Plaintiff v First Defendant

Supreme Court of Victoria|2013-12-11|Before: GINNANE J

TAXATION - Land Tax - contracts of sale of land - whether vendor liable for land tax - Tribunal decision that vendor not liable - appeal on questions of law - whether purchasers took possession of land - requirement that at least 15% of the purchase money had been paid - meaning of phrase 'subject to subsection (3)' - whether subsection (3) operated independently - meaning of phrase 'take possession' - Tribunal decision set aside - Commissioner's decision affirmed - Land Tax Act 2005 s 16.

PRACTICE - appeal on a question of law - whether defendant can rely on a notice of contention - Victorian Civil and Administrative Tribunal Act 1998 s 148.

1 The Commissioner of State Revenue (the 'Commissioner') issued a 2009 Land Tax Assessment to Oakbee Pty Ltd ('Oakbee') in respect of 18 properties in the amount of $69,131.21. Oakbee challenged the assessment and the Commissioner partially allowed the objection, but disallowed it in respect in respect of properties in Loren Court and in Reema Boulevard, Endeavour Hills. At Oakbee's request the Commissioner's determination was referred to the Victorian Civil and Administrative Tribunal (the 'Tribunal'). It set aside the Commissioner's determination. Pursuant to s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 (the 'VCAT Act'), the Commissioner seeks leave to appeal the Tribunal's decision on two questions of law:

(a) Did the Tribunal misconstrue s 16(3) of the Land Tax Act 2005 (Vic) (the 'Land Tax Act') as having a separate and distinct operation from s 16(1)?

(b) Did the Tribunal breach the hearing rule of natural justice, contrary to s 98(1) of the VCAT Act and/or fail to provide the Commissioner with reasonable opportunity to make submissions about the relationship between ss 16(1) and 16(3) of the Land Tax Act?

2 The issue before the Tribunal was whether the purchasers of the land had taken possession of it as at 31 December 2008, which was the date upon which liability to pay land tax was to be decided. Oakbee contended that the two properties were sold and possession was given to the purchasers before 31 December 2008. Its case was that the purchasers took possession of the land on the days that their contracts were signed and the initial deposit payments made. It contended that the Commissioner should exercise his discretion pursuant to s 16(3) and determine that Oakbee was not the owner of each property for the 2009 land tax year.

3 The determination of whether leave should be granted and the substantive appeal were heard together.

4 Oakbee did not appear, although it had been given notice of the hearing.

5 Mr Michael Pafiti and Ms Despina Pafiti were joined as the second and third defendants to the proceeding, as they were the purchasers of the Loren Court property and would be affected by the outcome of the review before the Tribunal. They indicated that they did not wish to appear.

6 The purchasers of the Reema Boulevard property rescinded the contract and did not appear at the hearing.

The provisions of the Land Tax Act 2005

7 Section 7 of the Land Tax Act imposes an annual land tax 'on all taxable land in Victoria'. 'Taxable land' means land that is not exempt land.

8 Section 8 provides that the owner of taxable land is liable to pay land tax on the land. Section 10, which is headed 'Who is the owner of land?', provides in relevant parts:

(1) The following persons are owners of land for the purposes of this Act -

(a) a person entitled to land for a freehold estate in possession;

...

(e) a person deemed by this Act to be the owner of land.

9 Section 15 is headed 'Purchaser of land under contract of sale' and provides:

(1) For the purposes of this Act, a purchaser under a contract of sale of land is deemed to be the owner of the land (but not to the exclusion of any other person) if the purchaser has taken possession of the land.

(2) Subsection (1) applies whether or not the contract of sale has been completed by the transfer of the land.

10 Section 16, which is the critical provision for the purposes of this proceeding, is headed 'Vendors of land' states in relevant parts:

(1) For the purposes of this Act, the vendor of land under a contract of sale of land is deemed to be the owner of the land (but not to the exclusion of any other person) until -

(a) the purchaser has taken possession of the land; and

(b) subject to subsection (3), at least 15% of the purchase money has been paid.

(2) Subsection (1) applies whether or not the contract of sale has been completed by the transfer of the land.

(3) The Commissioner may determine that the vendor is deemed not to be the owner of land despite the fact that 15% of the purchase money has not been paid if the Commissioner is satisfied that -

(a) the contract of sale was made in good faith and not for the purpose of evading the payment of land tax; and

(b) the contract of sale is still in force.

...

(5) If the vendor and the purchaser are both deemed to be the owners of land under this Part, there is to be deducted from any land tax payable on the land by the vendor any land tax payable on the land by the purchaser.

11 The first question of law concerns the interpretation of s 16(3) of the Land Tax Act. The issue, put shortly, is whether s 16(3) has an independent operation or operates as an alternative to s 16(1)(b). More particularly, this issue raises the question whether the vendor is deemed to be the owner of the land until the matters set out in s 16 (1)(a) and either s 16(1)(b) or s 16(3) are satisfied, or it is sufficient that the requirements of s16(3) are satisfied. There are conflicting decisions of the Tribunal on this issue. The Tribunal member whose decision is the subject of appeal has applied the reasoning that he adopted in the decision in Oakbee in subsequent decisions.[1]

12 On the other hand, in Decleah Investments Pty Ltd v Commissioner of State Revenue (Review and Regulation)[2], Her Honour Judge Jenkins declined to follow the line of interpretation adopted in Oakbee stating:

In conclusion, the proviso under par 16(1)(b) and the exercise of the Commissioner's discretion under sub-s 16(3) can only be invoked once para 16(1)(a) has been satisfied.[3]

13 I consider that the Commissioner's construction of s 16(3) is sufficiently arguable to justify the grant of leave to appeal in respect of the first question of law.

14 I also consider that the Commissioner's second question of law which contends that the Tribunal failed to provide the Commissioner with natural justice is sufficiently arguable to justify the grant of leave to appeal.

15 Having granted leave to appeal, it is then necessary to consider the grounds of appeal relied on by the Commissioner. They are:

The Tribunal erred in construing s 16(3) of the Land Tax Act as having a separate and distinct operation from s 16(1) (Reasons [18], [23]).
The Tribunal erred in:

(a) failing to accord natural justice, as required by s 98(1)(a) of the VCAT Act; and/or

(b) failing to provide the appellant with a reasonable opportunity to make submissions,

about the relationship between ss 16(1) and 16(3) of the Land Tax Act (Reasons[25]).

16 The question that arises for determination concerning the interpretation of the Land Tax Act becomes clearer once the facts concerning the two properties are stated. They are stated in the Tribunal's reasons as follows:[4]

In November 2008, the Applicant as registered proprietor sold two blocks of land in a housing development at Endeavour Hills. A block of land at 113 Reema Boulevard was sold to Michael and Jacqueline Lebon for $227,000 by contract dated 22 November 2008 ("the Reema land"). Another block of land at 5 Loren Court Endeavour Hills was sold to Michael and Despina Pafiti for $231,000 by contract dated 29 November 2008 ("the Loren land").
Deposits on each block were payable by instalments. The deposit for the Reema land was $11,350, of which $500 was paid on the day of sale and the balance of deposit was due on 8 December 2008. The Loren land deposit was also $11,350, of which $500 was payable on 1 December 2008 and the remainder due on 12 December 2008. Each deposit was approximately 5% of the land's purchase price.
Particulars of sale for the Reema land contract provided that

SETTLEMENT is the date upon which the Purchaser shall become entitled to vacant possession of the property and chattels must be provided, namely upon payment of the initial deposit monies and approval of the Plan of Subdivision.

DATE: 29th January 2009 or earlier by agreement.

The same term applied in the Loren land contract except that, impossibly, "29th January 2008 or earlier by agreement" was stated as the DATE when the purchasers became entitled to vacant possession. [2008] was the wrong year. Entitlement to possession therefore arose more than 10 months before the contract was entered.

The plan of subdivision relative to the blocks was approved in May 2007. Both contracts contained a "subject to finance" condition precedent in the purchaser's favour. The Reema land contract provided:

PURCHASER'S FINANCE

Lender: any approved lender

Loan being not less than: $181,000

Approval date: 08/12/08

Purchasers of the Loren land paid the balance of deposit outstanding by 12 December 2008 and the contract was completed by payment of the balance of the price on 29 January 2009.
Purchasers of the Reema land defaulted on payment of the balance of the deposit to the Applicant on 8 December 2012. No rescission notice was ever served on the Reema land purchasers. The Applicant sold the Reema land to different purchasers in late 2009.
Mr Mondous gave evidence for the Applicant as its director. He said that he regarded the Reema land contract with the purchasers Mr and Mrs Lebon as on foot until the Reema land was resold. Mr Mondous was challenged about this claim in crossexamination. LJ Hooker Dandenong was the Applicant's estate agent in the initial Reema land sale transaction. A 2 December 2011 letter from LJ Hooker to the Commissioner was put to him. Responding to the Commissioner's inquiry: "[O]n what date did you or the vendor receive notification of the termination of the contract of sale?", LJ Hooker said that "[T]he notification was received the date of the refund." This was on 12th January 2009. Another question asked by the Commissioner elicited the letter's reply:
1. The deposit was refunded on 12/01/09 with a sales trust cheque no 848 in the amount of $500.
Also put to Mr Mondous was Mr Lebon's email response to the Applicant's inquiries dated 20 November 2011. Communicating from India (as he said) Mr Lebon recollected being unable to obtain finance by 8 December 2008. When this fact was advised to the vendor, he said, "they gave us back the deposit without a fuss." Mr Lebon was unspecific as whether this was in 2008 or 2009.
Possibly the action of LJ Hooker in consensually discharging the Reema sale contract before the land's resale was done without the knowledge of Mr Mondous. LJ Hooker as the Applicant's agent in the sale transactions may have had sufficient authority to bind the Applicant. More likely, in my view, LJ Hooker acted on instructions from Mr Mondous. However, the time of discharge in 2009 is not important. LJ Hooker's letter was put in evidence by the Commissioner. That letter stated that the Reema land contract was discharged on 12 January 2009.
Both the Reema land and the Loren land were vacant blocks. No evidence was given that the purchasers of either land improved the land in any way or otherwise took physical possession of their land before 31 December 2008.[5]

17 The Pafitis paid the first instalment of the deposit for the Loren Court property on 1 December 2008, the balance of the deposit on 12 December 2008 and the balance of the purchase price on 29 January 2009. The Lebons paid the initial deposit on the Reema Boulevard property on 22 November 2008 but made no other payment and defaulted on the payment of the balance of the deposit on 8 December 2008. They sent a notice of termination to the vendor's agent on 12 January 2009 pursuant to the 'subject to finance' clause in the contract. Oakbee resold the Reema Boulevard property in 2009.

18 Mr S Mondous, who is a developer, gave evidence before the Tribunal on behalf of Oakbee. His evidence was that the date of possession was the date that the contract was signed. The purchasers received an advantage by taking possession before full settlement, in that they could take steps required to obtain a planning permit. Under the contract, the purchaser was required to commence construction of a dwelling house on the property within 18 months of settlement date.

19 Mr Pafiti, who was one of the purchasers of the Loren Court property, also gave evidence. He stated that he did not understand that he was entitled to enter into possession of the property before January 2009.

The Act's s-s 16(3) discretion has no other condition. It does not require the purchaser to have taken possession of the land. If the Tribunal were to construe the provision standing alone, it would seem that the Applicant has satisfied the requirements that the subsection imposes.
However, the preceding paragraph 16(1)(b) [of] the Act qualifies a requirement that "15% of the purchase price has been paid" with the expression "subject to subsection (3)". This is part of a formulation that the vendor of land is not deemed to be the owner of the land if certain matters are satisfied. Paragraph 16(1)(b) is the second of ss 16(1)'s two requirements. The first requirement, in paragraph 16(1)(a), is that "the purchaser has taken possession of the land".

20. There may be an implication from the words "subject to subsection (3)" in paragraph 16(1)(b) of the Act that the paragraph 16(1)(a) requirement is imported and applicable when the paragraph 16(1)(b) is referred to in s-s 16 (3). Subsection 16 (3) then requires the purchaser to have taken possession of the land as an additional condition. An ellipsis may have occurred. But the construction is not obvious.

21. It is instructive to compare s 16 of the 2005 Act and the corresponding provision of the Land Tax Act 1958 ("the 1958 Act").

49. (1) When any agreement has been made for the sale of land, whether before or after the commencement of this Act, and whether or not the same has been completed by transfer or conveyance or not, the seller shall be deemed to remain the owner of the land for the purposes of this Act (though not to the exclusion of the liability of any other person) until possession of the land has been delivered to the purchaser and at least Fifteen per centum of the purchase money has been paid.

(2) Where in any case in which possession has been so delivered, less than Fifteen per centum of the purchase money has been paid, the Commissioner may exempt the seller from the provisions of this section if the Commissioner is satisfied that the agreement for sale has been made in good faith, and not for the purposes of avoiding tax, and the said agreement is still in force. In any such case the decision of the Commissioner shall be final and conclusive. [emphasis added].

The discretion in s-s 49(2) of the 1958 Act corresponds with s-s 16(3) of the 2005 Act. However, s-s 49(2) includes an explicit condition that possession of the land "is delivered" to the purchaser. This correlates with the "possession of the land has been delivered to the purchaser" condition in s-s 49(1) of the Act.
The Acts differ in this respect. Subsection 16(3) of the 2005 Act does not include a "purchaser has taken possession of the land" condition correlating to the same condition in paragraph 16(1)(a). Reference to "subject to subsection (3)" in paragraph 16(1)(b) qualifies the condition in that paragraph and not the s-s 16(3) discretion. It does not, in terms, add anything to s-s 16(3).

24. Perhaps the person drafting the 2005 legislation meant to replicate the terms of the 1958 Act in different but equivalent language. However, it is doubtful whether it is a legitimate interpretive technique for courts (and tribunals) to "read in" words to legislation where words are believed to be omitted. I am not prepared to interpret s-s 16(3) of the Act other than by giving effect to its literal terms.

I am also mindful that the point about the ellipsis in subsection 16(3) of the Act was not properly argued before me. Both parties before me assumed that a vendor needed to show that a purchaser had "taken possession" of the land as required by paragraph 16(1)(a) in order to qualify for favourable exercise of the subsection 16(3) discretion.

21 In the hearing in the Tribunal, Oakbee and the Commissioner focused their submissions on the issue of whether the purchasers had taken possession of the property that they purchased.

22 Section 16(1) of the Land Tax Act provides that the vendor of land under a contract of sale is deemed to be the owner of the land until the events or circumstances set out in paragraph (a) and (b) occur.

23 The Tribunal construed s 16(3) as providing an alternative to s 16(1). On this interpretation the Commissioner could determine that the vendor was not deemed to be the purchaser of the land despite the fact that 15% of the purchase money had not been paid if satisfied of the matters set out in s 16(3) that -

(a) the contract of sale was made in good faith and not for the purpose of evading the payment of land tax; and

(b) the contract of sale is still in force.

24 The Commissioner contended that the Tribunal had misconstrued s 16 of the Land Tax Act. He submitted that s 16(1) contains the two components or requirements found in paragraphs (a) and (b). Section 16(3) provided a possible alternative to the second of the two requirements, ie that in s 16 (1)(b), but not to the first requirement, ie that in s 16 (1)(a).

25 The Commissioner submitted that the Tribunal erred by reading s 16(3) in isolation from the remainder of the section. He argued that even when s 16(3) was applicable, the requirement of s 16(1)(a) also had to be satisfied.

26 I accept the Commissioner's submission. The application of principles of statutory interpretation requires that s 16 of the Land Tax Act must be read in its entirety in order to ascertain the meaning of its particular provisions.[7] Once that is done, it is clear that s 16(1) contains two requirements which are joined by the conjunction 'and'. The Tribunal erred by regarding s 16(1) as being satisfied in circumstances where the matters set out in s 16(3) applied. Rather, the correct interpretation is that in circumstances where s 16(3) applies, it is still necessary for s 16(1)(a) to be satisfied. The fact that the Commissioner may be satisfied of the matters in s 16(3) has no bearing on whether the requirement in s 16(1)(a), that the purchaser has taken possession of the land, is established.

27 The Tribunal's decision therefore involved an error of law, which is relevant to the relief sought by the Commissioner on appeal.

28 The Commissioner's second ground alleges that the Tribunal denied the Commissioner natural justice by deciding the proceeding on a construction of s 16(3) that neither party argued and which construction is the subject of the first ground of appeal. The Tribunal acknowledged that it had so based its decision in paragraph 25 of its reasons, which I have set out above, but will repeat:

I am also mindful that the point about the ellipsis in subsection 16(3) of the Act was not properly argued before me. Both parties before me assumed that a vendor needed to show that a purchaser had "taken possession" of the land as required by paragraph 16 (1)(a) in order to qualify for favourable exercise of the subsection 16(3) discretion.

29 In this appeal, the Commissioner has been able to reargue the issue of the construction of s 16 on which the Tribunal based its decision. Therefore any denial of natural justice has been cured. [8]

30 Section 98(1)(a) of the VCAT Act and the principles of the common law both establish that VCAT is bound by the rules of natural justice.

31 When a tribunal or court considers that it may decide a case on a ground not argued by the parties it must give them an opportunity to address that ground before reaching its decision.[9] The proceeding could then be relisted for further argument or written submissions invited on the issue.

32 The Tribunal does appear to have denied the parties natural justice by deciding the case on a construction of s 16 which neither party advanced and indeed assumed not to be the case.[10]

33 The second error of law is also established, although, as I have stated, the denial of natural justice has been cured.

34 Oakbee filed a Notice of Contention seeking to challenge the Tribunal's finding that, if the construction of s 16(3) that it adopted was incorrect, then Oakbee was liable for land tax because the purchasers never took possession of the properties as required by s 16(1)(a). The Tribunal stated in respect of that contention:

Mr Dinelli contended that the meaning of the expression "the purchaser has taken possession" used in ss 16(1)(a) of the (2005) Act significantly differs from the sense of "possession of the land has been delivered to the purchaser" when used in ss 49(1) of the 1958 Act. Use of the active and not the passive voice was said to carry the implication that the purchaser must do something in order to obtain possession. An entitlement to possession which can be validly conferred on a person [who] is passive and/or ignorant of the right cannot suffice. The Tribunal was advised that the matter is free of authority and nothing in the Explanatory Memorandum assists in the subsection's construction.

31. Almost at the end of the hearing, the Applicant sought leave to re-open its case and call the evidence of Mr Pafiti, one of the purchasers of the Loren land, for the purposes of demonstrating the time at which the Loren land purchasers took possession of their neighbouring land. The Respondent took no objection to this course of action. It was not alleged that any dealings with the Loren land were irrelevant to dealings which may have occurred in relation to the Reema land. In the event, Mr Pafiti said that "[W]e took physical possession of the property on 29 January 2009" and "it wasn't our understanding" that he and his wife were entitled to possession "pre-January 2009". Mr Pafiti's evidence was evidently not what was hoped for on behalf of the Applicant.

I find that the Applicants never took possession of the land. Becoming "entitled" to possession was insufficient for the Applicant's to "take possession" in the sense required by paragraph 16(1)(a) of the Act. The Reema land contract was terminated before positive possessiontaking occurred. In the event that the Tribunal's construction of ss 16(3) of the Act is erroneous, the Respondent's assessment should be upheld.

35 Oakbee's Notice of Contention stated that it would contend that the Tribunal's decision should be affirmed on the ground:

That contrary to the finding of the Tribunal, becoming 'entitled' to possession was sufficient for the purchasers of 5 Loren Court, Endeavour Hills (Loren Court) and 133 Reema Boulevard, Endeavour Hills (Reema Boulevard) to 'take possession' in the sense required by section 16(1)(a) of the Land Tax Act 2005: see par 32 of the Tribunal's reasons. In particular:

(a) the meaning of 'taken possession' in section 16(1)(a) of the Land Tax Act 2005 (LTA) is not limited to 'positive possessiontaking' and includes the right to assume possession;

(b) the Tribunal should have found the requirement that the purchasers of Loren Court and Reema Boulevard 'has taken possession' of the land for the purposes of section 16(1)(a) of the LTA was satisfied when the purchasers became contractually entitled to possession, being the time that the contract was signed and, pursuant to its contract of sale, when the initial deposit was paid (and plan of subdivision approved): see paras 28, 29 and 32 of the Tribunal's reasons; and

(c) further to the extent the Tribunal found that, having regard to section 49(1) of the LTA 1958 (the previous corresponding provision) the purchaser must 'do' something in order to obtain possession, it erred: see par 30 of the Tribunal's reasons.

36 Oakbee made a similar submission to the Tribunal.

37 In Decleah Investments Pty Ltd v Commissioner of State Revenue (Review and Regulation)[11], the decision of the Tribunal to which I have referred, the Tribunal concluded that the words "take possession" when inserted in s 16(1) of the 2005 Land Tax Act did not show a 'purposeful change in legislative intent' and that the words 'obtain' in the 1958 Act and 'take' in the 2005 Act both connote an active and conscious act. The Tribunal stated:

In my view, an alternative analysis is preferable and does not rely upon any material change in meaning between the two Acts. The primary focus should be upon the nature and intent of the rights conferred upon the purchaser and whether they equate to rights normally associated with ownership.[12]

38 I raised with the Commissioner's counsel the question whether on an appeal limited to questions of law, a respondent to that appeal could rely on a notice of contention. The Commissioner in a subsequent written submission referred to authorities, most of which assumed that a respondent could do so.[13]

39 Oakbee did not take part in the proceedings in this Court to advance the argument raised in its Notice of Contention. The Commissioner wished to have the issue raised in it decided by the Court.

40 I propose to determine the issue raised in the Notice of Contention. The issue raised involves a question of law, which was argued before the Tribunal and on which it expressed an opinion. If in deciding an appeal on a question of law under s 148(1) of the VCAT Act, the Court determines, as it has here, that the Tribunal made an error of law, the Court must then decide whether the error was relevant to the relief sought on the appeal. If it is established that VCAT erred in respect of the question of law, the Court must determine whether that finding will advance the Commissioner's claim for relief.[14] If Oakbee's contention concerning the words 'take possession' is correct, then despite the Tribunal's erroneous construction of s 16, its decision to set aside the Commissioner's disallowance of part of Oakbee's objection would stand.

41 On Oakbee's contention, the purchasers had taken possession of the land within the meaning of s 16(1)(a). Oakbee's contention involves a question of law about which there are conflicting decisions of the Tribunal and which would ordinarily attract leave to appeal.

42 Because the Tribunal considered and expressed an opinion on Oakbee's contention, then in order to determine whether this Court, having found that the Tribunal erred in interpreting s 16, should set aside the Commissioner's decision, it is necessary to consider the issue raised by Oakbee's Notice of Contention.

43 The second reading speech on the Land Tax Bill 2005 suggests that it was not intended to alter the law. The Treasurer stated:

The bill is a rewrite of the Land Tax Act 1958 in modern drafting language, with the removal of obsolete provisions and with the Taxation Administration Act 1997 applying to it. The bill is not intended to alter any of the fundamental concepts as to how land tax is assessed, calculated or collected. The bill does not alter land tax rates or exemptions. There are only a few minor policy changes contained in the bill and these almost exclusively reflect existing practice and the current understanding of how land tax operates.

The bill does not remove any taxpayer rights and there is no expectation that the bill will have any appreciable effect on revenue.[15]

44 The Commissioner contended in a written submission that '[t]he function of the Court is to give effect to the will of the Parliament as expressed in the law'.[16] The Court's task is therefore to apply the 2005 Act rather than the 1958 Act, which in ss 48 and 49 uses the words 'obtained possession of the land' and 'possession of the land has been delivered'.

45 Some understanding of the meaning of the words 'take possession' is to be gained from the following passages in the judgment of Sugerman J in the Full Court of the New South Wales Supreme Court in Commissioner of Land Tax v Cam & Sons Pty Ltd[17], in considering legislation, which contained provisions in the same terms as the relevant provisions of the 1958 Victorian Act :

The words of paragraph (a) and (b) of section 26(1) are "obtained possession of the land", and "possession of the land has been delivered to the purchaser". It is not in terms required by the paragraphs that the purchaser should have taken or entered into possession or that the vendor should have put him physically into possession, but that possession should have been "delivered" on the one hand, and "obtained" on the other. One takes or enters into possession solely by one's own act, but one "obtains" it in this context by the act of another "in delivering it". These two expressions, "obtain" and "deliver", refer to the same acts and their consequences, since it is not to be taken that, in cases where more than 15 per cent of the purchase money had been paid, the legislature contemplated a lacuna between the vendor's being deemed to be the taxable owner and the purchaser's being so deemed.

...

The foregoing considerations in combination suggest that possession has been "delivered" and "obtained" in the statutory sense when the vendor, himself retaining no vestige of possession, has done all that it is necessary for him to do to enable the purchaser to assume actual occupation of the land or receipt of its rent and profits, and when, there being no obstacle in the way, such as adverse occupation by a third party, it rests solely with the purchaser to decide whether and when he will do so.

46 Walsh J expressed general agreement with "the conclusions and reasons of Sugerman J", although His Honour dissented from the decision of the other members of the Court on the issue of whether the purchaser had obtained possession of the land under the terms of the contract. Walsh J considered that possession may be delivered by means of a clause or a combination of clauses in the contract of sale itself.[18]

47 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. 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.

48 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.

49 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 s16(1)(a) of the Land Tax 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.

50 Support for the conclusion that I have reached is found in other provisions of the Land Tax Act. The words 'taken possession' are used in s 16A and the words 'takes possession' in s 30. In both instances, the context suggests that the provision requires some action by the acquirer of the land in relation to the land.

51 To the extent that the Tribunal in Decleah Investments Pty Ltd v Commissioner of State Revenue (Review and Regulation)[19] reached a different conclusion on this issue, I would, with respect, consider that part of the Tribunal's decision to be incorrect.

52 The nature of the conduct by a purchaser that will suffice to permit the finding that it has taken possession of land will depend on a range of matters. These will include the terms of the contract of sale and the nature of the land. In an appropriate case, something less than a purchaser taking physical possession of the land may satisfy the requirement that the purchaser 'has taken possession of the land'.

53 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 Land Tax Act that the purchaser has taken possession of the land.

54 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.

55 I do not consider that this case is to be decided by considering whether the 2005 Act differs from the 1958 Act. Rather I apply the ordinary meaning of the words 'take possession', which I have attempted to identify previously in this judgment.

56 In my opinion, neither purchaser had engaged in any conduct which could be described as 'taking possession' of the land.

57 The purchasers had the right to take possession, but were still obliged to pay the balance of the purchase price. They had not exercised that right to possession by taking any action in connection with the land on or prior to 31 December 2008.

58 The Tribunal correctly concluded that the purchasers had not taken possession of the land by the relevant date and, therefore correctly rejected the contention filed by Oakbee.

59 Oakbee was liable for the land tax assessed on the two properties in the 2009 Land Tax Assessment.

60 I allow the appeal and set aside the decision and order of the Tribunal dated 28 May 2012. I will hear submissions about the appropriate form of orders.

[1] KM Developments v Commissioner of State Revenue (Taxation) [2012] VCAT 1985, [39]-[56] and Kameel Pty Ltd v Commissioner of State Revenue (Taxation) [2013] VCAT 703.

[4] Oakbee Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 1984, [1]-[10].

[6] Oakbee Pty Ltd v Commissioner of State Revenue (Taxation) [2012] VCAT 1984,[18]-[25].

[7] Taylor v Public Service Board [1976] HCA 36; (1976) 137 CLR 208, 213 and the other authorities referred to in Dennis C Pearce and Robert S Geddes, Statutory Interpretation in Australia (LexisNexis7th ed 2011)116-118.

[8] See eg Calvin v Carr [1979] UKPC 1; [1980} AC 574, 592-597.

[9] See Friend v Brooker [2009] HCA 21; (2009) 239 CLR 129, 171-174 [114]-[118]; Pantorno v The Queen [1989] HCA 18; (1989) 166 CLR 466, 473.

[13] See Secretary, Department of Justice v Osland [2007] VSCA 96; (2007) 26 VAR 425 [111]; DFJ v Secretary Department of Justice [2012] VSCA 177 [93]; Cityrose Trading Pty Ltd v Booth [2013] VSC 504 [24], [106]. See however, the doubts expressed in Dover Beach Pty Ltd v Geftine Pty Ltd [2008] VSCA 248; (2008) 21 VR 442 at 451 [37].

[14] Secretary to the Department of Premier and Cabinet v Hulls [1999] VSCA 117; [1999] 3 VR 331, 335.

[15] Victoria, Parliamentary Debates, Legislative Assembly, 8 September 2005, 717, (John Brumby, Treasurer).

[16] Referring to Project Blue Sky Inc v Australian Broadcasting Association [1998] HCA 28; (1998) 194 CLR 355 , 348 [78].

[17] [1965] NSWR 589, 591. See also 596 (Walsh J) and, on appeal, Commissioner of Land Tax v Cam & Sons Pty Ltd [1965] HCA 13; (1965) 112 CLR 139, 146 (Kitto, Taylor and Owen JJ).

[18] {1965] NSWR 589, 596. Wallace J agreed with Sugerman J that the appeal should succeed.

Civil and Administrative Tribunal Act 1998

Administration Act 1997

At a glance

Court

Decision date

Before

Source

Judgment (115 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (6)