Plaintiff v Defendant

Supreme Court of Victoria|2015-05-28|Before: CROFT J

For the reasons which follow, I am of the opinion that Kameel's submission in this respect is based on a too narrow view of the issues arising with respect to the McDonald's land. In my view, questions of law do arise with respect to the operation of the provisions of the Agreement for Occupation and Lease, the contract and its variants and the effect of the payments which were made by McDonald's. Moreover, the Commissioner's concession with respect to what might have been implicit in the Tribunal's reasoning and findings with respect to the nature of payments is not more than an inference drawn from the Tribunal's reasons. Consequently, the Tribunal's findings of fact in this respect go no further than identifying the timing and quantum of payments. The consequences of those payments in the present context raise a question or questions of law.

Nature of payments and possession prior to completion of contract of sale

The Commissioner submits that, on the evidence, the source of the payments and possession before completion could not have changed from the lease to the contract of sale. The lease could not have been surrendered.
The Commissioner relies on five critical maters:

(1) The contract of sale provided for no periodic payments.[57] It provided for the payment of only: (i) an initial sum of $117,000;[58] and (ii) the balance upon completion.

(2) The balance payable upon completion was calculated by reference to the rent payable under the lease as at the completion date,[59] necessarily presupposing the continuation of the lease until that date. Other than that formula stated in the contract of sale, no other foundation was available in the evidence for the very specific consideration stated in the transfer of land.[60]

(3) The defendant's own evidence was that the lease was a 'formality' securing what was really 'interest' (at 9% per annum) on the outstanding purchase money pending completion.[61] In other words, it was the lease, 'formality' or not, that was the source of the obligation of McDonald's to make periodic payments until completion.

(4) The evidence from McDonald's was that, as at 14 October 2010, being almost two years after registration of the plan of subdivision on 8 January 2008, the only payment that it had in fact made under the contract of sale was the deposit of $117,000.[62] That evidence was unchallenged.[63] The Tribunal overlooked or ignored it.

(5) No evidence was led of any act that might constitute 'surrender' of the lease nor was there any evidence of contemporaneous or subsequent conduct constituting 'tak[ing] possession' within the terms of s 15(1) of the ... [Act].[64]

Other than by acceptance of the defendant's submission that there was 'a magical thing that happened', it was simply not open for the Tribunal to find that the lease had been surrendered and to find (implicitly) that payments of rent under the lease changed to being payments of 'interest' under the contract of sale. Rather, the evidence compelled a finding that the payments made after the supposed date of surrender of the lease could only have been payments of rent under a subsisting lease in exchange for possession.
These challenged findings were critical to the Tribunal's conclusion that ss 15(1) and 16(1)(a) of the ... [Act] were satisfied. The Tribunal applied the principles derived from Highlands Ltd v Deputy Commissioner of Taxes (SA),[65] Cam & Sons Pty Ltd v Commissioner of Land Tax[66] and E Long & Co Pty Ltd v Commissioner of Land Tax[67] to the facts as found. The Tribunal expressly found that, were the source of McDonald's possession the lease rather than the contract of sale, s 15(1) would not be satisfied.[68]

30 Kameel commences its submissions with respect to this aspect of the proceedings by observing that the contract of sale provided that the "Settlement Date" was "the date upon which the Purchaser shall become entitled to vacant possession of the land, namely upon registration of Plan of Subdivision 543420X".[69] Reference has already been made to the difference between the Plan of Subdivision reference in the contract and the plan actually registered. The Tribunal observed that the fact that both the "Settlement Date" clause and the Contract in clause 5.4 of the Agreement for Occupation and Lease were not varied to refer to the "L" plan, rather than the "X" plan was most likely an oversight, hence did not affect the substance of its finding that the contract "appears on its face operative to entitle McDonald's to vacant possession under the contract when the L plan was registered on 8 January 2008."[70] The Tribunal reasoned that this was so "although payment of the balance of the purchase price was not due until five years from 20 December 2006, on 20 December 2011."[71] Thus, Kameel submits, this finding means that this provision of the contract of sale made McDonald's a purchaser in possession, and therefore a deemed owner, for the purposes of s 15 of the Act.[72] Consequently, it is submitted that whether or not the lease was surrendered, McDonald's was in possession pursuant to the contract of sale and the Commissioner's challenge, even if successful, cannot affect the Tribunal's conclusions.

31 Continuing, Kameel concedes[73] that the Commissioner is correct in noting[74] that the Tribunal found that "if the source of possession is a lease rather than the contract of sale, this does not satisfy s 15."[75] Kameel contends that this finding has "no relevance to the Commissioner's submission that the source of possession was a lease and the contract of sale."[76] It is said that rights flowing from a contract of sale are not destroyed merely because the same rights flow from a lease. In support of this contention, reference is made to Cam & Sons' Case.[77] The plurality of the High Court found the purchaser "obtained possession ... not merely as a tenant but as a purchaser pursuant to the contract and this is sufficient to satisfy the requirements of s 26(1)(a) [of the Land Tax Management Act 1956 (NSW)]".[78] Similarly, in Yule v Commissioner of Taxes,[79] the Supreme Court of New Zealand cited Rhodes v Commissioner of Taxes[80] with approval, where it was held that "the relationship of landlord and tenant created by the lease was not meant to destroy that of vendor and purchaser; in other words ... the lessee had a leasehold interest plus the status of purchaser."[81] Consequently, it was found that the lessee/purchaser had possession pursuant to the equivalent provision in the New Zealand legislation.

32 At this point, Kameel also contends that leave to appeal in relation to the McDonald's land issues - Ground 1 of the Proposed Notice of Appeal - should be refused as the case put by the Commissioner is "far from 'sufficiently arguable'".[82] I do not, however, accept this submission, having regard to the nature and complexity of the issues raised by this proposed ground of appeal. It is tempting, when complex issues are disposed of on appeal, to think that the answer was clear and simple. It is, however, often hindsight and, in the present case, I am more than satisfied that the issues raised in this ground of appeal raise complex and difficult issues of general law and in terms of statutory interpretation and could not, reasonably, be said to be issues which were "not arguable". Moreover, Kameel's submissions in this respect do, particularly, in my view, overlook the complexities arising with respect to the construction of s 15 of the Act, matters which are addressed in detail in the reasons which follow.

33 Kameel then turns, in its submissions, to build upon the contention referred to earlier, namely, that the Commissioner's challenge to the Tribunal's findings does not disclose any error of law. In this context, Kameel contends that the Tribunal's findings were open to it and that the matters raised in the Commissioner's proposed Ground 1 do not identify errors in the Tribunal's reasoning.

34 First, Kameel submits that the Tribunal made no findings of fact - express, implied or "presumably implicit"[83] - in relation to the character or quantum of payments by McDonald's to Kameel. Kameel says that Mr Mondous' testimony that McDonald's paid interest until title was transferred was probative, unchallenged evidence that the payments were interest. Such a finding, it is said, is consistent with McDonald's possession under the lease being possession under the contract of sale. Moreover, at the settlement date, McDonald's was entitled to vacant possession and was and continued to be in possession of the McDonald's land.

35 Secondly, Kameel contends that the fact that the contract of sale referred to yearly rent payable under the Agreement for Occupation and Lease as at the completion date does not dictate the conclusion that the lease was not surrendered. That provision was, it is said, inconsistent with clause 5.4 of the Agreement for Occupation and Lease, requiring surrender of the lease on registration of the plan of subdivision, and the grant of vacant possession on that date. Kameel submits that the Tribunal took account of the inconsistencies and anomalies in the documents[84] and concluded that the parties intended the lease (or leasehold estate) to be surrendered automatically on the date of registration of the plan of subdivision; it being clear which plan of subdivision was being referred to, in spite of different nomenclature with respect to the plan of subdivision number.

36 Thirdly, Kameel contends that the Tribunal considered and rejected the "self-serving" letter from the solicitors for McDonald's, Hunt & Hunt, to the State Revenue Office, dated 14 October 2010,[85] on the basis that "the opinion of McDonald's is not an impartial one and it declined the opportunity to be jointed to be heard or make a submission."[86] Moreover, Kameel submits that consideration of, and the weight to be accorded to that evidence is a matter for the Tribunal.[87] In my view, there is no doubt that the latter proposition is correct.

37 Concluding its contentions with respect to these matters, Kameel submits:[88]

Even if valid, the Commissioner's arguments cannot be considered in isolation. A balanced analysis must weigh them against the arguments in favour of the conclusion that the lease was surrendered. Not least of these is the inherent implausibility of what the Commissioner suggests the Tribunal ought to have found - that McDonald's gratuitously paid the Defendant some $346,500 in rent[89] after it was contractually obliged to surrender the lease and during the period it was entitled (according to the Commissioner) to occupy the land rent-free.
1. Where the terms of a contract are inconsistent with those of a lease, the question of whether the lease has merged depends upon the intention of the parties.[90] Further, acceptance by the tenant of a new interest inconsistent with the demise constitutes surrender of the lease by operation of law.[91] The Tribunal found that the parties intended the purchaser to have possession under the contract (rather than the lease) from 8 January 2008.[92]

38 In response to the submissions by Kameel to which reference has been made and, in particular, to the broader proposition that the first ground of the proposed appeal does not identify any error of law, the Commissioner contends that it is immaterial for present purposes whether the better expression of the alleged error of law is, as Kameel prefers, that there was "no evidence" to support the Tribunal's conclusion or, as Phillips JA preferred in S v Crimes Compensation Tribunal[93] that the conclusion was "not open" to the Tribunal.[94] I turn now to the Commissioner's submissions in response to those of Kameel in support of the position that the relevant conclusions were open to the Tribunal.

39 In relation to Kameel's contention that there was evidence before the Tribunal supporting its findings in relation to the surrender of the lease and McDonald's subsequent payments to the defendant under the contract of sale, the Commissioner contends that the three pieces of evidence which Kameel says were available to support the Tribunal's conclusion do not in fact support that conclusion.

40 The first piece of evidence referred to is "a contract of sale which provided McDonald's a right to vacant possession".[95] The Commissioner says that this is a reference to the following part of the Particulars of Sale:[96]

SETTLEMENT DATE: Is the date upon which the Purchaser shall become entitled to vacant possession of the land, namely upon registration of Plan of Subdivision 543420X.

The Commissioner contends that, putting aside the fact that the plan of subdivision was never registered (and, it is said, that the evidence was arguably well short of the convincing evidence needed for rectification), the question for the Tribunal was whether, on 8 January 2008 when a different plan of subdivision was registered, McDonald's in fact surrendered its lease and instead took possession pursuant to the contract. It is contended that this part of the Particulars of Sale provides no assistance in answering the question of what occurred on and after 8 January 2008. The Commissioner says that, if not irrelevant, it is neutral; it is consistent with the conclusion advanced by the Commissioner that McDonald's maintain the lease. In my view, the focus on the plan of subdivision issue does not advance the Commissioner's case. In all the circumstances, having regard to the Tribunal's reasons and the documents to which reference was made by the Tribunal and in submissions by the parties on the hearing of this appeal, I am of the opinion that the Tribunal was not in error in finding that the plan of subdivision which was registered on 8 January 2008 was the critical plan of subdivision for present purposes. Moreover, in these circumstances, whether or not there was "convincing evidence" which would support rectification does not arise, as it is not a question of rectification but, rather, a matter of appropriate or sensible construction of documents in all the circumstances.[97]

41 The Commissioner then focuses on the second piece of evidence said to be available by Kameel to support the Tribunal's conclusion, namely, "a lease agreement wherein the parties agreed that it would be surrendered".[98] The Commissioner says that is a reference to clause 5.4 of the Agreement for Occupation and Lease, but that, as pointed out in Kameel's submissions,[99] the language of that clause is that the lease "will be surrendered" by the parties "if ...".[100] The Commissioner contends that it is significant that the clause does not say "will stand terminated" or "will automatically cease."[101] Moreover, it is submitted that beyond the "legal" question of the proper construction of the clause, the Tribunal's finding was that the lease was in fact, surrendered.[102] That is, the Commissioner submits, the question addressed and answered by the Tribunal was whether, on 8 January 2008 when the alternative plan of subdivision was registered, McDonald's actually surrendered its lease and instead took possession pursuant to the contract. The Commissioner says that, again, the evidence of the contractual provisions is of no assistance - or is neutral - in answering this question. This issue is explored further by the Commissioner in a footnote reference to these submissions, as follows:[103]

A "surrender" of a lease by a tenant may be implied where the tenant acts in a way unequivocally referable to an intention to the end lease, with the landlord's assent.[104] It is submitted that neither party acted in this way. No evidence was led that, at the time, the defendant: (1) made any complaint that McDonald's had breached any obligation to surrender the lease; (2) made any complaint that McDonald's had breached any obligation under special condition 12(c) to lodge a notice of acquisition; or (3) obtained a land tax clearance certificate as it was ostensibly obliged to do under special condition 11 of the contract. It is unnecessary to consider whether the relevant contractual provisions were a sham.[105] It suffices to say that any such rights/obligations of the parties that genuinely existed were never in fact exercised/performed.

42 For the reasons already indicated, I attach no significance to the reference, in the Commissioner's submissions to which reference has thus been made, to the "alternative plan of subdivision" or to the matters raised in the Commissioner's submissions set out in the immediately preceding paragraph. In my view, as indicated, the registration of the plan of subdivision on 8 January 2008 was registration of the critical plan for the purposes of the provisions of the Agreement for Occupation and Lease and for the provisions of the contract of sale, particularly with reference to the "Settlement Date" as set out in the Particulars of Sale. Moreover, it follows, in my view, that the Tribunal was correct, bearing in mind that it was speaking in its reasons subsequently to 8 January 2008, in finding that the lease had been surrendered on that date as a result of the agreement of the parties, express or implied in the provisions of the Agreement for Occupation and Lease and the contract of sale.

43 The third matter the subject of the Commissioner's submissions in this respect goes to Kameel's submission with respect to "the unchallenged testimony of the Defendant's director that McDonald's made payments of interest rather than rent."[106] In this respect, the Commissioner submits:[107]

That is a reference to paragraphs 17 and 18 of the witness statement of Mr Mondous.[108] Ignoring both the defendant's characterisation of this evidence as "unchallenged" and whether such evidence has any probative value at all,[109] the Commissioner submits that the evidence is actually inconsistent with the Tribunal's conclusion, because Mr Mondous maintained that it was the lease (albeit a "formality") that secured the monthly payments by McDonald's from the execution of the contract until completion, whereas the Tribunal found that the lease was surrendered before completion.

In my view, the Commissioner is quite correct in his submissions that, in summary, even if this evidence of Mr Mondous were admissible, it has no probative value and consequently, the reasoning of the Tribunal, putting aside the issue of the Mondous evidence, is not erroneous and has the effect contended for by Kameel.

44 Finally, the Commissioner contends that Kameel has not addressed, in its submissions, the "five critical matters" which the Commissioner identified with respect to the payments and possession before completion of the contract of sale.[110] Thus, the Commissioner submits in reply:[111]

With reference to the "five critical matters" identified at paragraph 20 of the plaintiff's submissions dated 20 February 2015:

(1) The first of those matters is ignored by the defendant's submissions. It is fundamental: how could the contract rather than the lease have been the source of McDonald's' monthly payments in exchange for possession before completion when the contract provided for no such payments?

(2) The second matter (calculation of the price at completion) is, contrary to the defendant's submissions (at [17]):

(a) plainly inconsistent with the Tribunal's conclusion; and

(b) consistent with both clause 5.4 of the "Agreement for Occupation and Lease" (properly construed) and the "SETTLEMENT DATE" particular in the contract of sale, for the reasons explained above.

(3) In respect of the fourth matter (the letter from McDonald's' solicitors), contrary to the defendant's submissions at [18], the Tribunal considered and rejected[112] only part of the letter in question, overlooking or ignoring the relevant aspect that was unchallenged by the defendant.

(4) The third and fifth matters need no elaboration.

The evidence compelled the conclusion that the payments made after the supposed date of surrender of the lease were payments of rent in exchange for possession under a continuing lease. The character of the payments made by McDonald's was the same both before and after the alleged date of surrender.
In the manner of a further notice of contention point, the defendant's submissions (at [11]-[14]) appear to contend that the Tribunal's decision that s 15 applied to the McDonald's land can be sustained even if, contrary to its finding, the lease was not surrendered. The basis for the contention appears to be a submission that "the source of possession was a lease and the contract of sale". That submission is attributed to the Commissioner. The Commissioner has never made any such submission. The notion that McDonald's, having taken possession as tenant under the lease, then took possession under the contract whilst at the same time somehow maintaining possession under the lease was never advanced by the parties or raised by the Tribunal.

45 These submissions by the Commissioner and Kameel do, at least, highlight one matter that is clear - namely, that the documentation of the McDonald's land transaction leaves a good deal to be desired in terms of clear and consistent drafting and a coherence and congruity between the relevant documents, principally the Agreement for Occupation and Lease and the contract of sale. Nevertheless, two provisions in the documentation do, in my view, provide some clarity. This is particularly the case when these provisions are viewed in the context of the overall transaction itself with respect to the McDonald's land - namely, a sale and purchase of land which was subject to the process of subdivision which meant that if possession was to be provided to the purchaser, it had to be on some basis other than under the provisions of the contract of sale, because of the restrictions on the sale of unsubdivided land imposed by s 9AD of the SLA.

46 The first of these provisions is clause 5.4 of the Agreement for Occupation and Lease providing for surrender of the Lease term created under this agreement on - in effect, as discussed previously - the registration of the relevant plan of subdivision, the plan actually registered with respect to the land of which the McDonald's land forms part. Moreover, the provisions of this clause do not, in my view, by reason of the language used, suggest any conditionality or that any further step was to be taken by the parties to effect surrender. In my view, the intention is clear in the context of the provisions of the Agreement for Occupation and Lease and the contract - and in the context of the overall transaction and the second of these provisions, which also emphasises and marks this context.

47 The second of these provisions is the definition of "Settlement Date", which appears in the particulars of sale. Thus, the settlement date means the date upon which the relevant plan of subdivision was registered - 8 January 2008. Moreover, on that date - as the settlement date - McDonald's became entitled to possession of the McDonald's land under the contract.

48 It follows, in my opinion, that, for the reasons and on the bases contended by Kameel, the Tribunal made no error of law in its findings with respect to the surrender of the lease and McDonald's possession and subsequent payments under the contract of sale. Moreover, although it may be said that the evidence with respect to subsequent payments - that is, payments made after surrender of the lease term - was not entirely clear, there is no basis, in my view, for any finding that the Tribunal made an error of law with respect to this evidence. This applies in relation to findings it did make and findings which the Commissioner contends it should have made.

Construction of section 15

49 Kameel, in its submissions, observes that in the Tribunal proceedings, it argued that Highlands Ltd v Deputy Commissioner of Taxes (SA)[113] stood for the proposition that a purchaser exercising de facto possession, with the vendor's consent, was a purchaser in possession for the purposes of s 15 of the Act, whether or not the contract provided a right to early possession.

50 Kameel contends, however, that one of the four judgments in Highlands adopted the approach the Tribunal attributed to them, namely, that a purchaser must have a legal entitlement to possession under the contract of sale in order to be in possession under s 15.[114]

51 Rich J, in his Honour's judgment, did not see any reason to determine whether the "self-contradictory, or almost self-contradictory, set of provisions upon which the right to possession depended"[115] afforded the purchaser a contractual right to early possession. All that mattered was the fact that the purchaser, with the vendor's consent, took actual possession. Thus, his Honour concluded:[116]

I see no reason to doubt that ... [the purchasers] were allowed de facto control by the vendor, and intended to exercise it; and this appears to me to amount to obtaining possession within the meaning of ... [s 37 of the Land Tax Assessment Act 1910].[117]

Paraphrasing the words of Hosking J in Yule, Rich J said that "when a person is spoken of as being in possession as purchaser it is but a colloquial method of indicating the particular right under which possession is maintained."[118]

52 This reference was, Kameel contends, cited by the Tribunal in support of its narrow interpretation of Highlands,[119] but the relevant passages in Yule and Highlands do, in my view, as Kameel submits, reveal that the intention of both Hosking J and Rich J was, on the contrary, to give as wide a meaning as possible to the term "possession". The cited words in the original context in fact suggest that possession by a purchaser is always possession for the purposes of the legislation, no matter what the "right" is under which it is maintained, including where, as in Yule, that right arises from a lease, rather than a contract of sale. Thus, in Yule, Hosking J said:[120]

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

Moreover_,_ immediately after referring to this passage, Rich J made this statement, which it must be accepted, in my view, is unqualified in its meaning:[121]

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

This statement also echoes Hosking J's understanding of "possession" in the same legislative context:[122]

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

53 Starke J, in Highlands, also spoke in terms of de facto possession referable to the contract:[123]

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

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

54 Also in Highlands, Dixon J held that possession, for the purposes of the relevant provision, was "possession as purchaser obtained in intended execution of the agreement of sale".[124] In my view, it is clear that the plain meaning of this proposition must be, as Kameel contends, that a purchaser who intends to complete the purchase of the land, and takes possession in the interim, obtains possession in intended execution of the agreement for sale. Whether, in possessing the land, the written contract of sale is performed, modified, or ignored was, for his Honour, immaterial: what counts is that the purchaser and vendor intended, respectively, to "relinquish and assume possession".[125] It is, again as contended by Kameel, the reason that Dixon J expressly stated that the question of whether the purchaser took possession does not depend upon the terms of the written contract of sale: giving and taking of possession was a matter the parties determined by their actions.[126] Consequently, it does not matter if the contract did not permit early possession, because the vendor may have implicitly waived conditions preventing the purchaser taking possession. Alternatively, the purchaser may have taken possession independent of the contract entirely, effectively tendering substituted performance of the contract. The vendor's consent to such possession would constitute acceptance of such tender.[127]

55 I also accept Kameel's contention with respect to the approach of Evatt J in Highlands. Evatt J, in his judgment, makes no mention of the problematic contractual provisions which, on the facts of Highlands, regulated the purchaser's right of possession. It is clear that his Honour regarded factual and not legal possession as the only relevant criterion:[128]

The section makes the land liable to taxation in the buyer's hands so soon as possession is obtained by him from the vendor.

What was the position on June 30th 1925? It has already been described. The appellant was not merely the buyer from Bransons under the contract made in the previous February but had exercised dominion and control of the land, had completed the scheme of subdivision, had endeavoured to cause all of it to be sold, and had had a great deal of it sold. ... The substance of the matter is that the Bransons had themselves ceased to be in possession of the land, and had given up such possession to the appellant in order that the latter could carry out its scheme of disposing of the subdivision.

56 Kameel submits that its understanding of Highlands leads to an harmonious interpretation of ss 14 and 15 of the Act. Whereas, it is contended, s 15 refers to de facto possession, with or without an express right under the contract of sale, s 14 refers to de jure possession - a right to possess the land before payment and transfer of title are complete. Thus, it is submitted, that under s 15, the purchaser becomes an owner on taking possession of the land; under s 14, the purchaser becomes an owner on entry into the contract. Because actual possession, as opposed to a mere entry into a contract, suggests a genuine rather than "dummy" sale, only possession pursuant to s 15 can lead to exclusive ownership by the purchaser pursuant to sub-ss 16(1) or (3). Kameel submits that this interpretation provides a closer fit to the ordinary meaning of the legislative language, and a more cohesive and logical legislative scheme, than either the Tribunal's or the Commissioner's construction.

57 Concluding its submissions with respect to McDonald's position vis-à-vis s 15, Kameel contends that the Tribunal made a finding of fact that McDonald's were in de facto possession of the land at the relevant assessment dates.[129] McDonald's was, therefore, a purchaser who had taken possession for the purpose of s 15 of the Act - it was a deemed owner of the land.

58 The Commissioner's contentions with respect to the proper construction of s 15 are, in relatively concise terms, that the construction advanced by Kameel is wrong and not supported by authority. Thus, the Commissioner submits:[130]

First, as a matter of authority, the point is settled. "[T]he particular right under which possession is maintained" is critical. Possession as tenant (ie pursuant to a lease) is insufficient. Possession as purchaser (ie pursuant to the contract of sale) is necessary. The Tribunal was correct in so construing ss 15(1) and 16(1)(a).[131] The authorities include:
- Highlands;[132]
- Cam & Sons' Case;[133]
- HC Sleigh Ltd v Commissioner for Land Tax (NSW);[134]
- E Long & Co Pty Ltd v Commissioner of Land Tax (NSW).[135]
Secondly, authority aside, it is evident from the ... [Act] read as a coherent whole that the character of a person's possession of land is critical to whether the person is considered an owner of the land for land tax purposes. Owners include those in possession as a mortgagee (ss 17, 43), as a tenant of Crown land (s 10(1)(b)), as a licensee of certain Crown land (s 10(1)(c)), and as a pre-30 December 1978 tenant of non-Crown land (s 45). Tenants and licensees are not otherwise made liable for land tax. The notion that mere possession of land (other than as a trespasser) is sufficient to make the person an owner liable to land tax under s 15 should be rejected.
Thirdly, the defendant's submissions ignore s 9AD of the ... [SLA]. Reading that statute together with the Land Tax Act 2005, it is submitted that Victorian law does not recognise any attempt to pass "possession" of a lot on an unregistered plan of subdivision by means of a contract of sale, as opposed to by means of a licence or lease for a fee, which is lawful.[136]

59 At the outset, it must be observed that the authorities to which the parties have referred in this context must be read in the context of their particular legislative environment. Nevertheless, it appears to be accepted that there is sufficient relevant similarity for these authorities to provide some assistance with respect to the provisions of the Act now considered. Although this may be true of the legislative context, these cases do show that careful attention must be given to the terms of the contractual arrangements involved - whether lease or sale and purchase contract provisions.[137]

60 The judgments in Highlands were the subject of detailed review by Collins J in HC Sleigh Ltd v Commissioner for Land Tax.[138] Liability of the purchaser to land tax in that case turned on the answer to the question whether, on the date for the assessment of land tax, the purchaser had "obtained possession of the land" within the meaning of s 26(1)(a) of the Land Tax Management Act 1956 (NSW).[139] In this context, the controversy between the parties was whether, as the Commissioner contended, the appellant was in possession of the relevant land under an agreement for sale of the land as at the land tax assessment date or was, as the appellant contended, in possession of the land at that date under a lease made some years prior to the agreement for sale. Collins J first made reference to the corresponding provisions of the Land Tax Assessment Act 1910 (Cth)[140] considered in Highlands:[141]

[The appellant taxpayer] ... relies on certain statements which appear in some of the judgments in ... [Highlands[142]]. At 196, Rich J said:

Section 37 of the Land Tax Assessment Act 1910 (Cth) has its origin in legislation in New Zealand which is expounded by Hosking J in Yule.[143] The expression "so soon as he has obtained possession of the land" in s 37(1)(a) refers to possession in the character of purchaser. As Hosking J says, at p 896, when a person is spoken of as being in possession as purchaser it is but a colloquial method of indicating the particular right under which possession is maintained. "To give effect to the objection of preventing dummy sales possession ought to be given the wider rather than the narrower meaning which might lead to evasion." The wider meaning results under our legislation in the liability of the buyer accruing as soon as he secures that control of the land which enables him to enjoy its profitable use or its returns.

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

The material portion of s 37 requires that, where an agreement has been made for the sale of land, the buyer shall be deemed to be the owner of the land as soon as he has obtained possession of the land. This appears to me to mean possession as purchaser obtained in intended execution of the agreement of sale, performance of which may, of course, be affected by agreed variations of its terms and by waiver, including the acceptance of substituted times and modes of performance. The provision is no doubt intended to include cases where the vendor has been in possession by himself, and cases where he has been in possession by his tenants. Accordingly, it includes not only cases in which the buyer obtains vacant possession, but cases in which he is put in receipt of the rents and profits.

Collins J observed that these statements afforded strong support for the appellant's arguments that whatever possession the appellant had on the land tax assessment date, the source of that right was the earlier lease. The respondent Commissioner in HC Sleigh, on the other hand, contended that the question before the High Court in Highlands did not relate to the nature of the possession of the purchaser, thus there was no -

need to differentiate between that type of possession of land which [is] enjoyed by a tenant of the land on the one hand, and that type of possession which is enjoyed by a purchaser who has been let into possession pending completion by the vendor on the other.[144]

61 Collins J then continued his analysis of Highlands and a variety of other Australasian authorities to which reference had been made:[145]

In Highlands the appellant had entered into a contract for the purchase of land. At no time was he the tenant of the vendor. The sole question was whether the purchaser, at the relevant date for land tax purposes, was in possession of the land. On the facts of the case it was held that certain acts that he performed, for instance dividing the land into allotments, was evidence that he had possession within the meaning of s 37 of the ... [Land Tax Assessment Act 1910 (Cth)].

[The respondent Commissioner] ... has drawn attention to the similarity of the act of subdividing in Highlands, which was one of the factors which led the court in that case to hold that the purchaser had entered into possession, with the act of the appellant in applying, before the relevant date in the present case, to the council for permission to subdivide. [The respondent Commissioner] ... also points to the action of the appellant in entering into an agreement for sale with Muir and letting him into occupation pending completion. He argues that both the application for subdivision and the appellant's act in letting Muir into possession are not the acts of a person who merely has possession of land as a lessee. With this I agree; in the context of other proceedings such acts would afford evidence of admissions which could be used against the appellant, but they cannot affect the resolution of the problem in the present case. The mere fact of contracting with Muir is, in my view, a neutral circumstance but the appellant strictly was not in a position to let Muir into occupation nor to apply to the council for permission to subdivide at the time these acts were performed.

[The respondent Commissioner] ... contended that the statements above quoted from the judgments in Highlands, although they could not be considered obiter dicta, were too widely framed and were given, as it were, per incuriam, the judges not having in mind that the circumstances of the present case might occur. He placed strong reliance on the New Zealand case of Yule,[146] which was referred to by Rich J in Highlands,[147] and submitted that the decision in that case was of assistance to his argument. In Yule the appellant had demised certain land for seven years under a lease containing a compulsory purchasing clause, and the lessee was in possession. On appeal from an assessment of the appellant by the Commissioner of Taxes for Land Tax in respect of the land it was held that - [148]

for the purposes of taxation the lease was an agreement for sale and purchase; that the lessee as purchaser was liable for land tax under s 15 of the Finance Act 1917 (NZ); and that the lessor was not concurrently liable as owner.

As Rich J pointed out in Highlands, s 37 of the Land Tax Assessment Act 1910 (Cth) had its origin in this New Zealand legislation. A distinction between s 37 of the Land Tax Assessment Act (Com) had its origin in this New Zealand legislation. A distinction between Yule and the present case is immediately apparent. In Yule there was one agreement between the parties which contained both the demise and the agreement for sale. As Hosking J said at 896:[149]

The parties entered into an agreement for sale and purchase (the purchaser going into possession) to be completed at a long-postponed date, and agreed that the intermediate period should be governed by the special incidents imposed by the lease. But the person who has entered into the unqualified obligation to buy is none the less a purchaser. The right under which he is in possession is, I think, to be properly described as a right by virtue of the instrument. At law, if an agreement to purchase is made by a tenant for years already in possession, he is said to have a double right - viz, "to enforce his bargain for the purchase of the estate and to continue in the meantime to hold it as tenant": Doe d Gray v Stanion.[150]

Previously in his judgment, at 894-5, Hosking J had referred to an earlier New Zealand case of Rhodes v Commissioner of Taxes.[151] He said:

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

Now, the nature of that possession was in question in Rhodes, when s 16 was dealt with. There a deed of lease contained a provision by which in terms in praesenti the lessor agreed to sell and the lessee agreed to purchase the freehold of the land at the price named, of which part was then paid, and providing that the purchase should be completed and the balance of purchase money paid at the end of the term, with the right in the meantime to pay off from time to time, and the right on payment of a third of the purchase money to have the purchase completed by conveyance and a mortgage for the balance. There was a further provision that the agreement should not modify nor affect the relationship of landlord and tenant created by the lease. It was held that the lessee was a purchaser within the meaning of s 16 of the Land and Income Assessment Act 1907 (NZ), that he was not merely the owner of a leasehold estate in the land but had an equitable estate in fee simple, and that the relationship of landlord and tenant created by the lease was not meant to destroy that of vendor and purchaser; in other words, that the lessee had a leasehold interest plus the status of purchaser. The Court appeared to treat the instrument as in effect an agreement for sale, with an attornment by the tenant of the rent stated for the sake of greater security, and held the actual and physical possession of the land to be enough to meet the purposes of the section, and that it could not be said that the possession was merely that of a lessee.

Instead of cutting down the principle contained in statements previously quoted from the judgments in Highlands, it is my opinion that the New Zealand cases reinforce it. The emphasis placed on the status acquired by the purchaser who is let into possession under the agreement for sale complements and expands the principle that, for land tax purposes, the possession obtained by the purchaser is to be "referable" to that agreement.

62 A similar approach to that of Collins J in HC Sleigh was adopted by Maguire J in E Long & Co Pty Ltd v Commissioner of Land Tax,[152] and by reference to Cam & Sons' Case.[153] Thus, Maguire J said:[154]

As has been said the contracts in Cam & Sons' Case provided that the purchaser should be entitled to the rents and profits as from the date of contract although all the members of the High Court pointed out that this provision, in itself, would not have given to the purchaser the right to assume possession before completion.[155] This result, that is the purchaser's right to assume possession on the signing of the contract, arose from the construction of the contract as a whole and from the inter-action of its various provisions. In the present cases the contracts provide that the vendor should be entitled to the rents and profits up to the date of completion and this provision was in no way modified by the licence agreements. They also provide that vacant possession should be given on completion, and there is certainly no express variation of this provision to be found in the language of the licence agreements although counsel for the appellants submitted that there had been an implied variation thereof; but I do not accept this submission. The licence agreements, in my view, conferred no right on the licensees, who happened also to be the purchasers under the contracts for sale, to assume possession in the relevant sense; they merely conferred a privilege to occupy and this privilege could be revoked for any reason at all (or for none) by the giving of seven days' notice. If the purchasers, on the other hand, were obtaining the right to assume possession under the contracts for sale (as varied, according to submissions put forward on behalf of the appellants) one would expect that the arrangement would have been such as to confer on them the right to protect that possession so long as they fulfilled their contractual obligations. In my opinion cl 10 of the licence agreement is inconsistent with the concept of the purchasers being given possession pursuant to a (varied) contract for sale.

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

In construing the contracts between the parties in the present instance and in determining their effect it is not irrelevant, I think, to bear in mind that the licence fees were in no way to be taken into consideration in reduction, or as being on account of, the purchase price under the contracts of sale. On the other hand, the "rent" payable under the attornment clause under the contracts considered in Cam & Sons' Case were, "in or towards satisfaction of interest and the balance in satisfaction of the purchase money."

63 As the review of the authorities in HC Sleigh and E Long emphasise, and as I have indicated previously, much depends on the provisions of any agreement for sale and agreement for occupation, whether it be a lease or licence. As these cases demonstrate, the general proposition to be derived from the authorities with respect to corresponding legislation is that possession of the land must be possession "referable" to an agreement for sale - and referable in a direct rather than a general sense (as noted, particularly, in E Long). Moreover, there is the possibility - depending on the provisions of the agreement for sale and the agreement for occupation - for occupation in "dual" capacities, both as tenant and purchaser. For the preceding reasons, I am of the opinion that on registration of the relevant plan of subdivision on 8 January 2008, McDonald's was in possession of the McDonald's land as purchaser under an unconditional contract.[156] In my view, this position would not be affected in any relevant sense even if McDonald's continued in a "dual" capacity with respect to its occupation - as purchaser and tenant. However, this position does not arise as I am of the opinion that any leasing of that land was determined on 8 January 2008, for reasons already explained.

64 Finally, issues were raised as to whether the use of the word "taken" in the context of the phrase "the purchaser has taken possession of the land" as appearing in sub-ss 15(1) and 16(1) of the Act is of any significance in the context of this proceeding. The Commissioner contends that the use of the word "taken" in this provision is significant and that McDonald's has not "taken" possession of the McDonald's land in the relevant sense. In this respect, reliance was placed on the judgment of Ginnane J in Commissioner of State Revenue v Oakbee Pty Ltd,[157] where his Honour considered the legislative history of the change in the expression "obtained possession of the land" as used in s 48 of the Land Tax Act 1958 to the expression "take possession of the land" as used in ss 15(1) and 16(1) of the Land Tax Act 2005. As his Honour observed, the second reading speech on the Land Tax Bill 2005 suggests that it was not intended to alter the law.[158]

65 Reference was also made by Ginnane J in Oakbee to the judgment of Sugerman J in the New South Wales Full Court in Commissioner for Land Tax v Cam & Sons Pty Ltd,[159] in relation to which his Honour said:[160]

Sugerman J's observations were referred to with approval by Kitto, Taylor and Owen JJ, in the High Court's judgment in Cam & Sons' Case.[161] The High Court allowed the appeal from the Full Court's decision on the ground that under the contract, possession of the land had been delivered to the purchasers as purchasers and the vendor was not liable to pay land tax.
The observations of Sugerman J in Cam & Sons' Case point to a distinction between obtaining possession and taking possession and suggest that a person takes possession by their act. That construction adopts one of the many meanings of the verb "to take". Many of the dictionary definitions of the word "take" use some active word such as to seize, grasp, capture or catch. Amongst the many definitions of the verb 'take' given in the Oxford English Dictionary are:

15a. To transfer by one's own direct act (a thing) into one's possession or keeping; to appropriate; to enter into possession or use of.

absol. To take possession; spec. in Law, to enter into actual possession.

In my opinion, the definitions of the word "take" that I have referred to and set out in the previous paragraph, convey the sense in which the word "taken" is used in the phrase that "the purchaser has taken possession" that is contained in s 16(1)(a) of the ... [Act]. Where a conveyance of the vendor's estate in the land to the purchaser has not occurred, some action by the purchaser in relation to the land is required to support a finding that the purchaser has taken possession of it.

A right to possession that a vendor confers on a purchaser pursuant to a term of a contract might well satisfy a requirement that possession be delivered or obtained. However, in the circumstances of this case, it does not satisfy the requirement contained in the ... [Act] that the purchaser has taken possession of the land.
In the present case, the purchasers had paid a small part of the purchase prices, settlements had not occurred, the purchasers had a contractual right to possession, but had not exercised it, and they still owed the balance of the purchase prices.

66 As is clear from these passages from the judgment in Oakbee, the position in the present proceedings is substantially different. Here, McDonald's was in possession of the McDonald's land - as at 8 January 2008 - under a provision in the contract for the purchase of the land whereby the vendor, Kameel, conferred the right to possession. As the authorities to which reference has been made indicate, this position is not affected by the circumstance that McDonald's had also taken possession of the McDonald's land at an earlier time as a tenant. For these reasons, I am of the opinion that McDonald's had "taken possession", consistent with the reasons of Ginnane J in Oakbee.

67 Concluding this discussion of the operation of s 15 of the Act, it is, for the preceding reasons, my view that McDonald's had taken possession of the McDonald's land for the purposes of these provisions on 8 January 2008.

68 Kameel submits that, having concluded that s 15 applied, the Tribunal did not consider whether McDonald's was an owner pursuant to s 14 of the Act.[162] Thus, Kameel submits that if the Court finds that McDonald's was not a purchaser in possession for the purposes of s 15, as submitted with respect to the Yassmin land, that McDonald's was nevertheless a purchaser on deferred payment for the purposes of s 14. In this respect, Kameel says that the Tribunal construed a purchaser on credit or deferred payment as being a purchaser with a right of some kind to possess the land,[163] before receiving title[164] and, presumably, before making payment in full.

69 On this basis, Kameel submits that even if the lease was not surrendered, McDonald's was a purchaser with a right of some kind, arising from the lease or from both the lease and contract of sale,[165] to possess the land at the relevant dates, which preceded the date on which McDonald's paid the balance of the purchase price and obtained title to the land. It was therefore, Kameel contends, a purchaser on deferred payment for the purposes of s 14, and deemed to be an owner of the land.

70 These issues are discussed in more detail in the reasons which follow with respect to the Yassmin land - both in terms of the contentions by Kameel and also the detailed contentions in response by the Commissioner.

71 For the reasons which follow in relation to the operation of s 14 of the Act, McDonald's would, to the extent that it is not the owner of the McDonald's land for the purposes of the Act as a result of the application of s 15, not be an owner as a result of the application of s 14 of the Act.

72 Yassmin contracted to buy from Kameel a lot in a proposed subdivision. The contract of sale to Yassmin did not give it any right to possession before completion, which, in any event, never occurred.[166] Yassmin did, apparently, have an informal licence to access the land;[167] and, additionally, had paid some of the purchase money. The issue, in broad terms, is whether these two facts made Yassmin an owner of the land as "a purchaser on credit or deferred payment" under s 14 of the Act.

Part payment of purchase money and a right of access

73 It is not controversial that the key facts are as set out in the Commissioner's submissions:[168]

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

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

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

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

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

74 The Tribunal accepted the Commissioner's alternative argument that Yassmin was a purchaser on credit or deferred payment within the meaning of s 14 of the Act.[169] The Commissioner contends, however, that the construction of s 14 of the Act adopted by the Tribunal is not clear, but that it appears that it saw s 14 as applying whenever a purchaser has paid some or "a significant amount" of the purchase money and, pending payment of the balance, has a "right of some kind" to access or occupy the land (including a right short of possession as purchaser which would satisfy ss 15(1) and 16(1)(a) of the Act).[170] The Commissioner contends that the Tribunal's construction of s 14 on this basis is wrong.

75 More particularly, the Commissioner contends that, textually, the Tribunal's construction finds little support in the words of s 14. The section does not refer to the purchaser having paid some or a significant amount of the purchase money and does not refer to the purchaser having some right to access or occupy the land. Contextually, the Commissioner contends that s 14 should be construed so that it operates harmoniously with ss 15 and 16 of the Act. The Commissioner says that those sections take as touchstones for liability the taking of possession by a purchaser, in the capacity of purchaser, and the payment of at least 15% of the purchase money (subject to relief under the provisions of s 16(3) of the Act). Moreover, the Commissioner submits that the Tribunal's approach tends to subordinate those carefully drawn requirements and treat s 14 as the leading provision in these suite of provisions.

76 Additionally, and in support of this proposition with respect to the harmony of ss 14, 15 and 16, the Commissioner says that the Tribunal's construction of s 14 would mean that a purchaser who executes a contract and pays (say) a 10% deposit, and obtains a right to access the land,[171] with the balance to be paid (say) three months later, is an owner liable for land tax. The Commissioner says, further, not only might that be seen as a surprising result in itself, but it would make s 15 redundant, except in the unlikely scenario of a purchaser who is given possession without paying anything.

77 Moreover, the Commissioner contends that the Tribunal's construction of s 14[172] is inconsistent with the second reading speech it relied upon.[173] In that speech, a predecessor to s 14 was described as "a declaratory clause to catch the beneficial owner".[174] The Commissioner says that Yassmin had paid "some" of the purchase money under the contract of sale - the deposit, but apparently no more, and certainly less than 15% - and so might have been described as having "a beneficial interest".[175] That is, it is said, very different to describing it as "the beneficial owner" of the land.[176]

78 Kameel submits that the task of construing s 14 of the Act must commence with the ordinary and grammatical sense of the words used in the statute. These are to be interpreted in the light of their context, including the mischief the statute was intended to remedy and the legislative purpose.[177] More particularly, Kameel submits that neither party contended, and the Tribunal did not find, that either McDonald's or Yassmin were purchasers on credit. Rather, the Commissioner contended they were purchasers on deferred payment. Consequently, Kameel focuses its submissions on the meaning of the expression "deferred payment" as used in s 14 of the Act.

79 The Tribunal construed a purchase on credit or deferred payment as being a purchaser enjoying a right of some kind to possess the land, before transfer of title and before making payment in full. Kameel contends that this interpretation accords with the natural meaning of "deferred payment": payment postponed until after delivery of what has been acquired. A land purchaser acquires possession and title. Deferred payment, in the context of land acquisition, Kameel submits, must mean payment deferred until after delivery of possession and/or title. Kameel contends that s 14 will have work to do if construed accordingly, but that it will not have work to do if the meaning is artificially restricted to exclude delivery of possession without title, because a purchaser holding title is, in any case, the owner pursuant to s 10(1) of the Act; an issue explored further in relation to the construction of s 14 advocated for by the Commissioner.

80 Additionally, Kameel contends that the construction adopted by the Tribunal accords with the legislative context. The Commissioner agrees that ss 15 and 16 are directed at ensuring vendors remain liable for land tax until possession has passed under a genuine rather than "dummy" sale.[178] Moreover, Rich J, in Highlands, held that a narrow interpretation of the equivalent of s 15 of the Act may lead to evasion, so a wider interpretation will better give effect to the legislative intent.[179] Kameel says that this is equally true of s 14 and, under the Tribunal's interpretation, that provision captures purchasers who might otherwise evade the incidence of land tax. In terms of harmony, Kameel says that the resulting legislative scheme of ss 13 to 16 of the Act is harmonious. All are concerned, it is said, to prevent evasion of land tax through early or delayed possession. Section 13 is concerned with vendors remaining in possession after transfer of title and ss 14 to 16 are concerned with purchasers coming into possession before transfer of title. Moreover, it is said that where a purchaser's right of possession is not explicitly provided for in the contract of sale, so that the purchaser is caught by s 14 but not ss 15 or 16 of the Act, that right is too weak to allow the purchaser to be deemed the exclusive owner for land tax purposes. Kameel also says that where the right to possession is explicitly provided for by the contract of sale, the purchaser may have sufficient rights in the land to justify being deemed exclusive owner - but only if the requirements of s 16(1) or (3) are satisfied as well.

81 Moreover, the Commissioner also contends, unsurprisingly, that s 14 should be construed harmoniously with ss 15 and 16 - and also s 13. Nevertheless, it is submitted that in this regard, unlike ss 13(1), 15(1) and 16(1), s 14 of the Act does not contain the bracketed words "but not to the exclusion of any other person". The Commissioner says that either the difference is immaterial and the extra words are otiose, or s 14 operates so as to deem the purchaser to be "the owner" to the exclusion of the vendor. If the latter be the case, then it suggests, the Commissioner says, that the words "a purchaser on credit or deferred payment" and "an assignee or transferee of a purchaser on credit or deferred payment" have a narrow scope. Moreover, importantly and contrary to the Tribunal's reasons,[180] the Commissioner says that one should avoid a construction of Part 2 of the Act that is capable of leading to the existence of two owners but no statutory deduction or apportion mechanism.

82 Having regard to these matters, the Commissioner submits that s 14 is directed at:

(1) sales that have been completed by the execution of a transfer of land instrument but where payment is on credit or deferred; or

(2) sales financed by a loan or other credit from the vendor, whether or not completed by transfer.

83 More particularly, the Commissioner submits that the first construction emerges from:[181]

(1) the contrast between s 14 and ss 15 and 16, the latter sections stating that they apply "whether or not the contract of sale has been completed by the transfer of the land" and s 14 containing no such provision;

(2) the fact that s 14 envisages the possibility of a "transferee" of the purchaser, which presupposes an original transfer to the purchaser.

84 The Commissioner submits that the second construction identified is also preferable to the Tribunal's construction. It finds, the Commissioner says, some support in the second reading speech to which reference has been made. If the purchase price has been paid in full, the purchaser is a "beneficial owner", regardless of the fact that all or a portion of the purchase price has been provided by way of a loan or other credit from the vendor.

85 In conclusion, the Commissioner submits that on either construction, Yassmin is not an owner liable for land tax. This is a proposition which Kameel submits is incorrect, both based upon its submissions as to the proper construction of s 14 and also on the basis of its submission that Yassmin was, in any event, an owner pursuant to s 15 of the Act.

86 Turning to Kameel's submissions with respect to the construction of s 14 in response to the Commissioner's submissions, Kameel says that a construction whereby s 14 is directed solely at sales which have been completed by the execution of a transfer of land instrument but where payment is on credit or deferred leaves s 14 with no work to do, because purchasers are already exclusive owners by the operation of s 10(1) of the Act. Thus it is submitted that since it is "improbable that the framers of legislation could have intended to insert a provision which has virtually no practical effect, one should look to see whether any other meaning produces a more reasonable result."[182]

87 Moreover, it is contended that once title has passed a purchaser becomes the legal owner of the land and, consequently, there is no need for s 14 to deem the title holder to be an owner.

88 In terms of legislative purpose, Kameel submits that this construction serves no apparent purpose, because no threat to the revenue arises from the fact that a registered owner happens to owe money to the vendor. The construction is inconsistent with the legislative context and purpose. It deals neither with early nor delayed possession. It is a narrow construction that does nothing to reduce opportunities for evasion or to broaden the potential tax base.

89 Additionally, Kameel observes that the Commissioner justifies this interpretation on the basis of s 16(5) of the Act, which on its face applies only to circumstances where both the vendor and purchaser are deemed owners.[183] However, Kameel submits, that s 16(5) must be construed to refer to both deemed and legal owners, otherwise, the entire legislative scheme in ss 13 to 15 of the Act is emasculated, as all the provisions involve a legal owner holding title on the one hand, and a deemed owner on the other.

90 Kameel then turns to the Commissioner's alternative construction of s 14, namely, "sales financed by a loan or other credit from the vendor, whether or not completed by transfer."[184] Kameel agrees with the proposition that "a purchaser on credit" in s 14 can be interpreted to refer to a sale financed by credit from the vendor, whether or not completed by transfer. However, it is said, the proposition that "a purchaser on deferred payment" refers to a sale financed by a loan must be rejected. It is said, that, as the Commissioner admits, this amounts to defining "deferred payment" as "payment in full" - using funds advanced by the vendor.[185] Deferral clearly means postponement to a later date, thus a construction which requires "deferred payment" to mean payment which is not deferred does violence to the ordinary sense of the statutory words. The Commissioner, nevertheless, justifies this construction, as Kameel observes, on the basis that it accords with the reference in the second reading speech to a "beneficial owner". Kameel contends that, statements in second reading speeches, however, "cannot overcome the need to carefully consider the words of the statute to ascertain its meaning."[186] Whatever was meant in 1910 by the reference to "beneficial owner", the "words of a Minister must not be substituted for the text of the law."[187]

91 The proper interpretation of s 14 of the Act raises significant difficulty. There is no doubt that the task of statutory interpretation must begin with, as Kameel submits, consideration of the ordinary and grammatical sense of the words used. This process must, however, take place in the legislative context and having regard to the legislative purpose of the statutory provisions in which a particular provision is to be found.[188] On this basis, the legislature now provides for resort to extrinsic materials for the purpose of statutory interpretation, within limits, and furtherance of the legislative purpose in the interpretation process.[189]

92 Before turning to the grammatical sense of the words, it is useful to consider the extrinsic material to which reference was made by the Commissioner - the second reading speech to the Land Tax Bill 1910 on its introduction in the Legislative Assembly on 22 November 1910,[190] on clause 44 of the Bill (the predecessor to s 14 of the Act).[191] In relation to the predecessor provision, clause 44, and related provisions, Mr Watt (the then Treasurer) said:[192]

Clause 44 makes the purchaser of land under deferred payments liable to the tax. This may be regarded as a declaratory clause to catch the beneficial owner. Clause 45 makes the buyer liable as soon as he obtains possession, while clause 46 makes the seller liable until possession is given, and until not less than 15 per cent of the purchase money has been paid. Under sub-clause (2) the Commissioner can relieve the seller from any liability if he is of opinion that the sale is bona fide. Honorable members will see the necessity for taking some precaution against holders who desire to gain the advantage of part of the exemption by splitting their property, theoretically, and putting it in the names of other people, with, perhaps, no money being paid over at all. The Commissioner must be in a position to decide that a given sale is bona fide before he remits the tax from the seller and puts it on the buyer.

93 It will be seen that clause 44, the predecessor provision to s 14 of the Act, is said by the then Treasurer to be a declaratory provision "to catch the beneficial owner".[193] Two points arise in this respect. First, if regarded as a declaratory provision, this would appear to answer the contention of Kameel that any interpretation of s 14 must avoid overlap with the operation of s 10 of the Act. On this characterisation, some overlap between ss 10 and 14 would appear to be intended - with s 14 being usefully declaratory of the position already established in whole or in part by s 10, but in the context of the particular provisions in the scheme of ss 13 to 16 of the Act. Second, the reference is to "the" (definite article) "beneficial owner".

94 In the context of a question whether a company was the owner or the holder of a substantial interest in land under the provisions of the Stamp Act 1894 (Qld), the High Court in KLDE Pty Ltd (in liq) v Commissioner of Stamp Duties (Qld)[194] considered the nature of "beneficial ownership". In relation to the nature of the interest of a purchaser under a contract of sale, the majority (Gibbs CJ, Mason, Wilson and Dawson JJ) said:[195]

More recently in Legione v Hateley, Gibbs CJ and Murphy J said:[196]

There is no doubt that when the purchasers executed the contract and paid the deposit the beneficial ownership of the land passed to them subject to the payment of the purchase money.

Mason and Deane JJ on the other hand took a slightly different view, saying:[197]

In this Court it has been said that the purchaser's equitable interest under a contract of sale is commensurate only with her ability to obtain specific performance of the contract (Brown v Heffer[198]). ...

A competing view - one which has much to commend it - is that the purchaser's equitable interest under a contract for sale is commensurate, not with her ability to obtain specific performance in the strict or primary sense, but with her ability to protect her interest under the contract by injunction or otherwise (Tailby v Official Receiver;[199] Redman v Permanent Trustee Co of New South Wales Ltd;[200] Hoysted v Federal Commissioner of Taxation;[201] Pakenham Upper Fruit Co Ltd v Crosby;[202] ...). ...

However, for the purposes of this case we are prepared to accept the correctness of the statement in Brown v Heffer.[203]

These differences of view do not detract from the force of the statement that a purchaser under a contract for the sale of land which is specifically enforceable has a beneficial interest in the land, albeit one conditional on, amongst other things, payment of the price.

It seems to me to be inaccurate to describe as ownership the interest which a purchaser acquires on entering into a contract for the sale of land before he is entitled to call for a conveyance of what he has contracted to purchase. Until the vendor is under an obligation to convey the title which the purchaser has contracted to purchase the purchaser cannot himself show title to the property. He owns an interest in the property but he does not own the property. When a purchaser, on payment of the price becomes entitled to insist upon conveyance of title to the property he has contracted to purchase, he may rightly be described as the owner of it: see R v Australian Broadcasting Tribunal; Ex parte Hardiman.[205] If the vendor then refuses or declines to convey or is disabled from doing so, the purchaser is entitled to a vesting order: Chang v Registrar of Titles.[206] Until the purchaser is entitled to insist upon conveyance of title to the property which he has contracted to purchase, it may be right to describe the vendor as a trustee sub modo of the property and the purchaser as a beneficial owner of it sub modo. Though the purchaser has sometimes been described as a beneficial owner once the contract is unconditional, the effect of an unconditional contract for the sale of land is more accurately stated by Kitto J as transferring "to an extent" the beneficial ownership of the land: Haque v Haque (No 2).[207]

These passages from the judgments in KLDE[208] demonstrate, in my view, that there are a variety of views expressed in the cases in relation to the proper characterisation of the interest of a purchaser under a contract of sale. It is not necessary to take this issue further in these proceedings, save to observe that the state of the authorities would make it perilous to interpret the reference to "beneficial owner" in the then Treasurer's second reading speech in 1910 as necessarily a term of art - as, even now, its meaning would be open to doubt in the context of that speech. Though in making these points, I am mindful of Kameel's contention to the effect that the words of the second reading speech cannot overcome the express words of a statute or, themselves, be substituted for the statutory text. Thus, the position is, in my view, that the reference to "beneficial owner" by the then Treasurer is not decisive for present purposes, so that the proper interpretation of s 14 falls primarily to the grammatical meaning of the words and the statutory context.

95 In terms of the language of s 14, as the Commissioner contends, it neither refers to the purchaser having paid some or a significant amount of the purchase money or to the purchaser having some right to occupy the land. Moreover, it does follow, in my view, from the language and content that, as the Commissioner submits, the significance and consequences of possession of the land having been taken by the purchaser are matters within the operation of ss 15 or 16, but not s 14. I also accept that unless regard is paid to the extent to which the language of s 14 indicates some delimitation of the generality of its language, if taken as an isolated provision, the operation of ss 15 and 16 is compromised, possibly to the point of redundancy.

96 Kameel, in submissions to which reference has been made, would not exclude issues of possession from the operation of s 14; giving it an operation where possession is not explicitly provided for under the contract of sale - ss 15 or 16 possibly operating when explicit provision is made.

97 In my opinion, these considerations - including the proposition that s 14 is a declaratory provision for the purposes of the scheme of ss 13 to 16 - weigh in favour of the interpretation the Commissioner would give s 14. In summary, this interpretation is that s 14 is directed at sales that have been completed by the execution of a transfer of land instrument, but when payment is on credit or deferred or the sale is financed by a loan or other credit from the vendor, whether or not completed by transfer. In both circumstances, the purchaser would, at general law, be the "beneficial owner", the purchase price having been paid in full. This would also accord with the legislative purpose outlined by the then Treasurer in 1910 and, subject to the reservations I expressed previously, would be more in accord with the likely more general use of the expression "beneficial owner" - particularly "the beneficial owner".[209] Moreover, insofar as it may now be thought to be relevant, I am of the view that the part of the then Treasurer's second reading speech, set out previously, is at least consistent with, if not supportive of, the interpretation of s 14 favoured by the Commissioner.

98 In my view, this analysis answers the criticism of the Commissioner's contentions with respect to the operation of s 14 which might be thought to be relevant on the basis of the interpretation I have accepted. There are, however, some particular matters which are helpfully addressed by the Commissioner in reply - submissions which I accept on the basis of their reasoning and the matters relied upon, and also for the preceding reasons I have expressed. Thus, the Commissioner submits:[210]

The defendant contends (at [49]) that to construe s 14 as directed to sales that have been completed by the execution of a transfer of land instrument but where payment is on credit or deferred would leave the section with no work to do, because such purchasers are "already exclusive owners by the operation of s 10(1)". This is not so.

(1) Section 10(1) says "The following persons are owners", with no mention of "exclusive" ownership.

(2) Before the transfer is registered, a purchaser on credit or deferred payment cannot be considered an owner under s 10(1)(a).

(3) Whether or not the transfer is registered, on one view, s 14, when it applies, serves to exclude the vendor from being an owner.

(4) Section 14 deems the purchaser to be an owner, thereby allowing s 16(5) to apply 'If the vendor and purchaser are both deemed to be the owners of land under this Part" (emphasis added).

(5) If nothing else, s 14 may have been included out of an abundance of caution, as suggested by the second reading speech referring to the section as "a declaratory clause".[211]

It is submitted that "a purchaser on credit or deferred payment" is apt to describe a sale where payment is deferred until some time after delivery of the transfer instrument. The defendant appears almost to accept such a proposition (at [45], first three sentences).
The defendant submits (at [55]-[56]) that to construe s 14 as directed to sales financed by a loan or other credit from the vendor whether or not completed by transfer would do "violence" to the statutory words "deferred payment". In reply the Commissioner submits:

(1) The words "deferred payment" should not be construed in isolation from the preceding words "on credit". The phrase "a purchaser on credit or deferred payment" should be read as a composite expression.

(2) The section says "payment" not payment "of the purchase money" (contrast s 16(1)(b)). "Payment" is deferred in the sense that the vendor awaits repayment of the loan. Further, s 16(4) treats money lent to the purchaser by the vendor as unpaid purchase money.

(3) The construction advocated does less "violence" to the statute than a construction that makes s 15 redundant.

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

(1) leave is granted to appeal the Tribunal decision on the basis of the Proposed Notice of Appeal;

(2) the questions of law contained in the Proposed Notice of Appeal are answered "Yes" as to the first question and "No" as to the second question; and

(3) at the relevant time or times McDonald's was an owner of the McDonald's land for the purposes of s 15 of the Act and Kameel was the owner of the Yassmin land for the purposes of the Act.

101 The parties are to bring in orders to give effect to these reasons. I otherwise reserve the question of costs.

[1] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [125]-[126].

[2] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [90], [106], [123], [125].

[3] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [251]-[252].

[4] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [252].

[5] Commissioner of State Revenue v Frost [2011] VSC 232 (1 June 2011) [5], referring to Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335-6; Myers v Medical Practitioners Board (Vic) [2007] VSCA 163 (23 August 2007) [28].

[6] Boucher v Dandenong Ranges Steiner School Inc [2005] VSC 400 (7 October 2005) [15], referring to Spurling v Development Underwriting (Vic) Pty Ltd [1973] VicRp 1; [1973] VR 1; Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198 (11 August 2005).

[7] [2011] VSC 232 (1 June 2011) [3].

[8] Commissioner of State Revenue v STIC Australia Pty Ltd [2010] VSC 608 (17 December 2010) [10].

[9] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331; Al-Hakim v Monash University (Unreported, Victorian Supreme Court of Appeal, 28 March 2003); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163 (23 August 2007).

[10] See Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475.

[11] Osland v Secretary to the Department of Justice [2010] HCA 24; (2010) 241 CLR 320 at 333 [21].

[12] Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475; Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335.

[13] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331 at 335-6; Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203 (6 June 2006) [20], [65].

[15] Minister for Immigration and Ethnic Affairs v Guo (1997) 191 CLR 559 at 575, 597. Cf Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 348 [74].

[16] (Unreported, Supreme Court of Victoria, Ashley J, 21 December 1994) at 13.

[20] The Gombac Group Pty Ltd v Vero Insurance Ltd [2005] VSC 442 (9 November 2005) [59].

[21] Kameel concedes in its submissions that no issue arises in this appeal with respect to the issue whether or not the appeal is on a pure question of law, or a mixed question of law and fact; but as to the effect of a question of the latter type, see Epping Hotels Pty Ltd v Serene Hotels Pty Ltd [2015] VSC 104 (28 April 2015) [67].

[25] The expression used in Land Tax Act 2005 s 10(1)(a), referred to previously.

[26] The Tribunal referred also to s 6 (re-enacted with effect from 31 October 2008 as ss 29M, 29N and 29O) and s 32(2)(f) of the Sale of Land Act 1962.

[27] See Sale of Land Act 1962 s 9AA(7) defining the phrase "prescribed contract of sale" by reference to s 9AA(1) of that Act.

[28] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [9]-[19] (emphasis in original and footnotes omitted).

[29] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [20]-[38] (emphasis in original and footnotes omitted).

[30] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [35].

[31] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [44]-[45], [88], [90], [106].

[32] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [38].

[34] Court Book, 122 [5]-[6], 181-249.

[37] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [39]-[40] (emphasis in original and footnotes omitted).

[38] Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [41]-[42] (footnotes omitted).

[39] See Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [90], [106].

[40] Court Book, 258, Agreement for Occupation and Lease, clause 5.4.

[41] See Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [125]-[126].

[43] See Kameel Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1260 (8 October 2014) [125]-[126].

[44] Defendant's Submissions (20 March 2015) [6]-[10].

[45] Kameel Pty Ltd v Commissioner of State Revenue [2014] VCAT 1260 (8 October 2014) [125].

[46] Plaintiff's Submissions (20 February 2015) [18].

[47] Commissioner of Taxation v Brixius (1987) 16 FCR 359 at 366.

[48] Plaintiff's Submissions (20 February 2015) [5].

[49] Roads Corporation v Dacakis [1995] VicRp 70; [1995] 2 VR 508 at 520, cited with approval in Konann Pty Ltd v Commissioner of State Revenue [2015] VSC 23 (20 February 2015) [13].

[50] Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 356, citing Waterford v Commonwealth [1987] HCA 25; (1987) 163 CLR 54 at 77, cited with approval in Konann Pty Ltd v Commissioner of State Revenue [2015] VSC 23 (20 February 2015) [13].

[51] Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 356, citing Waterford v Commonwealth [1987] HCA 25; (1987) 163 CLR 54 at 77, cited with approval in Konann Pty Ltd v Commissioner of State Revenue [2015] VSC 23 (20 February 2015) [13].

[52] SZDTZ v Minister for Immigration and Citizenship [2007] FCA 1824 (23 November 2007) [25].

[53] Kameel Pty Ltd v Commissioner of State Revenue [2014] VCAT 1260 (8 October 2014) [20]; Court Book, 181-249.

[54] Kameel Pty Ltd v Commissioner of State Revenue [2014] VCAT 1260 (8 October 2014) [9]; Court Book, 250-302.

[55] Kameel Pty Ltd v Commissioner of State Revenue [2014] VCAT 1260 (8 October 2014) [90]; Court Book, 498, Witness Statement of Souhail Mondous, [17]-[18].

[56] Plaintiff's Submissions (20 February 2015) [19]-[22] (emphasis in original).

[58] In the contract of sale dated 20 December 2006, this sum was stated to be a deposit, payable on signing (Court Book, 185); pursuant to the variation of contract of sale dated 21 December 2006, it was stated to be payable upon registration of Plan of Subdivision 543420X (Court Book, 304, Variation of Contract of Sale of Real Estate, clause 3).

[60] The sum of $1,351,263.46 (Court Book, 351).

[62] Court Book, 122 [5]-[6] (read with Court Book, 119).

[63] The Defendant objected to the letter at Court Book, 122 only on the basis that parts of it constituted matters of legal submission rather than matters of fact. In that regard it was agreed between counsel that paragraphs 1-6 were admissible and paragraph 11 was all or mostly inadmissible (see Court Book, 886-8).

[64] Commissioner of State Revenue v Oakbee Pty Ltd [2013] VSC 672 (11 December 2013).

[66] [1965] HCA 13; (1965) 112 CLR 139 ("Cam & Sons' Case").

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