See also Commissioner of State Revenue (Vic) v Pioneer Concrete (Vic) Pty Ltd (2002) 209 CLR 651 at 669, though see per Callinan J at 670 contra.
38 The classic Australian utterance on the words "in respect of" was made by Mann CJ in The Trustees Executors & Agency Co Ltd v Reilly [1941] VLR 110 at 111, where his Honour said:
"The words 'in respect of' are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject-matters to which the words refer."
39 The High Court in Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45 at 47 said:
"The words 'in respect of' have a very wide meaning. Indeed they have a chameleon-like quality in that they commonly reflect the context in which they appear. The nexus … is a broad one which is not susceptible of precise definition. That nexus will not, however, exist unless there be some discernible and rational link between the basis of legal liability and the particular … [propositus]."
40 The phrase "in respect of" occupies four pages of notes in the F-O volume of Australian Legal Words and Phrases (2007) at pp 254-258. Some stamp duty cases are cited including Commissioner of State Taxation (WA) v Kitchener Mining NL (1994) 29 ATR 530 (Western Australian Full Supreme Court) where at 543, Murray J said that money paid in respect of the instrument meant that money will be paid:
"as a result of or in consequence of the creation of the instrument".
41 The Chief Commissioner says that the words "in respect of" require no more than a relationship whether direct or indirect between two subject matters and justifies that submission with reference to the High Court's utterances in O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356.
42 I considered that phrase in Rogers v Wentworth (1986) 7 NSWLR 88 at 92 and Campbell J built on what I there said in Wondall Pty Ltd v Clarence Property Corporation Ltd (2003) 58 NSWLR 23 at 44-5. Campbell J concluded that whilst the phrase may have a wide meaning, it does not necessarily have it and the context may so indicate.
43 Paragraph 29 of the submissions of Messrs Slater and Mescher refers to the words of learned judges in the past that the extent of the nexus imported by the phrase "in respect of" depends very much on the context and is to be ascertained having regard to the subject scope and objects of the statute in which it appears and that "[f]or this purpose regard may be had to 'the mischief which the statute was designed to overcome and of the objects of the legislation' as revealed by (inter alia) the language of the legislation and the relevant extrinsic materials." Cf CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408.
44 I was then referred to the Second Reading Speech in proposing the 2003 amending Act where the Minister said:
"The Duties Act was amended last year to strengthen an anti-avoidance provision dealing with the use of long-term leases that avoid or minimise transfer duty. These anti-avoidance provisions have been effective and will be retained. However, the other States have addressed these practices by also charging the transfer rate of duty on lease premiums and it is appropriate that NSW imposes transfer duty on lease premiums."
45 The submissions then continue at [32]:
"The elaborate transaction comprised in the Deed of Call Offer, Deed of Put Offer, Deed of Covenant, Agreement for Lease and Memorandum of Lease is manifestly within the mischief to which the legislation is directed. The plaintiff outlaid more than $265 million and acquired exclusive possession of the land for 99 years plus a right (and obligation) to acquire the land for a nominal consideration, amounting for all practical purposes to ownership, but claims to be liable to duty of only $38. It would be difficult to postulate a clearer case of 'the use of long-term leases that avoid or minimise transfer duty' on which 'it is appropriate that NSW imposes transfer duty.' "
46 Messrs Slater and Mescher submit that the offer may be the nominal, but it is not the substantial, consideration for the payment; the substantial consideration for the payment is the lease, under which only nominal rent is payable and that on any view the payment is "in respect of" the agreement for lease, and the equitable lease, which came into being as a direct consequence of the transaction which included the payment. There is a "discernable and rational link", a "sufficient or material connection or relationship" between the payment of the premium consideration and the agreement for lease. The words quoted derive from the judgment in J & G Knowles & Associates Pty Ltd v Commissioner of Taxation (2000) 96 FCR 402 at 408 (Full Federal Court).
47 The plaintiff says that that argument ignores the fact that s 170 does not talk about monies paid in respect of the lease but a premium paid in respect of the lease.
48 However, reverting to the question what "in respect of" means, Mr Gleeson notes that in s 166(1)(b) of the Duties Act the expression is "premium payable for a lease of premises" and that in s 166 the word "premium" appears to be used in its usual sense of monies paid in order to secure a lease. He puts that this is an indication that the words "in respect of the lease" in s 170(2) should have the same meaning, especially when one can see that the apposition between premiums paid concerning retirement villages and premiums concerning other premises are both referred to in both of the sections. I consider that this is a valid point.
49 The next significant matter is the question of first execution. Section 169 makes a lease liable to duty on the date of first execution. The document at tab G was executed on 31 October 2005 but under s 171(2), if the lessee requests (as it did in this case) that ad valorem duty be paid on the lease but not the previous agreement for lease, then the lease is taken to have been first executed on the date of first execution of the agreement. This makes the notional first execution date of the document at tab G 2 September 2005.
50 Mr Gleeson says that the effect of ss 168 and 169 read together is that duty is imposed upon the lessee on the date of execution of the instrument. There must therefore be an identified lessee being a person who has taken up the rights and obligations under the lease. In the instant case, the Call Option was in favour of a bevy of possible persons. As at the date the Call Option Fee was paid none of these people could be called the lessee. At the date of deemed first execution of the lease, the Call Option Fee had already been paid and that for which it was promised had been consummated in that the lease had been granted. It could thus never be said that the payment was a payment for the grant of the lease.
51 I have already quoted from the written submissions of Mr Slater and Mr Mescher that only a simpleton would be blind to ignore the way in which all these transactions fit together. It is quite obvious, Mr Slater says, that when one looks at the Call Option, every aspect of what was to happen in the next few months is there in consummate detail including all the terms of the lease. Indeed virtually everybody is locked into a particular transaction at that point, money is paid ($265 million) and it is obvious that no commercial person would be paying that sum of money for the mere right to pick up an option.
52 On the other hand, Mr Gleeson says one must be very careful not to fall into the sort of error that is illustrated in Prime Wheat Association Ltd v Chief Commissioner of Stamp Duties (1997) 42 NSWLR 505. In that case Gleeson CJ warned at 511 that courts must not resolve the issues:
"by reference to considerations of economic equivalence rather than by reference to an accurate characterisation of the instrument under consideration."
53 I should note that in Burbury v Commissioner of Stamp Duties (1972) 3 ATR 313 at 314 Nettlefold J in the Tasmanian Supreme Court again noted that stamp duties legislation (with of course, significant exceptions) imposes duties on instruments not transactions as such. When considering the instruments one cannot ignore the legal operation of the instrument and assess the alleged realities behind it. In law the reality of the document is what, in law, it effects.
54 In Littlewood's Mail Order Stores Ltd v Inland Revenue Commissioners [1963] AC 135 at 154-155, Lord Reid said that as a result of the parties wishing to minimise stamp duties and leaving the matter to competent advisers:
"[t]he result was a bizarre series of six deeds. But none of these deeds was a sham. Each had the effect which it purported to have, and if the parties chose to proceed in this way they were quite entitled to do so. There is no question of any of these deeds purporting to do something different from what the parties had agreed to do. So each must be stamped according to what it purported to do and in fact did. "