Plaintiff v First Defendant

1 This proceeding was commenced by originating motion between parties dated 21 June 2013.

2 The active parties to this proceeding are the plaintiff and the second defendant, the Commissioner of State Revenue ("the Commissioner"). The Attorney-General for the State of Victoria has not taken an active part in this proceeding.[1] In broad terms, the issue between the active parties arises out of an investigation which the Commissioner is currently completing under the Taxation Administration Act 1997 ("the TAA") into whether an acquisition of shares by the plaintiff attracts duty under the provisions of the Duties Act 2000 ("the Duties Act"). This issue, in turn, raises questions as to whether various buildings, structures and plant and equipment on land the subject of a lease between Melbourne Port Corporation and Grainco Limited of land at 137 Coode Road, Footscray, which was leased for a term of 25 years commencing on 1 September 1998 ("the Lease") are to be treated as part of the leased land for the purposes of assessment.

3 The Lease was assigned by Grainco Limited to Melbourne Terminal Operations Limited ("MTO") and ACN 089 443 407 Pty Ltd ("ACN") by an Assignment of Lease dated 7 September 1999. Subsequently, by a Sub-Lease dated 30 June 2003, the land the subject of the Lease was sub-leased by MTO and ACN to MTO.

4 MTO is a wholly owned subsidiary of Australian Bulk Alliance Pty Ltd ("ABA"). Immediately prior to 21 April 2010, the plaintiff held 50% of the issued ordinary shares in ABA. On or about 21 April 2010, the plaintiff acquired the remaining 50% of the issued ordinary shares in ABA and, as a result of this acquisition, ABA and MTO became wholly owned subsidiaries of the plaintiff.

5 In this context, the specific relief or remedy sought by the plaintiff in the originating motion is, apart from seeking an order for costs, declaratory only. The declaratory relief which is sought is in the following terms:

1. A declaration that, even if the buildings, structures, plant and equipment brought by the tenants on to the leased land were fixtures (which for the purposes only of this application the plaintiff assumes) they were not, as at 21 April 2010, part of the land.
2. A declaration that, even if the buildings, structures, plant and equipment brought by the tenants on to the leased land were otherwise fixtures (which for the purposes only of this application the plaintiff assumes) they were, as at 21 April 2010, chattels in the hands of the tenants.
3. A declaration that any interest the tenants have, or which Australian Bulk Alliance Pty Ltd ACN 087 280 260 ("ABA") is deemed to have in the buildings, structures, plant and equipment on the leased land is not an interest in land of the tenants for the purposes of the Duties Act 2000 (Vic).
4. A declaration that if the interest of the tenants in the buildings, structures, plant and equipment on the leased land is an interest in the land, the value of the buildings, structures, plant and equipment on the leased land is not to be included in the unencumbered value of the land holding of the tenants or ABA as at 21 April 2010 for the purposes of Part 2 of Chapter 2 of the Duties Act 2000 (Vic).

No relief of, what may be described as, a coercive nature, such as injunctive relief, was sought by the plaintiff either with respect to the substantive issues raised or with respect to the process of investigation and assessment by the Commissioner.

6 Senior Counsel for the Commissioner said at the hearing on 23 July 2013 that the process of investigation by the Commissioner is well advanced and that an assessment would be issued by the Commissioner "next month"; that is in August, at some time on or before 31 August 2013. It was common ground that the issues raised in the relief sought by the plaintiff are issues likely to be relevant to the Commissioner's assessment.

7 The present application arises out of submissions made at a directions hearing on 28 June 2013 at which the plaintiff advanced arguments as to the desirability of its application for the declaratory relief sought in the originating motion proceeding in advance of any assessment by the Commissioner. The Commissioner sought to counter these arguments on the basis, broadly speaking, that the statutory processes under the TAA should be utilised to resolve the assessment under the Duties Act and, in particular, to resolve matters of the kind raised by the declaratory relief as sought by the plaintiff.

8 As a consequence of the directions hearing on 28 June 2013, arrangements were made for the hearing of a preliminary question with respect to the relief or remedy sought by the plaintiff in the originating motion. These arrangements were formalised in orders made on 23 July 2013 at the commencement of the hearing of that question, orders which were in a form agreed by the plaintiff and the Commissioner. The critical part of those orders is the statement of the preliminary question; which is in the following terms:

1. Pursuant to Rule 47.04 of the Supreme Court (General Civil Procedure) Rules 2005, there be a preliminary trial of the following question:

Should the Court, in the exercise of its discretion and having regard to the evidence before it (as specified in the schedule to the order), decline to make any declaration by reason of the specialised procedures and remedies laid down by the Taxation Administration Act 1997?

9 It is important to stress the limited nature of both the preliminary question and the evidence which the parties agreed could be relied upon for its determination. For example, the agreed evidence does not include direct or comprehensive evidence of the possible complexity of any valuation process involved in the Commissioner's assessment - a process which the plaintiff submitted would involve complex factual evidence (including on technical issues going, for example, to the function and interconnectedness of machinery and equipment) and legal questions to determine whether or not buildings, structures and plant and equipment are or are not fixtures for the purpose of the application of provisions of the Duties Act. Rather, the submissions by the plaintiff in this respect sought to rely on inferences to be drawn on the basis of correspondence between the active parties.

Procedures and remedies under the Taxation Administration Act 1997

10 The Commissioner has responsibility for the general administration of the Duties Act and the TAA. This includes the responsibility to conduct investigations under Division 2 of Part 9 of the TAA.

11 The scheme established by the TAA is that:[2]

(a) an investigation may result in the Commissioner issuing a notice of assessment (under Part 3);

(b) an assessment may lead to an objection by the taxpayer (under Part 10);

(c) the Commissioner must determine an objection (see s 101 in Part 10);

(d) if the taxpayer is dissatisfied with the Commissioner's determination, the taxpayer has the right to invoke the judicial power of the Court by way of appeal or seek a merits review by the Victorian Civil and Administrative Tribunal (s 106 in Part 10);

(e) the Commissioner is bound to give effect to the decision on an appeal or review (see ss 114 to 116 in Part 10);

(f) the assessment cannot be challenged outside the Part 10 process;[3] and

(g) the tax debt may be recovered notwithstanding any impending objection, review or appeal (s 104 in Part 10).

12 In the present circumstances, the steps taken by the Commissioner are as follows:[4]

(a) The Commissioner began an investigation in 2010, in respect of an acquisition of shares by the plaintiff earlier in that year.[5]

(b) After some dialogue with the taxpayer, in March 2013 the Commissioner communicated to the Plaintiff a "preliminary view" that duty is payable.[6]

(c) In May 2013, the Commissioner instructed the Valuer-General Victoria to provide a valuation of the relevant tenant's interest in the Melbourne Grain Terminal.[7]

(d) The Valuer-General has provided a quote ($9,500 plus GST) and estimated completion date (two weeks from the provision of requested information).[8]

(e) The taxpayer is currently compiling, and making inquiries about, the information requested,[9] which has been requested by 12 July 2013.[10]

(f) Subsequent to receipt of the valuation, the Commissioner will finalise his investigation and assessment process.

(g) The taxpayer is likely to be dissatisfied with and object to any assessment, on grounds including those evidenced by the terms of the declarations it seeks.[11]

13 In this way, the Commissioner submitted that the plaintiff's liability under the Duties Act will be established. That includes, it was further submitted, the prospect that the Court or Tribunal will need to adjudicate on any issue that remains in dispute after the objection process; a process said to be designed to resolve or narrow what, in this case, appear to be a series of tax and valuation issues. Consequently the utility of determining questions prior to the completion of the narrowing of issues in this statutory process is doubtful. This was a point made by the Commissioner; the plaintiff's response being that the issues raised in the originating motion would necessarily arise in the present circumstances. For the reasons which follow I do not regard the plaintiff's responsive point as being decisive having regard to the issues raised by the preliminary question.

14 Although the nature and content of the legislative scheme as outlined by the Commissioner was, effectively, common ground, the plaintiff did question the estimated cost of the valuation by the Valuer-General. The plaintiff submitted that the correspondence with respect to valuation instructions and fees indicated that the sum of $9,500 was in fact an estimate which reserved the possibility of additional fees depending on the ultimate scope of the valuation task. Additionally, the plaintiff submitted that having regard to the complexity of valuation work arising out of the issues raised by the plaintiff with respect to the assessment the cost is likely to be substantial, and well in excess of the Commissioner's quote or estimate. There is, as I have indicated, no direct or comprehensive evidence in support of the plaintiff's submission in this respect. This is because the extent and cost of the valuation work involved in the assessment is not an issue going to the preliminary question - at least not directly - hence not a matter focussed upon in the evidence agreed as the basis for its determination. I would not, however, wish the parties to think that I have decided the preliminary question without at least being conscious of the distinct possibility of complex legal and valuation issues arising out of the issues raised by the originating motion - the substantive issues. Consequently, I think it is reasonable to infer from the nature of the substantive issues raised and the evidence before the Court for present purposes that the cost of valuation work associated with the assessment process is more than likely to be substantial. Nevertheless, for the reasons which follow, even assuming this position, I do not accept that this is decisive of the preliminary question.

Power to grant declaratory relief and relevant principles

15 It was common ground between the parties that the authorities establish that the Court does have power to grant the declaratory relief sought in circumstances such as the present. In this respect, particular reference was made to the judgment of Dawson J in Oil Basins Limited v Commonwealth of Australia:[12]

Where an assessment has been made, that proposition finds support in F.J. Bloemen Pty Ltd v Federal Commissioner of Taxation.[13] That case decided that because a notice of assessment is conclusive evidence that the assessment was duly made and that the amounts and all of the particulars of the assessment are correct,[14] a taxpayer cannot challenge an assessment on any ground in proceedings other than an appeal against the assessment.[15]

The same conclusion does not follow when an assessment has not been made. The plaintiff has not been assessed under the PRRT Assessment Act in this case and s 106(1) of that Act does not apply. If the jurisdiction of this Court to make a declaration were to be excluded it would have to be by implication and the implication would have to be a necessary one.[16] In my view no such necessary implication arises. I can see no good reason why, in the absence of any assessment or, at all events, any immediate prospect of one being made,[17] the Court should be precluded from determining the liability to tax of a person in proceedings for a declaration if there is a real question.

Indeed, there are, as the plaintiff points out, good reasons why such a jurisdiction should exist. A person who derives assessable receipts in relation to a petroleum project is obliged to furnish a return.[18] The Commissioner may decide at any time that a person is liable to tax and issue a default assessment for those years in which he considers that person should have made a return.[19] The failure to lodge a return attracts a penalty equal to double the amount of tax payable.[20]

The reference to the PRRT is a reference to the Petroleum Resource Rent Tax Assessment Act 1997 (Cth) ("PPRT Assessment Act"), legislation which imposed tax on the taxable profit of a person in relation to a petroleum project. The circumstances of this case are also relevant to discretionary considerations, aspects of which are discussed further below. Nevertheless, in considering the significance of the Oil Basins[21] case in this context one should not lose sight of the circumstances of that case, which was a controversy between Oil Basins of the one part and producers on the other part as to whether there was an obligation created by the PRRT Assessment Act_._ This was a live question between these parties even though no assessment had been made, as the Commissioner might have subsequently decided that there was such an obligation and issue a default assessment. This is a different situation from where, such as in the present circumstances, an assessment process is underway. This raises different discretionary considerations, as discussed below.

16 In relation to the relevant principles to be applied, reference was made to the dissenting judgment of Walsh J in Forster v Jododex Australia Pty Ltd:[22]

It was contended, also, that in the circumstances of the case, a proper exercise of the discretion of the Court required it to decline to make any declaration. This question has caused me considerable difficulty. Applications had been made by the appellant for authorities to enter certain land. It became the duty of the warden to deal with those applications in accordance with s 50 and other relevant provisions of the Mining Act, 1906 (NSW), as amended, (the Act). The warden had initiated an inquiry into the matter of the applications and Jododex had notice of that inquiry. It had become owner of part of the subject land, as well as being the holder of an exploration license, the validity of which is now in contest between the parties. In my opinion, there is no reason to doubt that in the proceedings before the warden, if they had continued without any intervention by the Supreme Court, Jododex would have had the opportunity to raise and to debate the question whether the provisions of the Act precluded the grant of the authorities to enter, by reason of the fact that Jododex was, as it claimed, the holder of an exploration license. validly granted to it and validly renewed. [sic]

In my opinion, when a special tribunal is appointed by a statute to deal with matters arising under its provisions and to determine disputes concerning the granting of rights or privileges which are dependent entirely upon the statute, then as a general rule and in the absence of some special reason for intervention, the special procedures laid down by the statute should be allowed to take their course and should not be displaced by the making of declaratory orders concerning the respective rights of the parties under the statute. In other words, I think that it will ordinarily be a wise exercise by the Supreme Court of the discretion which it has under s 10 of the Equity Act to decline to undertake the tasks which have been committed by the Parliament to a specialized tribunal.

Although Walsh J was in dissent in the result in Forster v Jododex,[23] his Honour's statement of relevant principles has been accepted in subsequent cases.[24]

17 The discretionary considerations to which reference is made in the passages from Forster v Jododex Australia Pty Ltd[25] and Oil Basins Limited v Commonwealth of Australia[26] have also been applied with respect to taxation administration regimes.

18 In Cuming Campbell Investments Pty Ltd v Collector of Imposts (Victoria),[27] the question which arose was whether, in view of the specific provisions of the Stamps Act 1928, the Supreme Court could properly direct the Collector to assess stamp duty on a particular basis by means of a writ of mandamus. On appeal, the High Court held that the writ as sought was rightly refused, as its mandate would be an interference with the discretion vested in the Collector of Imposts under s 32 of the Stamps Act. More specifically, Latham CJ said:[28]

The appellant in this case asks that mandamus should issue directing the Collector of Imposts not to give his opinion under s 32 of the Act, but to decide the matter by giving a particular opinion, namely, that the transfer is taxable as a conveyance on sale as upon a consideration of £50,000. What is asked is that the collector be ordered to arrive at a particular decision in the appellant's favour. In my opinion the court can do no more than direct the collector to perform his statutory duty. He will perform the whole of his statutory duty if he considers the instrument submitted to him and expresses an opinion whether it is chargeable with any duty and with what amount of duty it is chargeable.

If any person is dissatisfied with the assessment made by the collector he is entitled under s 33 to appeal against the assessment to the Supreme Court. If he does so appeal, the collector is bound to state and sign a case setting forth the question upon which his opinion was required and the assessment made by him (s 33(1)). Upon the hearing of the case the court determines the question submitted, and, if the instrument in question is in the opinion of the court chargeable with any duty, the court assesses the duty with which it is so chargeable. Section 34 entitles the collector to require evidence to be furnished "in order to show to his satisfaction whether all the facts and circumstances affecting the liability of the instrument to duty or the amount of duty chargeable thereon are fully and truly set forth therein"; and the collector may refuse to proceed upon any application for his opinion until the evidence which he requires is provided. Thus the statute expressly provides a specific method of putting the collector right if he goes wrong. The court is not authorized by the statute to make an original assessment of duty. The court is authorized to make an assessment only after the collector has assessed and when the court has the benefit of the opinion of the collector. (Cf R v Mayor &c of Stepney[29]). The statute shows the intention of the legislature that the court should engage in the assessment of duty only upon an appeal from the collector. It would, in my opinion, be wrong for the court, when this specific remedy by way of appeal is given, to utilise mandamus proceedings so as to exclude the collector from the exercise of the function entrusted to him by the statute, and at the same time, to enable the court to make an original assessment of duty which is not contemplated by the Act.

19 The same approach, in the context of an assessment under the Income Tax Assessment Act 1936-1979 (Cth), was taken by Young CJ in Lucas v O'Reilly (Federal Commissioner of Taxation):[30]

The Act provides its own remedy to a taxpayer who claims that he has been wrongly assessed. He may appeal to a Board or a court pursuant to the provisions of Part V and by these provisions the legislature has shown that the prescribed method of objection and appeal is to exclude any other challenge to an assessment. If a taxpayer is assessed in a manner which he contends is incorrect he cannot challenge the assessment except in the manner prescribed. Section 177 is conclusive on this point. It must be noted that s 177(1) makes production of a notice of assessment conclusive evidence not only of the due making of the assessment, but also that the amount and all the particulars of the assessment are correct. The sub-section literally says that production of a notice is to be conclusive evidence but no doubt it means that the notice rather than the act of production is to be conclusive evidence.

(2) If a taxpayer cannot challenge an assessment once issued except pursuant to Part V, it would be strange indeed if he could challenge its intended making and issue by some other process.

As was raised by the parties in submissions, there appears to be some controversy in the authorities whether the proposition enunciated in paragraph (2) of the passage quoted from the Chief Justice's judgment takes matters a step too far. In any event, the issue does not arise in the present circumstances because there is no suggestion that matters not effectively challenged or determined by way of the declaratory relief sought by the plaintiff could not be the subject of controversy and challenge in the course of the operation of the statutory machinery provided by Part 10 of the TAA.

20 Reference was made in the course of argument by both the Commissioner and the plaintiff to a decision of the Federal Court of Australia in Young v Commissioner of Taxation.[31] Briefly, that case raised the question whether a general policy announcement by the Commissioner of Taxation as to the assessment of a class of taxpayer is subject to judicial review. Consequently, the context of the case was taxation policy, rather than taxation assessment. A further question, whether the issue of the lawfulness of the act was a hypothetical question, also arose in Young's case.[32] Gyles J said that decisions such as Oil Basins Limited v Commonwealth of Australia[33] were distinguishable because they were decisions in the context of the ascertainment of substantive liability, adding that in the context of the situation in Young's case "the lack of any act to scrutinise is a factor against the grant of relief".[34] Continuing, Gyles J said:[35]

This is particularly true where the act in question, assessment, cannot, for relevant purposes, be challenged otherwise than in accordance with Pt IVC of the Taxation Administration Act 1953 (Cth) by reason of the operation of s 175 and s 177 of the Act (Deputy Commissioner of Taxation (Cth) v Richard Walter Pty Ltd [1995] HCA 23; (1994-1995) 183 CLR 168; Sunrise Auto Ltd v Commissioner of Taxation (1995) 61 FCR 446; Golden City Car & Truck Centre Pty Ltd v Deputy Federal Commissioner of Taxation (1999) 99 ATC 4131; San Remo Macaroni Co Pty Ltd v Federal Commissioner of Taxation (1999) 99 ATC 5138, [1999] FCA 1468). Whilst, as Dawson J pointed out in Oil Basins Ltd (supra), the sections do not in terms relate to the period anterior to assessment, it would, in my opinion, be anomalous to permit issues which could not be agitated after assessment to be agitated before assessment, when it is only the assessment which gives effect to the unlawfulness so far as the applicant is concerned.

Whether, as raised in submissions, the reference to the judgment of Dawson J in Oil Basins[36] provides some support for the statement of Young CJ in Lucas v O'Reilly,[37] in paragraph (2) of the passage set out above, is not relevant for present purposes for the reasons already indicated.

21 In the context of these authorities, the Commissioner submitted that the relevant test for determining whether this Court should exercise its discretionary power in favour of, in effect, intervention in the statutory functions of the Commissioner, by granting the declaratory relief sought, is whether exceptional circumstances exist in favour of such a course.[38] The Commissioner submitted that the question for the Court is whether the plaintiff has demonstrated relevant exceptional circumstances as a basis for the exercise of the jurisdiction to order the declaratory relief sought. Moreover, the Commissioner submitted that where there is a comprehensive statutory regime established for assessment, objection and determination under the TAA, the jurisdiction to grant declaratory relief must be exercised with caution.

22 The plaintiff, however, cast doubt on whether the exceptional circumstances test is the applicable threshold test to be satisfied before the Court's jurisdiction is enlivened. It was submitted that a requirement of exceptional circumstances would create a very high threshold and it was to be doubted whether the authorities do support the Commissioner's contention in this respect. The plaintiff submitted that there is nothing in the authorities relied upon which establishes exceptional circumstances as the threshold test. Rather, it submitted that the Court is required, when considering whether to exercise its discretion to grant declaratory relief, to balance all relevant factors in determining whether or not to exercise such jurisdiction.

23 Having regard to the authorities, accepting that the Court has the power to grant a declaration or other discretionary relief, such relief will usually be withheld having regard to any otherwise applicable specialised statutory regime absent some special reason for intervention.[39] On this basis the plaintiff is required to establish that, on balance, the circumstances favour the exercise of the Court's discretion in favour of granting the declaratory relief sought. Whether or not on analysis of the authorities the view is taken that the applicable test is characterised in terms of "exceptional circumstances", the plaintiff will, nevertheless, need to establish circumstances favouring the exercise of the Court's discretion which, in many respects, would circumvent the statutory processes and functions vested in the Commissioner by Parliament. In Commissioner of Taxation v Futuris Corporation Ltd,[40] Gummow, Hayne, Heydon and Crennan JJ in finding in favour of the refusal of declaratory relief, did so on the basis that the usual discretionary considerations attending the grant of equitable remedies apply to injunctions and declaration in public law cases.[41] The Court did not refuse the granting of declaratory relief on the basis that the applicable test required to be satisfied was one characterised in terms of "exceptional circumstances".

24 The Commissioner submitted that in the circumstances of this case, no exceptional circumstances exist which would warrant this Court exercising its jurisdiction to grant the declaratory relief sought. Further, in support of this contention, the Commissioner submitted that there is no third party intervention; there is no future dealing or transaction which is affected by any assessment; an assessment will be completed some time in August and, in any event, before 31 August 2013; the cost of the valuation is not significant; and that there are tax issues which are exposed in the Commissioner's correspondence to the plaintiff.[42] The Commissioner submitted that there needs to be some feature of transactional urgency, future dealings, or the prospect of a future liability which requires a taxpayer to reasonably organise its affairs to amount to exceptional or unusual circumstances - and it submits that none of those features are present in this case.

25 The plaintiff submitted that in, any event, exceptional circumstances do exist to warrant the Court exercising its jurisdiction and grant the declaratory relief sought on the basis of the significance and effect of two Court of Appeal decisions, Vopak Terminals Australia v Commissioner of State Revenue[43] and Commissioner of State Revenue v Uniqema[44] in relation to what was said to be the critical issue underlying any liability the plaintiff may have to assessment. More particularly, the plaintiff submitted that these decisions are directly relevant in the present circumstances in resolving the issue whether the various buildings, structures and plant and equipment on the land the subject of the Lease need to be valued - or are properly disregarded in the sense of not being treated as part of the land - for assessment purposes. The plaintiff submitted that if these decisions apply in this case, resolution of this position now, by entertaining the application for declaratory relief as sought, would avoid the cost and expense of a valuation of these buildings, structures and plant and equipment, as part of the assessment process. On this basis, the plaintiff submitted that if the Court were to hear the application for declaratory relief, there is a reasonable possibility that if the relief sought were granted the Commissioner may accept that no liability would accrue to the plaintiff and no assessments would issue.

26 The plaintiff made further submissions in relation to the prejudice which would flow from the likely cost and expense of the valuation process which would be required in the event the declaratory relief were not granted. The plaintiff says that this process would require the opinion or opinions of technical experts with respect to a complex facility in order to establish whether or not the buildings, structures and plant and equipment are fixtures in order to provide a proper basis of valuation. The point was also made that expert valuers may disagree even if a common basis were accepted. Accordingly, the plaintiff submitted that it cannot be said that the valuation cost will be small, or that the time and delay in obtaining it will be insignificant, if the assessment proceeds in the manner advocated by the Commissioner. The obvious point might also be made that the plaintiff's proposed course is not without the potential for further cost and delay as any grant of the declaratory relief sought may be the subject of appeal.

27 The plaintiff also submitted that there is no evidence before the Court or in the Commissioner's materials which establishes the Commissioner's contention that the assessment is imminent, nor any evidence which establishes, for example, that the Commissioner is ready to terminate its investigation and issue an assessment. I do not, however, accept this submission - or at least the consequences the plaintiff would have follow from this submission - for the reasons indicated at the hearing on 23 July 2013. This was the position put with respect to the assessment process by Senior Counsel on behalf of the Commissioner. In the present circumstances, where the position was put by Senior Counsel on behalf of an emanation of the Crown which is subject to obligations of good faith and the Model Litigant Guidelines,[45] it is appropriate that the position be accepted as put by the Commissioner.

28 In my opinion, whether a "special circumstances" or some lesser test might be adopted as the basis for the Court's intervention, it is clear that the usual discretionary considerations applying to the grant of equitable remedies in general are applicable in the present circumstances.[46] More specifically, the plaintiff has not been able to identify any basis for intervention by the Court other than its submission that it would be likely to be more efficient to resolve the basis upon which the Valuer-General should proceed to value the land the subject of the Lease having regard to the two relatively recent decisions of the Court of Appeal in Vopak Terminals Australia v Commissioner of State Revenue[47] and Commissioner of State Revenue v Uniqema[48] in which the Court of Appeal found that, in Victoria, in the circumstances of these cases, property which is affixed to land by a tenant remains the property of the tenant and does not become part of the land.[49] As indicated previously, there is no direct or comprehensive evidence before the Court as to the likely cost and time involved in a valuation process unassisted by the intervention of the Court as proposed by the plaintiff. Additionally, it should be kept in mind that there is no present obligation on the plaintiff to pay the costs of any valuation and any liability in this respect will only arise if the plaintiff makes objection to any assessment and is unsuccessful in establishing that objection, according to the regime provided for in s 273 of the Duties Act.

29 Reliance was also placed on various provisions of the Civil Procedure Act 2010 ("Civil Procedure Act") but, for reasons set out below, I am not satisfied that the arguments based on the provisions of that Act do, having regard to the relevant principles applicable to the grant of declaratory relief in the present circumstances, favour the grant of the relief sought.

30 On balance, I am not satisfied that there is any basis to conclude that the application of the procedures and remedies under the TAA will not result in the narrowing of issues and the resolution of matters of controversy between the active parties in a reasonably timely and efficient manner. Critically, in my view, the authorities to which reference has been made provide no basis for entertaining an application for any departure from the special procedures laid down by statute, the TAA, in the present circumstances; having regard to the likely arguments and evidence which would be canvassed on such an application, on the basis of the submissions and material now before the Court with respect to the preliminary question.

Effect of the Civil Procedure Act

31 The plaintiff relied in support of its application on the provisions of the Civil Procedure Act, in particular the overarching purpose provided for under s 7(1) of that Act being to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute; and the court's powers under s 9(1) of the Act to further the overarching purpose having regard to various objects - particularly the just determination of the civil proceeding, (sub-s 9(1)(a)); the efficient conduct of the business of the court (sub-s 9(1)(c)); the efficient use of judicial and administrative resources (sub-s 9(1)(d)); and the timely determination of the civil proceeding (sub-s 9(1)(f)).

32 The plaintiff submitted that the provisions of the TAA, and in particular Part 10, does not stand unaffected by the Civil Procedure Act, and thus its operation is not excluded from the operation of the Civil Procedure Act. It further submitted that it would be consistent with the overarching objectives under this Act for the Court to exercise its discretion in the present circumstances in favour of the plaintiff as the relief sought provided the possibility of proceeding to the grant of declaratory relief which would circumvent significant delay and expense.

33 More particularly, as considered previously, the plaintiff submitted that if the declaratory relief sought were granted, consistent with the Court of Appeal decisions in Vopak Terminals Australia v Commissioner of State Revenue[50] and Commissioner of State Revenue v Uniqema,[51] the parties would avoid significant cost and delay, as well as the potential for a lengthy process of assessment, objection and determination, and possible appeals.

34 I do not, however, regard these arguments compelling, either in the circumstances of this particular proceeding or on the basis of the efficiency, cost-effectiveness and expedition sought to be achieved by the Civil Procedure Act.

35 First, from a legislative "structural" perspective, there is no warrant under the provisions of the Civil Procedure Act, in effect, to disregard administrative and other procedures already established in other legislation specifically tailored to processes of assessment, objection and determination, such as those contained in the TAA. In other words, the Civil Procedure Act is directed to litigation and other dispute resolution processes which are or may take place in the courts according to the existing legislative structure of the Victorian statute book. Its provisions do not permit the "dismantling" of this structure in favour of some other procedure which a court might think a more efficient way of doing things.

36 Secondly, even if the provisions of the Civil Procedure Act did give the courts power to override or "replace" administrative or other procedures such as those provided for in the TAA with respect to assessment, objection and determination with relief thought to be more cost-effective and efficient, I am not satisfied on the material that this is or is likely to be the position in the present circumstances. In my view, it is not unreasonable to expect that the TAA process will narrow issues and that the Commissioner will be very conscious of the current state of the law with respect to buildings, structures and plant and equipment on leased land. Indeed, the TAA process is designed to achieve a narrowing of issues in the context of a process conducted in good faith. There is no reason to suppose that the Commissioner will proceed other than on this basis.

37 For the preceding reasons, I am of the opinion that there do not exist circumstances that, on balance, favour the entertaining of the application for the grant of declaratory relief of the nature sought by the plaintiff having regard to the specialised procedures and remedies available to the plaintiff under the provisions of the TAA, to which reference has been made.

38 Consequently, I am of the opinion that the answer to the preliminary question is "Yes".

39 The parties are to bring in orders to give effect to these reasons. I will hear the parties in relation to the question of costs.

[1] The Attorney-General for the State of Victoria is the first-named defendant in the plaintiff's originating motion. The Victorian Government Solicitors Office, solicitor for the Attorney-General, advised the Prothonotary of the Supreme Court of Victoria by letter dated 27 June 2013 that the Attorney-General does not intend to take an active role in this proceeding and that the Attorney-General intends to abide by the decision of the Court.

[2] See Commissioner's Outline of Submissions (12 July 2013), paragraph 6.

[3] See Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; (2008) 237 CLR 146 and DCT v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473, applied to the TAA (ss 17, 127, 96(1) and 96(2)) by the Court of Appeal in Commissioner of State Revenue v Gas Ban Pty Ltd (in liq) [2011] VSCA 89; (2011) 31 VR 397 at 408, [47]- [49].

[4] See Commissioner's Outline of Submissions (12 July 2013), paragraph 7.

[5] Affidavit of James Hebron affirmed 4 July 2013 ("Hebron Affidavit"), Exhibit JH2.

[6] Affidavit of Wayne Pan affirmed 20 June 2013, ("Pan Affidavit"), Exhibit WP4; see also Affidavit of John Tan sworn 27 June 2013 ("First Tan Affidavit"), Exhibit JT1.

[7] Affidavit of John Tan sworn 11 July 2013 ("Second Tan Affidavit"), Exhibits JT7, 8, 9 and 10.

[11] See also the taxpayer's position stated in the Pan Affidavit, Exhibit WP5.

[12] [1993] HCA 60; (1993) 178 CLR 643 at 651.

[13] [1981] HCA 27; (1981) 147 CLR 360.

[14] Income Tax Assessment Act, s 177(1).

[15] The effect of s 75(v) of the Constitution on this decision was not argued before me: cf David Jones Finance & Investment Pty Ltd v Federal Commissioner of Taxation (1991) 28 FCR 484.

[16] See Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 at 435-436.

[17] Cf Lucas v O'Reilly (1979) 36 FLR 102.

[21] Oil Basins Limited v Commonwealth of Australia [1993] HCA 60; (1993) 178 CLR 643.

[22] [1972] HCA 61; (1972) 127 CLR 421 at 427.

[23] [1972] HCA 61; (1972) 127 CLR 421.

[24] The principle enunciated by Walsh J is a longstanding one and was applied by the High Court recently in Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; (2008) 237 CLR 146 at 153, [10] and 162, [48]; and more recently in Victoria, see Annacott Pty Ltd v Konann Pty Ltd [2012] VSC 389 at [6]- [7], [49]-[52] and the earlier proceeding before Pagone J there referred to.

[25] [1972] HCA 61; (1972) 127 CLR 421.

[26] [1993] HCA 60; (1993) 178 CLR 643.

[27] [1938] HCA 53; (1938) 60 CLR 741.

[28] [1938] HCA 53; (1938) 60 CLR 741 at 750-51.

[29] (1902) 1 KB 317 at 321.

[30] (1979) 9 ATR 540 at 544-5; applied in Independent Holdings Ltd v Commissioner of Taxation [1992] FCA 444; (1992) 38 FCR 68 at 82 and Macquarie Bank Limited v Commissioner of Taxation [2013] FCA 96.

[31] [2000] FCA 122 (Gyles J).

[32] Young v Commissioner of Taxation [2000] FCA 122.

[33] [1993] HCA 60; (1993) 178 CLR 643.

[34] [2000] FCA 122 at [19], referring to the discussion by Kenny J in Hamersley Iron Pty Ltd v National Competition Council [1999] FCA 867; (1999) 164 ALR 203 at 225-227.

[35] [2000] FCA 122 at [20].

[36] [1993] HCA 60; (1993) 178 CLR 643.

[37] (1979) 36 FLR 102.

[38] The Commissioner also relied upon Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 at 427 (Walsh J) and Deputy Commissioner of Taxation v PM Developments Pty Ltd [2008] FCA 1886 (Logan J) in support of its contention that the applicable test for the exercise of judicial intervention is "exceptional circumstances".

[39] Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 at 427 (Walsh J); and see Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; (2008) 237 CLR 146 at 153, [10] and 162, [48]; see also Annacott Pty Ltd v Konann Pty Ltd [2012] VSC 389 at [6]- [7], [49]-[52] (Pagone J).

[40] [2008] HCA 32; (2008) 237 CLR 146.

[41] [2008] HCA 32; (2008) 237 CLR 146 at 162, [48], referring to Gaudron J's statement in Enfield City Corporation v Development Assessment Commission (2000) 1999 CLR 135 at 157-158 [58].

[42] See, eg, Pan Affidavit, Exhibit WP4 and First Tan Affidavit, Exhibit JT1.

[43] [2004] VSCA 10; (2004) 12 VR 351.

[44] [2004] VSCA 82; (2004) 9 VR 523.

[45] Model Litigant Guidelines - Guidelines on the State of Victoria's obligation to act as a model litigant' (March 2011); and see S. Lee, The State as a Model Litigant (Victorian Government Solicitor's Office, 2006).

[46] See Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; (2008) 237 CLR 146 at 162, [48]; referring to the statement by Gaudron J in Enfield City Corporation v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135 at 157-8, [58] that "The usual discretionary considerations attending in a grant of equitable remedies apply to injunctions and declarations in public law cases".

[47] [2004] VSCA 10; (2004) 12 VR 351.

[48] [2004] VSCA 82; (2004) 9 VR 523.

[49] As a result of operation of s 28 of the Landlord and Tenant Act 1958; now found in s 154A of the Property Law Act 1958.

[50] [2004] VSCA 10; (2004) 12 VR 351.

[51] [2004] VSCA 82; (2004) 9 VR 523.