Plaintiff v First Defendant Second Defendant

1 This is an application for leave under s 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 ('the VCAT Act') to appeal against the orders of the Victorian Civil and Administrative Tribunal ('the Tribunal') constituted by Senior Member Robert Davis dated 21 August 2014 in Proceeding Nos. Z64/2014, Z67/2014 and Z68/2014 ('the VCAT proceedings').

2 The reasons for the orders made in the VCAT proceedings are contained in very detailed and extensive reasons of Senior Member Davis which were published on 21 August 2014 ('the Tribunal's reasons').[1]

3 The Commissioner of State Revenue ('the Commissioner') submitted that the plaintiff's proposed appeal has insufficient prospects of success to warrant the grant of leave to appeal, referring in this respect to Secretary to the Department of Premier and Cabinet v Hulls.[2] In support of this submission, the Commissioner relied on four matters, as follows:

(1) on s 33(3) of the Duties Act 2000 ('the Duties Act') - the transfer of land was not made necessary by a change in the trustees of the land;

(2) on 'dutiable value' for the purposes of the Duties Act - the point is decided against the taxpayer by a long line of authorities;

(3) on penalties under the Duties Act - penalty was a matter of fact for the Tribunal; and

(4) on liabilities and land tax - the idea that one can ignore the registered proprietor for land tax purposes is absurd.[3]

4 The Commissioner agreed in the early stages of the hearing that it was appropriate to adopt the course which was then being pursued by the plaintiff, which was to proceed to hear argument on both the leave question and also on the substantive matters raised in the proposed notice of appeal so that they could be dealt with if leave were granted. In my view, this is the appropriate course, as the matters relied upon by the Commissioner in opposing the grant of leave to appeal traverse all of the substantive issues the subject of the Tribunal's reasons and so any other course would have resulted in a substantial duplication and significantly increased time and cost as these issues would, in many respects, then have to have been addressed twice.

5 Annacott Pty Ltd ('Annacott') is named as the second defendant in the Originating Motion Between Parties dated 17 September 2014, by which these proceedings were commenced. Annacott was a joined party in VCAT proceedings Z64/2014 and Z67/2014. For the purposes of these proceedings, Annacott is not an active party. It is, however, represented with the same legal representation as the plaintiff.

The plaintiff's application for leave to appeal

6 The orders of VCAT which the plaintiff sought leave to appeal are set out in its Proposed Notice of Appeal, dated 17 September 2014, as follows:

(a) the land the subject of the proceeding is dutiable at the full rate of duty pursuant to the Duties Act 2000 and the decision relating thereto is confirmed;

(b) in relation to the issue of the penalty imposed by the respondent, the decision is varied to reduce the penalty from 60% of the dutiable amount to 40% of the dutiable amount;

(c) in relation to the value of the subject land, the proceeding is adjourned to a date to be fixed by the Principal Registrar and the proceeding shall be brought on for a directions hearing at the request of either party.

1. In proceedings Z64/2014 and Z67/2014 the Assessment of the respondent is confirmed.

The appeal is brought against all of the orders made by the Tribunal.

7 The questions of law which the plaintiff seeks to rely upon are set out in the Proposed Notice of Appeal as follows:

QUESTIONS OF LAW

The appeal raises the following questions of law

1. Does the exemption under s 33(3) of the Duties Act 2000 (the Duties Act) apply to a transfer of property from one trustee to another trustee without any change in the beneficial ownership of the property?
2. Did the Plaintiff at all times hold the property the subject of the transfer on trust for the same beneficial owner for whom it was held prior to the transfer?
3. Did the Tribunal fail to exercise its review jurisdiction or otherwise commit legal error by making findings of fact for which there was no evidence, or that were not open on the evidence, or that were unreasonable or perverse?
4. In ascertaining the dutiable value of the dutiable property the subject of the transfer to the Plaintiff, was it necessary and appropriate to have regard to the effect on value of the prior existing equitable proprietary interest of Annacott?
5. Did the Tribunal have power to impose an amount of penalty tax greater than 25% in circumstances where it did not make any finding that the Plaintiff or a person acting on behalf of the Plaintiff had intentionally disregarded a taxation law?
6. Is the owner of the equitable estate of freehold in possession in land under an implied or constructive trust the 'owner' of the land within the meaning of s 67(1)(b) and (2) of the Land Tax Act 2005?

8 The grounds of appeal which the plaintiff seeks to rely upon are set out in its Proposed Notice of Appeal as follows:

Section 33(3) of the Duties Act

1. The Tribunal asked itself a wrong question or identified a wrong issue, took into account irrelevant considerations and/or failed to take into account relevant considerations.

1.1 The Tribunal misconstrued s 33(3) of the Duties Act.

1.2 The Tribunal:

(a) should have found that a transfer of property from one trustee to another trustee without any change in the beneficial ownership of the property is a transfer made solely because of the retirement of a trustee or 'other change in trustees' and in order to vest the property in the trustees for the time being entitled to hold it;

(b) should have asked whether or not the transfer of Tulliallan to the Plaintiff in 2006 (the 2006 transfer) involved any change in the beneficial ownership of the property, and in particular whether the property was on trust for Annacott both before and after the 2006 transfer.

1.3 The Tribunal erred in construing s 33(3)(b) of the Duties Act as requiring that Konann be appointed as trustee for Annacott at a time prior to signing the 2006 transfer. The Tribunal should have found that it was sufficient to satisfy s 33(3)(b) that the property was transferred to Konann in the capacity of trustee (including constructive trustee) for Annacott and entitled to hold the property in that capacity.

1.4 The Tribunal erred in law by finding (at paragraphs [86]-[88]) that the property was or would have been held by Konann on a different type of trust to which it was held prior to the transfer:

(a) The Tribunal erred in finding the property was or would have been held by Konann on a 'resulting "mistaken" trust' for the benefit of Peter and Garry White (as trustees for Annacott) as opposed to a 'resulting "payment" trust' for the benefit of Annacott.

(b) The Tribunal should have found that the property would have been held by Konann as a constructive trustee for Annacott on the same terms as it was held by Peter and Garry White as trustees for Annacott prior to the transfer.

1. The Tribunal made findings for which there was no evidence, or that were not open on the evidence, or that were unreasonable or perverse, namely the Tribunal's findings at paragraph [72] and [76] that the sole reason or cause for the 2006 transfer was to change the beneficiaries or beneficial ownership of the property from Annacott to the Peter White Family Trust.

1. The Tribunal erred in finding that the prior existing equitable interest of Annacott as the beneficial owner of the property should be disregarded in assessing the dutiable value of the property, being the amount for which the property might reasonably have been sold on the open market.
2. The Tribunal should have found that, having regard to the prior existing equitable interest of Annacott as the beneficial owner of the property (and irrespective of whether that equitable interest was 'impressed upon' rather than carved out of' the legal estate in fee simple), the dutiable value of the property transferred to Konann was a nil or nominal value.

1. The Tribunal did not have power to impose an amount of penalty tax greater than 25%.

5.1 Section 30(2) of the Taxation Administration Act provides that the amount of penalty tax may be increased from 25% to 75% of the amount of unpaid tax if the tax default was caused wholly or partly by the intentional disregard of the taxpayer (or a person acting on behalf of the taxpayer) of a taxation law.

5.2 The Tribunal did not make any finding that the Plaintiff or a person acting on behalf of the Plaintiff had intentionally disregarded a taxation law.

5.3 Further or alternatively:

(a) it was not open to the Tribunal to make a finding that the Plaintiff or a person acting on behalf of the Plaintiff had intentionally disregarded a taxation law; and/or

(b) any such finding made by the Tribunal would have involved a breach of the requirements of procedural fairness.

Land Tax

1. The Tribunal erred in finding that Konann was the 'owner' of Tulliallan for the purposes of s 67(1)(b) and (2) of the Land Tax Act 2005.
2. The Tribunal should have found that, on the proper construction of s 67 of the Land Tax Act 2005, Annacott was the 'owner' of Tulliallan as the owner of an equitable estate of freehold in possession under an implied or constructive trust.

9 The orders sought by the plaintiff as set out in its Proposed Notice of Appeal are as follows:

1. The appeal be allowed.
2. The orders of the Tribunal are set aside.
3. The proceeding be remitted to the Tribunal, differently constituted, to be heard and determined again.
4. The First Respondents pay the Appellant's costs.
5. Such further or other relief as this Honourable Court sees fit.

(1) A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding-

(a) if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others, to the Court of Appeal with leave of the Court of Appeal ; or

(b) in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.

It follows from these provisions that any appeal is dependent upon two important qualifications. First, that the appeal be "on a question of law" and the second qualification is that the court "gives leave to appeal". The legislative policy underlying these provisions is that "VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal".[4] It follows that "[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal".[5]

11 The leave requirement under s 148 is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:[6]

1. The requirement for leave under s 148(1) of the VCAT Act 'is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the Court do found the subject matter of the appeal'.[7] It also confers a discretion about whether to grant leave[8] which an applicant must persuade the Court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.[9] It will ordinarily be necessary (in addition to a clearly articulated question of law)[10] for an applicant to make out a prima facie case[11] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.[12]

12 In considering an application of this nature, courts have been concerned to respect the role entrusted by the legislature to the particular tribunal and not, in effect, subvert this position by seeking out error. Thus, Kirby J in Roncevich v Repatriation Commission, said:[13]

Courts conducting this form of review have been repeatedly enjoined by this Court to avoid overly pernickety examination of the reasons.[14] The focus of attention is on the substance of the decision and whether it has addressed the 'real issue' presented by the contest between the parties.

Similarly, in Vegas Nominees Pty Ltd v Werribee Sports & Community Club Inc, Ashley J said:[15]

This Court has said more than once that it should not examine briefly stated reasons by an expert Tribunal in an over-legalistic manner or by the over-zealous drawing of inferences in order to disclose some supposed error; although where unambiguous language is used, the user should be taken to mean what the words say. I should add that the Court is not entitled to interfere with the Tribunal's decision unless it is satisfied that there was in fact a vitiating error of law. It is not enough for the appellant to show that the Tribunal's reasons for its decision are so expressed as to suggest the possibility that it proceeded upon a wrong view of the law. In support of the several propositions that I have just stated I refer to Portland Properties Pty Ltd v Melbourne and Metropolitan Board of Works (1971) 38 LGRA 6 at 18, Michaelis Bayley (Vic) Pty Ltd v Melbourne and Metropolitan Board of Works and others (1980) 44 LGRA 65 at 67-68 and Teston Investments Pty Ltd and Anor v Melbourne and Metropolitan Board of Works (1985) 62 LGRA 346 at 349-350.

Additionally, "[o]n appeal this Court must recognise the forensic realities of the way in which the case was put to the Tribunal. It is these realities to which a Tribunal must respond in its reasons".[16]

13 Mere want of logic in the reasons given by a tribunal does not, of itself, establish an error of law. Thus, Mason CJ said in Australian Broadcasting Tribunal v Bond:[17]

But it is said that '[t]here is no error of law simply in making a wrong finding of fact': Waterford v The Commonwealth [(1987) [1987] HCA 25; 163 CLR 54 at 77], per Brennan J. Similarly, Menzies J observed in Reg. v District Court; Ex parte White [(1966) [1966] HCA 69; 116 CLR 644 at 654]:

'Even if the reasoning whereby the Court reached its conclusion of fact were demonstrably unsound, this would not amount to an error of law on the face of the record. To establish some faulty (e.g. illogical) inference of fact would not disclose an error of law.'

Thus, at common law, according to the Australian authorities, want of logic is not synonymous with error of law. So long as there is some basis for an inference - in other words, the particular inference is reasonably open - even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place.

In the same vein, Batt J, in Roads Corporation v Dacakis, said:[18]

... a finding of fact will only be open to challenge as erroneous in law if there is no probative evidence in support of it (and not also if it is not reasonably open on the evidence), whilst an inference will be open to challenge as being erroneous in law if it was not reasonably open on the facts.

But, as the statement of Mason CJ at 360 shows, there is virtually no difference between the tests.[20]

Batt J continued, quoting the passage from the judgment of Mason CJ in Bond at 356, which is set out above, and concluded:[21]

For the reasons I have given, I consider that I should take that passage as stating the law which I must apply. The ascription of value to a parcel of land or a chattel is, or at least will frequently involve, an inference of a fact. Accordingly, a want of logic in drawing that inference will not by itself constitute error of law. But it may, I consider, sound a warning note and put one on enquiry whether there was indeed any basis for the inference.

This conclusionary statement was made by Batt J after a comprehensive review of the authorities in relation to the nature of a question of law or an error of law.[22]

14 In the context of those authorities, I am satisfied that the matters raised in the Proposed Notice of Appeal would, if established, constitute vitiating errors of law on the part of the Tribunal such as would warrant the granting of leave to appeal. Accordingly, leave will be granted. Moreover, for the reasons which follow, I find that these vitiating errors are established.

15 A quite detailed revised chronology is set out in the Tribunal's reasons.[23]

16 The plaintiff provides a helpful summary of factual matters in its submissions.[24] The Commissioner makes reference in his submissions to the plaintiff's summary, supplementing it on the basis that he says that it is, in some respects, incomplete.[25] As the facts of and surrounding the relevant transactions are significant in the present context, it is helpful to set them out in some details in these reasons. In so doing, I rely on the plaintiff's summary, and as supplemented by the additional matters raised by the Commissioner which he says it is necessary to have regard to in order to complete the factual picture.

17 Annacott was incorporated in May 1994, shortly after which it was acquired by Peter White as a corporate vehicle to receive distributions from the Peter White Family Trust ("PWFT"), a discretionary trust.[26] At that time, the trustees of the PWFT were Peter White and his brother, Garry White.[27]

18 On 1 August 1994, Peter White signed a contract of sale by which a parcel of land known as "Tulliallan", which is located at 805 Berwick-Cranbourne Road, Berwick ("the Land") was purchased by "Peter White and/or nominee" for the price of $3,000,000.

19 It is common ground that on 5 September 1994, Peter White sent a handwritten note to his conveyancing solicitor, Mr Lachlan Donaldson ("Donaldson"), in which he gave the following instructions in relation to the conveyance of Tulliallan: "Confirming purchaser Peter White Family Trust. Confirming trustees PE White and GR White".[28] In his submissions in relation to factual matters, the Commissioner makes reference to the following:[29]

1. Initial acquisition in 1994. After signing the contract to buy the land in question, Peter White instructed his solicitor that the acquisition was to be completed in the name of Peter and Garry White in their capacity as trustees of the Peter White Family Trust.' However, later an accountant suggested to Peter White that it was preferable that he and Garry White acquire the land as trustee for Annacott, and a directors' resolution was executed accordingly (and backdated).[30] The accounts treated Annacott as having provided the money for the purchase of the land.[31] For his part, the solicitor confirmed to his client that the acquisition had been completed in accordance with his instructions.[32] Peter White did not speak up.[33] It was unexplained why the land was not acquired in Annacott's name.

Moreover, the Tribunal found that Annacott provided the funds for the purchase of the Land, and subsequently paid for improvements to the Land.[34] The Tribunal also found that the Land was held on a resulting trust for Annacott prior to the 2006 transfer "because of the fact that Annacott had made all the payments for the land".[35] Those findings having been made by the Tribunal, the explanation as to why the land was not registered in the name of Annacott on its initial acquisition is irrelevant;[36] as is whatever Peter White may have thought appropriate in terms of trustee or trustees after the contract had been signed and before matters were considered further with the benefit of advice.

20 On 8 September 1994, the Trustees of the PWFT received legal advice from Mr J.D. Merralls QC, which confirmed that they had power under the Trust Deed to make distributions to Annacott (as a corporation all of the shares in which were held by primary beneficiaries of the PWFT) for the purposes of purchasing the Land.[37]

21 On 14 September 1994, Peter White and Garry White made a declaration of trust by which they declared that they held the Land on trust for Annacott.[38] The Tribunal did not allow an unstamped copy of this declaration of trust to be admitted into evidence.[39] On 26 September 1994, Peter White signed a Sale of Real Estate Nomination Form ("the Nomination") by which he nominated himself and Garry White as purchasers of the Land. The Nomination did not state expressly the capacity in which Peter and Garry White were nominated as purchasers; and, as the plaintiff observes, whether in the capacity as trustees for Annacott or as trustees for the PWFT. In any event, settlement took place on 2 November 1994, and Peter and Garry White were registered as joint proprietors of the Land on 8 November 1994.

22 The purchase price for the Land was paid by Annacott from distributions and loans from the PWFT.[40] Annacott expended further moneys on improvements to the Land and also conducted a farming business on the Land.[41]

23 Peter and Garry White retired as trustees of the PWFT in October 1998 and were replaced by the plaintiff, Konann Pty Ltd.[42] The plaintiff observes that the Land was not transferred to Konann at that time, which it says is consistent with the fact that the Land was held by Peter and Garry White as trustees for Annacott, as opposed to being held on trust for the PWFT. Moreover, the plaintiff submits that it was not disputed before the Tribunal that Annacott was the beneficial owner of the Land prior to the 2006 transfer,[43] and the Tribunal made a finding to that effect.[44] The plaintiff contends that, as the State Revenue Office later found, the Land had "always been considered as an asset of Annacott and ... all the funds for the purchase of the [Land] were provided by Annacott even though Peter and Garry White ... were the registered owners of the [Land]".[45] On this basis, the plaintiff submits that, in other words, Peter and Garry White held the Land on trust for Annacott. Moreover, in May 2004, Peter and Garry White sought to resign as trustees and to be removed as registered proprietors of the Land. Donaldson was informed by Peter White that he and Garry were trustees of the Land for Annacott, and not for the PWFT.[46] The plaintiff submits that there was a degree of subsequent confusion on the part of Donaldson, who, to that point, had been unaware of Annacott's interest as beneficial owner of the Land. Nevertheless, Donaldson prepared a transfer of land by which the Land was transferred from Peter and Garry White to Annacott "pursuant to its entitlement in equity as beneficial owner" ("the 2004 Annacott transfer").[47]

24 On 21 January 2005, the State Revenue Office wrote to Donaldson requesting specified kinds of documentary evidence to show that Annacott was the "real purchaser" of the Land. Ultimately, on 27 February 2006, Donaldson informed the State Revenue Office that its evidentiary requirements could not be met, and that the Land should remain registered in the name of Peter and Garry White.[48] As a consequence, the State Revenue Office agreed to impound the 2004 Annacott transfer and associated documents pursuant to s 275 of the Duties Act.[49] The Commissioner, on the other hand, puts a slightly different perspective on the events surrounding the 2004 Annacott transfer, as follows:[50]

1. Abandoned transfer to Annacott. In 2004, Garry White told his brother that he wanted his name off the title.[51] Peter White attempted to have the property transferred to Annacott, belatedly informing his solicitor that he and his brother had actually held the land on trust for Annacott rather than the family trust, and making a statutory declaration to that effect; but ultimately, in 2006, he decided to abandon the transfer to Annacott, upon advice from senior counsel that it was better not to proceed given both duty and income tax considerations.[52]

Nevertheless, none of these events is consistent with, or indicative of, an intention to change the beneficial ownership of the Land.[53]

25 Based on an understanding of their legal advice that the Land was now "deemed" to be an asset of the PWFT,[54] Peter and Garry White executed the 2006 transfer by which the Land was transferred to Konann for consideration stated as "Entitlement in Equity".[55] Peter White gave evidence that the 2006 transfer was not intended to transfer the beneficial interest of the Land to the plaintiff, Konann Pty Ltd, or otherwise affect the beneficial interest of the Land.[56] His evidence as to the reasons for the 2006 transfer was that he and Garry White "no longer wished to be registered proprietors and trustees of the property and wanted a new trustee to hold the property in place of us",[57] and that "the steps that Garry and I took in transferring the title to Konann were taken only in order to change the trustees of Tulliallan without affecting the beneficial ownership of the property".[58] In terms of events around this time, the Commissioner adds the following:[59]

1. Transfer to Konann in 2006. Peter White then in 2006 informed his solicitor that the trustee of the Peter White Family Trust was actually Konann, it having replaced Peter and Garry White as the trustee in 1998,14 and instructed that '[t ]he title should be in this name'.[60] Documents were executed accordingly, including: a resolution of directors of Konann recording that Konann was to secure title to the land as trustee of the family trust;[61] the transfer of land instrument dated 7 July 2006 that is in contention;[62] and a statutory declaration in which Peter White declared that he and Garry White had held the land as trustee of the family trust and that Konann would be doing likewise.[63] The statutory declaration was relied on by the Commissioner to stamp the transfer as exempt from duty on 4 September 2006.[64] The transfer was registered (and a notice of acquisition was lodged).[65]

26 The 2006 transfer was initially stamped as exempt from duty,[66] but, following an investigation by the State Revenue Office, a Notice of Assessment was issued on 24 April 2012 by which the plaintiff, Konann Pty Ltd, was assessed to duty on the 2006 transfer ("the Duties Assessment").[67] In relation to this investigation, the Commissioner adds in his submissions in relation to factual matters:[68] "In 2009, the Commissioner began a duty and land tax investigation (leading to the assessments in issue).[69] It was then that the claim was made first that the transfer was a 'mistake'".[70]

27 The plaintiff, Konann Pty Ltd, objected to the Duties Assessment[71] and, the Commissioner having failed to determine the objection within 90 days, the plaintiff requested that the matter be referred to the Tribunal under s 106 of the Taxation Administration Act 1997 ("TAA"). The plaintiff was also assessed to land tax on the Land in respect of the 2012 tax year and the 2013 tax year ("the Land Tax Assessments").[72] It was not in dispute that Annacott carried on a primary production business on the Land during the relevant periods.[73] Prior to August 2011, the Land had been entitled to an exemption from land tax pursuant to s 66 of the Land Tax Act 2005 ("LTA"), being land in greater Melbourne that was not within an urban zone and that was used primarily for primary production.[74] However, following its rezoning as "Urban Growth" in August 2011, the Land was brought within an urban zone and was required to satisfy the additional requirements of s 67 of the LTA - in particular, s 67(1)(b) which required the owner of the land to be a person specified in s 67(2) of that Act. In terms of factual matters, the Commissioner adds the following with respect to Peter White's evidence in 2014 and the purpose of the 2006 transfer:[75]

1. Peter White's evidence in 2014. Peter White confirmed in his evidence to the Tribunal that, although the transfer to Konann was made in order to get the title into Konann's name as trustee for the family trust, in his view that had occurred based on bad legal advice, because in his view the transfer to Annacott should have been pursued rather than a transfer to Konann as trustee for the family trust.[76]
2. Purpose of the transfer. The Tribunal found, as a matter of fact, and, it is submitted, unsurprisingly, that it was 'abundantly clear' that the cause or purpose of the transfer was 'to secure the registration of Konann as trustee for PWFT'.[77]

Nevertheless, the Tribunal confined itself in its reasons to consideration of the "cause", rather than the "purpose", of the transfer - a distinction which, in all the circumstances, is not, in my view, merely semantic. Thus, the plaintiff submits:[78]

1. The Tribunal's reference to the cause (not the purpose, as suggested by the Commissioner)[79] of the 2006 transfer being 'to secure the registration of Konann as trustee for PWFT' is difficult to reconcile with the Tribunal's refusal to make a finding whether or not Annacott remained the beneficial owner of the Land. In any event, the Tribunal's statement about the cause of the transfer does not preclude the application of the exemption under s 33(3) of the Duties Act. The reason for securing the registration of Konann was directly because of the retirement of Garry White and Peter White as trustees, or because of a change of trustees, within the meaning of s 33(3)(a). In other words, the cause of the transfer was that Garry White wanted to cease being trustee of the Land due to illness, as a result of which a decision was made to transfer the Land to a new trustee (Konann).

Section 33(3) of the Duties Act

28 The plaintiff submits that the 2006 transfer was exempt from duty under s 33(3) of the Duties Act which, it says, gives rise to the following questions of law:

(1) does the exemption under s 33(3) apply to a transfer of property from one trustee to another trustee without any change in the beneficial ownership of the property; and

(2) did Konann at all times hold the property the subject of the transfer on trust for the same beneficial owner for whom it was held prior to that transfer?

On this basis, the plaintiff raises the further questions with respect to the Tribunal's decision, namely, whether the Tribunal failed to exercise its review jurisdiction or otherwise commit legal error:

(3) by failing to make a finding on the question whether the 2006 transfer involved any change in the beneficial ownership of the Land and, in particular, whether the Land continued to be held on trust for Annacott after the 2006 transfer; and/or alternatively,

(4) by making findings of fact for which there was no evidence, that were not open on the evidence, or that were unreasonable or perverse?

29 The Commissioner made the following submissions in response to the propositions implicit in the plaintiff's submissions:[80]

1. The plaintiff's proposed appeal is that the transfer of land dated 7 July 2006 from Peter and Garry White to Konann is exempt under s 33(3) of the Duties Act 2000 (as at 7 July 2006) because:

(1) (legal premise) section 33(3) applies whenever one trustee transfers land to another trustee without causing any change in the beneficial ownership of the land,[81] and

(2) (factual premise) that is what happened here, and the Tribunal should have so found.[82]

1. The legal premise is wrong (and so the difficulties with the factual premise do not arise). It is not a sufficient condition for exemption under s 33(3) that one trustee transfers land to another trustee without any change in beneficial ownership. Rather, s 33(3) requires the transfer of the trust property to have been made necessary by a change. in the office of trustee. This is 'a rigorous test of a factual nature'.[83]

30 The provisions of s 33(3) of the Duties Act are as follows:

(3) No duty is chargeable under this Chapter in respect of a transfer of dutiable property to a person other than a special trustee if the Commissioner is satisfied that the transfer is made solely -

(a) because of the retirement of a trustee or the appointment of a new trustee, or other change in trustees; and

(b) in order to vest the property in the trustees for the time being entitled to hold it.

The expression "new trustee" is defined in s 33(1) of the Act to mean "a trustee appointed in substitution for a trustee or trustees or a trustee appointed in addition to a trustee or trustees".

31 The critical point of difference between the parties is with respect to, what might be described, as the broad or underlying purpose and effect of s 33(3) of the Duties Act. The plaintiff's position is, in broad terms, that the legislation is not intended to impose duty on transactions that do not involve a change in the beneficial ownership of dutiable property. The Commissioner, on the other hand, contends that it is not a sufficient condition for exemption under s 33(3) that there be no change in beneficial ownership of the dutiable property, though it is said that it is probably a necessary condition. For the reasons which follow, I am of the opinion that the application of the principles of statutory interpretation and authority favour the position put by the plaintiff. In reaching this view, I accept the reasoning advanced by the plaintiff in support of its position and the bases relied upon. The reasoning advanced by the Commissioner and the bases relied upon are not persuasive and would, in any event in my view, produce an artificially narrow application and operation of these provisions.

32 Turning to the policy underlying these provisions, the plaintiff contends that the exemption in s 33(3) of the Duties Act reflects the broader policy of the Act which is intended to impose duty on transactions that involve a change in the beneficial ownership of dutiable property. Thus, reference is made to the judgment of Davies J in Commissioner of State Revenue v STIC Australia Pty Ltd,[84] where her Honour said:

The primary purpose of the Act is to tax transactions that result in a change of beneficial ownership of dutiable property, by providing for duty to be charged on transfers of dutiable property and on other transactions that result in a change of beneficial ownership of property.

The plaintiff says that this policy is evident in the definition of "dutiable transactions" in s 7 of the Duties Act, which extends to "any other transaction that results in a change in beneficial ownership of dutiable property (other than an excluded transaction)".[85] Moreover, it is submitted that the policy is also carried into effect by the scheme of exemptions from duty in respect of changes in trustees,[86] transfers of property from an apparent purchaser to the real purchaser,[87] transfers to a trustee or nominee without any change in beneficial ownership,[88] and transfers from a trustee to a beneficiary of a fixed trust.[89]

33 In Perpetual Trustee Co Ltd v Commissioner of State Revenue, Hansen J identified the purpose of the exemption in s 33(3) in the following terms:[90]

In my view the purpose of the exemption is clear. It is to exempt from stamp duty a transfer of real property given in the context of a change of trustee of a pre-existing trust in order to vest the real property of the trust in the name of the trustee for the time being. In such a case the transfer is not given in consequence of a sale or other disposition of the real property for valuable consideration. In such circumstances it would be unreasonable to charge the instrument of transfer to duty. The beneficial interest has not changed. There has been a mere change in the registered proprietor (in a case such as the present which concerns land under the Transfer of Land Act 1958) consequent upon and because of the change in the office of trustee and the need for the trust property to be conveyed into the name of the trustee for the time being.

Moreover, in Commissioner of State Revenue v Challenger Property Nominees Pty Ltd,[91] the Commissioner accepted that "the clear policy behind the exemption [in s 33(3)] is that no duty should be payable where there is a 'mere' change of trustee, necessitating a transfer of legal title, and no change of beneficial ownership", and that "[i]n those circumstances, the property continues to be held on the same trusts for the same beneficiaries and there has been no disposal which should properly attract duty".[92] Thus, in this regard, the plaintiff submits that a construction of s 33(3) of the Duties Act which promotes the purpose or object underlying the Act should be preferred to a construction that would not promote that purpose or object.[93] In the present circumstances, I do not understand the Commissioner to be cavilling with that general proposition but, rather, contending that this general proposition must rest in the context of the express provisions of s 33(3) of the Duties Act and not be taken simply to transcend express provisions. Consequently, it is to these provisions which I now turn.

34 The plaintiff contends that in order to satisfy s 33(3) of the Duties Act, the relevant transfer must satisfy two requirements. First, it must be made solely "because of the retirement of a trustee or the appointment of a new trustee, or other change in trustees" and, secondly, it must be made solely "in order to vest the property in the trustees for the time being entitled to hold it". It is submitted that the first limb raises a question about the cause of the transfer, and the second limb raises a question about the purpose of the transfer.[94]

35 The plaintiff contends that most of the decided cases on s 33(3) of the Duties Act (or its predecessor exemptions) are directed to the first of these requirements - the cause of the transfer.[95] The plaintiff submits that although the causation requirement imposes a "rigorous test of a factual nature",[96] it does, nevertheless, involve a "broad inquiry into the surrounding circumstances" which is not confined to the terms of the relevant instruments in question and demands a "commonsense approach".[97] Moreover, it is submitted that in both the Perpetual Trustee and the Victoria Gardens Developments cases, where an analogous exemption was held to be inapplicable, did not involve a change in trustees of a pre-existing trust.[98]

36 The Commissioner, on the other hand, contends that the provisions of s 33(3) have a much more limited operation. Thus, it is said that the phrase "new trustee" used in s 33(3)(a), as defined in s 33(1), means that the appointment of a substitute or additional trustee, necessitating the transfer of the trust property from the previous trustee or trustees to the new trustee or any continuing trustee, is capable of attracting the exemption. It is said that a "retirement" without any appointment could also attract the exemption. The example cited is where one of two trustees might decide to retire, necessitating a transfer from the previous trustees to the continuing trustee so entitled. Obviously enough, so it is said, if all the trustees of a trust decide to retire without any replacement, then that is a decision to discontinue the trust, rather than the change the trustee, so there will be no trustee of the trust who is entitled to call for a transfer of property from the outgoing trustees. Although it is not necessary to pursue this point further in the present context, I do repeat my comments during the course of the hearing of this matter that one should not lose sight of the fundamental proposition in the equity jurisdiction that a trust will not be allowed to fail for want of a trustee. Continuing, the Commissioner also says that there could be neither a "retirement" nor an "appointment" but an "other" change in the trustees of the trust, such as the removal of a trustee.[99] Nevertheless, it would appear from the authority cited that the meaning and operation of the expression "other change of trustees" is clearly not exhausted by the example of the removal of a trustee.[100] Thus, a wrongful transfer of property by a trustee in breach of trust, in circumstances where the transferee holds the land on constructive trust for the beneficiaries of the trust, should not attract duty.[101] Either such a transfer should be exempt under s 33(3) of the Duties Act, or alternatively the property that is transferred has a nil dutiable value. The application of s 33(3) to a constructive trustee was accepted by the Tribunal in Kringas v Commissioner of State Revenue,[102] a decision which is not addressed in the Commissioner's submissions. In any event, there is an important difference between the hypothetical example given by the Commissioner[103] and the present case, in that Peter and Garry White did not seek to transfer the Land to the plaintiff beneficially, but only in the capacity of trustee.

37 Thus, the Commissioner contends that whatever the precise change in the office of trustee, the change in the trustees must be the sole cause of a transfer (echoing the words "solely because of" in the statutory language); and the transfer's sole purpose (echoing the words "solely in order to" in the statutory language) must be to vest the property in the name of the continuing and, alternatively, appointed trustees entitled to it. In other words, it is said the exemption is directed at "a mere change in the registered proprietor ... [solely] consequent upon and because of [a] change in the office of trustee and the need for the trust property to be conveyed into the name of the trustee for the time being".[104] In summary, it is said that the transfer of the trust property must have been necessitated by a change in the trustee of the trust.[105]

38 Moreover, the Commissioner submits that to say that the Duties Act attempts to bring to duty transactions that change the beneficial ownership of dutiable property[106] is not to say that all transactions do not change the beneficial ownership are not dutiable. Similarly, the Commissioner contends, to say that all transfers of land that meet the requirements of s 33(3) are transfers from one trustee to another trustee without any change in beneficial ownership[107] is not to say that all transfers of land from one trustee to another trustee without any change in beneficial ownership will meet the requirements of s 33(3).

39 Consequently, the Commissioner submits that the first question of law in the plaintiff's proposed notice of appeal would be answered in the negative, with the result that the second and third questions do not arise, and so it is unnecessary to consider the plaintiff's challenge to the Tribunal's findings of fact (observing that this is an appeal limited to questions of law).[108] Additionally, the Commissioner contends that it ought not be accepted that, as a matter of principle, the plaintiff's indefeasible Torrens title to the Land is vulnerable, in the absence of fraud on the part of the plaintiff, whether or not it was a volunteer, to a claim by Annacott capable of leading to the imposition of a constructive trust.[109] The authorities relied upon by the Commissioner in this respect do not support the proposition sought to be advanced as they deal with indefeasibility in different contexts. In the present circumstances, the question whether or not the trustee as registered proprietor has indefeasible title under the Torrens legislation is not relevant. No doubt the holder of a beneficial interest in Torrens title land under a trust would fervently hope that its trustee held indefeasible legal title as an aspect of protection of the beneficial interest. However, as between beneficiary and trustee, title so protected from the rest of the world is no obstacle to the former seeking the assistance of equity in aid of its beneficial interest - whether by an order for transfer of the legal title to it, the beneficiary, or otherwise. It is also contended by the Commissioner, putting to one side issues of indefeasibility, that the actions of Peter White, the controlling force behind "what happened", gave rise to any constructive trust in favour of Annacott, despite his or his advisors' alleged "mistake".[110]

40 The plaintiff submits that s 33(3) of the Duties Act is capable of application where the trustees of an existing trust, having decided to resign as trustees and remove themselves as registered proprietors, transfer trust property to another person in circumstances where the transferee takes the property subject to the existing trust. In my view, the language of the Act and the authorities relied upon in this respect strongly support this position.

41 More particularly, the plaintiff contends that the causal requirement in s 33(3)(a) would be satisfied as the transfer takes place solely because of the retirement of a trustee or "other change in trustees".[111] It is submitted that there is no need for a formal deed of retirement and appointment of a new trustee separate from and prior to the transfer. In this respect, it is said that on one view, a retirement cannot be completely effected until the former trustee has transferred title to the land to the new trustee, until which time the retiring trustee would continue to hold the land subject to the trust. It is submitted that it is the intention to retire which motivates or provides the reason for the transfer of title by the retiring trustee, even if the requirement is not completed until the transfer is effectuated. Any other interpretation of these provisions would, in my view, impose artificial formality in the process of transferring property to a new trustee or trustees - and be at odds with the clear legislative purpose.

42 Secondly, it is submitted that the purpose requirement in s 33(3)(b) would be satisfied because the transferee would be entitled to hold the property as a constructive trustee or trustee de son tort.[112]

43 Finally it is submitted that any mistake or confusion in relation to the identity of the particular trust on which the property was held both before and after the transfer would not preclude the application of the exemption under s 33(3) of the Duties Act where its provisions would otherwise apply. It follows that the transfer would not have brought about any change in the beneficial ownership of the property, and nor would there have been an intention to effect any such change in the beneficial ownership of the property. In any event, equitable, beneficial, ownership, will not change as a result of transactions involving trustees, purported trustees or intending trustees absent the agreement of the holder of the equitable, beneficial, interest, or the intervention of a bona fide purchaser for value without notice.

44 On this basis, the plaintiff contends that on the facts of the present case, it was critical to the proper application of the exemption in s 33(3) of the Duties Act to determine whether the Land, having been held by Peter and Garry White on trust for Annacott prior to the 2006 transfer, continued to be held on trust for Annacott following the 2006 transfer. The Tribunal did, however, decline to make any findings on that critical issue,[113] a failure which the plaintiff submits demonstrates that the Tribunal misconstrued s 33(3) and asked itself the wrong question.

45 In my opinion, the plaintiff's contentions as to the proper construction and interpretation of s 33(3) of the Duties Act are to be preferred as being supported by the language of these provisions, the clear purpose or object underlying the Act as identified by the plaintiff and by the authorities to which reference has been made. As I have indicated in the preceding reasons, the interpretation contended for by the Commissioner is both narrow and, in my view, advances an artificial and unduly limited approach to analysing and determining both the causation and purpose of any transaction which is considered in the context of these provisions. Parliament may well seek to maximise State revenue, but would need to have legislated in clear terms as the Commissioner advocates if that interpretation and approach were to prevail.[114]

46 It was accepted by the Tribunal that, prior to the 2006 transfer, Annacott was the beneficial owner of the Land as the beneficiary under a resulting trust, having provided the funds for the purchase of the Land and for subsequent improvements.[115] Moreover, the Tribunal did not make any finding that Annacott had at any time transferred or relinquished its beneficial interest in the Land. The plaintiff contends that it would not have been open to the Tribunal to make such a finding upon the evidence before the Tribunal. More particularly, it submitted that the mere fact that Peter White was the sole director and shareholder of Annacott at the relevant time does not, of itself, provide a sufficient basis on which to infer that Annacott transferred its beneficial interest in the Land to the PWFT without receiving any consideration. As I observed at the hearing of the matter, the distinct corporate personality of Annacott must be recognised and the mere fact that Peter White was its sole director has no consequence in the absence of any step taken to affect Annacott's position as a separate corporate entity. In any event, as the plaintiff indicates in its submissions, no suggestion that Annacott transferred its beneficial interest in the Land to PWFT was directly put in cross-examination of Peter White, who gave specific evidence to the contrary in re-examination.[116] Thus, the Tribunal did not exclude the possibility that Annacott remained the "true beneficiary" of the Land and, further, did state that Annacott may have had a claim as beneficiary of the property subsequent to the 2006 transfer.[117]

47 The plaintiff also submits that the Tribunal fell into error in finding, first, that "Mr Peter White and the other parties, as at the time of the transfer, did not only intend just changing trustee", but "[t]hey intended to change the beneficiaries" and, secondly, that after the 2006 transfer, the "type of trust must necessarily have changed" from "a resulting 'payment' trust" to "a resulting 'mistaken' trust", being a "trust upon a trust", and that the latter was "clearly a different type of trust to which it was held prior to the transfer".[118]

48 I accept the plaintiff's submissions that the first statement or finding by the Tribunal to which reference has been made does not sit comfortably with its refusal to make any finding on the question whether Annacott's beneficial interest in the Land was affected by the 2006 transfer. In the present context, it is even more significant that there was no evidence whatsoever to support the suggestion that Peter White or any other party intended to "change the beneficiaries" of the Land. More particularly, Peter White gave unchallenged evidence that he did not intend the 2006 transfer to change or affect the beneficial ownership of the Land.[119] Additionally, insofar as the Tribunal purported to base its finding on an "objective" intention evidenced by the resolution of directors of the plaintiff dated 30 June 2006 or the statutory declaration of Peter White dated 30 August 2006, neither of those documents provide evidence of any intention to change the beneficiaries of the Land. Importantly, while the statutory declaration indicated that the plaintiff was to hold the Land in its capacity as trustee of the PWFT, the declaration also stated that Peter and Garry White had held the Land in the same capacity as trustees of the same trust. It follows, as submitted by the plaintiff, that whatever "objective" intention might be revealed by these documents, they do not provide any foundation for an intention to "change the beneficiaries".

49 The second finding or statement by the Tribunal with respect to the changing nature of the trust does, as the plaintiff submits, involve a misapplication of legal and equitable principles applicable to protect and enforce Annacott's interest as the beneficiary of the trust on which the Land was held prior to the 2006 transfer. Moreover, as the plaintiff contends, the Tribunal apparently ignored the established body of principles relating to constructive trusts, priorities between legal and equitable interests, and the tracing of trust property, instead finding a resulting trust in favour of the former trustees, Peter and Garry White, who had never held the beneficial interest in the trust property.

50 A constructive trust is properly described as "a remedial institution which equity imposes regardless of actual or presumed agreement or intention (and subsequently protects) to preclude the retention or assertion of beneficial ownership of property to the extent that such retention or assertion would be contrary to equitable principle".[120] While it is "remedial" in character, a constructive trust can arise by operation of law from the time at which the relevant circumstances occurred, and its existence does not depend on a prior declaration or order by a court.[121] It follows that "the decree recognises and enforces the trust, but does not create it; the trust arises immediately the circumstances exist in respect of which equity would construe a trust".[122]

51 The proper analysis of the circumstances in which a constructive trust may arise in relation to the receipt of trust property raises some debate as to whether a constructive trust arises or whether equity intervenes simply to protect an existing beneficial interest. Thus, in these circumstances, reference has been made to a "borderline" category of constructive trust, in that it is as much a consequence of the continued enforcement of the pre-existing trust against the recipient of the trust property rather, perhaps, than a fresh trust arising. Thus the statement is made in Jacobs' Law of Trusts:[123]

'The second borderline category [of constructive trust] concerns third parties who have received trust property in such circumstances that equity will hold them bound by the trust. While the third parties are often called constructive trustees,[124] they are more properly treated as persons against whom the beneficial interest under the primary trust persists because they cannot set up a title as a bona fide purchaser of the legal title without notice.[125] The third party will be subjected to the prior beneficial interest not so much by dint of the imposition of a fresh trust as by the operation against them of the rules as to priority between legal and equitable titles.'

A similar point was made in a previous edition of Lewin on Trusts,[126] describing situations in which the trust estate passes into the hands of a volunteer or a purchaser for value with notice as "cases rather of an existing trust continued and kept on foot than of a new trust created". In Scott and Ascher on Trusts,[127] the authors state that "[t]he principle that a transferee of trust property who has notice of the trust at the time of transfer takes subject to the trust is so well established that it is unnecessary to cite the numerous cases that so hold". Similarly, in relation to volunteers or "donees", the authors state that "it is well-settled law that, when a trustee in breach of trust transfers trust property to one who pays no value, the transferee takes subject to the trust, even if the transferee is without notice of the breach of trust or the existence of the trust".[128] In any event, whichever perspective is adopted in the analysis, equity will protect the interest of the beneficiary in trust property against the world, rather than against the bona fide purchaser without notice.

52 Moreover, the application of these principles applies with equal force to the transfer of trust property by the trustee of a resulting trust. Thus, Scott and Ascher state:[129]

The interest of the beneficiary of a resulting trust is an equitable interest, and as such it is cut off if the trustee transfers the property to a bona fide purchaser. But if the transfer is to one who does not give value or who has notice of the resulting trust, the transferee takes subject to the trust.

53 Accordingly, having regard to the state of the evidence before the Tribunal and the legal and equitable principles to which reference has been made, as the Land was held on a resulting trust for Annacott, the 2006 transfer to the plaintiff, which did not provide any consideration for the Land and had actual or constructive notice of Annacott's interest, was subject to that trust on the same terms. Consequently, it is not accurate to suggest that a constructive trust arises only "as a consequence of the transfer, automatically, in order to preserve the interest of the beneficiary".[130] The situation is, for the preceding reasons, more accurately characterised as one in which the existing trust continues and is enforceable against the transferee of trust property. It follows that Annacott is entitled to enforce this trust directly against the plaintiff and not merely through Peter White as the surviving former trustee.[131] It is both unnecessary and contrary to equitable principle to erect a resulting "trust upon a trust" between the plaintiff and Peter and Garry White. Additionally, there is no basis for the classification of such a trust as a "resulting 'mistake' trust", nor as a "different type of trust".[132] Thus, the 2006 transfer did not involve any change of trust nor any change of beneficial ownership in the Land. Both before and after the 2006 transfer, the Land was held subject to the same trust in favour of Annacott as the beneficial owner. The 2006 transfer merely brought about a change in trustees of the trust for Annacott, so that the plaintiff became a trustee of that trust in the place of Peter and Garry White.[133] As submitted by the plaintiff, the evidence indicates that such a change in trustees was precisely what was intended by the parties.

Application of s 33(3) of the Duties Act

54 The plaintiff contends that the Tribunal made five key errors in concluding that the 2006 transfer was not exempt from duty under s 33(3) of the Duties Act. The plaintiff, in its reply submissions, helpfully summarises, on the basis of authority, the proper approach of the Court in considering the application of s 33(3) in the present context:[134]

1. It can be accepted that the application of s 33(3)(a) and (b) raises questions of a 'factual nature'. However, this does not immunise the Tribunal's decision from appeal or review on a question of law. The Tribunal must still properly direct itself as to the applicable law, and it must not ask the wrong question or identify the wrong issue. The Tribunal must also make findings of fact that are reasonably open on the evidence.[135]

55 The first error contended for was that the Tribunal erred in refraining from making any finding on the question whether Annacott remained the beneficial owner of the Land following the 2006 transfer, and whether the Land was held on the same trust before and after the 2006 transfer.[136] For the preceding reasons, I accept that this was a critical issue in relation to the application of s 33(3) of the Duties Act to the facts of the present case. It was, in my view, necessary for the Tribunal to make the relevant factual findings and the failure to do so was, in my view, a fundamental legal error.[137]

56 Secondly, the plaintiff contends that in applying the causation requirement in s 33(3)(a) of the Duties Act, the Tribunal wrongly confined its inquiry to the "objective intention" said to be discerned from particular instruments executed by the plaintiff or by Peter White and disregarded evidence of all of the surrounding circumstances relevant to the identification of the cause of the 2006 transfer. This approach was, in my opinion, inconsistent with the "broad inquiry" required by s 33(3)(a) of the Act; an approach emphasised in the Perpetual Trustee and Lendlease Funds Management cases.[138] More particularly, the Tribunal did not apply the words of s 33(3)(a) of the Duties Act, which required it to address the question whether the 2006 transfer was made solely because of the retirement of a trustee or the appointment of a new trustee, or other change in trustees. A narrower approach was adopted by the Tribunal under which it was said that it was "necessary to look at what the applicant and those surrounding it did and said, rather than what they thought", and applied a different test of "what would an unbiased observer believe to be the true object of the 2006 transfer".[139] In so doing, I accept that the Tribunal asked itself a wrong question and, in so doing, misapplied the provisions of s 33(3)(a) of the Duties Act.

57 Thirdly, as indicated in the preceding reasons,[140] the Tribunal's conclusion in relation to the cause of or reason for the 2006 transfer was based on a finding which was not open on the evidence, namely that the parties intended to "change the beneficiaries" and not just to change the trustees of the Land. In the course of the hearing of this matter, the parties took the Court to a variety of documents with respect to the 2006 transfer and the context in which that transfer was signed, all of which reinforced my opinion that the Tribunal's finding was based on a selective misreading of documents stating that the transfer was to the plaintiff as trustee of the PWFT, while overlooking statements in the same documents revealing a premise that the Land was already held on the same trust, and disregarding clear evidence that the transfer was not intended to change or affect the beneficial ownership of the Land. Moreover, as appears from the Tribunal's reasons and from the documents to which the Court was taken, there appears to have been a degree of confusion as to whether the Land was subject to the PWFT. Nevertheless, there was no evidence that this "confusion" manifested any intention, objective or otherwise, to "change the beneficiaries" under the trust of the Land for the benefit of Annacott.

58 Fourthly, the plaintiff contends that the Tribunal wrongly concluded that the purpose requirement in s 33(3)(b) of the Duties Act could not be satisfied because the Land was held on different trusts before and after the 2006 transfer.[141] More particularly, the plaintiff submits:[142]

1. It is no answer to the present appeal to suggest that Konann might not have held the Land on trust for Annacott after the 2006 transfer.[143] In the proceedings below, the Commissioner adopted the position that s 33(3) did not apply even if the 2006 transfer gave rise to a constructive trust between Konann and Annacott.[144] Largely on the basis of this submission, the Tribunal declined to make any finding on whether Annacott was the beneficial owner after the 2006 transfer.[145] Accordingly, in order to uphold the Tribunal's decision, the Commissioner is required to establish that it could not have made any difference to the application of s 33(3) if Konann held the Land on trust for Annacott after the 2006 transfer.
2. Contrary to the Commissioner's submissions,[146] a constructive trust is capable of being enforced against the registered proprietor of Torrens system land as an in personam claim founded in equity.[147] Accordingly, indefeasibility of title is no obstacle to the enforcement by Annacott of its beneficial interest against Konann (as a volunteer with notice of Annacott's interest).

In this context, I accept the plaintiff's submission that because the Tribunal had expressly declined to make any finding as to the beneficial ownership of the Land after the 2006 transfer, there was simply no factual foundation for this conclusion. Moreover, the conclusion involved a legal error, in that it was based on an erroneous assumption that the 2006 transfer would have given rise to a "resulting 'mistaken' trust" in favour of Peter and Garry White, as opposed to a constructive trust for Annacott on the same terms. In my view, the plaintiff took title to the Land subject to the existing trust for Annacott and Annacott was able to enforce the beneficial interest under that trust against the plaintiff. There was no basis for a finding that there were two "different trusts". The other aspect of these findings is they appear to overlook and have no regard to the position that on the evidence there is nothing to suggest that Annacott has ever agreed to any surrender or variation of its beneficial entitlement to the Land as it originally arose. More particularly, there is no evidence of Annacott ever passing any resolution to give up, transfer or vary its beneficial interest in the Land. It follows that unless there were some power in the trustees to vary the trust created in favour of Annacott, it matters not what the trustees of that trust do or think they are doing in relation to the legal estate, short of a dealing with a bona fide purchaser for value without notice, which title would defeat Annacott's equitable title. No such power of variation was found by the Tribunal and none is suggested now. Moreover, no resolution of, declaration or dealing by the plaintiff could, of itself, affect the trusts upon which the Land is held.[148] Illustrating the point in more general terms, it simply could not follow that, for example, the transfer of Blackacre from trustee A, who holds the legal title on a bare trust for the beneficial owner of that land, to trustee B, who is also the trustee of a discretionary trust, would result in the trusts with respect to Blackacre being varied so that its beneficial ownership and the terms of that ownership became regulated by the provisions of the discretionary trust. In any event, no new trust is created however "mistaken" the trustees are in their dealings or arrangements - in equity trustee B simply holds Blackacre on a bare trust for the same beneficiary and on the same terms as they subsisted prior to the transfer. The position may change with the agreement of the beneficiary of Blackacre, and depending on the nature of that agreement, but that is not the position in the present circumstances.

59 The Commissioner sought to address these issues during the hearing of the matter by reference to the fact that Peter White was, at all relevant times, the sole director and shareholder of Annacott. It is not entirely clear where this observation was intended to take matters - whether as indicating Annacott's agreement to changes that might have been effected to the beneficial interests in the Land as a result of agreement by its agent, Peter White, or whether it was being suggested that there was knowledge as a result of a common directorship in Peter White as between the plaintiff and Annacott and, presumably, acquiescence by Annacott in circumstances of such knowledge. These matters were, however, not taken further by the Commissioner and I made observations with respect to the authorities on the extent to which knowledge could be transmitted from corporate entity to corporate entity through common directors by reference to matters canvased in the judgment in the Great Southern Proceedings.[149] Additionally, it is clearly correct on the authorities that, as the plaintiff submits, indefeasibility of title to Torrens system land is no obstacle to the enforcement of the beneficial interest of Annacott against the plaintiff as a volunteer.

60 Fifthly and finally, I accept that it was an error insofar as the Tribunal suggested that it was necessary for the plaintiff to have become the trustee for Annacott at "a time immediately prior to signing the transfer".[150] In my view, there is no foundation in the terms of s 33(3)(b) of the Duties Act for any such requirement and, in any event, it cannot be said that there was any moment in time, however short, in which the plaintiff held the beneficial interest in the Land in its own right or on trust for anyone other than Annacott. Accordingly, the plaintiff must, in my view, be regarded as having become the trustee "for the time being entitled to hold" the Land immediately upon the 2006 transfer being effected.

61 The Commissioner argued a contrary view on the basis of the language of s 33:[151]

1. The phrase 'new trustee' used in s 33(3)(a) is defined in s 33(1) to mean 'a trustee appointed in substitution for a trustee or trustees or a trustee appointed in addition to a trustee or trustees'. So the appointment of a substitute or additional trustee, necessitating a transfer of the trust property from the previous trustee or trustees to the new trustee and any continuing trustee, is capable of attracting the exemption.
2. A 'retirement' without any appointment could also attract the exemption. For instance, one of two trustees might decide to retire, necessitating a transfer from the previous trustees to the continuing trustee so entitled. Obviously enough, if all the trustees of a trust decide to retire without any replacement, then that is a decision to discontinue the trust rather than to change the trustee, and so there will be no trustee of the trust who is entitled to call for a transfer of the property from the outgoing trustees.
3. Lastly, there could be neither a 'retirement' nor an 'appointment' but an 'other' change in the trustees of a trust, such as the removal of a trustee.[152] The plaintiff's submissions at [50] are therefore mistaken.

For the preceding reasons, however, I am of the view that the plaintiff's submissions to which the Commissioner makes reference (at [50]) are correct.[153] In my view, neither the statutory language nor the authorities to which reference is made by the Commissioner justify such a restrictive interpretation of the provisions of s 33(3). Moreover, such interpretation would not advance the statutory purpose to construe s 33(3) as requiring a sequence of discrete steps by which the change in trustees must take place separately from and prior to the relevant transfer.[154] Requiring a "prior appointment" of a new trustee in advance of a transfer does not give any meaning or operation to the words "other change in trustee" in s 33(3)(a), which demonstrates that the exception is not confined to situations involving the retirement of a trustee or the appointment of a new trustee, whether by substitution or addition. The construction advocated for by the Commissioner would effectively mean that the exemption was incapable of application of any transfer of trust property to a constructive trustee, notwithstanding that the latter continued to hold the property on the same trust without any change in beneficial ownership.

62 Moreover, the plaintiff submits that the construction contended for by the Commissioner is at odds with authority:[155]

1. Further, the Tribunal's construction cannot be reconciled with the decision in Kringas v Commissioner of State Revenue,[156] where the Tribunal concluded that, even if the transferee had not been validly and effectively appointed as a trustee of the relevant trust, the transfer was nevertheless made solely 'in order to vest the property in the trustees for the time being entitled to hold it'. The Tribunal found that the transferee 'was bound to hold that property in the terms of the trust and equity would have enforced that trust', and considered that it was 'difficult to imagine a situation of a person who is actually holding the property as trustee whether it be as constructive trustee or solely under the trust instrument itself that they are not "entitled" to hold the property as trustee unless of course they were forbidden by law from being a trustee'.[157] Contrary to the Tribunal's reasons in the present case,[158] the decision in Kringas cannot be distinguished on the basis that it was directed to the issue whether the purported trustee was 'entitled' to hold the land, as opposed to the question whether the transfer was made 'solely in order' to vest the property in the trustee for the time being entitled to hold the land. Both issues were necessarily decided on the facts of Kringas, where the transferee had not been appointed as a trustee prior to the transfer, and she only became a constructive trustee upon the transfer taking place. The Tribunal in Kringas nevertheless had no difficulty in concluding that the transfer had been made 'in order to vest the property in [the applicant]' as a person entitled for the time being to hold the property as a constructive trustee.

Although the decision in Kringas is clearly not binding on this Court, I am of the view, nevertheless and with respect, that the reasoning in that decision is persuasive and does support the plaintiff's submissions for the reasons and on the bases indicated in these submissions.

63 Accordingly, for the preceding reasons, I am of the opinion that it is clear that Annacott remained the beneficial owner of the Land after the 2006 transfer and that it is appropriate that the Court reach its own conclusion as to the application of s 33(3) of the Duties Act to the facts of the present case; in the latter respect, noting the provisions of s 148(7) of the Victorian Civil and Administrative Tribunal Act 1998. Having regard to the finding by the Tribunal that Annacott was the beneficial owner of the Land prior to the 2006 transfer, I am of the opinion that no other factual finding is open on the evidence properly before the Court in the present proceeding. Moreover, having regard to my views as expressed in these reasons and the time and expense already incurred in the Tribunal and this Court, I am of the view that it is appropriate that matters be determined by this Court. Consequently, the proceedings will not be remitted to the Tribunal to be heard in accordance with the directions of this Court.

64 The plaintiff's alternative position is that if the transfer of the Land to it was not exempt from duty under s 33(3) of the Duties Act, it is necessary to ascertain the "dutiable value" of the "dutiable property" the subject of the transfer.[159] There was no consideration payable for the 2006 transfer, the consideration having been expressed as the plaintiff's "Entitlement in Equity". Consequently, it is submitted by the plaintiff that the dutiable value is the unencumbered value of the dutiable property, namely the amount for which the dutiable property might reasonably have been sold in the open market at the time the dutiable transaction occurred.[160]

65 The expression "dutiable property" is defined in s 10 of the Duties Act, with the following provisions of sub-s 10(1) being of particular importance in the present circumstances:

(1) "Dutiable property" is any of the following -

(a) each of the following estates or interests in land in Victoria -

(i) an estate in fee-simple;

(i)(a) a life estate;

(i)(b) an estate in remainder;

(ii) a Crown leasehold estate;

(iii) a term referred to in s 153 of the Property Law Act 1958 that may be enlarged into a fee-simple under that section;

(iv) a leasehold estate, if the lease is of a kind referred to in section 7(1)(b)(v);

(v) a land use entitlement;

...

It is relevant in the present circumstances to observe that the provisions of sub-s 10(1) do not distinguish between legal or equitable interests in the estate or interests to which reference is made.

66 Having regard to the provisions of the Duties Act to which reference has been made, particularly sub-s 10(1), it is clearly necessary to identify the "dutiable property" the subject of any relevant transaction. In the present case, the plaintiff submits that the "dutiable property" transferred was an estate in fee simple in the Land, referring in this respect to s 10(1)(a)(i) of the Act. The plaintiff contends, however, that in valuing that property, it is necessary to have regard to the effect of the pre-existing equitable proprietary interest held by a third party, namely Annacott, as the beneficial owner of the Land. As submitted by the plaintiff, Peter and Garry White, as trustees for Annacott, were incapable of relinquishing or extinguishing Annacott's equitable interest in the Land, at least without Annacott's consent or as a result of a transfer to a bona fide purchaser for value without notice. As indicated in the preceding reasons, neither event occurred. Consequently, the transfer of the fee simple estate in the Land by Peter and Garry White to the plaintiff was necessarily subject to Annacott's existing equitable interest, in circumstances where the plaintiff, as transferee, was not a bona fide purchaser for value without notice of Annacott's interest.

67 Thus, it is contended that because the dutiable property transferred to the plaintiff was subject to the equitable proprietary interest held by Annacott, the value of the estate in fee simple must reflect that burden. In this respect, reference is made to Australian Stamp Duties Law:[161]

... a transfer of property by A to B, where an outstanding equitable interest is throughout held by a third party, cannot be valued without deducting the value of that outstanding equitable interest. Logic would suggest that, since A is not able to pass the beneficial interest held by another to B, it is incorrect to value the transfer as so passing that interest.

In some respect, this is merely a statement of the commercial reality with respect to the value of the transfer of, in the present circumstances, a bare legal estate in fee simple which itself might properly be regarded as the species of "dutiable property" to which the provisions of sub-s 10(1)(a)(i) of the Duties Act attach. In my view, there is nothing in s 10 or other provisions of the Duties Act which is at odds with the principles of divisibility of the whole proprietary interest in land, at law and in equity.[162]

68 This position was, in my view, and as submitted by the plaintiff, confirmed in Vopak Terminals Australia Pty Ltd v Commissioner of State Revenue,[163] where the Court of Appeal held that it was necessary to take into account existing equitable interests held by a third party when determining the dutiable value of a fee simple estate that had been transferred to the appellant. In that case, a third party had acquired an equitable proprietary interest in affixed chattels, which constituted improvements to the land. The Commissioner argued that the interests of the third party should be disregarded or ignored when valuing the property transferred to the appellant, largely on the basis that those interests were merely impressed upon and were not carved out of the estate in fee simple. The Court rejected the Commissioner's argument.

69 Ormiston JA, with whom Warren CJ and Buchanan JA agreed, described the logic of the Commissioner's contentions as "both technical and arid in that value to the holder of an estate in fee simple in the land, at least with notice of the equitable interest, could never expect to realise its full value inasmuch as on requisition it would be obliged to reveal this qualification or 'defect' in its title and thus could not expect to sell its estate in the land without accounting for the effective reduction in value resulting from the equitable interest".[164] Ormiston JA distinguished the outcome in Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd[165] on the basis that the "tipping rights" considered in that case were merely contractual rights which did not confer a proprietary interest in the land. In Pioneer Concrete, the property to be valued was "an estate in fee simple in the land referred to in the relevant Certificates of Title, unqualified by any exception or reservation, or any other outstanding proprietary interest".[166] Ormiston JA considered that the emphasised words "were intended to cover a wide range of existing ('outstanding') interests affecting the right of the transferor to transfer the interest or estate in question", and continued:

Undoubtedly one had to look at the nature of the instrument and the nature of the estate or interest which that instrument purported to conveyor transfer, but at the end of the day, if that interest, whether legal or equitable, was capable of enforcement against the relevant estate or interest at the "date of sale", then, in determining the value of the subject estate or interest, i.e. the "amount" for which it might reasonably have been sold in the open market, any such interest which affected that value had to be taken into account in the process of valuation, both as a matter of logic and commonsense. [plaintiff's emphasis]

Accordingly, the Court of Appeal held that any equitable proprietary interest that is enforceable in the courts should "have a bearing on what the hypothetical purchaser would pay for an estate or interest so bound and affected", and should not be ignored when making a valuation of the estate or interest transferred.[167] Ormiston JA noted that "it would be remarkable if a pre-existing equitable interest, so clearly now recognised as a property right regardless of its origins in equity, could be disregarded in fixing what is the proper value of the interest sold",[168] and concluded that for valuation purposes "any equitable interest which affects the land must be taken into account, unless the statute provides to the contrary".[169]

70 The decision in Vopak Terminals was followed and applied by the Tribunal in Challenger Property Nominees Pty Ltd v Commissioner of State Revenue[170] in relation to a transfer of land by a trustee of a unit trust to a new trustee of that trust. The primary contention advanced by the taxpayer was that the property transferred had only nominal value in the light of the "outstanding equitable interests" of the unit holders.[171] The taxpayer submitted that "the interests of the unit holder beneficiaries were as much outstanding proprietary interests as the interest of the tenant and the third party to remove fixtures in Vopak Terminals and the dutiable value of the estate here should be adjusted accordingly".[172] Although the Tribunal ultimately found that the transfer was exempt under s 33(3) of the Duties Act, it did accept the taxpayer's submissions and concluded that the dutiable value of the properties being transferred by the subject transfer were of nil or nominal value. This decision of the Tribunal was upheld by this Court on the ground of the s 33(3) Duties Act exemption, without the need to consider the valuation issue.[173]

71 Similar issues arose and were considered by the Court of Appeal in Commissioner of State Revenue (Vic) v Lend Lease Funds Management Ltd.[174] The facts of that case may, however, be regarded as "sui generis" insofar as they involved the relationship between a custodian and a responsible entity of a managed investment scheme. The majority of the Court of Appeal in that case held that a transfer of title from a "custodian-trustee" to the responsible entity involved the assignment of only the bare legal estate, which was of nil value for duty purposes.[175] Maxwell ACJ, on the other hand, dissented, concluding that a transfer of title by a trustee to a beneficiary involved a transfer of an unqualified estate in fee simple, and not the bare legal estate.[176]

72 The Commissioner does, however, particularly on the basis of the Lend Lease decision, and more particularly on the basis of the dissenting judgment of Maxwell ACJ, submit that the Tribunal was right to reject the plaintiff's argument that the amount for which the estate in fee simple might reasonably have been sold on the open market, for the purposes of ss 22(1) and 10(1)(a)(i) of the Duties Act, was not nil value. The Commissioner says that the Tribunal was right to reject a contrary argument advanced by the plaintiff.[177] Moreover, the Commissioner submits that in so doing, the Tribunal followed recent Court of Appeal authority,[178] which itself followed a long line of authority.[179] More particularly, the Commissioner submits:[180]

1. The essential point explained by the authorities is that the interest of a beneficiary under a trust, although proprietary in nature, does not qualify or diminish the trustee's title. The trustee holds an unqualified estate in fee simple. The trustee has all the rights of an absolute owner, but is bound by an obligation of trust to exercise those rights of ownership in the interests of the beneficiary.
2. The equitable interests impressed upon the trust property do not mean that the trustee is left with a title having no value. Indeed, if that were so, then all or many of the exemptions from duty for transfers between trustees (s 33) and between trustees and beneficiaries (ss 34(1)(b), 35(1)(a), 35(1)(c), 36, 36A, 36B and 41A) would be unnecessary, since such transfers would be dutiable at nil value in the first place.[181] The Tribunal in Challenger,[182] relied on by the plaintiff, described this as 'a very significant point'.

73 I am, however, of the view that, as the plaintiff submits, there was nothing in the decision of the Court of Appeal in Lend Lease which is inconsistent with the decision in Vopak Terminals, nor with the application of that decision to a transfer between trustees as considered in Challenger Property Nominees. In this regard, I accept that it is important to note that the discussion in the dissenting judgment of Maxwell ACJ was directed to the position "[a]s between trustee and beneficiary",[183] in the context of transfers of title by trustee to a beneficiary or vice versa. This discussion did not address the situation of a transfer of trust property by the trustee to a third party who takes subject to the trust. In that situation, the reasoning in Vopak Terminals is directly applicable both to the identification of the dutiable property that is conveyed by the transfer and the ascertainment of the "dutiable value" of that property by reference to its market value.

74 Returning to the divisibility of estates and interests in land, at law and in equity, it is clear and accepted that a transfer of property by a full legal and beneficial owner to a trustee to be held on trust for the transferor will not ordinarily involve a transfer of merely the bare legal estate.[184] It follows that as there is no separation of the legal and equitable interests or estates prior to transfer, it cannot be said that the owner transfers only the bare legal estate and retains the beneficial interest, or the equitable estate, in the property or, conversely, that the trustee "fails to acquire" the beneficial interest, or the equitable estate, in the property. It is in this sense that it is said that the equitable interest of the beneficiary is "impressed upon", rather than being "carved out", of the legal estate.[185] As Maxwell ACJ accepted in Lend Lease,[186] the decision in DKLR Holding Co (No 2) is distinguishable from a case such as the present one on the basis that, in that case, "the relevant equitable interest only came into existence after the transfer was complete". Thus, the authorities relied upon by Maxwell ACJ in Lend Lease were concerned with a different situation, the situation of a transfer of legal title by a trustee to a beneficiary of the trust. This includes Oughtred v Inland Revenue Commissioners[187] and Perpetual Trustee Co,[188] each of which involved a constructive trust between a vendor and a purchaser after the execution of a contract of sale but prior to transfer; O'Sullivan v Commissioner of Stamp Duties;[189] and Sportscorp Australia Pty Ltd v Commissioner of State Revenue.[190] Those cases have nothing to say as to the correct approach to ascertaining "dutiable value" in circumstances where the property transferred to the purchaser is subject to an equitable proprietary interest of a third party, such as a beneficiary under a pre-existing trust. That is precisely the situation that is addressed directly by Vopak Terminals.

75 Thus, it is clear in my view, as submitted by the plaintiff, that the conclusion reached by Maxwell ACJ in Lend Lease was in terms directed to "the position as between trustee and beneficiary", and expressly distinguished the situation addressed in Vopak Terminals "where legal title is held subject to an equitable interest vested in a third party", that is, a person other than the transferee.[191] Maxwell ACJ concluded that "[a]s between trustee and beneficiary, the trustee as legal owner of the property has all the rights of ownership".[192] The situation is, however, different as between a trustee and a third party transferee who takes the property subject to the trust. In the same way that the value of the property transferred in Vopak Terminals was affected by the proprietary right of a third party to remove chattels affixed to the land, the value of the property transferred to the plaintiff in the present case is affected by Annacott's entitlement as the beneficial owner, the owner of the equitable estate, to call for a transfer of title to the Land. I accept that it would be absurd to value the dutiable property transferred to the plaintiff without having regard to that right. Moreover, in my view, a proper reading of sub-s 10(1)(a)(i) of the Duties Act in these circumstances would, for the preceding reasons, indicate that the relevant "dutiable property" is only the legal estate in fee simple.

76 In any event, I accept that, as recognised in Vopak Terminals,[193] the question whether the equitable interest of a beneficiary is "impressed upon" the estate in fee simple, rather than being "carved out" of that estate, does not control the outcome of the present case. Nor does the argument depend on treating the transfer as conveying a "bare legal estate" as opposed to the estate in fee simple. Provided that the beneficiary's interest is "an equitable interest enforceable against any holder of the estate by action or by use of the caveat procedure under the Transfer of Land Act, then it ought to be taken into account" for the purpose of determining the price for which the property might reasonably have been sold in the open market between a hypothetical vendor and purchaser.[194] It cannot be disputed that a trustee is not free to exercise the rights of an absolute owner in fee simple for the trustee's own benefit.[195] On the contrary, "the beneficiary has the right to compel [the trustee] to hold and use those rights which the law gives him in accordance with the obligations which equity has imposed on him by virtue of the existence of the trust".[196] In accordance with the reasoning in Vopak Terminals and Challenger Property Nominees, such constraints and restrictions affect the property in the hands of the transferee, and must therefore be taken into account in assessing the "dutiable value" of the property.

77 In my view, an outcome such as this is consistent with the fact that the Duties Act is a regime that imposes duty on transactions as opposed to instruments.[197] The relevant inquiry requires an identification of the dutiable property that was conveyed by the transfer, and an assessment of the unencumbered value of that property within the meaning of s 22 of the Duties Act. For such purposes, the equitable interest of a beneficiary under a trust is not an "encumbrance" which must be disregarded when determining market value.[198]

78 In the present case, Annacott had an equitable proprietary interest as the beneficial owner of the Land, the equitable fee simple. The transfer to the plaintiff was necessarily subject to that pre-existing equitable interest or estate, which is enforceable in equity against the plaintiff. The prior equitable interest or estate of Annacott cannot be disregarded when determining the amount for which the property might reasonably have been sold in the open market. Clearly, a hypothetical purchaser would not pay more than a nominal amount for the Land, knowing that it was subject to a pre-existing trust in favour of Annacott. There is no suggestion in the relevant provisions of the Duties Act that the hypothetical purchaser would not have full knowledge of or interests which might be held by others in the property being purchased or that such a hypothetical purchaser is to be treated as in the category of a bona fide purchaser without notice of an equitable estate or interest such as that held by Annacott.

79 The argument advanced by the Commissioner that the position I have indicated would render unnecessary all or many of the exemptions from duty for transfers between trustees and between trustees and beneficiaries does not, in my view, have any substance. The fact that there is a specific exemption in s 33(3) of the Duties Act dealing with changes in trustees nor these other exempting provisions say anything about whether a transfer of trust property would otherwise be at more than a nil or nominal dutiable value. Where s 33(3) is applicable, there would be no need to address the question of the dutiable value of the property the subject of the transfer. However, insofar as the requirements of s 33(3) are not satisfied, it does remain necessary to ascertain the dutiable value of the dutiable property, having regard to any equitable proprietary interests that are held by a party other than the transferor.

80 For these reasons, as, in the present case, no consideration passed between the parties to the 2006 transfer and there was no change in beneficial ownership of the Land, nothing of value was transferred which could attract any liability for duty.

81 Thus, in terms of the Tribunal's decision, I am of the opinion that the Tribunal erred by failing to apply the reasoning in Vopak Terminals and Challenger Property Nominees to the facts of the present case. The Tribunal sought to distinguish Vopak Terminals on an erroneous basis, namely that the case "concerned whether chattels on the land belonging to a third party should be valued with the land when it was transferred", which the Tribunal characterised as "an entirely different situation to the present".[199] However, the Tribunal failed to address the reasoning by which the Court reached its decision in Vopak Terminals, which (as illustrated by Challenger Property Nominees) is directly applicable to the situation of a transfer of trust property by a trustee to a third party who takes title subject to the equitable proprietary interests of the beneficiaries under the existing trust. Secondly, the Tribunal wrongly relied on the proposition that "an equitable interest is not carved out of the legal estate but is impressed upon it" as being determinative in the present case.[200] As indicated in the preceding reasons, the decision in Vopak Terminals established that such a distinction does not control the outcome on the question of "dutiable value" for the purposes of the Duties Act.[201]

82 For these reasons, it is appropriate that the Tribunal's orders in proceeding Z68/2014 be set aside and orders made declaring that the dutiable value of the dutiable property is nil. The same reasons as indicated with respect to the argument as to the applicability or otherwise of the exemptions in s 33(3) of the Duties Act is not, in my view, appropriate to remit this issue to the Tribunal for hearing and determination in accordance with any directions of the Court.

83 The imposition of penalty tax is governed by ss 30 to 35 of the TAA. Section 30(1) of the TAA provides that the amount of penalty tax payable in respect of a tax default is 25% of the amount of tax unpaid. Under s 30(2), the amount of penalty tax can be increased to 75% but only "if the Commissioner is satisfied that the tax default was caused wholly or partly by the intentional disregard by the taxpayer (or a person acting on behalf of the taxpayer) of a taxation law". The formation of the requisite state of satisfaction by the Commissioner (or by the Tribunal) is a jurisdictional fact which conditions the exercise of the power conferred by s 30(2) of the TAA to increase the amount of penalty tax.

84 The issue of penalty tax does, naturally, only arise in the event that the plaintiff is unsuccessful in terms of the operation of sub-s 33(3) of the Duties Act or in relation to the determination of dutiable value. For the preceding reasons, I am of the opinion that the plaintiff succeeds in relation to both aspects of the matter and, consequently, the issue of penalty tax does not arise. Nevertheless, as the matter was the subject of the Tribunal's decision and is an issue raised on appeal, some attention should be given to the issue in these proceedings.

85 The Tribunal did not make any express finding on whether the tax default was caused wholly or partly by the intentional disregard of the taxation law by the plaintiff or a person acting on its behalf. This is the position put by the plaintiff and the position which I accept for the reasons which follow. The Commissioner, on the other hand, contended that it could be inferred from the Tribunal's decision that such a finding had been made and that this position was "clear enough" on the basis of various matters identified in the following submissions by the Commissioner:[202]

1. That the Tribunal found intentional disregard is clear enough having regard to the fact that the Tribunal:

(1) extracted the relevant parts of the relevant sections of the Taxation Administration Act 1997,[203] indicating an awareness that the penalty could not in the circumstances exceed 25% without a finding of intentional disregard (which had been explained to it at the hearing[204]);

(2) was well aware that it needed to resolve a controversy between, on the one hand, the Commissioner's assessment that, 'in providing false and misleading information in order to obtain the exemption, Konann ha[d] intentionally disregarded a taxation law' (but that the penalty should be reduced from 75% to 60%),[205] and, on the other hand, the plaintiff's contrary assertion;[206]

(3) recited,[207] and later accepted,[208] the particular instances of intentional disregard identified by the Commissioner, including that Peter White had made a false statutory declaration on 30 August 2006 in order to obtain the s 33(3) duty exemption (which he in fact succeeded in obtaining, until the Commissioner's investigation);

(4) concluded that a penalty of 25% under s 30 was too low, and that the penalty amount determined under s 30 should be 'reduced' by 40% to 40%.[209]

86 A finding of this nature is clearly one of significant importance having regard to both the nature of the finding itself and the position that under the provisions of s 30 it is a jurisdictional fact which conditions the power to increase the amount of penalty tax. That a person, whether as a taxpayer or as the result of a person acting on the taxpayer's behalf, has intentionally disregarded a taxation law is not a finding to be made lightly. For these and the reasons which follow, I am not prepared to make an inference of such a finding from other aspects of the Tribunal's decision in circumstances where an express finding of this nature has not been made. On this basis, I turn now to some more particular aspects of the Tribunal's decision which are highlighted in the plaintiff's submissions which support the view that no finding was made in this respect by the Tribunal and there is no basis for an inference of such a finding.

87 The Tribunal found that the circumstances which have substantially led to this proceeding were the result of a failure of Peter White's legal advisers and accountant to talk to each other and it was suggested that it may have been "complete foolishness" on his part in not spending the money to arrange conferences between his different advisers.[210] Although the Tribunal thought it was wrong to blame Peter White's advisers entirely, the Tribunal nevertheless accepted that it was "equally clear that Donaldson for example has assumed matters that he should not have and acted in a way where he should have insisted upon talking to those that set up the company structure around Mr White".[211] I accept the plaintiff's submissions in this respect that at their highest, these findings amount to findings of negligence, rather than "intentional disregard" of either the Duties Act or the TAA.

88 In the exercise of the discretion to remit penalty tax under s 35 of the TAA, the Tribunal took into account "the dishonesty that has been pointed out by" counsel for the Commissioner.[212] It should be emphasised, however, that the discretion conferred by s 35 is separate and distinct from the power to increase the amount of penalty tax under s 30(2), and only arises after the amount of penalty tax payable under s 30 has been determined. Accordingly, I am of the view that this passing reference cannot be treated as a finding of the requisite state of satisfaction for the purposes of s 30(2) of the TAA. In any event, the reference to "dishonesty" cannot necessarily be equated to "the intentional disregard of a taxation law". The contention that was advanced by counsel for the Commissioner, and which was put to Peter White in cross-examination, was that Peter White "was prepared at all times to say whatever was necessary in order to avoid stamp duty".[213] However, as the plaintiff contends and observes, a desire to reduce or avoid a liability to stamp duty does not of itself amount to the intentional disregard of a taxation law. The numerous authorities at the highest level which confirm the right of taxpayers to seek to minimise liability for tax by lawful means are so well known and numerous that there is no need to refer to them specifically. The illustrations of "dishonesty" cited by the Commissioner, namely, statutory declarations dated 26 September 1994 and 30 August 2006, do not necessarily involve the intentional disregard of a taxation law having regard to the position of taxpayers as long recognised at general law. In any event, I express no view on the substance of this issue, save to emphasise that the Tribunal's reasons do not contain any finding that it was satisfied, for the purposes of s 30(2) of the TAA, that the tax default was caused wholly or partly by the intentional disregard of taxation law by the plaintiff or a person acting on its behalf. Accordingly, the power to increase the amount of penalty tax to 75% did not arise and the Tribunal acted beyond jurisdiction.

89 Having regard to the seriousness of a finding of intentional disregard of a taxation law for the purposes of s 30(2) of the TAA and having regard to the position that the Tribunal was in the position of hearing the evidence of Peter White and considering documents relied upon the parties and also those which were put to him in cross-examination, I am of the view that if the penalty tax issue becomes relevant as a result of these proceedings being taken further, then the appropriate course is to remit the question back to the Tribunal under s 148(7) of the Victorian Civil and Administrative Tribunal Act 1998 for consideration again in light of reasons for final determination of these proceedings by this Court.

Section 67 of the Land Tax Act

90 Section 10(1)(a) of the LTA provides, as far as is now relevant, that an "owner" of land for the purposes of that Act includes "a person entitled to land for a freehold estate in possession". The plaintiff contends that this should be construed as encompassing a person who has an entitlement in equity - that is, as the holder of an equitable freehold estate in fee simple.[214] Thus, it is said that as the beneficial owner under a resulting (implied) or constructive trust, Annacott is entitled to the equitable freehold estate in fee simple in the Land and is, therefore, an "owner" within the meaning of s 10(1)(a).

91 Section 67 of the LTA relevantly provides:

1. Exemption of primary production land in an urban zone in greater Melbourne

(1) Land is exempt land if the Commissioner determines that -

(a) the land comprises one parcel that is -

(i) wholly or partly in greater Melbourne; and

(ii) wholly or partly in an urban zone; and

(iii) used solely or primarily for the business of primary production; and

(b) the owner of the land is a person specified in subsection (2).

(2) The owner of the land must be -

...

(b) a proprietary company (not acting in the capacity of trustee of a trust) -

(i) in which all the shares are beneficially owned by natural persons; and

(ii) the principal business of which is primary production of the type carried on on the land; or

...

(3) For the purposes of subsection (2)(b)(ii), the principal business of a proprietary company is not primary production of the type carried on on the land unless -

(a) the main undertaking of the company is primary production of that type; and

(b) either -

(i) dividends distributed during the relevant period were made to all the holders of the issued share capital of the company in proportion to their respective paid up shareholdings and 60% of those dividends were paid to persons normally engaged in a substantially full-time capacity in the business of primary production; or

(ii) if no dividends were declared during the relevant period, ordinary shares representing more than 60% of the paid up capital of the company (excluding shares entitled to a fixed rate of dividend) have been beneficially owned for the relevant period by persons normally engaged in a substantially full-time capacity in the business of primary production.

...

(6) For the purposes of this section -

...

(b) a reference to an owner of land does not include a reference to a beneficiary of a trust or a unitholder in a unit trust scheme to which the land is subject.

92 Section 67(6)(b) provides that, for the purposes of applying the requirements of s 67(1)(b) and (2), a beneficiary of a trust is not "an owner of land". However, the reference to "a beneficiary of a trust" in s 67(6)(b) does not include an implied or constructive trust. This flows from the definition of "trust" in s 3(1) of the LTA. The plaintiff contends that as Annacott is the beneficial owner of the Land under either a resulting (implied) trust or a constructive trust, it is not a beneficiary of a "trust" and is not excluded as "an owner of land" for the purposes of the requirements of s 67(1)(b) and (2).

93 The Commissioner, on the other hand, contends otherwise:[215]

1. The plaintiff's land tax argument is that, in applying the primary production exemption contained in s 67 of the Land Tax Act 2005,[216] one must ignore the registered proprietor of the land, Konann, and regard only Annacott as 'the owner', it being the beneficiary under a constructive trust (allegedly). So, says the plaintiff, one ignores the fact that Konann was not a primary producer; it is enough that Annacott was (allegedly[217]).
2. The plaintiff's argument is indeed 'quite wrong'.[218]
3. One cannot just ignore the registered proprietor of the land. It is an 'owner' for land tax purposes. The Act says so: s 10(1)(a).[219] The registered proprietor is to be assessed as owner including where it is an implied or constructive trustee: ss 46L and 46M.
4. The Act deems the holders of beneficial interests in certain trusts to be owners in addition to the trustee: s 18 and division 2A of part 3; and see the definition of 'trust' in s 3. This stands in stark contrast to the way implied and constructive trusts are dealt with (ss 46L and 46M).
5. Beneficiaries deemed to be owners by division 2A of part 3 are excluded from being 'owners' for the purposes of s 67: s 67(6)(b). So the exemption is to be considered at the trustee/registered proprietor level. That is probably already apparent from s 67(2). Contrary to the plaintiff's argument, s 67(6)(b) does not need to exclude beneficiaries of implied or constructive trusts from being 'owners' for the purposes of s 67, since they are not considered to be owners in the first place.

The Commissioner's submissions in this respect do not, however, reflect the position put by the plaintiff, as is clarified in its submissions:[220]

1. Konann's argument is not that one must 'ignore' the registered proprietor of the land when applying the requirements of s 67 of the LTA. However, the beneficial owner is also an 'owner' under s 10(1)(a) as a person entitled to an equitable estate in possession in the fee simple. There are no words of limitation in the definition of 'owner' to exclude persons who hold equitable interests, and no such limitation can be implied.
2. Apart from the express exclusion contained in s 67(6)(b) of the LTA, one cannot 'ignore' the beneficial owner in the application of s 67 of the LTA. And because the beneficiary under an implied or constructive trust is not excluded by s 67(6)(b), the beneficiary remains an 'owner' of the land. It is sufficient if such an owner meets the requirements of the exemption under s 67, irrespective of whether or not the registered proprietor would meet those requirements. Given the definition of 'trust', paragraphs 67(2)(c) and (d) are incapable of application to a registered proprietor who is the trustee of an implied or constructive trust. In such circumstances, the applicable paragraph must be s 67(2)(b), which is apt to apply in relation to the beneficial owner of the land held on an implied or constructive trust.

94 In any event, the Commissioner's submissions do not, in my view, detract from the position as contended for by the plaintiff. In relation to ss 46L and 46M of the Land Tax Act, the answer is, in my opinion, that as provisions of Part 3 of that Act they are concerned with the assessment of land tax but have no application of the land as exempt land, for example because the requirements of s 67 of the LTA are satisfied. Section 67(6)(b) does, as the plaintiff submits, give rise to an implication that, but for the express exclusion, a beneficiary of a trust can be "an owner of land" for the purposes of s 67 - as, for example, a person entitled in equity to the freehold estate in fee simple. As Annacott is not excluded by s 67(6)(b), Annacott remains the "owner" of the Land within the meaning of ss 10(1)(a) for the purposes of s 67(1)(b) and (2). Moreover, the Commissioner did not contend before the Tribunal that Annacott could not satisfy the requirements of s 67(2)(b) and (3) if Annacott were properly regarded as the owner of the Land. The unchallenged evidence before the Tribunal established that, at the relevant dates for each of the tax years, the Land was used by Annacott solely or primarily for the business of primary production by way of cattle farming and horse breeding.[221] Annacott was a proprietary company, the principal business of which was primary production of the type carried on upon the Land. Primary production of this kind was the main undertaking of Annacott, and Peter White, as a shareholder and director, was engaged in a substantially full-time capacity in the business of primary production.

95 It follows, in my view, that the Tribunal erred in law in finding that the LTA "makes no recognition of implied or constructive trusts",[222] and that Annacott was not the owner of the Land for the purposes of the primary production exemption in s 67 of the LTA.[223] In my view, the appropriate course is that the Court should set aside the Tribunal's order by which it confirmed each of the land tax assessments and instead order that those assessments be set aside.

96 For the preceding reasons, I am of the opinion that the Court should make the following orders:

(1) The Plaintiff be given leave to appeal from the orders of the Tribunal dated 21 August 2014 in Proceeding Nos Z64/2014, Z67/2014 and Z68/2014.

(4) A declaration that Annacott is and has at all material times been the beneficial owner of the Land.

(5) The objections to the Duties Assessment and the Land Tax Assessments be upheld, and each of the Duties Assessment and the Land Tax Assessments be set aside.

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

[1] The citation for the Tribunal's reasons is Konann Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1024.

[2] [1999] VSCA 117; [1999] 3 VR 331.

[3] See Commissioner's Submissions (15 December 2014), [1] (where these matters were each referenced to those parts of the Tribunal's reasons said to be relevant, together with references to the grounds set out in the proposed notice of appeal.

[4] Commissioner of State Revenue v Frost [2011] VSC 232 at [5] (Pagone J), referring to Secretary to the Department of Premier and Cabinet v Hulls [1991] 3 VR 331, 335-6 (Phillips JA); Myers v Medical Practitioners Board (Vic) [2007] VSCA 163, 55 [28] (Warren CJ).

[5] Boucher v Dandenong Ranges Steiner School Inc [2005] VSC 400 at [15] (Osborn J), 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.

[6] [2011] VSC 232 at [3].

[7] Commissioner of State Revenue v STIC Australia Pty Ltd [2010] VSC 608, [10] (Davies J).

[8] Secretary to the Department of Premier and Cabinet v Hulls [1991] 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.

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

[10] Osland v Secretary to the Department of Justice [2010] HCA 24; (2010) 241 CLR 320, [21] (French CJ, Gummow and Bell JJ).

[11] Morris v R [1987] HCA 50; (1987) 163 CLR 454 at 475 (Dawson J); Secretary to the Department of Premier and Cabinet v Hulls (1991) 3 VR 331 at 335 (Phillips JA).

[12] Secretary to the Department of Premier and Cabinet v Hulls [1991] 3 VR 331 at 335-6 (Phillips JA); Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203, [20], [65] (Hollingworth J).

[14] 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].

[15] (1994) 14 AAT Tr 73; BC 9401309 at 13.

[16] The Gombac Group Pty Ltd v Vero Insurance Ltd [2005] VSC 442, [59] (Osborn J).

[17] [1990] HCA 33; (1990) 170 CLR 321 at 356; referred to with approval by Osborn J in Lucas v Transport Accident Commission [2003] VSC 97 at [10].

[18] [1995] VicRp 70; [1995] 2 VR 508 at 520.

[19] [1995] VicRp 70; [1995] 2 VR 508 at 520.

[20] The page reference is to (1990) 170 CLR 360, part of the Chief Justice's judgment in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321.

[21] [1995] VicRp 70; [1995] 2 VR 508 at 520; and see Tisdall v Webber [2011] FCAFC 76 at [31]- [32] (Greenwood J) and [126] (Buchanan J).

[22] See Roads Corporation v Dacakis [1995] VicRp 70; [1995] 2 VR 508 at 517-520.

[24] Submissions of the Plaintiff and Second Defendant (1 December 2014), [8]-[23].

[25] Commissioner's Submissions (15 December 2014), [2].

[26] See Affidavit of Peter Everett White sworn 8 December 2011, paras 22, 28. The PWFT was established in October 1973 as a discretionary trust, the primary beneficiaries of which are members of Peter White's family: see Trust Deed dated 3 October 1973.

[27] Affidavit of Peter Everett White sworn 8 December 2011, para 4.

[28] See Submissions of the Plaintiff and Second Defendant (1 December 2014), [11]; and see Tribunal's Reasons, at [7].

[29] Refer to Commissioner's Submissions (15 December 2014), [3].

[30] [2014] VCAT 1024 at [10], [29] p 8 T57 and T300.

[31] [2014] VCAT 1024 at [6], [13], [29] pp 9-10. The Tribunal concluded that this established a resulting trust in favour of Annacott: [2014] VCAT 1024 at [86].

[32] [2014] VCAT 1024 at [12], [29] p 9, T74.

[33] [2014] VCAT 1024 at [75].

[34] Tribunal's Reasons, at [13],[74], [86], [130].

[36] Cf Commissioners Submissions (15 December 2014), [3].

[38] Tribunal's Reasons, at [11]; see Affidavit of Peter Everett White sworn 8 December 2011.

[39] Tribunal's Reasons, at [40]-[41].

[40] Tribunal's Reasons, at [6], [86], [130].

[43] On 7 July 2006, Peter and Garry White transferred Titles to the Land to the plaintiff, Konann Pty Ltd. The transfer did not specify any monetary consideration for the transfer of the Land, but rather described the consideration as "Entitlement in Equity".

[44] Tribunal's Reasons, at [74], [86].

[45] Letter dated 1 August 2011 from the SRO to the solicitors for Konann and the Second Defendant. See also letter from the SRO to Konann dated 21 April 2009, in which the SRO accepts or assumes that the Land had been held on trust for Annacott.

[46] Tribunal's Reasons, at [15]; and see fax from Peter White to Donaldson dated 4 June 2004.

[47] Letter from Donaldson to the State Revenue Office dated 2 December 2004; and Statutory Declaration of Peter White dated 25 November 2004.

[49] Letter SRO to Donaldson Trumble, Solicitors, dated 9 March 2006.

[50] Commissioner's Submissions (15 December 2014), [4].

[51] [2014] VCAT 1024 at [15], [29] p 10.

[52] [2014] VCAT 1024 at [15]- [19], [29] pp 10-12, [75].

[53] See Reply Submissions of the Plaintiff and the Second Defendant, [5].

[54] Tribunal's Reasons, at [17], [20].

[55] The plaintiff notes the statement by Robson J in White Rock Properties Pty Ltd v Commissioner of State Revenue [2014] VSC 312 at [13] (fnt 2): 'The Land Victoria Lodging Book Section 1 - General Information under the heading of "Non-Monetary Considerations" provides - as an example of considerations for a transfer to trustees or to change trustee on retirement of an existing trustee or appointment of a new trustee (i.e. no beneficial ownership passing) - "the transferee(s) being entitled in equity."'

[56] Affidavit of Peter Everett White sworn 8 December 2011, para 97; Supplementary Witness Statement of Peter Everett White, paras 10-11. While Peter White made a statutory declaration dated 30 August 2006 in which he stated that the transfer had arisen as the result of Konann's appointment as the trustee of the PWFT, that declaration was based on an incorrect assumption that Peter and Garry White had previously held the Land on trust for the PWFT. The statutory declaration expressly contemplated that Konann would hold the Land subject to the same terms, conditions and obligations as those to which Peter and Garry White were subject, and that sole intention of the transfer was to relieve Peter and Garry White of the obligations of trusteeship. See Tribunal's Reasons, at [21].

[57] Supplementary Witness Statement of Peter Everett White, para 10.

[58] Supplementary Witness Statement of Peter Everett White, para 11.

[59] Commissioner's Submissions (15 December 2014), [5].

[60] [2014] VCAT 1024 at [29] p 12 T97.

[61] [2014] VCAT 1024 at [20], [29] p 12 T49.

[62] [2014] VCAT 1024 at [29] p 13 T23.

[63] [2014] VCAT 1024 at [21], [29] p 13 T108.

[64] [2014] VCAT 1024 at [22], [29] p 13 first four rows, [101], [105].

[65] [2014] VCAT 1024 at [22], [29] p 13 T109.

[68] Commissioner's Submissions (15 December 2014), [6].

[69] [2014] VCAT 1024 at [23], [29] p 13 T112.

[70] [2014] VCAT 1024 at [29] p 1.3 T1.20.

[71] See letter, SRO to Konann Pty Ltd, dated 21 September 2012; and 2013 Land Tax Assessment Notice, dated 1 February 2013.

[72] See letter, SRO to Konann Pty Ltd, dated 21 September 2012; and 2013 Land Tax Assessment Notice, dated 1 February 2013.

[73] Tribunal's Reasons, paras [107], [130]; see generally First VCAT Affidavit of Peter Everett White sworn 14 April 2014, paras 9-34.

[74] See the letter dated 21 September 2012 from the SRO to Konann.

[75] Commissioner's Submissions, (15 December 2014), [7] and [8].

[76] Transcript p 136 line 29 to p 137 line 5; p 141 lines 23-28; p 142 line 29 to p 143 line 1; see [2014] VCAT 1024 at [72]- [75].

[77] [2014] VCAT 1024 at [72].

[78] Reply Submissions of the Plaintiff and the Second Defendant, [7].

[79] Commissioner's Submissions, para 8; cf Tribunal's Reasons, at [72].

[80] Commissioner's Submissions (15 December 2014), [10] and [11].

[81] Question 1 of the plaintiff's proposed notice of appeal.

[82] Questions 2-3 of the plaintiff's proposed notice of appeal.

[83] Perpetual Trustee Co Ltd v Commissioner of State Revenue [2000] VSC 177; (2000) 44 ATR 273 at [54]. See also Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204 at [171] ('It is a factual inquiry that is called for by s 33(3)'); Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203 at [47] ('Questions as to causal link, such as whether one thing is the result of some other thing, are classic questions of fact').

[84] [2010] VSC 608 at [26]; see also Loyalty Connection Pty Ltd v Commissioner of State Revenue [2011] VCAT 2422 at [17]- [22].

[85] Section 7(1)(b)(vi) of the Duties Act.

[86] Duties Act s 33.

[87] Duties Act s 34.

[88] Duties Act s 35.

[89] Duties Act s 36.

[90] [2000] VSC 177; (2000) 44 ATR 273 at [54] (emphasis added by plaintiff), addressing the predecessor to s 33(3) contained in the Stamps Act 1958 (Vic); cited in Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203 at [38] (Hollingworth J).

[91] [2006] VSC 203 at [35].

[92] Counsel for the Commissioner made a similar concession as to the statutory purpose in his submissions to the Tribunal: see Transcript (1 August 2014), p 298, lines 8-18: "It's true to say as a matter of statutory purpose that when one looks at the Duties Act ... one can derive or see a purpose of trying to tax transactions in which the beneficial ownership changes, ... and lots of judges and people have said over the years that the Act tries to tax transactions where the beneficial ownership changes, so that's certainly true and the commissioner accepts that and indeed he said that himself on a number of occasions".

[93] Interpretation of Legislation Act 1984 (Vic), s 35(a). See also Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204 at 216 [46] (Maxwell CJ): "a key consideration in the applicability of an exemption is whether its application to the case at hand advances the statutory purpose."

[94] The plaintiff relying in this respect on Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233; (2000) 46 ATR 61 at [29] (Batt JA); Commissioner of State Revenue v Lend Lease Funds Management Pty Ltd [2011] VSCA 182; (2011) 33 VR 204 at 206 [2], 212 [34] (Maxwell CJ), see also at 241 [154] (Tate JA).

[95] Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204 at 212 [35] (Maxwell CJ); see e.g. Perpetual Trustee Co Ltd v Commissioner of State Revenue [2000] VSC 177; (2000) 44 ATR 273; Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233; (2000) 46 ATR 61; Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203.

[96] Perpetual Trustee Co Ltd [2000] VSC 177; (2000) 44 ATR 273 at [54] (Hansen J); see also Challenger Property Nominees Pty Ltd [2006] VSC 203 at [30] (Hollingworth J).

[97] Perpetual Trustee Co Ltd [2000] VSC 177; (2000) 44 ATR 273 at [55], [58] (Hansen J_); Lend Lease Funds Management_ [2011] VSCA 182; (2011) 33 VR 204 at 217 [48], [51] (Maxwell ACJ).

[98] See Challenger Property Nominees Pty Ltd [2006] VSC 203 at [41] (Hollingworth J).

[99] See Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233; (2000) 46 ATR 61 at [27].

[100] Cf Commissioner's Submissions (15 December 2014), [15], referring to Commissioner of State Revenue v Victoria Gardens Development Pty Ltd [2000] VSCA 233; (2000) 46 ATR 61 at [27], where Batt JA stated: "The expression 'other change' does have meanings: at the least it covers the removal of a trustee". (emphasis added).

[101] Cf Commissioner's Submissions (15 December 2014), [21].

[102] [2005] VCAT 424.

[103] Commissioner's Submissions (15 December 2014), [21].

[104] Perpetual Trustee Co Ltd v Commissioner of State Revenue [2000] VSC 177; (2000) 44 ATR 273 at [53] per Hansen J. The analysis of Hansen j at [53] - [54] was endorsed in Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204 at [43] - [47] per Maxwell ACJ, [129] - [130] per Tate JA, [171] per Pagone AJA.

[105] Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204 at [46] (Maxwell ACJ). See also the plaintiff's submissions at [28], which speak of a change of trustee "necessitating a transfer". The Commissioner also seeks to illustrate the point (Commissioner's Submissions (15 December 2014), [21]):

"The point may be illustrated by way of example. The example is similar to how the taxpayer seeks to characterise the facts of this case. Assume that A holds Torrens title land on resulting trust for B. Assume that A wants his name off the title. Assume that A transfers the land to C. Assume that the transfer is made for no consideration, based on a mistake, based on bad legal advice, without B's authorisation, in breach of trust, or in whatever circumstances that are sufficient to give rise, by operation of law, and despite C's registration as proprietor, to a constructive trust by which C's title is impressed immediately with an obligation in equity in favour of B. We therefore have a transfer of land from one trustee (A) to another trustee (C), without any change in the beneficiary (B) or the beneficial ownership of the land. Yet s 33(3) does not apply. The transfer was not made necessary by a change in the office of trustee. C was not a trustee before the transfer. C was not entitled to call for a transfer of the land. In the language of the section, the transfer was not a transfer made solely because of a change in the trustee of a trust and solely in order to vest the property in the trustee entitled to it. The constructive trust has arisen as a consequence of the transfer, automatically, in order to preserve B's interest".

[106] See Commissioner of State Revenue v STIC Australia Pty Ltd [2010] VSC 608 at [26].

[107] See Perpetual Trustee Co Ltd v Commissioner of State Revenue [2000] VSC 177; (2000) 44 ATR 273 at [54].

[109] Citing in support of this contention, Farah Constructions Pty Ltd v Sad-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [190] - [198]; Conlan v Registrar of Titles [2001] WASC 201; (2001) 24 WAR 299 at [177] - [200].

[110] See Commissioner's Submissions (15 December 2014), [25].

[111] And see Reply Submissions of the Plaintiff and the Second Defendant, [10]-[11].

[112] Compare Kringas v Commissioner of State Revenue [2005] VCAT 424 at [55]- [58].

[113] Tribunal's Reasons at [74], [76], [82], [130].

[114] See Pearce and Geddes, Statutory Interpretation in Australia (8th ed, 2014, Lexis Nexis) [9.9], [9.35]-[9.37].

[115] Tribunal's Reasons at [6], [86], [130].

[116] See Transcript, pp 148-149 (31 July 2014).

[117] Tribunal's Reasons at [74], [76].

[118] Tribunal's Reasons at [85]-[88].

[120] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 614 (Deane J); see also Paragon Finance plc v D B Thakerar & Co (a firm) [1998] EWCA Civ 1249; [1999] 1 All ER 400 at 408-409 (Millett LJ); and see Wright_, The Remedial Constructive Trust_ (Butterworths, 1998), [1.1].

[121] Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 at 614 (Deane J).

[122] Jacobs' Law of Trusts in Australia (7th ed) at [1311].

[123] Jacobs' Law of Trusts in Australia (7th ed) at 259 [1304] (emphasis added by plaintiff). See also Australian Stamp Duties Law, [27.0010]: "A constructive trust can arise where a person has received trust property in circumstances where the court will hold that he is bound by the trust. This is really just an instance of an existing trust being continued and kept on foot rather than the creation of a new trust: Lewin on Trusts, 15th ed, p 168. The person holding the trust property is nonetheless usually referred to as a 'constructive trustee'."

[124] Karak Rubber Co Ltd v Burden (No 2) [1972] 1 All ER 210 at 1234-1235; Peffer v Rigg [1977] 1 WLR 285 at 294; [1978] 3 All ER 745 at 752.

[125] Rolfe v Gregory (1864) 4 De G J and S 576; 46 ER 1042; United States Surgical Corp v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 247 (reversed on other grounds [1984] HCA 64; (1984) 156 CLR 41).

[126] Lewin on Trusts (16th ed 1964), p 151; see also at pp 655, 661 in relation to tracing trust property into the hands of a purchaser with notice or a volunteer.

[127] Scott and Ascher on Trusts (5th ed), p 1969.

[128] Scott and Ascher on Trusts (5th ed), p 1972.

[129] Scott and Ascher on Trusts (5th ed), p 2833.

[130] Cf Commissioner's Submissions (15 December 2014), [21].

[131] See e.g. Scott and Ascher on Trusts (5th ed), p 1995: ''The beneficiaries, or any of them, can maintain a suit in equity against the transferee if the transferee took with notice of the breach of trust or paid no value. It is true that the trustee, if subject to the jurisdiction of the court, should ordinarily be joined as a party. But this is to permit resolution of the entire controversy, not because the rights of the beneficiaries against the transferee are derivative, through the trustee. Primarily, the transferee's liability is to the beneficiaries, not the trustee, and the rights of the beneficiaries against the transferee are direct."

[132] The traditional classification of resulting trusts involves situations in which there is an inference that the transferor did not intend to give the beneficial interest in the property to the transferee ("presumed" resulting trusts) and situations in which the transferor/settlor does not wholly dispose of the beneficial interest ("automatic" resulting trusts): see generally Re Vandervell's Trusts (No 2) [1974] Ch 269 at 288-289 (Megarry J); Jacobs' Law of Trusts in Australia (7th ed) at 234 [1201]. A transfer which is vitiated by mistake would arguably fall into the first category, but it has also been held to give rise to a constructive trust as opposed to a resulting trust: see Ford and Lee, Principles of the Law of Trusts, [21.000], [22.6040].

[133] Even if Peter and Garry White might also have had standing to assert a claim on behalf of Annacott against the plaintiff in respect of the beneficial ownership of the Land (see Lewin on Trusts (18th ed 2008), pp 1678-1679; Scott and Ascher on Trusts (5th ed), pp 1994-1997; Montrose Investments Ltd v Orion Nominees Ltd [2004] EWCA (Civ) 1032 at [24]- [26]), this is not because they remained as trustees of the Land. In any event, there was a change in trustees upon Konann becoming a trustee for Annacott, whether that was in the place or in addition to Peter and Gary White.

[134] Reply Submissions of the Plaintiff and the Second Defendant, [9].

[135] Hoser v Department of Sustainability and Environment [2014] VSCA 206 at [29]; S v Crimes Compensation Tribunal [1998] 1 VR 83 at 89; Director of Liquor Licensing v Kordister Pty Ltd [2011] VSC 207 at [247]- [25] (upheld on appeal Kordister Pty Ltd v Director of Liquor Licensing [2012] VSCA 325 [71], [212]-[215].

[136] Tribunal's Reasons at [74], [76], [82], [130].

[137] Moreover, I accept that it is incorrect to suggest that questions 2 and 3 of the proposed notice of appeal do not arise if question 1 is answered in the negative (cf Commissioner's Submissions (15 December 2014), [24]). If the Tribunal's decision on s 33(3) of the Duties Act depended on a finding that there was an objective intention to change the beneficiaries of the Land, the proposed notice of appeal raises a question of law as to whether such a finding was reasonably open on the evidence. If it was not reasonably open to the Tribunal to make such a finding, the error would infect the Tribunal's conclusion on the application of s 33(3).

[138] Perpetual Trustee Co Ltd [2000] VSC 177; (2000) 44 ATR 273 at [55], [58] (Hansen J_); Lend Lease Funds Management_ [2011] VSCA 182; (2011) 33 VR 204 at 217 [48], [51] (Maxwell ACJ).

[141] Tribunal's Reasons, at [83]-[88].

[142] Reply Submissions of the Plaintiff and Second Defendant (22 December 2014), [16]-[17].

[143] cf Commissioner's Submissions (15 December 2014), [25].

[144] See e.g. Respondent's Contentions dated 29 May 2014, para 27.

[145] Tribunal's Reasons, [74], [76], [130]. In particular, the Tribunal refrained from making any findings of fact as to whether 'the actions of Peter White ... gave rise to any constructive trust in favour of Annacott': cf. Commissioner's Submissions (15 December 2014), [25(2)]. However, there was no evidence before the Tribunal on which it would have been open to find that Annacott had relinquished its beneficial interest in the Land: see Plaintiff's Submissions, [35]. To the extent that any such issues of fact were capable of affecting the outcome of the Tribunal's decision, the matter would need to be remitted to the Tribunal.

[146] Commissioner's Submissions (15 December 2014), [35(1)].

[147] Ford and Lee, Principles of the Law of Trusts, at [22.10380]. See Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at 169-170, referring to Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd [1998] 3 VR 133 at 156-157: 'Those terms allow, it is true, a claim in personam founded in equity against the holder of a registered interest to be invoked to defeat the interest; and a claim in personam founded in equity may no doubt include a claim to enforce what is called a constructive trust'. See also Simmons v New South Wales Trustee and Guardian [2014] NSWCA 405 at [70]- [73]; and also Casegrain v Gerard Casegrain & Co Pty Ltd [2015] HCA 2 (4 February 2015).

[148] See, for example, the Resolution of Directors of Konann Pty Ltd dated 30 June 2006.

[149] See Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liquidation) [2014] VSC 516 in the Annexure to that judgment - Clarke (as trustee of the Clarke Family Trust) v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liquidation) [2014] VSC 334 at [1985]-[1989].

[151] Commissioner's Submissions (15 December 2014), [13]-[15].

[152] See Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233; (2000) 46 ATR 61 at [27].

[153] See above, [58] where these submissions by the plaintiff are discussed.

[154] And see Reply Submissions of the Plaintiff and the Second Defendant, [8]; and see also above, [32]-[33].

[155] Submissions of the Plaintiff and Second Defendant (1 December 2014), [51].

[156] [2005] VCAT 424 at [55]- [58].

[157] [2005] VCAT 424 at [58] (emphasis added).

[159] See Duties Act, ss 7, 10, 18, 20 and 22.

[160] See Duties Act, ss 20(1) and 22(1).

[161] Australian Stamp Duties Law, para [21.0690].

[162] There is, in my view, no better explanation and account of the principles of divisibility of the whole proprietary interest in land, ownership, in law and in equity than as expounded in Jackson, Principles of Property Law (Law Book Company Ltd, 1967) 137-167; and particularly by reference to, what might be called, the "Jacksonian orange".

[163] [2004] VSCA 10; (2004) 12 VR 351. Compare Snowy Hydro Limited v Commissioner of State Revenue [2010] VSC 221 at [32]- [41] (Davies J).

[164] [2004] VSCA 10; (2004) 12 VR 351 at [53].

[165] [2002] HCA 43; (2002) 209 CLR 651.

[166] [2002] HCA 43; (2002) 209 CLR 651 at [44], referred to in Vopak Terminals [2004] VSCA 10; (2004) 12 VR 351 at [67].

[167] [2004] VSCA 10; (2004) 12 VR 351 at [73]- [74].

[168] [2004] VSCA 10; (2004) 12 VR 351 at [78].

[169] [2004] VSCA 10; (2004) 12 VR 351 at [79].

[170] [2004] VCAT 2434; (2004) 58 ATR 14.

[171] [2004] VCAT 2434; (2004) 58 ATR 14 at [2]- [14].

[172] [2004] VCAT 2434; (2004) 58 ATR 14 at [43].

[173] Commissioner of State Revenue v Challenger Property Nominees Pty Ltd [2006] VSC 203; (2006) 63 ATR 65 at [70]- [71].

[174] [2011] VSCA 182; (2011) 33 VR 204 at 221-234 [70]- [116] (Maxwell ACJ, dissenting), 242-244 [157]-[163] (Tate JA), 248-250 [174]-[178] (Pagone AJA).

[175] [2011] VSCA 182; (2011) 33 VR 204 at 243-244 [163] (Tate JA), 249-250 [177]-[178] (Pagone AJA).

[176] [2011] VSCA 182; (2011) 33 VR 204 at 225 [87], 233-234 [112]-[116] (Maxwell ACJ), cf. Tate JA at 243 [163], who would have agreed with the analysis of Maxwell ACJ if the relationship between the custodian and the responsible entity had 'exhibited the orthodox character of a trustee and beneficiary relationship'.

[177] Tribunal's Reasons at [89] - [94]; see also [50] - [53], [63] - [69].

[178] Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204 at [70] - [116], [163]. The result in that case was emphasised to have turned on its special facts: [2011] VSCA 182; (2011) 33 VR 204 at [163]. This was illustrated recently: White Rock Properties Pty Ltd v Commissioner of State Revenue [2014] VSC 312 at [165] - [176].

[179] Oughtred v Inland Revenue Commissioners [1959] UKHL 3; [1960] AC 206; Farm Products Co-Operative (Tararua) Ltd v Inland Revenue Commission (NZ) (1969)1 ATR 85; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1980] 1 NSWLR 510; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431; O'Sullivan v Commissioner of Stamp Duties (Qld) [1984] 1 Qd R 212; Re Transphere Pty Ltd (1986) 5 NSWLR 309; Extra Nominees Pty Ltd v Comptroller of Stamps (Vic) (1990) 21 ATR 3664; Sportscorp Australia Pty Ltd v Chief Commissioner of State Revenue (NSW) [2004] NSWSC 1029; (2004) 58 ATR 1; Perpetual Trustee Co Ltd v Commissioner of State Revenue (Vic) [2000] VSC 177; (2000) 44 ATR 273. These authorities are analysed in Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204 at [89] - [105]. Vopak Terminals Australia Pty Ltd v Commissioner of State Revenue [2004] VSCA 10; (2004) 12 VR 351, contrary to the plaintiff's submissions, and in accordance with the Tribunal's reasons at [91], should be seen as not requiring any departure from the long line of authority identified: Commissioner of State Revenue v Lend Lease Funds Management Ltd [2011] VSCA 182; (2011) 33 VR 204 at [112], [163]; Sportscorp Australia Pty Ltd v Chief Commissioner of State Revenue (NSW) [2004] NSWSC 1029; (2004) 58 ATR 1 at [76] - [77].

[180] Commissioner's Submissions (15 December 2014), [28], [29].

[181] See Sportscorp Australia Pty Ltd v Chief Commissioner of State Revenue (NSW) [2004] NSWSC 1029; (2004) 58 ATR 1 at [77).

[182] Challenger Property Nominees Pty Ltd v Commissioner of State Revenue [2004] VCAT 2434; (2004) 58 ATR 146 at [52].

[183] [2011] VSCA 182; (2011) 33 VR 204 at 233 [113].

[184] Cf DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431.

[185] DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431 at 474 (Brennan J).

[186] [2011] VSCA 182; (2011) 33 VR 204 at 222 [77]; compare Challenger Property Nominees Pty Ltd v Commissioner of State Revenue [2004] VCAT 2434; (2004) 58 ATR 14 at [52]. Similarly, the recent decision in White Rock Properties Pty Ltd v Commissioner of State Revenue [2014] VSC 312 at [175]- [176] can be distinguished as involving a transfer of property to a trustee on a new and separate trust for the transferor, the terms of which gave to the trustee 'full powers of ownership to sell the lands' (see also at [154]-[161]).

[187] [1959] UKHL 3; [1960] AC 206.

[188] [2000] VSC 177; (2000) 44 ATR 273.

[190] [2004] NSWSC 1029; (2004) 58 ATR 1; see [2011] VSCA 182; (2011) 33 VR 204 at 230 [103]- [104].

[191] [2011] VSCA 182; (2011) 33 VR 204 at 233 [112].

[192] [2011] VSCA 182; (2011) 33 VR 204 at 233 [113] (plaintiff's emphasis added).

[193] [2004] VSCA 10; (2004) 12 VR 351 at 381 [73]- [74].

[194] [2004] VSCA 10; (2004) 12 VR 351 at 381 [74].

[195] DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1980] 1 NSWLR 510 at 518-519 (Hope JA), cited in Lend Lease [2011] VSCA 182; (2011) 33 VR 204 at 228 [98] (Maxwell ACJ).

[196] Re Transphere Pty Ltd (1986) 5 NSWLR 309 at 311, cited in Lend Lease [2011] VSCA 182; (2011) 33 VR 204 at 229 [101] (Maxwell ACJ).

[197] Cf Commissioner of State Revenue (Victoria) v Pioneer Concrete (Vic) Pty Ltd [2002] HCA 43; (2002) 209 CLR 651 at 663 [34], 667 [44]; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431 at 449 (Mason J).

[198] See Commissioner of State Revenue v Bradney Pty Ltd (1996) 34 ATR 233 at 236-237.

[201] [2004] VSCA 10; (2004) 12 VR 351 at 381 [73]- [74]; see paragraph 63 above.

[202] Commissioner's Submissions (15 December 2014), [32].

[203] [2014] VCAT 1024 at [96].

[204] Transcript p 209 line 27 to p 210 line 22; p 299 line 30 to p 300 line 21; p 338 line 28 to p 340 line 11.

[205] [2014] VCAT 1024 at [97].

[206] [2014] VCAT 1024 at [99]- [100].

[207] [2014] VCAT 1024 at [101]; see also [22] and [29] p 13.

[208] [2014] VCAT 1024 at [105], read together with [96]-[106] and order 1(b).

[209] [2014] VCAT 1024 at [104]- [106] and order 1(b).

[213] See Tribunal's reasons, para [101].

[214] See generally Glenn v Federal Commissioner of Taxation [1915] HCA 57; (1915) 20 CLR 490; cf. Lend Lease Funds Management Ltd v Commissioner of State Revenue [2009] VSC 360 (2009) 77 ATR 374 at [57] (Mandie J).

[215] Commissioner's Submissions (15 December 2014), [35]-[39].

[216] As at midnight 31 December 2011 and 2012, being the times relevant to the 2012 and 2013 land tax years in question: sees 36(1) of the Land Tax Act 2005.

[217] Contrary to the plaintiff's submissions, the Tribunal did not need to, and did not, make any finding about whether the evidence made good the proposition that Annacott was a primary producer within the meaning of s 67. In particular, the Commissioner had put in issue whether the keeping of cows on the land amounted to a 'business' of primary production and whether Peter White was himself a 'full-time' cattle farmer.

[218] [2014] VCAT 1024 at [127]; and see [124]-[128].

[219] It is well established that the words 'estate in possession' in s 10(a) bear their technical meaning of a present estate as distinct from an estate in reversion or remainder: Glenn v Federal Commissioner of Land Tax [1915] HCA 57; (1915) 20 CLR 490 at 496-8 per Griffith CJ, at 500-1 per Isaacs J and at 507 per Rich J; Chief Commissioner of Land Tax (NSW) v Macary Manufacturing Pty Ltd [1999] NSWCA 471; (1999) 48 NSWLR 299 at [58] - [65] per Mason P (Spigelman CJ agreeing at [1] and Sheller JA agreeing at [94]).

[220] Reply Submissions of the Plaintiff and the Second Defendant, [27]-[28].

[221] And see Reply Submissions of the Plaintiff and the Second Defendant, [30].

[222] Tribunal's Reasons, at [117], [125].

[223] Tribunal's Reasons, at [127]-[128].