promoting it through its website and database. In May 2014, PIR produced a report summarising their research, assigning an AA investment rating to the Diamond Creek investment opportunity. ... I understand PIR have their own database of approximately 7,000 subscribers and that the PIR report in respect of the Share Offer was circulated through PIR's database.[8]
6. The Memorandum under the heading 'The Offer' began at paragraph 1.1 Sophisticated Investors with the words:

This Information Memorandum has been issued pursuant to the exemption for sophisticated investors under section 708(8) of the Corporations Act ("Qualified Persons"). This Information Memorandum has not been lodged with ASIC and is not regulated by the Corporations Act. The Company reserves the right to accept investment from investors under any other category of offer considered by Directors not to constitute an offer needing disclosure for the purposes of the Corporations Act, and in that case potential investors are also Qualified Persons.[9]

1. The offer under the heading 'Who Can Invest in the Company', paragraph 1.3 stated 'Investment is open to all types of investors. Investors may be individuals or entities including self managed superannuation funds (SMSFs).' Paragraph 1.4 stated 'As soon as the target subscription of 1,800,000 ordinary shares is achieved, shares will be allotted. Share certificates will be mailed to successful Applicants as soon as practicable following the date of allotment of shares.' Paragraph 1.5 stated, inter alia:

An electronic version of this Information Memorandum is available on the following website ... to Qualified Persons. The Offer, if received by the electronic version of this Information Memorandum, is only available to persons receiving the electronic version within Australia. Persons who receive the electronic version of this Information Memorandum should ensure that they download and read the entire Information Memorandum before making an application. A hard copy of this Information Memorandum will be provided free of charge to any Qualified Person who requests a copy during the Offer period ... Applications can only be made by downloading the Application Form accompanying this Information Memorandum, and printing, completing and returning a hard copy of the Application Form ... There is no facility available to submit applications and application monies on-line.[10]

Shareholders may sell or transfer their shares at any time, subject to the Constitution of the Company and the Corporations Act and other laws. Should you appoint a securities dealer to sell your shares, then brokerage may apply. It is not proposed to apply to list the shares of the Company on the Australian Securities Exchange Limited or any other securities exchange. Shares in the Company should therefore be considered an illiquid investment.[11]

1. The Memorandum estimated acquisition costs for the subject real estate at $1,868,850 with total funds raised and utilised after allowing for costs of capital raising of $22,500 as being a total of $1,777,500. $1,097,141 being used to retire existing loans for acquisition and $680,359 being used to repay loans for development costs.[12]
2. The subject property is located 25 kilometres north-east of Melbourne, consisting of 3.45 hectares,[13] its address being 272 Broad Gully Road, Diamond Creek.[14]
3. According to paragraph 5.3 'General Risk Factors':

Provided the only dutiable property held by the Company is the Land, the acquisition of Shares by Applicants under this Offer will not attract Victorian transfer duty, unless the landholder duty provisions apply (generally, if the shareholder, or two or more associated shareholders acquire 50% or more shares of the Company).

It is recommended that potential investors obtain appropriate professional advice prior to any proposed acquisition of Shares.[15]

1. Clause 6.2.1 noted a special provision of the Company's constitution as follows:
   • The Company may not terminate the Management and Intermediary Agreement with Synergy Funds Management [part of the Oliver Hume Group] and the Manager and the Project Management Agreement with the Manager except as permitted by those agreements and with the authorisation of a 90% vote of the Company's shareholders at a general meeting.[16]
2. On 2 July 2014, Diamond Creek issued and offered 1,800,000 shares at a price of $1 per share to some 18 investors with investment parcels ranging from $50,000 [viz 50,000 shares] to $200,000 [viz 200,000 shares]. Fourteen of the 18 were existing investors in the sense that their names were sourced from the Funds Management Group database but four of the investors were new investors in the sense that their names were not to be found on the database. Two of them were referred to the Funds Management Group by Mr Ian Mortley under a consultancy arrangement with Elder Heights Pty Ltd and two investors were neither on the database nor apparently referred via any consultancy. According to Mr Rogers, seven of the 18 were 'sophisticated investors' as defined in the Corporations Act and 11 were 'retail investors' within the meaning of that statute which meant, according to him 'that no disclosure to those investors [was] required to be made under the Corporations Act 2001.' Fifteen of the investments were made by what Mr Rogers understood to be self managed superannuation funds and the rest by trustees of other types of trusts. Thirteen of the investors were resident in Victoria, three in New South Wales and two in South Australia.[17]
3. Mr Rogers said that this spread of investors resulted from the following:

The Information Memorandum and Share Offer were not made available only to persons listed on the database [of the Funds Management Group] at the time and to persons known to the Applicant and the Oliver Hume group of companies. The Information Memorandum and Share Offer were marketed and promoted through various channels. As a result of that marketing, I believe the Information Memorandum and Share Offer were made available to many persons not known to the Applicant and to persons who were not listed on the ... database at that time. This is reflected by the fact that four of the 18 investors were not listed on the database at the time but were subsequently added to the database.[18]

1. Presumably in conformity with the views expressed in the Share Offer at the time of share allotment, no duty under the Duties Act 2000 was assessed or paid. On 19 January 2017, the State Revenue Office advised Diamond Creek 'that an investigation ... had commenced to determine the Company's compliance with the landholder provisions of the Duties Act 2000 ... in respect of the Share Issue.'[19]
2. On 28 February 2019, the State Revenue Office informed Diamond Creek:

...that the Commissioner [of State Revenue] formed the view that a relevant acquisition for the purposes of the [Duties Act] had taken place when the Share Issue occurred on 2 July 2014 as the Investors' acquisitions of shares in the Company constituted an associated transaction as defined in the Act as they together form, evidence, give effect to or arise from substantially one arrangement, one transaction or one series of transactions.[20]

1. On 1 July 2020, the Commissioner issued Notice of Assessment 22877182 addressed to Diamond Creek, assessing duty calculated on 'Acquisition of an aggregate 99.99% interest in [Diamond Creek] on 2 July 2014' in the sum of $151,235. He also assessed penalty tax in the sum of $7,561.75 and interest of $9,365.92 with a total payable of $168,162.67.[21]
2. Pitcher Partners on behalf of Diamond Creek gave notice of objection to that assessment by email dated 27 August 2020.[22] By a determination dated 11 August 2021, the Commissioner partially allowed the objection by deleting the 'penalty tax component of the Assessment' but otherwise confirming the assessment with the total amount payable reduced to $160,600.92.[23]
3. These processes were set in motion according to a letter from the Commissioner's delegate to the directors of Diamond Creek dated 19 January 2017 because Diamond Creek had been 'selected for a duties investigation by the State Revenue Office'. The aim of which was to 'assess compliance with the landholder provisions contained in Part 2 of Chapter 3 of the [Duties] Act.'[24]
4. In accordance with a request by Diamond Creek, the Commissioner referred Diamond Creek's objection to the Tribunal pursuant to section 106 of the Taxation Administration Act 1997.

1. Since the events said to give rise to Diamond Creek's liability under the Duties Act took place as long ago as July 2014, it is the provisions of the Duties Act 2000 in effect as at that date which are relevant.
2. Chapter 3 of the Duties Act 2000 deals with what are described as 'Certain Transactions Treated as Transfers'. Part 2 of the statute renders dutiable as if transfers 'Acquisition of Interests in Certain Landholders'. Section 71 of the Act defined the word 'landholder' to mean, inter alia 'a private company' which had 'land holdings in Victoria with a total unencumbered value of $1 000 000 or more'. Private company was defined in section 3 as meaning, inter alia 'a corporation that is not listed and whose shares are not quoted on the ASX or an equivalent exchange or any exchange of the World Federation of Exchanges'. It is accepted, as I understand it, that Diamond Creek is a 'private company' in accordance with the definitions and a landholder within the meaning of section 71.
3. Section 77 of the Act created a liability to pay duty 'when a relevant acquisition is made' and the phrase 'relevant acquisition' was defined or explained in section 78 which provided, inter alia as follows:

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

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

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

(ii) that amounts to a significant interest in the landholder when aggregated with other interests in the landholder acquired by all or any of the following -

(A) the person; or

(B) an associated person; or

(C) any other person in an associated transaction; or

...

1. Section 79 rendered the entitlement of a person to 50% or more of the property of the landholder corporation upon winding up a 'significant interest'. Section 80 provided that an interest or a significant interest in a landholder was regarded as being 'acquired' inter alia by 'the purchase ... of a ... share'. Section 80(3) provided 'a person is taken to obtain an interest beneficially if the person obtains the interest as trustee of a trust.' Section 3 defined the term 'associated transaction' as follows:

In relation to the acquisition of an interest in a landholder by a person, means an acquisition of an interest in the landholder by another person in circumstances in which -

(a) those persons are acting in concert; or

(b) the acquisitions form, evidence, give effect to or arise from substantially one arrangement, one transaction or one series of transactions

1. Section 85 of the Act, headed 'Who is liable to pay the duty?' provided as follows:

(1) The following are jointly and severally liable to pay duty chargeable under this Part -

(a) the person who makes the relevant acquisition; and

(b) the landholder or, if the landholder is a unit trust scheme, the trustee of the landholder; and

(c) if the relevant acquisition results from an aggregation of the interests of the person referred to in paragraph (a) and other persons - each of those other persons.

(2) A person, other than a person referred to in subsection (1)(c), may recover as a debt from the person who made the relevant acquisition or a person referred to in subsection (1)(c) the amount of any duty chargeable under this Part and any penalty paid by the first person in respect of that duty.

1. Mr Flynn KC and Mr Sievers on behalf of Diamond Creek contended that the Commissioner's assessment should be set aside.
2. They summarised salient and background facts relative to the assessment. Referring to a decision of Wilson J of the Supreme Court of Queensland in Radiology Partners Pty Ltd as Trustee for the Radiology Partners Unit Trust v Commissioner of State Revenue (Qld) ("Radiology Partners")[25], they said that this decision:

Identified the following principles that were said to provide some guidance to the question whether the acquisitions should be aggregated:

(a) The factors considered by the respondent involve a consideration of the conduct of the parties. The transferee(s)' conduct will, therefore, be of primary significance.

(b) In deciding whether the circumstances amount to one arrangement, the respondent is required "to have regard to all relevant factors" and there will be "questions of degree involved".

(c) One must look at the whole facts of the situation, and the enquiry is not limited to the circumstances of the transactions themselves.

(d) The substance of the transaction or transactions must be examined in order to determine whether they are "in substance" one transaction. Which is to say that the subject transaction need not be one arrangement, they only need to be substantially so.

(e) There must be an "integral and not [merely] fortuitous" relationship between the transactions before they will be viewed as being substantially the same. Looked at in the negative, to avoid aggregation, the transactions must be "separate and independent [and] unconnected with the others".[26]

1. The 'respondent' referred to is the Commissioner.
2. Next, they referred to a decision of Bowskill J (as Her Honour then was) in Wakefield & Ors v Commissioner of State Revenue ("Wakefield's")[27] which they said established the following propositions. First, that there must be a 'unifying factor' between the relevant acquisition which might be found in the purpose or objective of the transferors or the transferees or might be some other relationship, connection or interdependence between the transactions. It being necessary to take into account all relevant circumstances. They said Her Honour found that the word 'arrangement' was a word of wide but not unlimited means, being something less than a legally enforceable contract, possibly an understanding or plan which was not enforceable. It might be inferred from circumstances, it need not be bilateral but may be unilateral but it connotes 'a plan, with a purpose or objective, of some kind.' As to the word 'substantially', they said it 'invites' a consideration of the substance of dutiable transactions looked at together as opposed to their form to determine whether together they form what is substantially (or really or essentially) one arrangement, although as a matter of form they might seem separate. They said that this was a question of fact involving matters of degree and consideration of all circumstances depending on each individual case extending to surrounding circumstances not merely the transactions themselves.
3. They noted that Her Honour observed that the obligation to pay transfer duty under the Queensland Duties Act section 30 fell on all parties to the dutiable transaction and therefore 'There is nothing in the words of the section which supports a construction that the primary focus is on the objectives, actions or conduct of the transferee(s).'[28]
4. Referring to the decision of Wilson J in the Radiology Partners case, they said that in reaching a decision in favour of the revenue, the Judge had determined that the substance of the arrangement which was found to justify the aggregation was embodied in a set of minutes of meeting of unit holders exhibiting some 'oneness' or some 'unifying factor'.[29] They noted that in Wakefield's case Her Honour found in favour of the taxpayer or payers placing particular weight upon the fact that there was no agreement between the various transferees. They noted however that Her Honour found that in reaching a judgment as to whether aggregation should take place, it was necessary to have regard to the actions not only of the acquirer of the relevant interest but also to those of the disponer. They said, giving primary weight to the actions of the acquirer rather than the disponer, was consistent with the remarks of the Appeal Panel of the New South Wales Civil and Administrative Tribunal in State Revenue v Pacific General Securities Ltd & Finmore Holdings Pty Ltd ("Pacific General")[30] where relative to aggregation, the Appeal Panel (O'Connor K-DCJ President, Block J-ADCJ Judicial Member, Bennett C Non-Judicial Member) said 'the conduct of primary significance will be that of the transferee(s).'[31]
5. They said they had found no authority which addressed 'factual circumstances similar to those here - where shares were issued to a range of persons under an Information Memorandum for capital raising purposes.'[32] As to this Tribunal's decision in Urban Consolidation and Development Pty Ltd & Ors v Commissioner of State Revenue ("Urban Consolidation")[33] they said the determination in favour of the Commissioner there depended upon the fact that 'in that case the units were sold by one unit holder to the three remaining unit holders in proportion to their respective unit holdings and the acquisitions were the result of the common circumstance involving the alleged default by the transferor unit holder.'[34]
6. They said that there should be no aggregation of the 18 separate shareholder acquisitions because the Information Memorandum and share offer were not confined in their circulation or as to the entitlement of acceptance of the offer was in no way limited to a finite group on a database. It was far more widely distributed. The various investors made their decisions independently 'There was no requirement that certain parties invest in the project, or that any application was conditional upon the investment by other identified parties. The only requirement was that the target investment was reached.'[35] They stressed that there were 18 separate investors and that they exhibited no 'unified feature'. They noted that the present assessment meant that by virtue of section 85 of the statute, each individual investor was jointly and severally liable for the whole of the duty assessed where one investor had no relevant connection with any of the others. It could not be said that 'in substance' any one investor had acquired 99% plus of the shares in Diamond Creek. They said the Information Memorandum and share offer were 'relevantly indistinguishable' from public offers and prospectuses lodged with ASIC which the Commissioner accepted in his ruling ought not to be regarded as associated transactions. That is there was to be no aggregation. The relationship between the investors, they said, was merely fortuitous.[36]
7. In contentions in reply they noted that since the Commissioner now concedes that the investors were not drawn solely from the funds management database, the assessment 'validity' now rests on a single proposition: 'that paragraph (b) of the definition of "associated transaction" in s 3(1) is satisfied if the transactions that give [scil gave] rise to the "acquisitions form, evidence, give effect to or arise from substantially one arrangement, one transaction or one series of transactions", from the perspective of the person disposing of the shares'.[37] They said such a proposition should be rejected because they said it was inconsistent with the statutory text and statutory history was unsupported by evidence and as a matter of fact the acquisitions were not to be regarded as associated transactions. They said that the Commissioner's ruling highlighted 'the problematic nature of his construction'.[38]
8. As to the construction of the relevant provisions they referred to the joint judgment of McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc & Ors v Australian Broadcasting Authority.[39] They said that the Commissioner's construction of the definition of 'associated transaction' treated the existence and nature of any connection between the acquiring entities being relevant to paragraph (a) of the definition only and irrelevant to paragraph (b). They stressed that section 78(1) of the Duties Act was concerned with acquisitions and not dispositions and the focus should therefore be upon the acquirer. The two paragraphs they said were never intended to be mutually exclusive.[40] They said that their clients did not contend that the definition of associated transaction should be 'construed narrowly' but rather in accordance with its text and the relevant authorities.[41]
9. They said that it was 'difficult to imagine acquisitions made by persons acting in concert with each other that would not also form, evidence or give effect to or arise from substantially one arrangement or transaction or series of transactions.'[42]
10. Mr Flynn KC and Mr Sievers said that according to the construction that they advocated:

If a large shareholder exited from a listed public company by way of a share buyback and share cancellation, and none of the other shareholders voted or participated in the transaction, the increases in their ownership interests in the company would not be aggregated. On the Commissioner's construction, they would be aggregated.[43]

1. They said that the proper guide to construction was to be found in the statements to be made in the joint judgment of Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Limited v Bankstown Football Club Limited.[44]
2. They said the legislative purpose of section 78(1)(a) of the Duties Act was to:

Ensure that acquirers cannot avoid a relevant acquisition by "acquisition splitting", that is, acquiring a significant interest in a landholder through several acquisitions, each of which amounts to less than a significant interest.[45]

1. They continued 'If the acquirers are unrelated and genuinely act independently of each other they should fall outside the aggregation rules.'[46] They said that determining the nature of a transaction for the purposes of the relevant provisions 'requires an enquiry into the actions of the acquiring entities as well as into all the circumstances surrounding the transactions. In relation to paragraph (a) of s 3(1) the question is whether those actions can be elevated to a conclusion that those acquirers were "acting in concert"'.[47] The lack of connection between the various shareholders was, in itself, a circumstance which was necessarily to be considered.[48]
2. It was necessary they said to look at all the circumstances 'including the existence and nature of any connections between the parties to those transactions. The investigation under paragraph 3(1)(b) is not to be carried out in a vacuum, divorced from circumstances that are clearly relevant to how the parties conducted themselves and the transactions were entered into.'[49]
3. They referred to the legislative history of section 24 of the Duties Act and its predecessor section 68 of the Stamps Act 1958[50] which they said led to the conclusion that the definition of 'associated transaction' was:

Designed to counter avoidance of tax by artificially splitting shareholdings for transfer purposes. It does not support the Commissioner's position that the matters to be taken into account in paragraphs (a) and (b) are mutually exclusive, and that the nature and extent of any connection between the acquiring entities was excluded from the matters to be taken into account under paragraph (b).[51]

1. They said that the list of authorities relied on by the Commissioner in support of giving a wide construction to the phrase 'associated transaction' in each case exhibited 'an identifiable connection between the acquiring entities'.[52] The authorities listed were as follows:

(a) In Attorney-General v Cohen [1937] 1 KB 487 [scil 478] the same entity purchased four separate lots at auction. > > (b) In Jeffrey v Commissioner of Stamps (SA) (1980) 23 SASR 398 a mother and son purchased two adjacent lots from one vendor. > > (c) In Old Reynalla [scil Reynella] Village Pty Ltd v Commissioner of Stamps (SA) [1989] SASC 1724; (1989) 51 SASR 378 a single purchaser acquired 17 contiguous properties from different owners. > > (d) In Re Clancy v Commissioner of Stamp Duties (Vic) (1998) 40 ATR 99 a mother transferred interests in properties to her four daughters under 19 transfers. > > (e) In Wakefield v Commissioner of State Revenue (Qld) [2019] QSC 85 a widow subdivided land and transferred 5 lots to her children and grandchildren. > > (f) In Radiology Partners Pty Ltd as Trustee for the Radiology Partners Unit Trust v Commissioner of State Revenue (2019) 110 ATR 369 the holdings of six unitholders in a trust were restructured. > > (g) In Brianco Nominees Pty Ltd v Commissioner of State Revenue [2008] VCAT 999 fractional interests in land were sold to four entities pursuant to four contracts of sale. Each purchase was in contemplation of the construction of a building on the land. The same solicitor acted for each entity.[53]

2. As to the matters relied on by the Commissioner, they said each of them could be regarded as reflected in a genuine public offer which according to the Commissioner's ruling would not be dutiable.[54] They said:
   1. The transactions were not, as the Commissioner asserts, conditional upon one another. No particular offer was conditional upon any other offer being accepted, provided the targeted subscription was reached. Each investor made a decision to respond to the share offer independently of the others. Indeed, because the offers were oversubscribed, if one of the acquirers had withdrawn their acceptance, the other acquisitions would still have proceeded.[55]
3. They noted the Commissioner's concession in his ruling relative to genuine public offers could not be justified by any material distinction between that situation and the present. There was no legislative basis for the concession on the Commissioner's interpretation. Like matters were not being treated alike.[56]
4. They said that the assessment was an aggregation of acquisitions where the relevant share offer was made to the public at large and there was no identifiable connection between the investors 'save that they each responded to the offer.'[57]

1. Mr D J Williams KC and Ms C M Pierce on behalf of the Commissioner stated 'There are no authorities that deal directly with the construction...of an "associated transaction" in so far as it is relevant to s 78(1) of the Act.'[58]
2. They said however that guidance might be derived from authorities on the aggregation provisions that apply to dutiable transactions relating to separate items in Victoria and other States or the case of Urban Consolidation dealing with the former land rich provisions before amendments in 2012. It was the text of the provisions themselves, however, that must be determinative.[59]
3. They noted that the general aggregation provision in the Duties Act section 24 whilst similar to the definition of 'associated transaction' in section 3 did not contain an equivalent to paragraph (a) of the definition referring to persons acting in concert.[60] They said that when the definition of 'associated transaction' was 'read into s 78(1) of the Act, it is apparent that the second limb of the definition of "associated transaction" is not intended to focus on the relationships between, and conduct and community of purpose of, the acquirers.'[61] They continued 'Therefore, paragraph (b) of the definition of "associated transaction" in s 3(1) must be construed having regard to the existence of paragraph (a), and its role within s 78(1), which can relevantly apply to acquisitions made in a variety of different ways by reason of s 80.'[62] They said that focus on relationships between acquirers for the purposes of paragraph (b) of the definition would render paragraph (a) otiose. They continued:

Further, construing paragraph (b) of the definition of "associated transaction" narrowly would mean that the aggregation provisions could never apply to acquisitions that are made in a way that does not involve the active involvement of the acquirer, such as an acquisition made by virtue of the cancellation of a unit or shares. However, there is nothing in the language, subject-matter or context of the provisions that would warrant construing the definition of "associated transaction" in a way that could never apply to the full range of ways in which an acquisition may be made under s 80.[63]

1. They referred to the breadth of the meaning which has been ascribed to the word 'arrangement' citing Federal Commissioner of Taxation v Newton[64] per Williams J with whom Dixon CJ agreed, noting that it has been held to extend to all kinds of concerted action by which persons may arrange their affairs for a particular purpose so as to produce a particular result, citing Bell v Federal Commissioner of Taxation[65] per Dixon CJ, Williams, Webb, Fullagar and Kitto JJ. The existence of an arrangement may be inferred from the circumstances or conduct of the parties citing Urban Consolidation and Development Pty Ltd & Ors v Commissioner of State Revenue.[66]
2. They referred to the principles summarised by Bowskill J (as she then was) in Wakefield's case.[67] They noted that Her Honour's approach was different from the one adopted by the Appeal Panel in the Pacific General case where the Panel suggested a primary focus on the actions of the acquirer. Her Honour denied that the 'primary focus' should be on the actions of the acquirer. They said this was consistent with the approach adopted by Wilson J of the Supreme Court of Queensland in the Radiology Partners case.[68] They said the relationship between the acquirers was to be found by reference to the following circumstances:
   1. The transactions by which the investors acquired interests in the applicant on 2 July 2014 were related, connected and interdependent in a way that was integral, and not merely fortuitous, in circumstances where:
      1. the transactions each stem from the same offer and terms set out in the IM;
      2. the transactions were also conditional on one another, and interdependent, in so far as they would only occur if the target subscription was met;
      3. the purpose of the transactions was the same in so far as they were made as part of a capital raising of $1,800,000 (which approximately corresponded to the acquisition cost of the Property) as part of setting up a syndicated managed investment vehicle to fund a residential development of the Property;
      4. the acquires all apply to invest at or around the same time and under the same offer, pursuant to documents that define the relevant common purpose to be achieved by the investment;
      5. therefore, if it is necessary to do so (which the respondent denies), it is possible to impute to the investors a unity of purpose in so far as they invested on the terms set out in the IM, in order to invest in the development of the Property, and they agreed to be bound by the provisions of the Company's constitution - this, in turn, effectively bound the investors to the agreed management structure for the development;
      6. the transactions were made on the same date after the target subscription was met; and
      7. the landholder issued shares to each of the 18 investors who applied to participate.[69]
3. They said therefore, the fact that the offer could be regarded as made to the public at large was irrelevant.[70]
4. They said that the assessment was consistent with the Commissioner's ruling. The share offer whatever its other features might have been was not lodged with ASIC. Therefore they said it was not necessary to deal with the question of what constitutes a genuine public offer as referred to in the ruling.[71]

1. Most of the authorities referred to in the course of the hearing and in the parties' contentions relate not to the provisions as to the acquisition of interests in landholder companies but rather to the provisions relating generally to the aggregation of transfer or conveyancers of dutiable property. As at 2014 the relevant provision in the Victorian Duties Act was section 24(1) which provided as follows:

(1) Dutiable transactions relating to separate items of dutiable property referred to in section 10(1)(a) or (d) or section 10(1)(e) as it relates to dutiable property referred to in section 10(1)(a) or (d), or separate parts of such property are to be aggregated and treated as a single dutiable transaction if -

(a) either -

(i) in the case of dutiable transactions that are transfers on a sale of an item or part of dutiable property - the contracts of sale are entered into within 12 months; or

(ii) in any other case - the dutiable transactions occur within 12 months; and

* * * * *

(c) the dutiable transactions together form, evidence, give effect to or arise from what is, substantially, one arrangement relating to all of the items or parts of the dutiable property.

1. In Diamond Creek's Notice of Objection lodged on its behalf by accountants Pitcher Partners, that firm stated 'Whilst the term "arrangement" could include unilateral arrangements, the case law to date relates to the unilateral actions of the purchaser.'[72]
2. In a decision which does not seem to have come to the attention of either of the parties, I gave extended consideration to the operation of section 24 of the Duties Act as it stood in the years 2004 to 2007. Whilst the section was amended, it stood in the same terms materially for the purposes of the present argument in 2014 as it did at the time of my determination in Giacomo Pertile Nominees Pty Ltd v Commissioner of State Revenue.[73]
3. In that case I considered all or nearly all of the authorities relied on by the parties in the present proceeding save for Wakefield's case or the Radiology Partners case and the Urban Consolidation case all of which post-dated that decision. At [68] I concluded that these authorities established that an 'arrangement' could be unilateral as the Commissioner contended and Diamond Creek was inclined to concede. Again, in contrast to the provisions considered by the High Court in Federal Commissioner of Taxation v Lutovi Investments Pty Ltd ("Lutovi's")[74] there is no reference to the arrangements being 'entered into'. In Lutovi's case Aickin J concluded that the arrangement referred to in the Income Tax Assessment Act section 44(2)(b) and 44(2D) as those sections then stood must be 'entered into' led to the conclusion that only bilateral arrangements were in contemplation.
4. In this case, the phrase 'entered into' appears neither in the definition of 'associated transaction' nor in section 24.
5. In oral argument Mr Williams KC contended that an 'arrangement' could be constituted by something in the nature of a wheel whereby a central individual, in the present case, Diamond Creek as the hub of the wheel entered into arrangements with disparate investors which arrangements could be regarded as the spokes of the wheel. In this scenario whilst the entire complex constituted a single wheel, the only association between the individual investor was via their arrangements made through Diamond Creek as the hub. Moving to another analogy, he suggested the arrangement could be seen as like the phenomenon where especially in totalitarian regimes, citizens attend a stadium going to particular assigned seats with cards of a particular colour on the basis that at a pre-arranged time or on a pre-arranged signal they hold their coloured cards up such that the cards in their totality create the image perhaps of the country's leader or the country's flag. There he contended there would plainly be an arrangement albeit one that was achieved without any necessary direct communication or agreement between the individuals who would go to their assigned seat and raise the coloured cards at the appropriate time.
6. Mr Flynn KC and Mr Sievers referred to and relied on a decision of the Court of Appeal in Commissioner of State Revenue v Australand Investments Ltd (As Trustee for Australand Wholesale Property Trust No 4) ("Australand").[75] The question for the Court there was whether exit strategies described in an investment memorandum for a unit trust including what were described as exit strategies could be regarded as an 'arrangement' whereby an acquisition is made such that the acquisition had the benefit of an exemption under a transitional provision. I had decided in the Tribunal that the 'exit strategies' were too vague to constitute an arrangement. On appeal Mandie J in the Trial Division found that I had erred in this regard and set aside the Commissioner's assessment. A majority of the Court of Appeal, Hansen JA and Almond AJA - Maxwell P dissenting upheld the decision of Mandie J. Crucially their Honours analysed the concept of 'arrangement' by reference to a dictum of Diplock LJ (as he then was) in British Basic Slag Ltd v Registrar of Restrictive Trading Agreements[76] where His Lordship said inter alia:

No necessary or useful purpose would be served by attempting an expanded and comprehensive definition of the word 'arrangement' in s 6(3) of the Act. Cross J said:

All that is required to constitute an arrangement not enforceable in law is that the parties to it shall have communicated with one another in some way and that as a result of the communication each has intentionally aroused in the other an expectation that he will act in a certain way.

I think that I am only expressing the same concept in slightly different terms if I say without attempting an exhaustive definition, for there are many ways in which arrangements may be made, that it is sufficient to constitute an 'arrangement' between A and B if:

(i) A makes a representation as to his future conduct with the expectation and intention that such conduct on his part will operate as an inducement to B to act in a particular way;

(ii) such representation is communicated to B who has knowledge that A so expected and intended;

(iii) such representation or A's conduct in fulfillment of it operates as an inducement, whether among other inducements or not, to B to act in that particular way.[77]

1. Mr Williams KC said that His Lordship's formulation in its own terms did not purport to be exhaustive. I accept that submission. Without going to the fairly complex facts of the Australand case, that formulation was apt to the concept of arrangement under consideration there. Neither Lord Diplock (as he later became) nor the majority of the Court of Appeal can be regarded as stating that nothing can be an arrangement which does not fall within the description just quoted. The concept of a 'unilateral' arrangement therefore may be appropriate in the present case.
2. Uninstructed by various authorities already referred to, I would have considered that since the provisions with which we are dealing render 'acquisitions' dutiable, the focus as to whether a number of acquisitions constituted an arrangement or a single transaction should be upon the actions and motives of the acquiring parties. This view is however at odds with the views expressed by Bowskill J (as she then was) as a Judge of the Supreme Court of Queensland in Wakefield's case.[78] Her Honour specifically rejected a contrary statement in the Queensland Tribunal in Rawlings & Ors v Commissioner of State Revenue.[79] Nevertheless, this statement does not seem to have formed part of the ratio decidendi of Wakefield's case. Her Honour determined that the aggregation provisions did not apply in that instance because whilst there might have been a unity of purpose on the part of the transferor, namely to divest herself of her property, there was no unity of purpose or action in the case of the transferees.[80] Mr Flynn KC and Mr Sievers were correct in their observation that none of the authorities under consideration determines a particular dispute in favour of the revenue and aggregation based on the actions of the transferees. Mr Williams KC observed, however, that Wakefield's case is a decision of a State Supreme Court which necessarily outranks and is more persuasive as a precedent than a mere Tribunal decision. Moreover, where the appeal panel in the Pacific General case stated that the conduct of the transferees was of 'primary significance', necessarily they did not suggest that the actions or motives of the transferor were irrelevant or not to be considered.[81]
3. It would seem therefore that the proper approach based on the totality of the authorities in Court and in various Tribunals to provisions such as those with which we are now concerned is to have regard to the actions and motives of both the transferor and the transferee.
4. I invited Mr Williams KC to give his analysis and response to a hypothetical scenario in which a land development company encountered a liquidity crisis. It determined to resolve the crisis by liquidating all of the allotments on a particular plan of subdivision. It instructed solicitors to prepare contracts for the sale of each allotment in identical terms providing for a 10% cash deposit and settlement in 60 days from the day of sale. Auctions were scheduled on the same day at various times for all allotments in the subdivision and the auctions were conducted in every case by the same auctioneer. The allotments were 'knocked down' to a variety of members of the public with no connection one with another. Mr Williams KC was inclined to concede that in those circumstances, based on the aggregation provisions in the Duties Act under consideration here, there would be no occasion to aggregate the various sales for duty purposes despite the many resemblances between the various sales. Why I asked should that scenario be seen as different from the one now before the Tribunal?
5. Mr Williams KC replied by stating that in the present instance there was a unity or 'oneness' of intention on the part of Diamond Creek's investors. Whilst they were not acquainted with one another, they did have a unity of purpose in becoming shareholders in Diamond Creek. In doing so, they bound themselves to the terms of a share offer and to the terms of the constitution. They there by joined albeit indirectly as shareholders rather than directly as principals in a development project. The management structure of the company for whose shares they had subscribed, laid down the regime under which this project would be carried out, including, it would seem, according to the share offer, a special clause in the constitution entrenching Oliver Hume's management role, absent 90% of shareholders resolving to the contrary. I accept this characterisation of the transaction. At least as regard the shareholders or 'acquirers'.
6. There is clearly a unity of purpose as regards the transferor. The purpose being to raise equity via the enlistment of shareholders to enable the company to carry through a singular development project.
7. Plainly there was an 'arrangement'. The authorities show the word whilst not of infinite width is very wide indeed, extending to situations where no legally enforceable rights and obligations are created. As it is, there were legally enforceable relationships in the form of the share offer, perhaps more accurately to be regarded as an invitation to treat with the shareholder applications constituting offers which might be accepted. Upon acceptance the shareholders acquired not only equity in the company and therefore for duty purposes a 'deemed' interest in the development property owned by Diamond Creek, they were also bound by the statutory contract constituted by the constitution and the rules laid down under the Corporations Act.
8. Further, there was a 'oneness' or 'unity' of purpose as between the shareholders and Diamond Creek. Diamond Creek sought to have the shareholders as members and as providers of equity which was the very same objective which the shareholders had in lodging their application for shares in accordance with the Information Memorandum. The subscribers joined in that objective. Even if as Mr Flynn KC and Mr Sievers (in a supplementary submission) contended, the landholder provisions (section 78) focus only upon the actions of the acquirers unlike the provisions of section 24 the necessary 'oneness' is to be found there.
9. There remains the issue of revenue Ruling No. DA.057 issued by the Commissioner July 2012 entitled 'Landholder Provisions - Meaning of 'Associated Transaction''. Mr Flynn KC and Mr Sievers on behalf of Diamond Creek contended and I accept, that subject to a restriction on the acceptability of subscription offers from persons who did not render the process exempt from the most rigorous requirements of the Corporations Act as to issues of security, this Information Memorandum and the share offer could be regarded as made to the public at large. The reasoning which the Commissioner's counsel have advanced and which I have accepted, would lead, as a matter of logic to the view that all security offers of this type, whether subject to the most rigorous regulation by the Corporations Act or not, would be brought to charge under the landholder provision. The revenue ruling however states

The Commissioner has taken the position that he will not regard acquisitions of interests by independent members of the public as an associated transaction if the acquisitions are made in response to a genuine public offer under a product disclosure statement or prospectus lodged with the Australian Securities and Investments Commission. However, the Commissioner's position will not apply if it is found that other circumstances exist which indicate that the acquisitions form part of substantially one arrangement one transaction or one series of transactions or the acquirers acted in concert in making the acquisitions.[82]

1. There is no provision which would appear to authorise the Commissioner to offer this concession. Mr Williams KC said it could be equated with a police officer's determination to merely reprimand a speeding motorist rather than issue a contravention notice or otherwise pursue a prosecution. Doubtless all persons holding Government office with a responsibility for the enforcement of certain laws have discretions to make compromises and refrain from pursuing matters in particular cases. Here, however, what seems to be purportedly done is to add a proviso to the terms of the Duties Act and make a general rule without any statutory warrant for doing so. Nor is there evident any statutory policy in the Duties Act which would justify the drawing of any such distinction as the ruling does. Mr Williams KC also observed correctly that the ruling does not have the force of law. At page 6 it concludes with the following statement 'Please note that rulings do not have the force of law ...'. I have only one matter before me. That does not involve an offer to the public where product disclosure statement or prospectus was lodged with the Australian Securities and Investments Commission. The matter that is before me, for the reasons already given seems properly to be subject to the aggregation elements of the Landholder provisions and so is dutiable as assessed by the Commissioner.
2. The Commissioner's assessment is confirmed.

[25] (2019) 110 ATR 369.

[27] [2019] QSC 85.

[29] (2019) 110 ATR 369, 391 [108].

[30] [2004] NSWADTAP 51; (2004) 58 ATR 17.

[31] [2004] NSWADTAP 51; (2004) 58 ATR 17, 25 [47].

[33] [2011] VCAT 593.

[39] (1998) 194 CLR 355, [69].

[44] (1997) 187 CLR 384, 408.

[64] [1957] HCA 99; (1957) 96 CLR 577, 630.

[65] [1952] HCA 34; (1953) 87 CLR 548, 573.

[66] [2011] VCAT 593.

[67] [2019] QSC 85, [53].

[73] [2009] VCAT 2774.

[74] [1978] HCA 55; (1978) 140 CLR 434.

[75] [2012] VSCA 152; (2012) 89 ATR 329.

[76] [1963] 2 All ER 807.

[77] [1963] 2 All ER 807, 819.

[78] [2019] QSC 85, [53]-[55].

[79] [2015] QCAT 10, [12].

[80] [2019] QSC 85, [66]-[67].

[81] [2004] NSWADTAP 51; (2004) 58 ATR 17, [47].