Plaintiffs v Defendant

1 These proceedings are brought by the plaintiffs against the Commissioner of State Revenue ('the Commissioner'). Both proceedings raise the same question. Namely, whether certain transactions entered into pursuant to a 13 December 2017 settlement deed ('the Deed') between brothers, Ercole ('Colin'), and Domenico ('Paul') De Lutis, and entities connected with them, which, amongst other things, restructured three superannuation funds of which Colin and Paul were the only members, are exempt from duty under Chapter 3 of the Duties Act 2000 (Vic) ('the Act').[1]

2 The facts are not in dispute.[2] The three funds of which the brothers were members were 'complying superannuation funds' within the meaning given in s 3(1) of the Act. The investments held by the funds included units in the Lonsdale Unit Trust and the South Melbourne Unit Trust. The Lonsdale Unit Trust directly held an interest in land in Victoria and the South Melbourne Unit Trust indirectly held an interest in land in Victoria. Both trusts were 'private unit trust schemes' and therefore 'landholders' as defined in s 71(1) of the Act. Each ordinary unit in one or other of the trusts conferred an 'interest' in that trust, as defined in s 79(1) of the Act.

3 Lonsdale Investment CD Pty Ltd ('Lonsdale') as trustee for the Lonsdale Unit Trust, JT Super Pty Ltd as trustee for Jeans Team Superannuation Fund ('JT Fund') and DLF Nominees CD Pty Ltd as trustee for the Fixtures and Fittings Unit Trust ('FFUT') are the plaintiffs in proceeding No. 4306 of 2019 ('the Lonsdale Proceeding'). Pursuant to the Deed, by the redemption of units and subsequent rollover of funds, an underlying interest in land was effectively transferred from the DLF Superannuation Fund ('DLF Fund'), of which Colin and Paul were members, to the JT Fund, of which Colin became the only member. In performance of the Deed, the JT Fund increased by 10.25% and the FFUT increased by 12.09% their underlying interests in the Lonsdale Unit Trust. A diagrammatic representation showing how these changes came about is Annexure A to these reasons.[3]

4 Razzy Australia Pty Ltd ('Razzy') as trustee of the South Melbourne Unit Trust and CPL Super Pty Ltd as trustee for the DLF Fund are the plaintiffs in proceeding No. 4304 of 2019 ('the South Melbourne Proceeding'). Pursuant to the Deed, the DLF Fund, from which Colin exited and of which Paul became the sole member, increased by 22.1% its unit holding in the South Melbourne Unit Trust. A diagrammatic representation showing how these changes came about is Annexure B to these reasons.[4]

5 The Commissioner imposed duty in respect of both transactions based upon the increase in the percentage of units held in the landholding unit trust. The plaintiffs contend the transactions are exempt from duty under s 89D(a) in Chapter 3 in conjunction with s 40 in Chapter 2 of the Act. The construction of these provisions has not been considered elsewhere and there are no directly applicable cases.

6 Duty as assessed has been paid. The plaintiffs claim restitution of $1,036,408 in the Lonsdale Proceeding and $558,562 in the South Melbourne Proceeding. Alternatively, orders that the Commissioner refund the amounts in question.[5] The Commissioner opposes the relief sought.

7 The relevant legislation is the Act as at 26 February 2018.[6] Chapter 2 of the Act imposes duty on transfers,[7] and 'transactions'. Chapter 3 charges duty at the same rate for the transfer of dutiable property under Chapter 2 on certain acquisitions of interests in 'landholders'.[8] Units in a private unit trust scheme, such as the Lonsdale and South Melbourne Unit Trusts, are dutiable property.[9]

8 Section 77 provides that a liability for duty arises when a 'relevant acquisition' is made. Section 78 defines a 'relevant acquisition' to include an acquisition of a 'significant interest' in a landholder (the equivalent of a 20% interest on a winding up).[10] A 'relevant acquisition' of an interest that amounts to a 'significant interest' may occur when one acquisition of an interest is aggregated with another acquisition of an interest by another person in an 'associated transaction'.[11] The plaintiffs accept that the transactions in each of the cases are 'associated transactions'.[12]

9 Section 89D(a) provides an exemption from landholder duty. It does so by incorporating certain circumstances specified in Chapter 2, including those in s 40, into Chapter 3:

89D Exemptions

An acquisition by a person of an interest in a landholder is an exempt acquisition -

(a) if the means by which the person acquired the interest would have resulted in no ad valorem duty being payable under Chapter 2 had the subject of the acquisition been a transfer of the land of the landholder to the person; or

...

10 Section 40(1) provides that no duty is chargeable in respect of a transfer of dutiable property between complying funds:

40 Transfer of property from one superannuation fund to another

(1) No duty is chargeable under this Chapter in respect of a transfer of dutiable property from one superannuation fund to another if the Commissioner is satisfied that -

(a) the transfer is made from a complying superannuation fund or from a fund that was a complying superannuation fund within the period of 12 months before the transfer was made; and

(b) the transfer is made to a complying superannuation fund or to a superannuation fund that, in the opinion of the trustees, will be a complying superannuation fund within 12 months after the transfer is made; and

(c) the transfer occurs in connection with a person's ceasing to be a member of, or otherwise ceasing to be entitled to benefits in respect of, the fund from which the dutiable property is transferred and the person's becoming a member of, or otherwise becoming entitled to benefits in respect of, the fund to which the dutiable property is transferred.

11 The Lonsdale Proceeding was treated by the parties as the primary proceeding.[13]

12 The first question in that proceeding is whether there was an acquisition of a 'significant interest' in the Lonsdale Unit Trust. To achieve the 20% threshold requires aggregating the 10.25% increase in the JT Fund unit holding with the 12.09% increase in the FFUT unit holding. If the 20% threshold for duty is not met, then there is no dutiable transaction and the potential application of the exemption in s 89D(a) and s 40 does not arise.[14]

13 For the reasons discussed below, aggregation in accordance with the Act results in two separate acquisitions of a 'significant interest' in the Lonsdale Unit Trust. One aggregation results in a 'significant interest' being acquired by the FFUT, the other results in a significant interest being acquired by the JT Trust.

14 The 20% threshold having been reached as a result of aggregation, the second question, assuming the acquisition by the JT Trust is exempt by operation of ss 89D(a) and 40(1)(c), is whether landholder duty is to be calculated on the entire aggregated interest of 22.34%. Alternatively, is the 10.25% transferred between complying funds exempt but the 12.09% increase in the FFUT dutiable? The answer is that the 10.25% transfer between complying funds (assuming the ss 89D(a) and 40 statutory criteria are satisfied) is exempt, but the 12.09% increase is dutiable.

15 The Commissioner raised three further questions:

(a) Question 3, does the exemption in ss 89D(a) and 40 apply where there has not been a direct transfer of units or shares and the transaction involves a redemption and/or issue of units or shares?

(b) Question 4, has there been a 'transfer' of dutiable property in each of these cases to a complying fund so as to satisfy s 40(1)?

(c) Question 5, has there been a transfer of units in each of these cases 'in connection with' the individual member ceasing to be a member of a complying fund and becoming a member or otherwise becoming entitled to benefits in respect of the fund to which the dutiable property is transferred as provided for in s 40(1)(c)?

16 The answer to each of questions 3 to 5 is 'yes'.

17 For the reasons that follow, in respect of the significant interest acquired by the JT Trust in issue in the Lonsdale Proceeding and the significant interest acquired by the DLF Fund in issue in the South Melbourne Proceeding, the plaintiffs are entitled to the benefit of the s 40 exemption imported into Chapter 3 by s 89D(a). They are entitled to refunds of duty to be calculated accordingly.

18 The principles relevant to statutory construction were summarised by Kiefel CJ and Keane J in R v A2.[15] They require consideration by the Court of the ordinary and grammatical meaning of the words used, taking into account both context and legislative purpose.[16]

19 In Federal Commissioner of Taxation v Consolidated Media Holdings Ltd,[17] French CJ, Hayne, Crennan, Bell and Gageler JJ said:

This court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is there examination and end in itself.[18]

20 The purpose of the Duties Act 2000 (Vic), as its title indicates and as specified in s 1, is to create and charge a number of duties. While divided into separate chapters, parts and divisions, the Act must be interpreted like any other act, as a coherent whole having regard to that purpose.[19]

21 Section 7(1) charges duty on transfers of dutiable property,[20] and on transactions of dutiable property effected by other means.[21] All transactions that result in a change of beneficial ownership, other than 'excluded transactions',[22] are by s 7(1)(b)(vi) dutiable.[23] Section 8(1) provides:

8 Imposition of duty on dutiable transactions that are not transfers

(1) The duty charged by this Chapter on a dutiable transaction referred to in section 7(1)(b) is to be charged as if each such dutiable transaction were a transfer of dutiable property.

22 Section 40, the text of which is reproduced above,[24] provides in substance that no duty is chargeable under Chapter 2 in respect of a transfer of dutiable property from one complying superannuation fund to another such fund.

23 The stated purpose of Chapter 3 is to charge duty at the same rate as for a transfer of dutiable property under Chapter 2 on certain acquisitions of interests in landholders.[25] Duty is chargeable under Part 2 of Chapter 3 on the acquisition by a person of an interest in a landholder that has land holdings in Victoria with an unencumbered value of $1 million or more.[26] In Commissioner of State Revenue v STIC (Australia) Pty Ltd,[27] Davies J explained the policy underlying Chapter 3:

1. The purpose of the land rich provisions in Chapter 3 is to prevent the use of private companies and unit trusts to reduce the rate at which duty would otherwise be payable on transfers of land and to treat such transfers of shares and units as equivalent to a transfer of land for duty purposes ...
2. The evident policy of Chapter 3 itself, ... is to bring to tax the acquisition by a person of shares or units in a landholding entity where that transaction would have been chargeable with duty had there been a transfer of land instead. It therefore makes sense that there is a specific exemption in s 85(1)(a) to ensure that Chapter 3 does not bring to tax transactions that would not otherwise have been taxable under Chapter 2 had the subject of the acquisition been a transfer of the land, not an acquisition of shares or units.[28]

24 When introducing the 2004 landholder provisions, in the Second Reading Speech accompanying the State Taxation Acts (Tax Reform) Act 2004, the then treasurer, Mr Brumby said:

... the rules for calculating the duty on high-value property transactions conducted through private companies and trusts are to be revised in light of current business practices, which have the effect of reducing taxation liabilities ...

The fundamental basis of stamp duty is that changes in beneficial ownership in land, however achieved, are subject to a conveyance duty. For reasons of equity and revenue protection, it is essential that duties are applied equitably and effectively.[29]

25 Sections 77 - 79 are relevantly in the following terms:

77 When does a liability for duty arise?

A liability for duty charged by this Part arises when a relevant acquisition is made.

78 What is a relevant acquisition?

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

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

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

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

(A) the person; or

(B) an associated person; or

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

(b) after an interest referred to in paragraph (a) was acquired, the person referred to in paragraph (a) or an associated person or any other person whose interest was aggregated with the interest under paragraph (a)(ii), acquires a further interest in the landholder.

Note

Associated person and associated transaction are defined in section 3(1).

(2) For the purposes of subsection (1)(a)(ii) or (b), a person is not an associated person ...

79 What are interests and significant interests in landholders?

(1) A person has an interest in a landholder if the person has an entitlement (otherwise than as a creditor or other person to whom the landholder is liable), whether directly or through another person, to a distribution of property from the landholder on a winding up of the landholder.

(2) A person who, by virtue of subsection (1), has an interest in a landholder has a significant interest in the landholder if the person, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, would be entitled to -

(a) in the case of a landholder that is a private unit trust scheme - 20% or more of the property distributed;[30]

26 Section 80 provides that a person acquires an interest in a landholder if that person's interest increases in the landholder 'regardless of how it is obtained or increased'[31] and, without limitation, if a person acquires such an interest by the cancellation, redemption or surrender of a unit or share.[32] Section 80 relevantly states:

80 How may an interest be acquired?

(1) A person acquires an interest in a landholder if the person obtains an interest beneficially, including if the person's interest increases, in the landholder, regardless of how it is obtained or increased.

(2) Without limiting subsection (1), a person may acquire an interest in a landholder in the following ways -

(a) the purchase, gift, allotment or issue of a unit or share;

(b) the cancellation, redemption or surrender of a unit or share;

(c) the abrogation or alteration of a right pertaining to a unit or share;

(d) the payment of an amount owing for a unit or share.

...

(7) For the avoidance of doubt, an acquisition by way of transfer of units or shares is not necessary to acquire an interest in a landholder.

27 Prior to the Deed, Paul and Colin each had interests in three complying superannuation funds: the DLF Fund, the DLF Executive Superannuation Fund ('DLF Executive Fund'), and the JT Fund.[33] CPL Super Pty Ltd was the trustee of the DLF Fund.[34] Toucmos Pty Ltd was the trustee of the DLF Executive Fund. JT Super Pty Ltd was the trustee of the JT Fund.[35]

28 Clause 11.1 of the Deed recorded the express agreement of the parties of their objective to rearrange their superannuation funds in a way that resulted in Paul having control and being the sole member of the DLF Fund and Colin having control and being the sole member of the DLF Executive Fund and the JT Fund.[36] The fund or funds which each brother was to own and control was or were to contain net assets equal to that brother's existing entitlement in the three funds.[37]

29 Clause 11.4(a) provided that Colin and Paul must do all things necessary for Razzy as trustee of the South Melbourne Unit Trust to redeem specified units held by the DLF Executive Fund and by the JT Fund on the rollover dates. Clause 11.4(b) provided that Colin and Paul must do all things necessary for Lonsdale as trustee of the Lonsdale Unit Trust to redeem 100% of the units held by the DLF Fund on the rollover date. Clause 11.5(a) provided that on or before the rollover date Colin and Paul must do all things necessary for the rollover in cash of the entirety of Paul's member balance in the DLF Executive Fund, the DLF Fund and the remainder of Paul's member balance in the JT Fund to the DLF Fund and the entirety of Colin's member balance in the DLF Fund to a complying fund to be nominated by Colin, which, following nomination, was the JT Fund.

30 On the rollover date, as amended, 15 February 2018, there was to be a rollover in cash of Paul's member balances in the DLF Executive Fund and the JT Fund to the DLF Fund, and of Colin's member balance in the DLF Fund to a complying fund nominated by Colin.[38] The rollovers were to take place subsequent to and separate from the redemption of the units in the two unit trusts.[39]

31 To achieve a 'rollover' of the relevant entitlements of each of the brothers, the trustee of the superannuation fund or funds from which that brother was exiting realised assets including by redeeming units held by the trustee in the landholding unit trust from which that brother was exiting. The redemption of units in the landholding unit trust was followed by an increase in the interest in the landholder of the remaining unitholders. It is that increase which the Commissioner assessed as dutiable that gave rise to the proceedings.

32 The transactions taken to implement the terms of the Deed were finalised on 26 February 2018. Colin rolled over his interest in two of the funds and became the sole member of the third fund. Paul rolled over his interest in the fund of which Colin became the sole member and Paul remained the sole member of the other two funds from which Colin had exited as a member. After settlement, on 26 February 2018, Paul was the sole member of the DLF Fund and Colin was the sole member of both the JT Fund and the DLF Executive Fund.

Q1 Aggregation: Was there an acquisition of a 'significant interest' in the Lonsdale Unit Trust?

33 The first question is whether the acquisition of additional units are 'relevant acquisitions' under s 78. If there has not been an acquisition of a 'significant interest', then whatever the form of the transaction by which the increased unit holdings were acquired, the transaction is not dutiable. If it is not dutiable, no question as to the potential application of ss 89D(a) and 40 arises.

34 Relying upon s 78(1)(a)(ii)(C), the Commissioner argued it was permissible to aggregate the 12.09% interest acquired by the FFUT and the 10.25% interest acquired by the JT Trust so as to achieve the 20% threshold required to meet the definition of a 'significant interest'.[40] Section 78(1)(a)(ii)(C) was said to operate so that there were two 'relevant acquisitions', each potentially dutiable. In the case of the JT Fund acquisition, when aggregated with the interest acquired by the FFUT in an 'associated transaction', there was an acquisition of a 'significant interest'.[41] In the case of the FFUT, taking its acquisition, together with the acquisition by the JT Trust, once again, the 20% threshold was met.

35 The text of s 78(1)(a)(ii)(C) requires that, where relevant, an aggregation exercise is to be undertaken to determine whether or not the 20% threshold is met. There is nothing in the language of s 78(1) that says that there can only be one such aggregation exercise undertaken relying upon the same transaction and neither party contended to the contrary.[42]

36 Section 77 imposes duty 'when a relevant acquisition' is made. Section 78 applies in each case where 'a person makes a relevant acquisition'. As a consequence of aggregation, there was a 'relevant acquisition' by both FFUT and the JT Fund of an interest in excess of the 20% threshold.

Q2: How is duty to be calculated if the aggregation depends upon the inclusion of an increase in landholding that is exempt?

37 For the purposes of the second question, it is to be assumed the acquisition of an additional 10.25% by the JT Trust is exempt from duty by application of ss 89D(a) and 40.

38 During the hearing the Commissioner accepted that it is not permissible to aggregate an exempt acquisition with another, with the consequence that the aggregate acquisition (in this case, 22.34%) is fully dutiable and the benefit of the exemption is lost.[43] The Commissioner accepted, but the plaintiffs did not, that what is dutiable in that scenario,[44] is the 12.09% increase in units held by the FFUT.

39 The Commissioner submitted that an exemption in relation to the JT Trust, under s 89D(a) does not lead to an exemption in the case of the FFUT acquisition following aggregation. The acquisition by the FFUT was said to be a relevant acquisition under s 78(1)(b) and dutiable, irrespective of whether or not the acquisition by the JT Fund is an acquisition that is exempt from duty.

40 The plaintiffs submitted s 89D(a) treats certain acquisitions as exempt and exempt means exempt for all purposes, including for the purposes of s 78. They submitted it would be a strange and anomalous result if the FFUT having acquired a 12.09% interest only would not be assessable, but because of aggregation relying upon an exempt acquisition, by the JT Trust, the acquisition by the FFUT becomes assessable.

41 I do not agree with the plaintiffs' submission. If the amount of duty imposed on the FFUT following aggregation is duty referrable to the 12.09% increase in FFUT's unitholding only, there is no strange or anomalous outcome arising from the fact that the second acquisition used for the purposes of aggregation is deemed exempt by reason of s 89D(a). There is no infringement of the intention to give the full benefit of the s 89D(a) exemption to those entitled to it upon such an approach. That is so because if the JT Trust is properly entitled to the benefit of the s 89D(a) exemption, its 10.25% increase in units held will not be dutiable. FFUT is not a complying superannuation fund and has no entitlement to an exemption.

42 To approach s 78 in this way gives effect to the intention of the landholder provisions outlined in the Second Reading Speech. Namely, to ensure that changes in equitable ownership 'however achieved' are subject to a conveyance duty. The construction for which the plaintiffs contend would undermine that objective. On their construction, no component or part of a structured transaction that involved one exempt and one non-exempt acquisition, in aggregate an acquisition of more than a 20% interest, would be dutiable. On the approach to s 78 for which the Commissioner contends, those who are not entitled to the benefit of an exemption do not avoid duty by combining with an exempt acquisition; nor are they liable for duty other than duty referable to the additional percentage unit holding that they have acquired.

43 For those reasons, assuming the JT Trust acquisition exempt by operation of ss 89D(a) and 40, the 12.09% increase in the FFUT unit holding is dutiable.

Q3: Does the exemption in ss 89D(a) and 40 apply to the JT Trust acquisition where there has not been a transfer, and the transaction involves a redemption of units?

44 The Commissioner accepted as a matter of construction that a notional transfer arising as a result of an acquisition caused by a redemption of units in a landholder could be exempt under s 89D(a).[45] The dispute was said to be less about whether s 89D(a) can apply to a notional transfer via a redemption of units and more about how s 40 is to be applied. It was contended that the notional transfers did not satisfy s 40(1)(a).

45 The plaintiffs accepted the transactions involving the JT Trust would be dutiable, but for s 89D(a), in combination with s 40.

47 'An acquisition', to which the opening words of s 89D(a) refer, must be taken to be a reference to a 'relevant acquisition' that is otherwise dutiable by operation of Chapter 3. A 'relevant acquisition' of a 20% interest will only be an exempt acquisition 'if the means by which the person acquired the interest' would have resulted in no duty being payable under Chapter 2. In this case, by reason of the operation of s 40, 'had the subject of the acquisition been a transfer of the land'.

48 The plaintiffs submitted the section does not say there must be a transfer; what the language requires is first, to look at 'the means by which' the acquisition occurred and then, to treat the acquisition 'as if' it was a transfer. Put another way, s 89D(a) requires one to assume the actual means of acquisition (in this case a redemption of units) was a transfer of land. Adopting part of the language of s 89D(a), 'if the means by which the person acquired the interest ... [had] been a transfer of the land' and if a transfer in such circumstances would have been exempt under Chapter 2, then, the acquisition will be exempt.[46]

49 The opening words of s 89D(a) referring to 'the means' by which the person acquired the interest, without specifying any particular type or category of 'means' are deliberately broad. They do not restrict the means of acquisition and therefore the scope of the exemption to acquisitions taking place by transfer. An acquisition brought about by the redemption of units is not excluded. To construe s 89D(a) so as to exclude such an acquisition would require an impermissible reading down the opening words of the section.

50 A narrow approach to the construction of s 89D(a) would be inconsistent with s 80 which is intended to capture a wide variety of acquisitions of interests to duty under Chapter 3.

51 Section 80 has the heading 'How an interest may be acquired'. The section is broad in its terms and intended to capture all s 78 'relevant acquisitions' to duty under Chapter 3, no matter how effected.

52 Section 80(1) provides that a person acquires an interest in a landholder, if the person obtains an interest beneficially in the landholder, 'regardless of how it is obtained or increased'. Section 80(2) lists, without limitation, a number of ways in which a person may acquire an interest. Section 80(2)(b) provides that a person may acquire an interest in a landholder by the cancellation, redemption or surrender of a unit or share. Section 80(7), said to be 'for the avoidance of doubt', expressly reinforces that an acquisition by way of transfer of units is not necessary in order for a person to acquire an interest in a landholder for the purposes of Chapter 3.

53 Just as s 80 is intended to capture acquisitions 'regardless of how' they are effected, the reference to 'the means by which' in s 89D(a) reflects an intended broad operation of the exemption.

54 Irrespective of 'the means by which' the person acquired the interest, s 89D(a) requires consideration of whether an acquisition by that same means would have resulted in no ad valorem duty being payable under Chapter 2 'had the subject of the acquisition been a transfer of land to the person'.

55 Focussing on the first part of the text of s 89D(a), an acquisition by a person of an interest in a landholder (by means of a redemption of units) would have resulted in no ad valorem duty being payable under Chapter 2. That is so because a redemption of units is an 'excluded transaction' as defined in s 7(4). Duty is not charged under Chapter 2 on an excluded transaction by reason of s 7(1)(b)(vi). If the concluding words in s 89D(a) 'had the subject of the acquisition been a transfer' not formed part of the section then no ad valorem duty would have been payable under Chapter 2 due to the operation of s 7(1)(b)(vi).

56 Turning to the concluding words 'had the subject of the acquisition been a transfer'; pursuant to s 7(3A), a transfer of units in a unit trust scheme that occurred on or after 1 July 2002 is not a dutiable transaction for the purposes of Chapter 2. It would be an odd result in those circumstances if s 89D(a), read as a whole, did not extend an otherwise available exemption for Chapter 2 purposes to an acquisition effected by a redemption of units in the case of the acquisition of an interest under Chapter 3. Indeed, neither party contended for such a result.

57 I accept the plaintiffs' submission that s 89D(a) is an exemption provision that should be construed beneficially.[47] Such an approach does not support a narrow construction of the references to 'transfer' in ss 89D(a) and 40 so as to restrict its operation to actual transfers only, as defined in s 3 of the Act. Consistency is important as between s 89D(a) and s 40 in order that the Act is given effect as a coherent whole.

58 The plaintiffs relied on the legislative history of s 89D(a)[48] as providing confirmation that it includes, as a means by which the person acquired the interest, a notional transfer effected by the redemption of units.[49] The Commissioner accepted during the hearing that s 89D(a) does not exclude an acquisition resulting from a transfer, redemption or cancellation of units.[50] The Commissioner also submitted that it was unnecessary to go beyond the existing legislation to look at earlier legislation, even though there are slight, but material differences in wording.[51]

59 I consider that the legislative history of s 89D(a), while complex, is both relevant, and supports the construction of s 89D(a) importing s 40 for which the plaintiffs contend.

60 The predecessor of s 89A was s 84(1)(a) of the Duties Act 2000, introduced by Act No. 79/2000, enacted on 28 November 2000 but not to commence operation until 1 July 2001.[52] When first enacted s 84(1)(a) provided as follows:

An acquisition by a person of an interest in a private corporation is an exempt acquisition -

(a) if the land the subject of the interest concerned could have been acquired by the person in the manner that does not result in a liability to pay ad valorem duty under Chapter 2;

61 Before Act No 79/2000 came into operation it was amended by s 9(3) of the Duties (Amendment) Act 2001 which took effect from 1 July 2001. Section 9(3) of the amending Act amended s 84(1)(a) to include express reference to a change of beneficial ownership by redemption of units. Upon commencement on 1 July 2001 that section provided as follows:

An acquisition by a person of an interest in a private corporation is an exempt acquisition -

(a) if the land the subject of the interest concerned could have been acquired by the person in a manner that does not result in a liability to pay ad valorem duty under Chapter 2 (other than an acquisition consisting of a change in beneficial ownership of the land as a result of the issue, transfer, redemption or cancellation of units in a unit trust scheme).[53]

62 The effect of the amending provision was to remove from the class of acquisitions that were to be exempt from duty acquisitions of units in a unit trust scheme, including whether by transfer or by redemption of units. That is, an exclusion from the benefit of the exemption. The accompanying explanatory memorandum described the 2001 amendment:

Sub-clause (3) amends section 84(1)(a) of the Duties Act to exclude from exempt acquisitions within the meaning of the land rich provisions ... cases where the acquisition consists of a change in beneficial ownership of land as a consequence of the issue, transfer, redemption or cancellation of units in a unit trust scheme.[54]

63 On 13 July 2004 the State Taxation Acts (Tax Reform) Act 2004 replaced s 84(1)(a) with s 85(1)(a) which was in identical terms to what is now s 89D(a).[55] The 2004 replacement section did not specify any 'carve-out' or exclusion from the benefit of the exemption so far as units in a unit trust scheme are concerned as was previously the case.

64 The plaintiffs relied upon the removal of the previous 'carve out' in support of a construction of s 89D(a) that includes as exempt an acquisition of units via redemption. They submitted that just as Parliament made a deliberate decision in 2001 prior to the Act coming into operation to exclude the redemption of units from the scope of what is now the s 89D(a) exemption, a deliberate intention to reverse the exclusion is to be inferred when in 2004 the express 'carve out' was removed.

65 I accept that the removal of the express carve out relating to unit trusts when compared to the previous legislation is to be taken to be a deliberate and intentional repeal.[56] I also accept that the inference for which the plaintiffs contend is appropriately drawn. The repeal of the exclusion relating to the redemption of units from the carve out is consistent with the transactions relating to units in a unit trust, including by redemption, being an 'excluded transaction' as defined in s 7(4) and therefore not being dutiable by reason of s 7(1)(b)(vi). It is also consistent with the exclusion of transfers in unit trusts from duty by s 7(3A).

66 Turning to s 40, the plaintiffs submitted that it is not limited to a subset of acquisitions under Chapter 3 and that to limit the exemption in this way so as to exclude an acquisition effected by redemption of units would be both inconsistent with s 89D(a) and contrary to the legislative history.

67 The structure of Chapter 2 is to impose duty on transfers and on transactions as specified in s 7(1)(b), and to provide for exemptions and concessional rates of duty. Exemptions and concessional rates of duty are dealt with in Part 5 of Chapter 2 which includes Division 2, titled 'Superannuation' where s 40 is located.

68 The combination of s 10, which makes units in a unit trust dutiable property and s 8(1) which imposes duty on dutiable transactions referred to in s 7(1)(b) that are not effected by a transfer, has the consequence that except in the case of 'excluded transactions', duty is payable under Chapter 2 on 'transactions' referred to in s 7(1)(b) 'as if' they involved a transfer. It is in this context that the exemption in s 40, which refers to a 'transfer' but not to transactions and which contains no cross-reference to s 8(1), must be construed.

69 Where s 40(1) refers to a 'transfer of dutiable property' and sub-sections (a) - (c) refer to 'transfer', for consistency with s 8(1), notwithstanding the distinction in s 7(1)(a) and (b), 'transfer' must include transfer by the redemption of a unit in a unit trust scheme, just as it must include all 'transactions' captured by s 8(1). If that were not the case there would be a significant misalignment between what is dutiable under s 8(1) and the scope of the exemption in s 40. The scope of s 40 both as a beneficial provision for Chapter 2 purposes, and as imported into Chapter 3 by s 89D(a) would be severely curtailed by a construction that limited it to transfers of dutiable property. Such an outcome would be inconsistent with the beneficial nature of both sections.

70 On behalf of the Commissioner it was submitted that s 8 and s 89D(a) do not make a good analogy. It was said that s 8 has far more detailed deeming provisions, that s 89D(a) is quite different, and that s 8 is dealing with different transactions under s 7(1)(b) and is a 'catch all' provision. I do not agree. Section 8(1) may be described as a 'catch-all' provision regarding transactions, as defined in s 7(1)(b), subject only to excluded transactions, as defined in s 7(4). Section 7(1)(b)(vi) includes very general language ('any other transaction') in the same way that the language of s 89D(a) ('the means by which') is very general. The intent of both sections is to ensure that a broad range of transactions, s 7(1)(b), or acquisitions (s 89D(a)) are captured irrespective of the manner of their implementation.

71 A construction of s 40 so as to restrict references to the word 'transfer' to transfers as defined would be to ignore the broader context in which the reference to 'transfer' is found in s 89D(a). Such a construction would give materially less scope of operation to the exemption than to the sections that impose duty. Such an outcome is not to be preferred unless demanded by the text, which it is not.

72 For the reasons discussed, and noting that during the hearing the Commissioner accepted it to be so,[57] an acquisition of an interest made as a result of a redemption of units falls within s 40 and is imported into Chapter 3 by s 89D(a).

Q4: Has there been a transfer of property from one complying fund to another as required by s 40?

73 The Commissioner's defence to the Lonsdale Proceeding includes the following:

...

(f) In particular, s 40 of the Duties Act 2000 (Vic), operating together with s 89D(a), did not apply to the Acquisitions in circumstances where:

(i) each of [JT Fund and FFUT] did not acquire the interest in Lonsdale Unit Trust by a transfer of property from a complying superannuation fund to another complying superannuation fund, but rather the interest was acquired as a result of the redemption of units ...

74 At trial, the Commissioner submitted there was not a notional transfer of land between complying funds as required by s 40, operating together with s 89D(a). Two reasons were identified. The first, that the increased interest in the JT Fund arose because the trustee of the DLF Fund redeemed its units, not because it transferred them to the JT Fund.[58] The second reason, that the retention of the units in the landholder by the JT Fund was a separate and anterior transaction to the rollover of benefits which took place by a transfer of cash.[59] The Commissioner argued the two steps were separate, should be treated as such, and that as a result the redemption of units did not constitute a transfer from one unit holder to another.

75 The first reason relied upon proceeds from an assumption that it is only by a transfer of units from one complying fund to another that the s 40 exemption is engaged. As 'transfer' in s 89D(a) includes notional transfer, including by redemption, this argument must be rejected. Where there is a redemption, or for that matter a cancellation or surrender of units by the first fund, as is sufficient for a notional transfer to be brought to duty by s 8(1), there will never in fact be a 'transfer' to the remaining unit holder. In circumstances where there is a redemption, cancellation or surrender, the notional transferor will not be a participant in the transaction. The notional transferor will always be the person whose interest in the land is reduced or extinguished and the notional transferee will be the person whose interest in the underlying land is increased, but there will be no 'transfer' that takes place between them.[60]

76 Concerning the second reason, the Commissioner submitted that what occurred was that units in the Lonsdale Unit Trust were redeemed and the value associated with them was deducted from the Lonsdale Unit Trust. That resulted in a proportionate increase in the units held by the remaining unitholders, including the JT Trust, whose units held increased by 10.25%. However, the JT Trust did not 'acquire' new units, nor did it 'acquire' any part of the value of those units. The JT Trust continued to hold the same number of units 'representing the same underlying value', only the proportion of the interest the JT Trust held in the Lonsdale Unit Trust, and its landholdings, increased.[61] It was submitted that even though there was a redemption, there was not a transfer of units by the remaining unitholders who did not acquire any part of the value of those units and there was not a transfer of those units to the JT Trust.[62]

77 As the diagram, Annexure B illustrates, the JT Trust did not obtain additional units. The overall number of units issued in the Lonsdale Unit Trust decreased to 146 units while the number of issued units held by the JT Trust remained the same. This resulted in a consequential increase in JT's percentage of units held.[63] It obtained a 10.25% greater share of the units in the Lonsdale Unit Trust, with its unit holding percentage increasing from 35.64% to 45.89%. As the underlying land value remained the same, the JT Trust obtained a greater share of the value of the assets in the Lonsdale Unit Trust, including its landholding. That greater share in value and units was derived from the units that were redeemed.

78 The Commissioner submitted that neither 'the means by which the person acquired the interest', nor the 'subject of the acquisition' could be treated in form or in substance as a transfer of the land of the Lonsdale Unit Trust from the DLF Fund to the JT Fund. The redemption of units was contended to be different in form and in substance from a transfer of units between complying funds. Further, that even if there was a hypothetical transfer of land for the purposes of s 89D(a) from the trustee of the DLF Fund to the trustee of the JT Fund, that acquisition and transfer resulted from the prior redemption of the units in the Lonsdale Unit Trust, which was anterior to the roll-over in cash of the entitlements of the DLF Fund in the Lonsdale Unit Trust. The redemption of units that constituted the relevant acquisition by the JT Trust and FFUT was said to be separate to the transfer of property from the DLF Fund to the JT Fund which was effected by the payments to the JT Fund of an amount representing its member balance in the DLF Fund. It was submitted that the relevant transfer from one superannuation fund to another was the payment of $31,432,374 in cash from the trustee of the DLF Fund to the trustee of the JT Fund and that it was by this payment that Colin ceased to be a member of the DLF Fund and became a member of the JT Fund.

79 When referring to a difference in form, the submissions on behalf of the Commissioner fail to grapple with the fact that the landholder provisions are intentionally concerned with substance and not with form. What is brought to duty in Chapter 3 is the unencumbered value of the Fund's increased interest in the underlying land, 'regardless of how' it has been acquired.[64]

80 The plaintiffs contended that clause 11 of the Deed makes plain there is only one transaction and that the parties were bound by the Deed to achieve the purpose specified in s 40(1)(c) of the Act.[65] That is, a 'transfer ... in connection with a person's ceasing to be a member ... of the fund from which the dutiable property is transferred and the person ... becoming a member of ... the fund to which the dutiable property is transferred'. They submitted that the two steps, the redemption of units and the transfer of the cash, are both integral to achieving the end result and that the Act does not say that the transaction must be limited in the matter for which the Commissioner contends.

81 Those submissions must be accepted. The argument for which the Commissioner contends is both artificial in the case of redemption of units and contrary to s 89D(a), which provides an exemption irrespective of the 'means by which' the person acquired the interest.

82 The approach on behalf of the Commissioner impermissibly seeks to dissect what took place pursuant to the Deed into separate parts. It is an argument of form over substance which ignores s 89D(a).[66] It is an argument that must be rejected when it is appreciated that 'transfer' includes notional transfers, which the Commissioner accepts may qualify for the purpose of s 40, and that notional transfers include by the redemption of units.

83 Where there is a redemption, or for that matter a cancellation or surrender of units by the first fund, there will never be a transfer to the remaining unit holders. Additional steps will be required to bring about a transfer between complying funds, in this case, cash payment to another fund. While there will be no actual transfer between complying funds in the case of redemption of units, the notional transferor will always be the person whose interest in the land is reduced or extinguished and the notional transferee will be the person whose interest in the underlying land is increased.

Q5: Has there been a transfer of units 'in connection with' the individual member ceasing to be a member of a complying fund?

84 In addition to requiring that there be a transfer of otherwise dutiable property from one complying fund to another, s 40(1)(c) requires that the (notional) transfer occur 'in connection with' the person:

(a) ceasing to be a member of the transfer or fund; and

(b) becoming a member or otherwise becoming entitled to benefits in the transferee fund.

85 The Commissioner submitted that the requirement that the transfer be 'in connection with' the person ceasing to be a member of the first fund and becoming a member or otherwise being entitled to benefits in respect of the second fund is not satisfied.

86 In written and oral argument the Commissioner relied on four matters, taken together, to demonstrate that the required connection was not present. First, a lack of correspondence between the amount of money realised from the redemption of units in the first fund and the amount of money rolled over as cash to the second fund. Second, that the 'connection' was dependent upon the rollover of funds and not upon the redemption of the units. Third, the timing of the events that occurred with the redemption of units and the rollover of funds not taking place simultaneously. Fourth, that the redemption of units gave rise to a relevant acquisition by the FFUT, that acquisition not being exempt.

87 In response the plaintiffs relied upon clause 11 of the Deed as setting out a contractually binding regime that bound the parties to achieve a purpose falling within s 40(1)(c) pursuant to which the steps in question were taken.

88 I accept the plaintiff's submission that the meaning of the word 'connection' is both wide and imprecise, that its exact ambit will depend on the statutory context, and that it signifies a relationship of some sort.

89 In Collector of Customs v Cliffs Robe River Iron Associates,[67] a Full Federal Court made the following observations as to the meaning of the word 'connection':[68]

The meaning of the word "connection" is both wide and imprecise. One of its common meanings is "relation between things one of which is bound up with, or involved, in another". Shorter Oxford English Dictionary. We were referred to a number of cases where, in other contexts, the meaning of the word "connection" has been discussed, but we do not think that any assistance is to be derived from them. Given that the generation of electricity in the present case was carried out at a place adjacent to the area in which the mining occurred, the question of law which arises is whether, on the facts of this case, it was open to the Tribunal to hold that the generation of electricity for the township was an operation connected with the mining for minerals. In our opinion it was.

90 In Western Australia v Ward[69] Callinan J made observations to similar effect:

The phrase 'in connection with' also has a wide import (987), although its exact ambit will depend on the statutory context. It signifies a relationship of some sort, as one judge (Macfarlane J) has noted (988):

"One of the very generally accepted meanings of 'connection' is 'relation between things one of which is bound up with or involved in another'; or again 'having to do with'."

Here, "in connection with" signifies that there must be a relationship between the use of the land and "works" (in its extended statutory meaning). There is nothing in the statutory context to suggest that the phrase should have any more narrow a meaning. Accordingly, so long as it can be fairly said that the use of the land has "to do with" the works, the relevant land will fall within the definition.[70]

91 As discussed in these cases_,_ one of the common meanings of the word 'connection' is 'relation between things one of which is bound up with or involved, in another'. In Travelex Ltd v Federal Commissioner of Taxation,[71] concerning the phrase 'in relation to', French CJ and Hayne J said:

it may readily be accepted that "in relation to" is a phrase that can be used in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ. It may also be accepted that "the subject matter of the enquiry, the legislative history and the facts of the case" are all matters that will bear upon the judgement of what relationship must be shown in order to conclude that there is a supply "in relation to" rights.[72]

92 I agree with the Commissioner, that it will be a question of fact and degree whether the necessary connection exists so as to satisfy the statutory description.[73] Here the requisite connection must be between the transfer; in this case a notional transfer involving a redemption of units; and the person ceasing to be a member of one complying fund and that same person becoming a member of or otherwise becoming entitled to benefits in respect of the fund to which the dutiable property is transferred.

93 Dealing with the first argument, the Commissioner accepted that it was not necessary that there be a precise matching between the assets redeemed and the value of that which is then taken to the other complying fund.[74] However, if there is not an exact monetary matching, this was said to be one of the factors that illustrates the break in connection.

94 In both of the cases approximately 80% of the proceeds of redemption of units were used for the purposes of rollover. The degree of shortfall was submitted to be illustrative of a lack of the requisite connection.[75]

95 In response the plaintiffs submitted that just because more funds were needed to achieve the rollover than those redeemed does not mean that the redemption of those funds was not in connection with the brother ceasing to be a member of one fund and becoming or increasing his membership in the transferee fund.[76]

96 Second, the Commissioner submitted that the rollover of cash was the most important detail. In the case of Paul's entitlements, approximately $20 million was rolled over of which only $12 million was received from the sale of units. It was said that the rollovers and the transfer of cash is what led the brothers to cease to be members of the relevant funds and not the redemption of the units.

97 The Commissioner submitted that the fact the redemptions took place separately from the rollover of cash meant that the necessary connection could not be made. It was argued that the realisation of assets is a separate anterior transaction and not in connection with the transfer of membership because it could have been done without the transfer and vice versa.[77]

98 Third, concerning timing, the Commissioner submitted that in accordance with the Deed, there was first the redemption of the units, second, the transfer by Colin of entitlements in the DLF Fund to the JT Fund which he nominated under clause 11 of the Deed. It was submitted that there were three separate steps, each separated by one week, once again meaning that there was not sufficient connection for the purposes of s 40(1)(c).

99 Finally it was submitted on behalf of the Commissioner that by reason of the transaction involving the FFUT that the requisite connection was not established.

100 I will deal with the matters relied upon by the Commissioner in turn.

101 As to the first matter, it is accepted by both parties that precise matching between funds redeemed and funds rolled over is not required. I do not regard the fact that 80% of funds rolled were from the redemption of units and 20% of the funds were derived from other sources either as demonstrating of itself, or as providing evidence of substance in support of a finding that the redemptions were not 'in connection with' the rollover and transfer. Of itself, 80% is obviously a high percentage correlation.

102 As recorded in the notes to Annexure B, in the case of the South Melbourne Unit Trust there were three sources of funds rolled over; $12,118,301 from the redemption of units, $3,593,764 from the beneficial interest in the Laurel Hotel and $4,787,331, the balance of Paul's entitlement under the JT Fund. The Commissioner accepted that the Laurel Hotel transfer was exempt. The $4,787,331 in cash as required to be transferred, in addition to funds derived from the redemption of units in order to ensure the required superannuation balances of the two brothers after 28 February 2018. There is nothing about the transfer of funds for that purpose and in the context of the Deed that means that the notional transfer of units was not 'in connection with' Paul ceasing to be a member of both the JT Fund and the DLF Executive Fund and becoming the sole member of the DLF Fund. That was the very purpose of the rollover from the three sources identified. As set out in clause 11, the objective was to balance out Colin and Paul's interests in the three funds so that the fund or funds of which that brother was the sole member held the same net assets as was previously held by that brother. Insofar as the rollover required more funds to achieve this purpose, that was achieved using other resources at the brothers' disposal. The fact other funds or the interest in the Laurel Hotel was transferred does not detract from the redemption of units having the requisite connection. The contrary is the case. The reason for the other two payments, as in the case of the redemption of units, is to ensure one brother ceases to be a member of the relevant fund or funds and there is an increase in his benefit entitlement in the transferee fund or funds.

103 As to the second matter, the redemption of units was followed by a rollover of cash. The fact of the rollover does not mean that the notional transfer effected by redemption of units was not 'in connection with' the member ceasing to be a member of one fund and becoming entitled to increased benefits in a second fund. I accept the plaintiffs' submission that the two steps, the redemption of units and the rollover of cash are not only related to one another, they are related to the purpose of achieving the stated objective of clause 11:

The parties agree and acknowledge that it is their objective to rearrange their Superannuation Funds on and from the Rollover Date in a way that results in:

(a) Paul having Control and being the sole member of DLF Superannuation Fund;

(b) DLF Superannuation Fund containing net assets equal to Paul's member entitlements in the Superannuation Funds;

(c) Colin having Control and being the sole member of DLF Executive Superannuation Fund and Jeans Team Superannuation Fund;

(d) DLF Executive Superannuation Fund and Jeans Team Superannuation Fund containing net assets equal to Colin's member benefit entitlement in the Superannuation Funds;

(e) All steps necessary or desirable to effect the outcomes described above being approved by Hall & Wilcox.

104 As submitted on behalf of the plaintiffs, without a breach of contract one step could not happen without the other. The Deed expressly provided for the intended result to be achieved by the redemption of units and by the transfer of cash. As earlier discussed,[78] transfer of units by that process is clearly contemplated by the Act. A redemption of units and a transfer of cash was necessary so as to achieve the cessation of membership by the departing brother in the fund or funds which he was exiting and so as to achieve that brother being entitled to a corresponding interest in the fund or funds of which he was to be the only member after separation of the brothers respective interests.

105 As to the third matter, timing, there is no substance to the proposition that events separated by short time intervals, but carried out in sequence as contemplated by and in performance of obligations under the Deed support a finding the requisite degree of connection is not made out.

106 As to the fourth matter, the non-exempt increase in the unit holding in the FFUT requires separate consideration and attracts duty for the reasons previously discussed. That transaction is relevant to aggregation so far as the JT Trust is concerned but a consideration of it is not relevant to whether the 'relevant acquisition' by the JT Fund satisfies the 'connection' requirement in s 40(1)(c).

107 For those reasons I accept that in the Lonsdale case the connection required by s 40(1)(c) exists between the redemption of units, the notional transfer, and Colin ceasing to be a member of the DLF fund and becoming entitled to increased benefits in respect of the JT Fund, being the fund to which the dutiable property was transferred. The requisite connection also exists so far as Paul is concerned in relation to the transfer of units in the South Melbourne Unit Trust. The redemption of Paul's units in the JT Fund and in the DLF Executive Fund occurred in connection with him ceasing to be a member of those funds and becoming entitled to increased benefits in the DLF Fund.

108 I am satisfied that the acquisition by the JT Fund of its interest in the Lonsdale Unit Trust is an exempt acquisition under ss 89D(a) and 40(1)(c).

109 In the case of the Lonsdale Unit Trust, for the reasons previously given I consider that the acquisition of a 12.09% interest by the FFUT is properly aggregated with the acquisition of a 10.25% interest in the JT Fund and that the 12.09% interest acquired by the FFUT is dutiable. Duty is not payable on the 22.34% aggregated interest.

110 I will make the orders in the Lonsdale Proceeding for the refund of duty paid consistent with these reasons. I will also make orders in the South Melbourne Proceeding for the refund of duty paid consistent with these reasons.

111 The parties should submit minutes of a proposed order dealing with refunds, interest and costs within 14 days. If the parties are unable to agree upon the form of order, those minutes of order should be accompanied by short submissions directed to the matters remaining issue.

RAZZY AUSTRALIA PTY LTD (ACN 005 903 695) AS TRUSTEE OF THE SOUTH MELBOURNE UNIT TRUST (ABN 59 901 256 904)

CPL SUPER PTY LTD (ACN 109 407 516) AS TRUSTEE FOR THE DLF SUPERANNUATION FUND (ABN 23 085 052 353)

LONSDALE INVESTMENT CD PTY LTD (ACN 630 357 532) AS TRUSTEE FOR

JT SUPER PTY LTD (ACN 109 407 525) AS TRUSTEE FOR JEANS TEAM

DLF NOMINEES CD PTY LTD (ACN 630 371 774) AS TRUSTEE FOR THE

FIXTURES AND FITTINGS UNIT TRUST (ABN 25 925 252 537)

[1] The parties filed pleadings in both proceedings. Primary and reply submissions were filed on behalf the plaintiffs in the two proceedings. Written submissions were filed on behalf of the Commissioner in both proceedings.

[2] In proceeding 4306, the plaintiffs rely upon the affidavits of: Colin De Lutis made 11 September 2020 and Paul De Lutis made 12 September 2020. In proceeding 4304 the plaintiffs rely upon the affidavit of: Colin De Lutis made 11 September 2020 and the affidavit Paul De Lutis made 12 September 2020. No witness was required for cross-examination and the hearing proceeded on the basis of the unchallenged affidavit evidence.

[3] Annexure A is a version of the diagram filed on behalf of Lonsdale with additional information concerning cash flows and percentage increases.

[4] Annexure B is a version of the diagram filed on behalf of Razzy with additional information concerning cash flows and percentage increases.

[5] Refer to the Statement of Claim filed by the plaintiffs in each of the Lonsdale Proceeding and the South Melbourne Proceeding, [A]-[B]. The number of plaintiffs in the two proceedings may be explained by s 85 of the Act which makes a number of persons liable to pay duty.

[6] Agreed to be the Duties Act 2000 (Vic) No 112 incorporating amendments as at 20 December 2017.

[7] 'Transfer' is defined in an inclusive manner in s 3(1) of the Act to include an assignment, a conveyance, an exchange and a buy-back of shares in accordance with Division 2 of Part 2J.1 of the Corporations Act.

[8] Duties Act 2000 (Vic), s 70(1).

[9] Ibid, s 10(1)(c)(i). The definition of 'excluded transaction' set out in s 7(4) for the purposes of Chapter 2 includes the cancellation, redemption or surrender of a unit in a unit trust scheme, consistent with the proposition that, if not excluded, such transactions would be dutiable.

[10] Ibid, s 79(2)(a).

[11] Ibid, s 78(1)(a)(i), (ii) and (c).

[12] Transcript, Razzy Australia Pty Ltd as Trustee of the South Melbourne Unit Trust v Commissioner of State Revenue (Supreme Court of Victoria, Delany J, 29 September 2020) ('Transcript'), 23 (de Wijn QC).

[13] References in these reasons to submissions made by the parties and to the pleadings are to submissions and pleadings relating to that proceeding unless otherwise stated.

[14] The issue of whether the threshold is reached does not arise in the South Melbourne Proceeding where a 22.12% interest was acquired by the DLF Super Fund.

[15] [2019] HCA 35; (2019) ALJR 1106.

[16] Ibid, (2019) ALJR 1106, 1117; cited in State of Victoria v Thompson [2019] VSCA 237; (2019) 58 VR 583, 589 [27]-[28].

[17] [2012] HCA 55; (2012) 250 CLR 503.

[19] Wigmans v AMP Ltd [2021] HCA 7, [77] per Gageler, Gordon and Edelman JJ; Commissioner of State Revenue (Vic) v Landrow Pty Ltd [2010] VSCA 197; (2010) 79 ATR 800; Commissioner of State Revenue v Challenger Listed Investments Limited [2011] VSCA 272; (2011) 84 ATR 576, 45-47 (per Sifris JA, with whom Buchanan JA and Tate JA agreed) and see s 4 of the Act.

[20] Duties Act 2000 (Vic) s 7(1)(a).

[21] Ibid, s 7(1)(b).

[22] The definition of 'excluded transaction' in s 7(4) for the purposes of Chapter 2 includes the cancellation, redemption or surrender of a unit in a trust scheme, consistent with the proposition that, if not excluded, such transactions would be dutiable.

[23] Note that although s 10(1)(c) of the Act provides that units in a unit trust scheme constitute 'dutiable property', s 7(3A) provides that a transfer of 'marketable securities', the definition of which in s 3(1) includes units in a unit trust scheme, is not a dutiable transaction.

[25] Duties Act 2000 (Vic), s 70(1).

[26] Section 71(1)(a) of the Act defines a 'landholder'. The definition includes a private unit trust scheme with total unencumbered landholdings in Victoria having a value of $1,000,000 or more. It is agreed the total unencumbered value of the land holdings of each of the Lonsdale and South Melbourne Unit Trusts exceed this threshold.

[27] [2010] VSC 608.

[28] Ibid, [24]-[25]. While there have been a number of subsequent amendments to the Act and s 85(1)(a) to which her Honour referred was not within the legislation as at 26 February 2018, her Honour's observations as to the policy underpinning Chapter 3 remain apposite.

[29] Victoria, Parliamentary Debates, Legislative Council, 13 May 2004, 1316.

[30] Duties Act 2000 (Vic), s 75 (emphasis added). This provision extends the imposition of duty to circumstances where the landholder is entitled to land through a linked entity provided that the land of linked entities is not counted for the purposes of the Part unless at least 20% of the land would be received by the landholder ultimately from linked entities on a winding up.

[31] Ibid, s 80(1).

[32] Ibid, s 80(2)(b).

[33] Plaintiff, Affidavit of Domenico Paul De Lutiis dated 12 September 2020 in the Lonsdale Proceeding ('Lonsdale Affidavit of Paul De Lutiis**'**), [7].

[34] Lonsdale Affidavit of Paul De Lutiis, [5].

[35] Plaintiff, Affidavit of Colin De Lutis dated 11 September 2020 in the Lonsdale Proceeding, [8].

[41] Defendant, Submissions in the Lonsdale Proceeding, dated 13 July 2020 ('Defendant's Lonsdale Submissions'), [30].

[42] Interpretation of Legislation Act 1984 (Vic), s 37(c), which provides that words in the singular include the plural, may be noted.

[43] Defendant's Lonsdale Submissions, [31]; Transcript, 84-85 (Horan QC).

[44] Upon the application of s 86(3) which provides that duty is payable on all of the interests acquired, separately calculated.

[45] Ibid, 74 (Horan QC). The submissions on behalf of the Commissioner did not elaborate upon the reasons underpinning the acceptance of that proposition. The Commissioner's written submissions proceed on the basis that 'transfer' as referred to in s 89D(a) includes a notional transfer. See Defendant's Submissions in the Lonsdale Proceeding, [28].

[46] Plaintiff, Reply Submissions in the Lonsdale Proceeding, dated 27 July 2020 ('Plaintiff's Lonsdale Reply Submissions'), [6].

[47] Transcript, 35-36 with reference to Eichmann v FCT [2020] FCAFC 155, [38]; Collector of Customs v Cliffs Robe River Iron Associates [1985] FCA 96; (1985) 7 FCR 271, 275.

[48] Plaintiff, Submissions in the Lonsdale Proceeding, dated 1 May 2020 ('Plaintiff's Lonsdale Submissions'), [83]-[101].

[49] Plaintiff's Lonsdale Reply Submissions, [13].

[50] Transcript, 75 (Horan QC). While the Commissioner accepted this to be the case, the Court was not informed how, as a matter of construction of s 89D(a), the Commissioner contended that such an outcome was within the section.

[52] Plaintiff's Lonsdale Submissions, [88].

[53] Duties Act 2000 (Vic), s 84(1)(a) (emphasis added to show the amendments introduced by s 9(3) of the Duties (Amendment) Act 2001 (Vic)).

[54] Explanatory Memorandum, Duties (Amendment) Bill 2001 (Vic), 3 (emphasis added).

[55] The sections were re-numbered in 2012 when the land-rich provisions were rewritten in the Duties Amendment Landholder Act 2012 (Vic).

[56] See R v Lane ( Sally) [2018] UKSC 36; [2018] 1 W.L.R. 3647, [19].

[58] Defendant's Submissions in the Lonsdale Proceeding, [39].

[60] Plaintiffs' Reply Submissions in the Lonsdale Proceeding, [8].

[61] Defendant's Submissions in the Lonsdale Proceeding, [27].

[63] Refer Lonsdale Statement of Claim, [36]. The Lonsdale Defence does not admit this fact.

[64] Duties Act 2000 (Vic), s 80.

[66] Plaintiffs' Reply Submissions in the Lonsdale Proceeding, [2].

[67] [1985] FCA 111; (1985) 7 FCR 271.

[69] [2002] HCA 28; (2002) 213 CLR 1.

[71] [2010] HCA 33; (2010) 241 CLR 510.

[78] Paragraphs, [75], [82]-[83] above.