(1) Ruling that possession was delivered from the applicant to a purchaser in possession for purposes of Ss. 48 and 49 of the Act at the relevant dates.

(2) Orders resulting from this ruling to be finalised.

1 These matters come before me by way of referrals pursuant to s.25(1)(a) of the Land Tax Act 1958 ("the Act"). The referrals involve objections to amended assessments by the Commissioner of State Revenue ("the Commissioner") for the financial years 2002 and 2003, the objections being made by Sandhurst Golf Estates Pty Ltd ("SGE"). The objections for each financial year involve the same issues. The matter was argued as if it were one case and I shall treat it as such. Mr M Osborne of counsel appeared on behalf of SGE and Mr C Caleo of counsel appeared on behalf of the Commissioner. The matter proceeded by way of a statement of facts with the only oral evidence being that of Mr Mantello, a Director of SGE, who adopted an affidavit sworn by him on 1st October 2004. Various documents were tendered. Detailed oral and written submissions, including reference to many authorities, were made by each counsel, and these were particularly helpful.

2 There was basically no argument concerning the facts in this matter. Mr Mantello adopted on oath his affidavit of 1st October 2004. That in turn adopted as true and correct paragraphs 1 to 25 of SGE's statement of facts, issues and contentions, those paragraphs being the ones that deal with the facts. His evidence also involved one originally contentious issue, to which I shall return. I note that, in addition to being a Director of SGE, he is also a Director of Sandhurst Holdings (Australia) Limited ("SHA") and has been since 2nd July 2001.

3 I shall not set out in full all the material contained in paragraphs 1 to 25 of the applicant's statement, but shall summarise the salient facts so as to assist an understanding of the matter and of the decision at which I have arrived.

4 The land in question involves the development of an integrated golfing and residential community in Carrum Downs. When completed, it will have various recreational facilities, including two golf courses, and a residential sub-division of approximately 1,850 allotments.

5 On 10th August 2001 SGE entered into a contract with SHA ("the contract"). The land the subject of the contract is the land upon which it is proposed to build two golf courses and various recreational and associated facilities ("the golf course land"). The purchase price was $10.00 payable by a deposit of $1.00 with the balance of the purchase price of $9.00 payable 14 days after the last to occur of the date upon which SGE's solicitors gave notice to SHA or its solicitors of the registration of the plan by the Registrar of Titles, and the date of completion of the whole development.

6 The contract contains special conditions to the effect that it is conditional upon the plan being so registered within 10 years after the date of the contract and, if the plan is not so registered, SHA had the right to rescind the contract and, upon that happening, all monies paid under the contract, less the amount of any occupation fees remaining unpaid by SHA, would be refunded to it. Thereafter neither party could have any action against the other arising from or out of the rescission or the failure of SGE to procure registration of the plan.

7 Contemporaneously with the execution of the contract, SGE entered into a lease with SHA in respect of the golf course land ("the lease"). SGE, as landlord, would receive from SHA an annual rental of $1.00 per annum if so demanded, and the lease commenced on the day of sale referred to in the contract of sale, and continues until the date the land is transferred to SHA, or the contract of sale is otherwise terminated.

8 Again, contemporaneously with the execution of the contract of sale and the lease, SHA entered into a construction agreement in relation to buildings on the golf course land with Links Group (Constructions) Pty Ltd and Sandhurst Golf Estates (Constructions) Pty Ltd ("the construction agreement"). Again contemporaneously, SHA entered into an agreement for lease with Sandhurst Club Limited, whereby SHA would become the owner or lessee of the land and carry out construction works and, upon completion of the works, the parties agreed to enter into a lease of the land.

9 Thus, it can be seen that quite complicated arrangements were set in place. Upon execution of the documents, SHA assumed possession of the golf course land. In August 2001, the construction works in relation to the facilities on the golf course land commenced. These have not yet been completed, so that the lease between SHA and Sandhurst Club Limited is yet to commence. The question of whether SHA satisfied the full purchase price payable under the contract to SGE prior to the 1st December 2001 became a matter of evidence, basically given by Mr Mantello.

10 Whether the objects of SHA are such that it was established for the purposes of providing sporting, recreational or similar facilities, and whether this legitimately attracts exemption in relation to the land tax otherwise payable, were not questions for determination in this hearing. In other words, whether any exemption can be claimed pursuant to s.9(1)(g) of the Act is not an issue that requires determination.

11 By way of an amended 2002 Land Tax Assessment Notice, SGE was assessed as being liable for payment of land tax in a total sum of $169,500.00 in respect of lands owned as at 31st December 2001. The lands in question are the golf course land. By letter dated 12th November 2002, the solicitors for SGE lodged an objection to that assessment, the relevant part of which asserts that SGE was not required to pay land tax in respect of the assessed land because SHA was a buyer in possession and was liable to pay such land tax, having regard to the provisions of s.48 and s.49 of the Act. Of course, the distinction in liability between the two - SGE and SHA - is far from academic, given that SHA is asserting that it is exempt pursuant to s.9(1)(g). SGE, at least for the purposes of this application, claims no such exemption. Accordingly, and this is in no way a decision upon the merits of the exemption, if SGE is successful in relation to the first limb of its objection relating to s.48 and s.49 of the Act, it will have no liability in respect of land tax. Such liability will rest upon SHA, which, potentially, will in turn be exempt. If SGE is unsuccessful in its objection, a primary responsibility to pay the tax will fall upon it.

12 I have diverted from the background factual material so as to put the issue to be determined, and its significance, in context. Returning to the factual background, by Notice of Assessment dated 7th March 2003, SGE received an assessment of land tax on land owned as at 31st December 2002 in the amount of $828,970.00. The assessed land is again the golf course land. The solicitors for SGE again objected, and again on the same bases.

13 By Notice of Decision dated 12th May 2003, the Commissioner disallowed the objections in respect of each year. The Reasons for Decision are quite lengthy, and I shall not set them out in full. In essence, the Commissioner asserted that s.48 is only applicable upon a purchaser obtaining possession of the land and that, in accordance with s.49, SGE was deemed to remain the owner because, at the relevant dates, possession of the land had not been delivered to SHA as purchaser. Reliance was placed upon the existence of the lease which remained on foot at the relevant dates. SHA was thus a lessee and not a purchaser in possession, and this, it was asserted, was further confirmed by the recitals contained in the Agreement for Lease between SHA and Sandhurst Club Limited, the status of SHA there being described as that of a lessee.

14 Ultimately, and as stated at the outset of this judgment, by letter dated 9th July 2003, the solicitors for SGE requested the referral of the matter to this Tribunal pursuant to s.25(1)(a) of the Act. That letter also indicated that reliance was placed upon the objections referred to above.

15 Accordingly, given that I am not asked to deal with the objection insofar as it relates to s.9(1)(g) of the Act, the issue to be determined is whether SHA is a buyer in possession for the purposes of s.48 of the Act. Whilst the issue may, on the face of it, appear simple, that is far from the case, as evidenced by the detailed submissions made on behalf of the respective parties, and to which I shall now turn. Again, I shall not attempt to set out the case for each party in detail, but shall summarise the salient points.

16 Before so doing, I shall make one finding of fact. The question arose as to whether in fact SHA had paid to SGE the purchase price for the land of $10.00 which, pursuant to the contract, it was obliged to pay prior to 31st December 2001. On the basis of the evidence put before me, including that of Mr Mantello, I am satisfied that the $10.00 purchase price was in fact paid by SHA to SGE prior to 31st December 2001. In any event, the making of such payment was ultimately conceded by Mr Caleo on behalf of the Commissioner.

17 The case advanced by Mr Osborne on behalf of SGE could be summarised as follows, and I am here combining the written and oral submissions. The key question is whether, as at the relevant dates, possession has been delivered to SHA within the meaning of s.49(1) of the Act. This in turn involves consideration of what is meant by possession. Possession is that degree of control of the land that one would expect to be exercised by the owner of that land. In the present case, there is physical control or de facto possession. It is a matter of fact, and each case turns on its own facts.

18 The Australian case in which the facts are closest to those in the present case is Commissioner of Land Tax v Manors of Mosman Pty Ltd (1994) 34 NSWLR 94. In that case, which is a decision of the New South Wales Court of Appeal, retirement units were sold off the plan, with benefits of possession to be given at the date of completion or at a time and in a manner otherwise stipulated. Pursuant to such a stipulation, the vendor gave notice, licences were entered into, and the purchasers went into occupation. By the terms of the licence agreement the licensor granted to the licensee the licence and privilege to occupy the unit as a residence, for the licensee only, at a weekly fee of $1.00. The licence fee in Mosman is the equivalent of the rent paid by SHA in the present case. The New South Wales Court of Appeal found that once the notice was given, the licence agreement entered into, and the purchaser had gone into occupation, the purchaser had obtained possession within the meaning of the Act as a purchaser. It did not matter that the purchaser was in possession both as purchaser and as licensee (or lessee). The purchaser remained the purchaser in possession within the meaning of the Act. The decision in Mosman should be preferred to the decision in E Long & Co Pty Ltd v Commissioner of Land Tax [1968] 2 NSWR 143, which is a decision of a single Judge, as opposed to the later decision which is one of the Court of Appeal. Furthermore, the facts in Long are significantly different. Mosman is basically indistinguishable from the present case. The facts are essentially the same, other than there is a lease in the present case rather than a licence agreement. Thus, SHA is in possession both as a purchaser and as a lessee, and this is sufficient for it to be a buyer in possession within the meaning of s.48 and s.49 of the Act.

19 Reference is also made to a number of other authorities. These include Rhodes v Commissioner of Taxation [1910] NZGazLawRp 54; (1910) 29 NZLR 725, Yule v Commissioner of Taxes [1918] NZGazLawRp 162; [1918] NZLR 890, and Cam & Sons Pty Limited v Commissioner of Land Tax [1965] HCA 13; (1965) 112 CLR 139. Reference is also made to the case of Highlands Limited v Deputy Federal Commissioner of Taxes for South Australia [1931] HCA 38; (1931) 47 CLR 191.

20 In essence these cases are referred to in relation to the question of physical or de facto possession supporting the proposition of an entity being the purchaser in possession or owner of the land, even if some other arrangements are also in place.

21 In the present case, SHA is plainly exercising dominion over the land. It is enjoying the control that one would expect would be enjoyed by an owner. Pursuant to clause 2.2 of the contract, only SHA, as purchaser, has the capacity or right to bring the contract to an end. In accordance with clause 2 of the lease, it is SHA that can also bring the lease to an end. These matters of themselves represent great dominion over the subject land. Further, SHA occupies the land exclusively, has entered into a construction agreement, is building fixtures of a permanent nature on the land, and has entered into an agreement to lease the land to Sandhurst Club Limited.

22 For these reasons, and bearing in mind the authorities and in particular the decision in Mosman, SHA is the purchaser in possession for the purposes of Ss.48 and 49 of the Act.

23 The case as presented by Mr Caleo on behalf of the Commissioner could be summarised as follows. Again I am combining written and oral submissions.

24 The fundamental principle which has existed at least since the decision of the High Court of Australia in Highlands is that, for the purposes of the relevant provisions of the Act, possession must be possession in the character of purchaser pursuant to a contract of sale. In Highlands Starke J expressed the view that the possession required was de facto possession referrable to the agreement for the sale of land. Dixon J interpreted it as possession as purchaser obtained in intended execution of the agreement of sale. A similar approach was adopted in Cam & Sons.

25 In the present case, the fact that SHA entered into possession is the starting point of enquiries and not the conclusion. The question of fact to be determined is "What was the true intent of the documents executed by the parties?" It is to be remembered that, in the present case, there is no executed transfer; there has been no settlement; and the plan of subdivision has not been registered.

26 An understanding of why things have been structured in this way and as to the true nature of SHA being in possession is assisted by an examination of the provisions of the Sale of Land Act 1962. Pursuant to special condition 1 of the contract, the provisions of the Sale of Land Act apply. S.9AD(1) of that Act provides that a purchaser under a prescribed contract of sale (which the contract is) is not entitled to possession before the registration of the relevant plan of subdivision, which, in the present case, has not occurred. Section 9AD(4) provides that the section does not apply to possession by a purchaser in consideration of a payment of an occupation fee. The term "occupation fee" is not defined in the Act. There is reference to it in special condition 2.2 of the contract. The Commissioner's request for further and better particulars in relation to the term "occupation fee" as used in the contract provoked the response that the fees therein referred to were the rental payments made under the lease.

27 Therefore, SHA is only entitled to possession by reason of the payment of rental pursuant to the lease. Otherwise, because of s.9AD(1) of the Sale of Land Act (as incorporated in the contract) it would not be entitled to possession. Accordingly, the possession gained by SHA is as a lessee and not as a purchaser.

28 This is further underlined by examination of the status of SHA as at 10th August 2001 when it executed the contract and the lease. As at that date, the only relevant rights which could be exercised by SHA were derived from its status as a lessee. It had no possessory rights pursuant to the contract. It did not pay the purchase price until December 2001. Its rights, some of which it exercised promptly, were all pursuant to the lease. Its only right to possession was pursuant to the lease. Any acts of dominion which it performed - for example, the right to carry out works - were derived from the lease. There is no reference to possession in the contract. There still has been no settlement. Thus, the question to be asked is "What changed between 10th August 2001 and 31st December 2001 so as to convert SHA from a lessee into a purchaser in possession?" The answer is that nothing relevant had occurred. The payment of the purchase price does not assist on the question of possession or the source of the right to possession. The questions of possession and payment are totally separate.

29 The lease remains on foot today and the rights exercised by SHA both now, and at all relevant times, are rights exercised as a tenant. There is no basis for saying that they are rights exercised by the purchaser in possession, either absolutely or in addition to rights exercised pursuant to the lease.

30 In relation to the authorities referred to, greater assistance in relation to the present case is to be derived from Long than from Mosman, which is largely irrelevant because it deals with an issue not raised by the Commissioner in the present case. The characterisation of the licence agreements and the contract of sale by Maguire J in Long is applicable to the present case. Whilst these matters necessarily turn on their own facts, the observations of Maguire J to the effect that the licence agreements should be regarded as standing right outside the agreements for sale and as creating a separate relationship pending completion are relevant. In the present case SHA was not entitled to possession unless it paid occupation fees (rental) so a separate relationship was set up pending completion, and accordingly a lease containing all the necessary rights was entered into by the parties. The licence referred to in Long is the equivalent of the lease in the present case.

31 In Mosman the New South Wales Court of Appeal was dealing with an issue not raised by the Commissioner in this case. It is not the Commissioner's case that the existence of a right of "defeasibility" as contained in special condition 2.1 of the contract means that the possession is not or may cease to be possession as purchaser. The Commissioner places no reliance upon that special condition.

32 Further assistance is gained from examining the decision in Mosman at first instance. This helps understanding of the decision on appeal. It is apparent from the decision of Smart J at first instance that the licence agreement referred to was part of, and was attached to, the contract of sale. This is to be contrasted with the arrangement in the present case. Further, Smart J has set out both the special condition operating and the relevant provisions of the licence agreement. It can be seen that, in Mosman, the licence agreement is inextricably linked to the contract of sale and thus possession is specifically referrable to the contract of sale. Again, this is in contrast with the situation in the present case. When examined carefully, and when consideration is also given to the decision at first instance, it can be seen that Mosman in fact supports the position taken by the Commissioner. In summary, the decision of the Commissioner is correct and should be affirmed.

33 Mr Osborne's reply on behalf of SGE could be summarised as follows. In looking at s.49(1) of the Act, it should be noted that the wording used in the concluding three lines of the section are "delivered to the purchaser" and not "delivered to the purchaser pursuant to the agreement made for the sale of land".

34 In the present case it is conceded that possession arises from the lease and not from the contract of sale. There is no right of possession pursuant to the contract until settlement, which has not occurred. The situation is exactly the same as that in Mosman where the right to possession arose under the licence agreement.

35 The key question is whether possession has been provided to the purchaser pursuant to the provisions of Ss. 48 and 49 of the Act. The cases establish that this is a question of fact. They also establish that the enjoyment of the land, being referrable to a contract of sale, is the enjoyment that would be expected by an owner, and not simply by a lessee in an ordinary lessor/lessee situation. That applies in the present case. There will only be the dominion and control of an owner if there is some relevant relationship as purchaser and vendor, and something more than a lessor/lessee relationship. SHA has de facto possession and is exercising that dominion.

36 The phrase "referrable to a contract of sale" is embraced by SHA. It is beyond dispute that the lease between SGE and SHA was entered into as part of the transaction which involved the sale of the land. The de facto possession is referrable to the sale of the land. It is possession of the type referred to by Starke J in Highlands at page 199 or as referred to in Cam & Sons at page 146.

37 In relation to the decision in Mosman, when the judgment at first instance and the judgment on appeal are read it is clear that right to possession was derived from the licence agreement. Clause 44 of the special conditions contained in the contract did no more than permit the vendor to compel the purchaser to enter into a licence agreement, and it is quite clear from paragraphs 1 and 6 of the licence agreement that the purchaser (licensee) was then occupying the property pursuant to the licence. Nevertheless there was found to be possession referable to the agreement for sale or any intended execution thereof.

38 The only distinction between the situation in Mosman and that in the present case is a very minor one, namely that the contract of sale in Mosman contained a clause permitting the vendor to require the purchaser to enter into the licence agreement. That is a matter of form. In the present case, the substance of the transaction clearly involved both the contract and the lease which were contemporaneously executed. Here SHA, as purchaser, would occupy the golf course land between the date of the sale and the date of settlement and would occupy the land pursuant to the lease. It could not take possession pursuant to the contract. However, there is referability between the contract and the lease. There is an obvious link between the two documents which are part of the one transaction. The substance of the transaction should be looked at and the result is that SHA has been in possession which is referable to the contract and has been exercising dominion over the golf course land.

39 Bearing in mind the facts of this case, I prefer the submissions advanced on behalf of SGE. In my opinion the objections made by SGE are valid objections and SHA is in possession of the golf course land for the purposes of Ss.48 and 49 of the Act. I have come to this conclusion for the following reasons.

40 Firstly, I agree with Mr Osborne that, if the substance of what occurred on 10th August 2001 is examined, it is all one transaction. The contract and the lease were entered into on the one day. On the same day SHA entered into the construction agreement. On the same day SHA entered into the agreement for lease with Sandhurst Club Limited. On the same day it assumed possession of the golf course land. Thus, on 10th August 2001 the relevant documents were executed and SHA was immediately given dominion over the golf course land to the extent that it could immediately enter into both the construction agreement and an agreement for lease in which it was the landlord. I accept that the rights given were exercised in what could be described as a concrete form in that construction works began shortly thereafter. In any event, the construction agreement was executed on the same day as the other documents. When the substance of what occurred is examined, it is clear that the nature of the possession which was being delivered to SHA was such that it carried with it far greater rights than one would expect in an ordinary lessor/lessee agreement or arrangement.

41 It is not argued on behalf of SGE that the contract gives it the right to possession in a situation where settlement has not yet occurred. It is conceded that its possession arises from the lease and not pursuant to the contract. This seems to me to be correct. However, it seems to me that the lease and the contract are "inextricably linked". In clause 1 of the lease, "Contract of Sale" is defined as meaning the contract of sale for the sale of the land entered into between the landlord and the tenant contemporaneously with the lease. Clause 2 of the lease recites that the landlord leases the land to the tenant for the term commencing on the day of sale of the contract of sale until the date the land is transferred to the tenant or the contract of sale is otherwise terminated. Thus, the day of sale of the contract of sale fixes the commencing date of the term of the lease and termination of the contract of sale would mark the end of the lease. The two are complementary documents and are, as stated, all part of the one transaction. The possession enjoyed by SHA may be derived from the lease but the lease is so closely entwined with the contract that the possession is referable to the contract. This is in turn consistent with the dominion exercised by SHA over the land. It is dominion of the type one would expect to find exercised by an owner and is consistent with SHA being in de facto possession or a purchaser in possession for the purposes of the Act. This is underlined by the fact that, pursuant to the contract, it is SHA as purchaser, and not SGE as vendor, that possesses the sole right to rescind the contract, and this would have the effect of terminating the lease.

42 It also seems to me to be correct that the principles outlined in Mosman assist the position of SGE, and that the facts therein bear considerable resemblance to those in the present case. If one substituted the word "lease" for "licence" the following extracts from the judgment of Sheller JA, who delivered the leading judgment in the Court of Appeal decision, would seem quite apposite. At page 101 it is said that:-

"There can, I think, be no doubt that each purchaser of a unit, who went into occupation in accordance with the licence agreement, had that physical control and dominion described as de facto possession."

"Once the notice was given, the licence agreement entered into and the purchaser had gone into occupation, in my opinion, the purchaser had obtained possession within the meaning of s.26(1)(a) as purchaser".

43 In Mosman, the Court of Appeal substantially upheld the decision of Smart J at first instance in this regard, allowing the appeal on another ground relating to the time for due stamping. Accordingly, the observations of Smart J in relation to this issue can be of assistance, and I refer in particular to the following at page 170:-

"As I understand the effect of Highlands and Cam possession may be de facto physical possession or the right to assume possession, that is, the Vendor has done all that is necessary to enable the purchaser to assume actual occupation of the land or receipt of its rents and profits. In all cases the possession must be referable to the agreement for sale of the land or any intended execution thereof and obtained as purchaser. It does not matter if the possession is obtained both as purchaser and tenant or purchaser and licensee."

44 In my opinion SHA entered into possession both as a purchaser and as a tenant, and is accordingly in possession within the meaning of Ss.48 and 49. Possession of the land has been delivered to it. Even if that possession is derived directly from the lease, nevertheless it is referable to the contract.

45 In summary, I am quite satisfied that SHA has de facto possession of the land and that such possession is referable to the agreement for the sale of the land and that SHA has been enjoying that control of the land that one would expect to be enjoyed by an owner. In other words, it satisfies the type of requirements outlined in Highlands.

46 Thus, it seems to me that, for a number of reasons, the arguments advanced by Mr Osborne on behalf of SGE are to be preferred and SGE is entitled to succeed in this application. In summary, it seems to me that the contract and the lease are "inextricably linked", to again use the wording applied by Smart J to the licence and the contract of sale in Mosman. The substance of the transaction should be looked at, and that establishes that possession, whilst derived from the lease, is referable to the contract. SHA is in possession and is exercising that control over the land that one would expect to be enjoyed by an owner and is enjoying de facto possession referable to the contract. It seems to me that, when the facts of this case are examined, the proposition that it is in possession for the purposes of Ss. 48 and 49 of the Act is supported by the principles outlined in Highlands and in Cam & Sons, by the New Zealand decisions to which I was referred, and by the approach and principles set out in Mosman, both at first instance and on appeal.

47 I am of the view that SHA is the buyer in possession for the purposes of Ss.48 and 49 of the Act.

48 I shall hear the parties as to the orders sought as a result of this ruling.