Wilkinson v Commissioner of State Revenue (Review and Regulation) [2024] VCAT 807

The Commissioner's assessment of 10 October 2019 is varied to remit the penalty tax to $66,550.00 but is otherwise confirmed.

1. On 10 October 2019, the Commissioner of State Revenue ('Commissioner') assessed that Mr Shane Wilkinson was liable to pay duty of $532,400.00, together with penalty tax of $106,480.00 and interest of $42,045.69 ('Assessment'), in respect of the purchase of a property located at 73-77 Wellington Street, Collingwood ('Relevant Property'). While Mr Wilkinson had entered the contract to acquire that property from The Smith Family ('Vendor') in July 2014, the purchase was completed by one of his related entities.
2. Mr Wilkinson is an experienced property developer who owns and operates a group of entities known as the Pace Development Group ('PD Group'). In his witness statement of 20 April 2023 ('Wilkinson WS'), Mr Wilkinson explains that:

[while he] will often be the one who initially signs the contract [to acquire a property for development, he] will rarely, if ever, be the entity who takes the transfer of the land (for business and asset-protection reasons)'.[1]

1. Consistent with that business model, in 2015, Mr Wilkinson nominated a so-called 'special purpose vehicle' (or 'SPV') to be the transferee of the Relevant Property, being 73-77 Wellington Street Pty Ltd ('WS Co') in its capacity as trustee of the 73-77 Wellington Street Unit Trust ('WSUT').

[The shares in WS Co and the units in WSUT are held by another group company, Wilkinson Holdings Australia Pty Ltd ('WHA Co'), which also owns Pace Development Group Pty Ltd ('PDG Co'), being the development entity within the group. The shares in WHA Co are owned by Wilkinson No 2 Nominee Pty Ltd ('WN2 Co') as trustee of The Wilkinson Trust No 2 ('Wilkinson Family Trust'), a family (discretionary) trust of which Mr Wilkinson and his wife are the named primary beneficiaries.]

1. Mr Wilkinson nominated WS Co after PDG Co had lodged an application for a planning permit in respect of the Relevant Property with Yarra City Council ('Yarra CC'). While that application was unsuccessful, a planning permit was ultimately issued, and the Relevant Property was developed as a mixed use residential and commercial site in 2017 to 2018.
2. In August 2019, the Commissioner commenced an investigation regarding Mr Wilkinson's role in the acquisition of the Relevant Property. While duty had been paid by WS Co when the property was transferred by the Vendor to the company in June 2015, the Commissioner formed the view that Mr Wilkinson was also subject to duty under Part 4A of the Duties Act 2000 ('Duties Act') - which deals with '[t]ransactions treated as sub-sales of land' ('Sub-Sale Provisions') - and issued the Assessment.
3. Mr Wilkinson contends that the Assessment should be set aside on the bases that:

(a) under the Taxation Administration Act 1997 (Vic) ('Administration Act'),[2] the Commissioner has - and on review the Tribunal can and should exercise - a discretion not to reassess and/or to withdraw an assessment where appropriate as part of his general administration of the Duties Act and for the good management of the state taxation system ('Ground 1'); or

(b) his nomination of WS Co as transferee of the Relevant Property did not trigger the Sub-Sale Provisions because WS Co obtained no legal right as against the Vendor to have the Relevant Property transferred to it ('Ground 2').

1. In the alternative, should the duty be confirmed, Mr Wilkinson contends that the penalty tax should be reduced to nil on the basis that he took reasonable care in dealing with his duty liabilities or otherwise that the penalty tax and interest ought to be remitted in all the circumstances ('Ground 3').
2. For the reasons which follow, I have determined to remit the penalty tax in part (by $39,930), but otherwise confirm the Assessment.

1. Before considering the legislation and the submissions of the parties as to each ground, it is necessary to set out some further background as to the acquisition and development of the Relevant Property, the Commissioner's investigation and the procedural history of this proceeding.

The acquisition and development of the Relevant Property

1. The broad timeline concerning the acquisition of the Relevant Property and planning approval, so far as relevant to this proceeding, is as follows:

Mr Wilkinson executed a Contract of Sale of Real Estate to acquire the Relevant Property from the Vendor for a GST-inclusive purchase price of $9,680,000 ('Sale Contract').[3]

PDG Co lodged an application for a planning permit ('Original PP Application') with Yarra CC for approval of a '12 storey mixed use development plus four basement levels comprising two shops ... and 87 dwellings'.[4]

The WSUT was established[6] and Mr Wilkinson executed a Sale of Real Estate Nomination Form ('Nomination'), nominating WS Co as 'substitute purchaser/s to take a transfer or conveyance in lieu of' himself.[7]

The transfer from the Vendor to WS Co was executed.[8]

On behalf of WS Co, Mr Wilkinson signed and submitted a Duties Form 6A - Transactions treated as sub-sales of land statutory declaration ('Form 6A')[9] indicating that there had been a 'subsequent transaction' under the Sub-Sale Provisions, but that no land development had occurred between the contract date and transfer date.

WS Co paid transfer duty of $532,400 (being 5.5% of the purchase price).[10]

As no decision had been made by Yarra CC in respect of the Original PP Application, PDG Co lodged an application with VCAT seeking review of the deemed refusal of the permit.[11]

VCAT affirmed the (deemed) refusal of the Original PP Application.[12]

PDG Co submitted a new application for a planning permit to Yarra CC seeking approval for a 'Mixed Use Multi-Level Development (Use of Land for Shop, Buildings and Works)' ('New PP Application').[13] The application was for the building of 79 dwellings and an unspecified number of shops.[14]

The New PP Application was approved at some point in this period.[15]

1. The Sale Contract comprises the Particulars of Sale, General Conditions (or 'GCs'), Special Conditions (or 'SCs') and Vendor's Statement.
2. The Particulars of Sale indicate that:
   • the Vendor's legal practitioner or conveyancer was King & Wood Mallesons, while Ms Roslynne Brodie, an in-house conveyancer within the PD Group, represented Mr Wilkinson. Mr Wilkinson gave evidence that, while Ms Brodie handled the conveyancing, the PD Group arranged for an external lawyer to negotiate the Sale Contract (but could not recall who that was);[16]
   • the Purchaser was Mr Wilkinson 'and/or Nominee';
   • Mr Wilkinson was required to pay a deposit of $1,380,000.[17] Mr Wilkinson's evidence was that the deposit was paid by PDG Co, and not reimbursed by him (or, after nomination, WS Co).[18] He explained that this was because the PD Group does not operate separate banking or financial arrangements for SPVs, rather all money is channelled via PDG Co;[19] and
   • the balance of the purchase price was due (and presumably paid by PDG Co) at settlement, on (or about) 28 June 2015.
3. The general conditions are in the standard form,[20] subject to the variations effected by the special conditions. Relevantly, GC 18 provided for nomination of a substitute or additional purchaser, providing as follows:

Nominee

The purchaser may nominate a substitute or additional purchaser, but the named purchaser remains personally liable for the due performance of all the purchaser's obligations under this contract.

1. There are four special conditions. SC 33 (which deals with Access and Investigations) provided that:
   • Mr Wilkinson was entitled to erect on the Relevant Property 'any requisite notice required by a Government Agency relating to any application for any planning permit required by the Purchaser for the use and development of the property'.[21]
   • The Vendor agreed to 'sign all documents and do all things reasonably required by the Purchaser in respect of any application for any consent, approval or other authorisation which must be granted by an authority for the purpose of constructing a multi-storey mixed use development' on the Relevant Property and 'authorise[d] the Purchaser to make the application'.[22]
   • Completion was 'not conditional on a planning or development application consent issuing'.[23]
2. Mr Wilkinson gave evidence that, following the approval of the New PP Application, construction on the site was undertaken and the development was completed in late 2017.[24]
3. Between January 2017 and May 2018, 76 individual lots were sold to third party purchasers for a total sum in the order of $49 million.[25] While exact figures are not available, Mr Wilkinson estimated that, after development costs and the cost of acquisition of the Relevant Property, the PD Group's profit from the development was in the order of $3 to $4 million.[26]

1. On 22 August 2019, an officer from the State Revenue Office ('SRO') sent Mr Wilkinson a letter indicating that he had been selected for investigation of 'known or suspected tax defaults' and requesting certain information from him.[27] It appears from the content of that letter that the SRO was already aware of the Sale Contract, the Original PP Application and the Nomination. The letter indicated that the acquisition of the Relevant Property 'has been referred for review on the basis that the sub-sale provisions (Part 4A - Chapter 2 of the [Duties] Act) may apply, more specifically section 32I of the Act (transfers involving land development)'.
2. On 13 September 2019, Mr Wilkinson's then solicitors sent a response providing further details regarding the acquisition of the Relevant Property, as well as submissions contending the Sub-Sale Provisions did not apply or (if wrong) as to why any penalty tax and interest should be remitted.[28]
3. On 10 October 2019, the Commissioner issued the Assessment, providing reasons for doing so and as to the penalty tax (20% based on a failure to take reasonable care, but taking account of voluntary disclosure during the investigation) and interest (at the market rate, without a premium).[29]
4. On 9 December 2019, Mr Wilkinson's then solicitors lodged an objection to the Assessment on his behalf ('Original Objection').[30] In that objection, Mr Williamson claimed that the Assessment was 'excessive and not in accordance with law (or both) and the Commissioner should ... set aside or vary the Assessment to reduce that amount to Nil or to a greater extent'. Among other matters, he maintained that the Sub-Sale Provisions were not engaged, contending that:

[a]ttributing to the provisions a meaning that brings to duty nominations between commonly controlled entities within a corporate group not being part of a commercial on-sale conflicts with the purpose of the provisions revealed through the examination of the legislative history and extrinsic materials.

1. On 18 April 2020, Mr Wilkinson's then solicitors filed an amended objection ('Amended Objection') to provide 'additional information'.[31] This referred to a 'usual practice of the [PD] Group entities' of establishing and nominating a SPV 'prior to undertaking any land development' ('Standard Operating Procedure' or 'SOP') and observing that, following a review of the transaction, it had been identified that:

through inadvertent error of an employee, the internal procedures were not followed in respect of the [Relevant] Property and the special purpose entity was not established and nomination did not occur until after the land development was undertaken.

1. A Statutory Declaration made by Mr Pece Micevski ('Micevski SD'), who became the General Counsel of PDG Co in April 2018, was provided in support of the assertion of inadvertent error.[32]
2. While the Amended Objection included further information, it also expanded on the original ground as to the application of the Sub-Sale Provisions (headed 'not within [the] purpose of [the] legislation') and included a new ground (headed 'Commissioner's Discretion') contending that the Commissioner:

should exercise the discretion not to assess sub-sale transfer duty because there is no commercial on-sale or change of beneficial ownership in the property.

1. In support of the new ground, it was contended that, having regard to VCAT's decision in Pitard & Others v Commissioner of State Revenue ('Pitard'),[33] the Commissioner 'has a discretion to not assess a tax liability for sub-sale transfer duty having regard to the duty of good management informed by matters of public policy and good administration'. In particular, reference was made to the Commissioner's powers under sections 8, 9 and 63 of the Administration Act to 'make an assessment or a reassessment of a tax liability of a taxpayer' and to 'do all things that are necessary or convenient to give effect to the taxation laws'.
2. On 6 June 2022, the Commissioner made his determination of the Amended Objection, which was disallowed in full ('Determination').[34] The Commissioner acknowledged that, based on Pitard, he has a discretion under section 8 of the Administration Act 'to not issue an assessment where a duty liability arises', but determined that he had made the correct or preferable decision to assess having regard to the circumstances of the transaction.
3. On 19 July 2022, Mr Wilkinson requested that the Commissioner refer the matter to VCAT for review under section 106 of the Administration Act.[35]

1. In order to address the issues in this proceeding, it is necessary to set out - in some detail - relevant aspects of (and the history to):
   • the Sub-Sale Provisions, insofar as they relate to land development;
   • the Commissioner's powers under the Administration Act, as well as the procedures for objection, review and appeal of assessments; and
   • the review jurisdiction of VCAT under the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('VCAT Act').

1. The legislative history of duty provisions dealing with sub-sales can be traced back to 1994 amendments to the Stamps Act 1958 (Vic). Those amendments inserted section 67A which provided that double duty would apply in circumstances where:

(a) a person ("the vendor") agrees to transfer any real property ("the agreement") to another person ("the first purchaser") (whether or not the agreement provides for that other person to nominate another person as purchaser); and

(b) the conveyance of the real property executed by the vendor conveys the whole or any part of the real property not to the first purchaser but to another person ("the transferee") who has acquired, whether directly or indirectly, the whole or any part of the rights and interest under the agreement of the first purchaser in the real property -

1. In Politis v Commissioner of State Revenue ('Politis'), Nettle J had occasion to consider section 31 of the Duties Act (which replicated section 67A in the new regime). His Honour suggested that the 'paradigm at which the section was said to be directed' was:[36]

cases in which a purchaser having entered into an agreement for sale to the purchaser or nominee agrees to on-sell the land to a transferee and then directs the vendor to transfer the land directly to the transferee as the purchaser's nominee.

1. However, Nettle J recognised that the reference to the 'rights and interests under the agreement of the first purchaser' presented a difficulty given:[37]

under most nomination clauses the nominee would not acquire any rights as against the vendor, let alone the rights of the purchaser; for most nomination clauses constitute no more than a power in the purchaser to require the vendor to complete the contract by transfer of the land to the purchaser's nominee. In such cases the purchaser has rights as against the vendor to have the land transferred to the purchaser or to the purchaser's nominee, at least upon payment of the purchase price. And the purchaser has an interest in the land, in the nature of an equitable fee simple (assuming that the contract provides for purchase of the fee simple), although of course that really means no more than that the contract is susceptible to an order for specific performance at the suit of the purchaser. But the nominee does not acquire any rights as against the vendor, because the nominee is not privy to the contract. And for the same reason, the nominee has no standing in equity to obtain an order for specific performance of the contract. He must sue in the name of the purchaser or join the purchaser as a defendant. Therefore, such if any interest as the nominee may have in the land is one which derives from the purchaser, and relevantly the most that can be said is that the nominee may acquire an interest in the land equivalent to that which the purchaser had or would have had under the contract of sale.

1. However, Nettle J noted the use of the words 'directly or indirectly' in the section, observing they are 'ordinarily taken as words of wide import', and concluded that given the 'evident purpose of an anti-avoidance provision like s. 31':[38]

the notion of direct or indirect acquisition of rights or interest within the meaning of s. 31 of the Duties Act includes the acquisition by the transferee of rights which are equivalent to the rights or interest of the purchaser.

1. His Honour accepted that, 'without attempting an exhaustive catalogue of the mechanisms that might be employed, I think that [equivalent rights] would include a nomination clause in the original contract'.[39]
2. The Sub-Sale Provisions now found in Part 4A of the Duties Act were introduced by section 10 of the State Taxation Acts (General Amendment) Act 2005 (Vic). In the Explanatory Memorandum to the State Taxation Acts (General Amendment) Bill 2005 ('Explanatory Memorandum'), it is explained:[40]

New Part 4A sets out the situations in which transactions between parties between the date of contract and ultimate settlement will attract additional duty because these transactions constitute a sub-sale of the land.

The legislation brings to duty transactions, evidenced through nomination, assignment, novation or otherwise of a third party to be the transferee of the land, that are the result of a commercial arrangement, the nature of which is to effect a sub-sale of the land by the person with whom the vendor has a contract or option arrangement. Transactions involving relatives are specifically excluded.

1. As indicated in Pitard, the current Sub-Sale Provisions operate to modify the normal rules imposing duty on a transferee who receives a transfer of dutiable property (including land) under Part 2 of the Duties Act ('Transfer Duty Provisions'), in circumstances where:[41]

the identity of the transferee differs from the purchaser identified in an original contract of sale and an identified event has occurred between the entry into the contract of sale ... and the transfer of the land to the transferee.

1. One of the identified events, dealt with in Division 3 of Part 4A of the Duties Act, is land development. As indicated, in Pitard, that term is 'defined quite broadly'. It is appropriate to set out the (exhaustive) definition in full:[42]

"land development", in relation to land, means any one or more of the following -

(a) preparing a plan of subdivision of the land or taking any steps to have the plan registered under the Subdivision Act 1998;

(b) applying for or obtaining a permit under the Planning and Environment Act 1987 in relation to the use or development of the land;

(c) requesting under the Planning and Environment Act 1987 a planning authority to prepare an amendment to a planning scheme that would affect the land;

(d) applying for or obtaining a permit or approval under the Building Act 1993 in relation to the land;

(e) doing anything in relation to the land for which a permit or approval referred to in paragraph (d) would be required;

(f) developing or changing the land in any other way that would lead to the enhancement of its value;

1. Section 32I of the Duties Act sets out the circumstances in which the Sub-Sale Provisions are triggered in cases involving land development. It provides:[43]

(1) This Division applies to a transfer of dutiable property referred to in [the Transfer Duty Provisions] if -

(a) a person (the vendor) enters into a contract (the sale contract) to sell or transfer the property to another person (the first purchaser), and

(b) any of the following persons (a subsequent purchaser) obtains the right (a transfer right) to have the property or any part of it transferred, on completion of the sale contract, to the subsequent purchaser -

(i) a person other than the first purchaser;

....

and

(c) after the sale contract is entered into, but before the property or any part of it is transferred, land development occurs in relation to the property or part; and

(d) the vendor transfers the property or any part of it to a subsequent purchaser.

(2) It is immaterial whether a subsequent purchaser obtains a transfer right -

(a) by way of an assignment, nomination, novation or otherwise; and

(b) from the first purchaser or from another subsequent purchaser.

(3) Each assignment, nomination, novation or other arrangement by which a subsequent purchaser obtains a transfer right is called a subsequent transaction.

37 Unless an exception applies, where the Sub-Sale Provisions are triggered, duty is not imposed on the transfer under the Transfer Duty Provisions but, instead, section 32J(1) imposes duty on both:

• 'the sale contract as if it had been completed by the first purchaser', which is payable by the first purchaser;[44] and
• 'the subsequent transaction by which the final subsequent purchaser obtained the transfer right', which is payable by the final subsequent purchaser.[45]

38 The Sub-Sale Provisions contain a small number of exceptions to the imposition of two amounts of duty. This includes situations where:

• under the Transfer Duty Provisions, the transfer from the transferor to the first purchaser would be exempt from duty (in which case no duty applies to the first purchaser);[46] and
• if there were a transfer of the relevant property from the first purchaser to the final subsequent purchaser, it would be exempt (in which case no duty applies to the final subsequent purchaser).[47]

39 The Transfer Duty Provisions include many exemptions from duty, although none are claimed to apply in the present case. For example, while there is an exemption for the transfer of property from a person to a trustee, this only applies in circumstances where the trustee is to hold the property 'solely as trustee or nominee of the transferor, without any change in the beneficial ownership of the property'.[48]

1. Turning to the Administration Act, its purpose is to 'make general provision for the administration and enforcement of taxation laws'.[49] The term taxation laws is defined in section 4 and includes the Duties Act and other Victorian tax legislation, such as the Payroll Tax Act 2007 (Vic) ('Payroll Tax Act') and the Land Tax Act 2005 (Vic).
2. Section 7 explains the relationship between the Administration Act and other taxation laws. It provides that other taxation laws 'include provisions with respect to ... the imposition of tax and its payment [and] exceptions to and exemptions from liability to the tax', while the Administration Act:

includes general provisions with respect to -

(a) assessment and reassessment of tax liability;

(b) obtaining refunds of tax;

(c) imposition of interest and penalty tax;

...

(e) collection of tax;

...

(h) objections, reviews and appeals ...

1. Among other things, the Administration Act:
   • establishes the statutory office of the Commissioner and provides that the Commissioner 'has the general administration of the taxation laws and may do all things that are necessary or convenient to give effect to the taxation laws';[50] and
   • provides that the Commissioner 'may' make an assessment (section 8), make a reassessment (section 9) or withdraw an assessment (section 13).
2. The latter sections have been described as conferring 'separate grants of power and authority' on the Commissioner.[51] However, as indicated in Commissioner of State Revenue v ACN 005 057 349 Pty Ltd,[52] the use of may (in that case, in the context of a power to amend a land tax assessment) means the power is discretionary and does not impose a duty to exercise the power.
3. As already noted, in the Determination, the Commissioner accepted that he has a discretion whether to assess duty on a transaction. This is also apparent from his public ruling on retrospectivity which indicates that, generally, the Commissioner will not seek to (retrospectively) assess tax if more than five years has elapsed since the relevant transaction (despite having the power to do so).[53]
4. The provisions regarding objection and review are set out in Part 10 of the Administration Act.
5. Section 96(1) provides that a taxpayer can make a written objection:

if the taxpayer is dissatisfied with -

(a) an assessment ...; or

...

(d) a decision of the Commissioner under the [Payroll Tax Act].

1. The Commissioner must consider a taxpayer's objection and 'either allow the objection in whole or in part or disallow the objection',[54] and 'must give notice to the objector of the determination of the objection'.[55]
2. A taxpayer who is 'dissatisfied with the Commissioner's determination of the taxpayer's objection' may either:[56]
   • 'request the Commissioner to refer the matter to the Tribunal'; or
   • 'to treat the objection as an appeal and cause it to be set down for hearing at the next sittings of the Supreme Court'.
3. As explained Pagone J in Conte Mechanical and Electrical Services Pty Ltd v Commissioner of State Revenue ('Conte'), that choice is significant (or, in his words, 'not without important significance').[57] While VCAT 'stands in the shoes of the Commissioner' on a review, the Supreme Court does not do so in the case of an appeal.[58]
4. In Nationwide Towing & Transport Pty Ltd & Ors v Commissioner of State Revenue,[59] Croft J had occasion to reconsider the nature of an appeal to the Supreme Court, ultimately concluding that:[60]

to construe Part 10 of the [Administration Act] as confining the Supreme Court, on appeal, to merits review on a de novo hearing significantly reduces the efficacy of the taxpayer's choice, as it results in duplication and eliminates the historical choice given to the taxpayer without any clear legislative intention being discerned that Parliament intended that outcome. Accordingly, I am of the opinion that Part 10 of the Victorian legislation ... should not be construed in the same manner as the New South Wales [equivalent: see Tasty Chicks Pty Limited v Chief Commissioner of State Revenue (NSW)[61]] to confer concurrent jurisdiction on both the Victorian Civil and Administrative Tribunal and the Supreme Court.

1. In forming the conclusion that the nature of the appeal involved judicial review of the assessment - of the kind discussed, in a federal income tax context, in Avon Downs Pty Ltd v Federal Commissioner of Taxation[62] - Croft J observed:[63]

Avon Downs is a particularly important authority in the present context because of the similarity in structure between the provisions of the Income Tax Assessment Act 1936 (Cth) considered in that case and the provisions of and structure of Part 10 of the [Administration Act] ...

When the Victorian Parliament enacted the Taxation Appeals Act 1972, it is clear from both the text and the parliamentary debates that the scheme for appeal and review was modelled on Div 2 of Part V of the Income Tax Assessment Act 1936 (Cth). More particularly, this Victorian legislation established the Victorian Taxation Board of Review, and amended the provisions of a number of Victorian taxing Acts to emulate the Commonwealth scheme.

1. As indicated by (then) Deputy President Macnamara in Baranov v State Revenue Office, the architecture of the Administration Act is 'ultimately based upon the structure for appeals and reviews originally provided for in the Commonwealth Income Tax Assessment Act 1936'.[64] Moreover, so far as merits review is concerned, the structure has remained the same as the tribunal has evolved from the Victorian Taxation Boards of Review to the Administrative Appeals Tribunal of Victoria to VCAT.[65]
2. The Administration Act provides that, where a matter is referred to VCAT, the Tribunal 'must review' the matter and is empowered to 'confirm, reduce, increase or vary the assessment or decision'.[66]
3. As recently explained by the High Court in Miller v Minister for Immigration, Citizenship and Multicultural Affairs (in the context of the review of a migration decision by the Administrative Appeals Tribunal):[67]

The jurisdiction of the Tribunal, as is well settled, is in essence to remake the decision under review. The jurisdiction is "'to do over again' that which was done by the primary decision-maker": "to stand in the shoes of the decision-maker whose decision is under review so as to determine for itself on the material before it the decision which can, and which it considers should, be made in the exercise of the power or powers conferred on the primary decision-maker for the purpose of making the decision under review".

1. Part 10 is clearly intended as a code for dealing with appeals against or reviews of assessments. So much is made clear by section 96(2), which provides that:

No court or administrative body, including the Tribunal, has jurisdiction or power to consider any question concerning an assessment or decision referred to in subsection [96](1) [see above [46]], except as provided by this Part [10].

1. Where:
   • the Commissioner allows an objection (in whole or in part); or
   • the taxpayer's review or appeal 'in respect of an assessment is upheld',

the Commissioner 'must refund any amount paid under the assessment that is in excess of a requirement for payment under the relevant taxation law'.[68]

1. VCAT was established in 1998[69] as the first of the so-called 'super-tribunals'.[70]
2. The Tribunal has two 'types of jurisdiction' being its original jurisdiction and review jurisdictions.[71] Review jurisdiction is defined as 'jurisdiction conferred on the Tribunal by or under an enabling enactment to review a decision made by a decision-maker'.[72]
3. The review jurisdiction of the Tribunal must be 'invoked' in one of the ways contemplated in section 48, including 'by a decision-maker referring a decision to the Tribunal under an enabling enactment in accordance with section 69'. Section 69 simply requires that any referral be made in accordance with the applicable enabling enactment and, in the context of a referral under the Administration Act, clause 89 of Schedule 1 to the VCAT Act specifies the particular information to be provided by the Commissioner.
4. The functions of VCAT on a review are set out in section 51(1), which provides:[73]

In exercising its review jurisdiction in respect of a decision, the Tribunal -

(a) has all the functions of the decision-maker; and

(b) has any other functions conferred on the Tribunal by or under the enabling enactment; and

(c) has any functions conferred on the Tribunal by or under this Act, the regulations and the rules.

1. Section 51(2) sets out the orders that VCAT can make in 'determining a proceeding for review of a decision', which overlap with (but are broader than) those set out in the Administration Act. In addition to affirming or varying a decision under review, the Tribunal may set it aside and either 'make another decision in substitution for it' or 'remit the matter for re-consideration by the decision-maker in accordance with any directions or recommendations of the Tribunal'.
2. If there is any inconsistency between the VCAT Act and an enabling enactment, the provision of the enabling enactment 'prevails'.[74] However, as indicated by Richards J in Chopra v Department of Education and Training, 'two provisions that deal with the same subject matter may be able to operate together, in a complementary way, in which case they will not be inconsistent'.[75]
3. In this regard, in Cusmano v Commissioner of State Revenue, Deputy President Macnamara determined that the Tribunal's powers under section 51 are 'cumulative' to those found in the Administration Act.[76]
4. I turn to briefly outline the decisions in two (non-tax) cases that I asked the parties to address me on, to the extent they might be relevant to questions as to the Tribunal's jurisdiction.
5. In Director of Housing v Sudi ('Sudi'),[77] the Court of Appeal of the Supreme Court of Victoria examined the scope of the Tribunal's jurisdiction. While that case dealt with original jurisdiction conferred on VCAT under the Residential Tenancies Act 1997 (Vic), the Court made some observations that are equally relevant to the Tribunal's review jurisdiction. In particular, Warren CJ observed:[78]

As an administrative tribunal, the jurisdiction of VCAT derives entirely from statute. The powers of an administrative tribunal in any particular instance flow from the statute that establishes the tribunal, in this case the VCAT Act, and any subject-specific legislation granting further jurisdiction, in this instance, the [residential tenancies legislation].

1. In rejecting the suggestion that the Tribunal had jurisdiction to engage in collateral review of the decision of the applicant to apply to the Tribunal for possession of the relevant premises, Warren J noted that:[79]

a necessary consequence of setting up a specialist forum of limited jurisdiction [is that] a dispute between the parties to a proceeding in that court or tribunal may raise issues that fall outside of its limited jurisdiction. This may lead to fragmentation of proceedings. In some circumstances, it may also require the court or tribunal to make an assessment of the strength of a party's case in another forum. These difficulties are the flipside of the policy benefits derived from limiting VCAT's jurisdiction - the quick, efficient, inexpensive and informal resolution of issues arising under the RTA that do fall within VCAT's jurisdiction.

1. To like effect, Weinberg JA observed that, while 'VCAT's jurisdiction is extremely broad ... its powers are confined to those conferred upon it by statute, either expressly or by implication'.[80]
2. In McKechnie v VCAT & Anor ('McKechnie'),[81] Cavanough J considered the jurisdiction of VCAT to review a decision of the Secretary for the Department of Justice and Community Safety not to process the applicant's freedom of information request because the relevant fee had not been paid. VCAT had decided that it lacked jurisdiction because, in the absence of payment (or waiver) of the fee, there was no reviewable decision under the relevant legislation (being the Freedom of Information Act 1982 (Vic) ('FOI Act')). Some doubt as to that position had been raised by the obiter dicta of the Court of Appeal in Chopra v Department of Education and Training.[82] In McKechnie, Cavanough J summarised the Court of Appeal decision in the following terms:

the Court of Appeal said, in substance, that the problem of a [freedom of information] 'request' that was or might be invalid ... could be overcome, after the commencement of a VCAT proceeding, by VCAT exercising powers under s 50(4) of the FOI Act and ss 51 and 51A of the VCAT Act ...

1. To briefly explain, section 50(4) of the FOI Act provides that, on a review, the Tribunal has 'the same powers as an agency ... in respect of a [freedom of information] request'. That power is consistent with section 51(1) of the VCAT Act (see [60]), while section 51(2) is discussed at [61] above. Section 51A is an additional power (introduced in 2014) enabling VCAT to 'invite' an agency to reconsider a decision which is being reviewed '[a]t any time in a proceeding'.
2. Cavanough J expressed his opinion that:[83]

the powers conferred on VCAT by s 50(4) of the FOI Act and by ss 51 and 51A of the VCAT Act cannot be exercised so as to create a jurisdiction for VCAT. They become available only if VCAT already has jurisdiction. To use a phrase sometimes used in this context, a stream cannot rise higher than its source. VCAT only has such jurisdiction as it is given by certain other provisions of the relevant legislation. Further, its only relevant jurisdiction is to review certain specified 'decisions' made or deemed to have been made by others. It is not a 'primary administrator', to use another phrase sometimes employed in this context.

1. His Honour went on to note that the opening words of sections 51(1) and 51(2) of the VCAT Act[84] 'assume jurisdiction' rather than create it,[85] going on to cite (in support):
   • a decision of the Full Court of the Federal Court that the equivalent powers of the AAT 'are powers "[f]or the purpose of reviewing" the reviewable decision, not powers that may be exercised at large';[86] and
   • from the judgment of Kiefel J in Shi v Migration Agents Registration Authority ('Shi')[87] that the jurisdiction of the AAT, being 'a statutory tribunal, depends upon there having been a decision made which it is authorised to review' and that it is necessary to determine 'first of all, what is the decision under review' because that 'decision, and the statutory question it answers ... marks the boundaries of the review'.[88]
2. Cavanough J found that the 'same considerations apply equally to s 50(4)' of the FOI Act and that section 51A of the VCAT Act 'applies (only)' to a proceeding for review.[89] His Honour then examined the reviewable decisions identified in section 50(1) of the FOI Act, noting that, while some were of wide reach, 'each of them is, and each of their predecessors has always been, expressly tied, directly or indirectly, to the composite notion of "a decision refusing to grant access to a document in accordance with a request".'[90] He concluded that:[91]

nothing in the VCAT Act or the FOI Act gives VCAT jurisdiction to review such a determination. ... such a determination simply does not fall within any of the classes of 'decision' reviewable by VCAT under s 50 of the FOI Act. For so long as the determination of the agency or Minister [that the request is invalid] stands, and for so long as no modification of the request has been advanced to and accepted by the agency or Minister, then, by definition, there is no 'request' (as defined in the FOI Act). If there is no 'request', there cannot be an actual or deemed 'decision ... refusing to grant access to a document in accordance with a request'.

1. His Honour recognised that if the agency's determination that the request was invalid was 'affected by procedural or substantive error in an administrative law sense, [the Supreme] Court, in exercise of its general supervisory jurisdiction, could order the determination to be reconsidered'.[92] But, he added, 'VCAT has no such general supervisory jurisdiction'.[93]
2. While these two decisions were made in quite different legislative contexts, in my view they set out certain general principles relevant to this proceeding, as follows:
   • Whether in its review or original jurisdiction, VCAT is a statutory tribunal that only has jurisdiction in a matter to the extent that it is conferred on it by an enabling enactment.
   • An enabling enactment may confer jurisdiction on VCAT to review some decisions of a relevant agency and not others, even though this might result in fragmentation of proceedings.
   • The Tribunal's broad 'powers' under sections 51 and 51A of the VCAT Act, or like provisions of an enabling enactment, presuppose jurisdiction and do not operate to confer jurisdiction.
   • VCAT is not a primary administrator, does not have any general supervisory jurisdiction like a court, and cannot exercise its powers 'at large' or beyond the proper boundaries of the review.

Ground 2: Did Mr Wilkinson's nomination of WS Co as purchaser trigger the Sub-Sale Provisions?

1. It is appropriate to start with Ground 2 first because, if I were to find the Sub-Sale Provisions do not apply, I would simply set aside the Assessment and there would be no need to exercise (or consider the exercise of) any discretion not to assess, reassess or withdraw the Assessment.

1. In the Applicant's Statement of Legal Contentions dated 21 April 2024 ('ASLC'), Mr Wilkinson essentially contends that:
   • for the Sub-Sale Provisions to apply, the transferee (in this case, WS Co) must obtain a 'legal right to have the property transferred';[94] and
   • WS Co did not obtain such a right. Rather, '[a]t best, it was [Mr Wilkinson] who obtained a relevant right under the [Sale] Contract - being the right to nominate a third party as purchaser; and it was [Mr Wilkinson] who exercised that right', while 'WS Co, at no stage, obtained any enforceable legal right to require a transfer of the property to it'.[95]
2. In relation to the first proposition, Mr Wilkinson contends that the right referred to in section 32I(1)(b) of the Duties Act 'must be the legal right to have the property transferred' given 'the term appears in legislation and is referring to rights under a contract, and the right to a transfer of land'.[96]
3. In relation to the second proposition, Mr Wilkinson references the observation of Nettle J in Politis that:[97]

under most nomination clauses the nominee would not acquire any rights as against the vendor, let alone the rights of the purchaser; for most nomination clauses constitute no more than a power in the purchaser to require the vendor to complete the contract by transfer of the land to the purchaser's nominee ... the nominee does not acquire any rights as against the vendor, because the nominee is not privy to the contract ...

1. On this basis, Mr Wilkinson submits that it is 'not legally possible under a typical nomination' for a nominee to obtain the right to have the property transferred to it on completion of the sale contract, and 'the nomination in this case was a typical nomination'.[98] When Mr Wilkinson nominated WS Co as purchaser, and notified the Vendor of that nomination, this 'did not result in WS Co obtaining any legal right (much less any enforceable right) to have the [V]endor transfer the property to it'.[99]
2. Accordingly, because the condition to the operation of the Sub-Sale Provisions was 'not satisfied', no liability arose under the provisions, so that there is no basis for the Assessment, which should be set aside.[100]
3. To the extent that, in the 'second part' of Politis, Nettle J interpreted former section 31 to extend to 'equivalent rights' including any rights arising under a nomination, his decision 'cannot be relied on' in interpreting section 32I as:[101]
   • the wording of section 32I is 'very different' from section 31;
   • (contrary to what Nettle J did), 'words cannot be added to the legislation in an attempt to give it a meaning that one party perceives the legislation to have'; and
   • it was erroneous to make the 'a priori assumption' that the legislature intended to capture 'equivalent rights', while failing to recognise that the Sub-Sale Provisions are 'anti-avoidance provisions'.

1. In the Respondent's Statement of Legal Contentions dated 1 June 2023 ('RSLC'), the Commissioner contends that:[102]
   • '[u]pon a construction of the plain words of s 32I (particularly s 32I(2)(a)), it is clear that a nominee under a contract of sale acquires the right referred to in s 32I(1)(b) of the Act'; and
   • in this case, 'at law, WSCo as nominee did acquire the legal right (at least as against Mr Wilkinson) to have the Property transferred to it upon completion of the sale contract'.
2. The Commissioner contends there are 'three reasons' the Tribunal should find that the Sub-Sale Provisions apply. First:[103]

as a matter of construction, s 32I clearly intends that the nomination of a substitute purchaser under a contract of sale vests in the substitute purchaser 'the right ... to have the [Property] transferred, on completion of the sale contract' to it for the purposes of s 32I(1)(b).

This is clear from s 32I(2) that states: 'It is immaterial whether a subsequent purchaser obtains a transfer right - (a) by way of ... [a] nomination'. Mr Wilkinson has failed to explain what work those words in s 32I(2) could do, were his construction of s 32I in respect of nominations to be accepted.

1. Second, a substitute purchaser that is nominated by the original purchaser 'acquires, by way of that nomination, a right to have the Property transferred to it in two different ways',[104] being:[105]

the right - as against the first purchaser - to have the Property transferred to it, rather than to the first purchaser ...

...

the right - as against the vendor - to have the Property transferred to it.

1. Third, based on Pitard,[106] the proposition that the provisions only apply where a sub-sale is the result of a 'commercial arrangement' is erroneous and, as such, 'that purpose cannot compel the Tribunal to distort the plain words of s 32I' in the manner Mr Wilkinson contends for.[107]

1. Section 32I of the Duties Act provides that the Sub-Sale Provisions apply where:

(a) A person (in this case, the Vendor) enters a contract (in this case, the Sale Contract of July 2014) to sell or transfer property (in this case, the Relevant Property) to another person (in this case, Mr Wilkinson).

(b) A person other than the first purchaser obtains the right to have the property transferred, on completion of the sale contract, to that person. The Commissioner contends (and Mr Wilkinson denies) that WS Co obtained the relevant right by reason of the Nomination in May 2015.

(c) After the sale contract is entered, but before it is settled, land development occurs in relation to the property (in this case, by reason of the Original PP Application in November 2014).

(d) The vendor transfers the property to the other person (in this case, the transfer from the Vendor to WS Co in June 2015).

1. Only the second element is disputed.
2. As with any exercise of statutory interpretation, the text of section 32I(1)(b) must be interpreted having regard to the context and purpose of the provisions.[108]
3. Starting with the text, it simply provides that the 'subsequent purchaser' must have obtained a right to have the relevant property transferred to it on completion.
4. On its face, the provision does not specify that the right needs to be a 'legal' right or enforceable against the vendor of the property (as contended for by Mr Wilkinson).
5. Absent a requirement for the nominee to have a legal right directly enforceable against the vendor, it is appropriate to consider the ordinary meaning of the term 'right'. Among the ordinary meanings is 'a thing one may legally or morally claim'.[109]
6. In Politis, while Nettle J indicated that the nominee did not acquire rights against the purchaser, he suggested that the nominee could either sue in the name of the purchaser or sue in the nominee's name and join the purchaser as a defendant (see [30]). It is apparent that, while the process for a nominee to 'claim' its right to a transfer of property may be convoluted, there is a pathway for a nominee to do so.
7. There is no reason, on the face of the provision, to exclude such a right from the operation of the provision.
8. Turning to context, there are indications in the Sub-Sale Provisions themselves, as well as the historical context, which support a broad reading of the rights to which it applies.
9. First, section 32I(2) provides that it is 'immaterial' whether the right is obtained 'by way of an assignment, nomination, novation or otherwise'.
10. In Politis, Nettle J observed that some nomination clauses can result in the substitution of the nominee for the purchaser and that, in such a case, it 'would work a novation of the agreement ... mean[ing] that the acts that were to be performed by the parties to the original contract ... would be performed by the parties to the new contract'.
11. By including a reference to both a nomination and a novation in section 32I(2) and treating the form of the arrangement as 'immaterial', the Parliament can be seen to have intended a broad conception of the rights to which the provision applies.
12. Second, given the current Sub-Sale Provisions were introduced in 2005, following Politis, the differences between the current and former provisions provide valuable context.
13. The former provision (see [28]) required the transferee to acquire the 'rights and interests under the agreement of the first purchaser' (which, in light of the observations of Nettle J in Politis, was problematic even in terms of a novation).
14. By contrast, there is no requirement under the current provisions that the subsequent purchaser obtain the first purchaser's rights.
15. Again, this speaks to a broader conception of rights under the current Sub-Sale Provisions.
16. Lastly, in respect of purpose, it is fair to suggest the Sub-Sale Provisions are 'anti-avoidance' in nature, i.e. they are designed to prevent a circumvention of the Transfer Duty Provisions which would ordinarily operate to impose two lots of stamp duty if there were a transfer from the vendor to first purchaser followed by a transfer from the first purchaser to a subsequent purchaser. That purpose is consistent with the exemption available for the second lot of duty where an exemption from Transfer Duty would apply in the case of a (hypothetical) transfer of land from the first purchaser to the subsequent purchaser (see [38]).
17. However, a broad conception of the rights to which the Sub-Sale Provisions apply is not inconsistent with that purpose, particularly given that the legislature has taken care to identify the exemptions it considered appropriate to allow.
18. For these reasons, I find that when Mr Wilkinson nominated WS Co to take the transfer of the Relevant Property in accordance with GC 18, WS Co obtained the 'right' to have the property transferred to it on completion of the Sale Contract. As that nomination took place after the Original PP Application, it follows that the Sub-Sale Provisions were engaged.

Ground 1: Can and should the Tribunal exercise any discretion not to assess or withdraw the Assessment?

1. As noted as part of the background (see [23]), Mr Wilkinson's Amended Objection expanded on the grounds of the Original Objection to include a contention that the Commissioner ought exercise his discretion (i.e. under section 8 of the Administration Act) 'not to assess' under the Sub-Sale Provisions.
2. In his legal contentions in this proceeding, Mr Wilkinson sought leave to 'add' the ground that:[110]

The Commissioner has a discretion to withdraw the Assessment, once issued, under s 13 of the [Administration Act]. The Tribunal should now, pursuant to s 51 of the VCAT Act and as part of the merits review of this matter, now exercise the power, under s 13 ... to withdraw the Assessment.

1. Mr Wilkinson's essential argument is that:[111]

The Applicant's right to seek a review of the "matter" is given by s 106 of the [Administration Act] - and, in the exercise of the Tribunal's review jurisdiction, the Tribunal "has all the functions of the decisionmaker." [i.e. under s 51(1)(a) of the VCAT Act] That function necessarily includes the power to withdraw an assessment under s 13 of the [Administration Act].

1. Mr Wilkinson seeks to distinguish the decision in Pitard, concerning the power not to assess in section 8, on the basis that 'in Pitard ... there was an understandable doubt about the Tribunal's power not to issue an assessment ... when an assessment had already been issued'.[112]
2. In reply to the Commissioner's contention that the discretion under section 13 is not exercisable by VCAT on review, Mr Wilkinson submits:
   • the power to reassess (under section 9 of the Administration Act) or to withdraw an assessment (under section 13) 'are powers which were exercisable by the Commissioner when making the "decision under review" (being the determination of the [Amended] Objection)'.[113] This is 'especially so' because the exercise of the discretion was a 'ground of the original Objection - and the Commissioner, in his Determination of the Objection ... expressly declined to exercise that power';[114]
   • his dissatisfaction with the Assessment 'included the fact that it had been issued' which enlivened the right of objection under section 96 of the Administration Act that is 'nowhere, and in no way, limited'.[115] The 'power not to assess, or to reassess, or to withdraw an assessment, are all powers that the Commissioner has, and may exercise, on an objection in order to determine an objection'.[116] Further, that section 96(2) prohibits any question concerning an assessment from being raised in proceedings outside Part 10 of the Administration Act (i.e. the review and appeal provisions) 'reinforces that all such questions may be, and can only be, raised in Part 10 proceedings';[117]
   • the Tribunal's decision in Pitard was 'wrong' to the extent that it was suggested that the discretion to not assess was not vested in the Commissioner 'for the purpose of making an assessment'.[118] Further, it is suggested that the proper question for the Tribunal in that case was whether VCAT had all of the functions of the Commissioner (rather than whether those functions are for the purpose of making an assessment) and the bifurcation identified in Pitard 'proceeds from a misconception' and is a 'non-issue'.[119] In addition, it is contended that, in Pitard, the Tribunal 'failed to follow the binding authority' of Davidson v Victorian Institute of Teaching,[120] where Maxwell P indicated that:[121]

[t]he clearest words would need to be used in the parent statute before it could be concluded that Parliament intended to withhold from the Tribunal an aspect of the primary decision-making process which could otherwise be within the Tribunal's jurisdiction on a merits review.

• '[t]here is nothing in the VCAT Act or the [Administration Act] which precludes, or prohibits, the Tribunal from exercising this ... discretion on a review of an objection decision'.[122] Further, that the Tribunal is 'able to consider additional evidence and material in support of a taxpayer's case' is a 'further indication' that in reconsidering the matter afresh, the Tribunal's jurisdiction 'extend[s] to considering all the circumstances concerning the assessment, including the question whether the Tribunal should exercise its power to withdraw the assessment'.[123]

1. Mr Wilkinson rejects the Commissioner's suggestion that a taxpayer may be able to seek judicial review if dissatisfied with the Commissioner's failure to withdraw an assessment. This is 'not correct' as it is precluded by section 96(2) of the Administration Act (which provides that '[n]o court ... has jurisdiction or power to consider any questions concerning an assessment ... except as provided by [Part 10]').[124]
2. In relation to the two jurisdictional cases raised by the Tribunal (see [65] and [68]), Mr Wilkinson contends that:
   • as the decision in Sudi concerned the Tribunal's original (rather than review) jurisdiction, it is distinguishable on that basis.[125] Further, it is distinguishable in that the issue in Sudi concerned the Director of Housing's decision to make an application to the Tribunal. It is suggested that the proceeding in Sudi is 'analogous to a taxpayer challenging the validity of a referral by the Commissioner of a matter to the Tribunal ... or ... the validity of a refusal by the Commissioner to refer a matter'.[126] It is submitted that in a case like that, the 'collateral problem could only be addressed by separate legal proceedings, and in the supervisory jurisdiction of the Supreme Court'.[127] Mr Wilkinson goes on to suggest that because Sudi is 'distinguishable in such a significant respect from the facts of this case' it is 'completely irrelevant to the question of the Tribunal's jurisdiction in this case';[128] and
   • '[a] similar observation may be made' with respect to McKechnie. He accepts that 'the mere lodging of an ex facie invalid application following a taxpayer's request under s 106 of the [Administration Act] would not ... confer jurisdiction on the Tribunal'.[129] This is because 'the pre-conditions for a valid application (including a valid request [by a taxpayer] under s 106) have to ... be satisfied before the Tribunal['s] jurisdiction is engaged'.[130] However, 'those are not the facts here - in this case, there was a plainly valid request for a referral of the matter (the matter being the Commissioner's determination of the Applicant's Objection)'.[131] For this reason, the decision in McKechnie is contended to be 'of no relevance or assistance to the Tribunal's current question'.[132]
3. Turning to the exercise of the discretion, Mr Wilkinson contends that '[w]hile it is not necessary (or possible) to identify each of the circumstances' where the discretion to withdraw an assessment should be exercised, it should 'at least' be exercised 'so as to promote, rather than undermine, public confidence in the taxation system in [Victoria]'.[133]
4. Mr Wilkinson identifies the following matters in support of his contention that the Tribunal should now exercise that discretion to enable that public confidence to be 'best achieved, or furthered':[134]
   • The Sub-Sale Provisions are anti-avoidance provisions and, in this case, '[t]here was no intention on the part of [Mr Wilkinson] (or WS Co) to avoid duty by making [the Nomination]'.
   • The Sub-Sale Provisions were 'designed to apply where the nomination was a ... commercial arrangement' and, in this case, there was 'no payment by WS Co (or any other entity)' for the Nomination and, as such, it 'did not involve any "sub-sale" of the land'. Further, there was 'no "profit element" to this nomination'.
   • The 'fundamental basis of duty is that changes in beneficial ownership in land; however achieved, are subject to conveyance duty'[135] and, in this case, the Nomination of WS Co 'did not give rise to any change in beneficial, or economic, ownership of the Property (or to any rights under the Contract)' as WS Co was Mr Wilkinson's 'alter ego'.
   • The discretion should be exercised to achieve, rather than 'exercised gratuitously without regard to', its intended purpose and to avoid the potential for the Sub-Sale Provisions to 'operate in a capricious manner, unlikely to have been contemplated by the Parliament'.[136]
   • The original sub-sale provisions were not intended to apply to the 'genuine use of a nominee clause to enable the purchase of real property on behalf of a family member [or] a family company'[137] and, in this case, the nomination was a 'family transaction' given that the 'ultimate beneficiary' of the WS Unit Trust was the Wilkinson Family Trust, of which Mr Wilkinson and his wife are the named primary beneficiaries (see [2]).
   • The definition of land development 'contemplates steps, or actions' that will 'develop or change the land in any other way that would lead to an enhancement of its value',[138] and in this case the Original PP Application was rejected, such that there was no 'true "land development" here'. It is suggested that it is when assessments are raised in these kinds of situations that public confidence in the State's taxation system is undermined.
   • Duty of $532,400 was paid on the transfer of the Relevant Property, with the Assessment seeking an additional amount of approximately $680,000 despite the Nomination involving a 'family group arrangement, and not being a transaction of any commercial, or economic, substance'.
   • Noting the Standard Operating Procedure (see [21]), this was 'a single instance of inadvertent error' which could be contrasted with the situation in Pitard (involving 35 nominations).[139]
5. Mr Wilkinson concludes that:[140]
   • it is part of a revenue authority's 'duty of good management'[141] 'in appropriate circumstances, to not collect tax which may, on a literal application of the tax legislation, be due and payable';
   • '[o]bserving, and acting in accordance with, the duty of good management is important so as to maintain (and not undermine) public confidence in [Victoria's] taxation system'; and
   • '[t]here is not ... a single policy consideration that supports the imposition of double duty in this case'.

1. The Commissioner contends that VCAT 'does not have (by virtue of s 51 of the VCAT Act or otherwise) the power to withdraw an assessment under s 13 of the [Administration Act]'.[142]
2. The Commissioner suggests that Mr Wilkinson's case is 'analogous' to the one run by the taxpayer in Pitard.[143] He suggests there are 'at least three features' of the Administration Act that make clear that the Tribunal does not have the power to withdraw an assessment,[144] namely:
   • the decision to withdraw an assessment 'is not a decision that is listed in s 96 of the [Administration Act], and is thus not a decision that is the subject of any review to the Tribunal'.[145] While a taxpayer has a right to object if dissatisfied with an assessment, section 96 'does not empower' a taxpayer to object where the taxpayer is 'dissatisfied with the Commissioner's failure to serve a notice of a withdrawal of an assessment';[146]
   • section 101, which addresses the Commissioner's powers in relation to an objection, provides that the Commissioner may 'either allow the objection in whole or in part or disallow the objection'. However, it 'makes no reference to the power to withdraw an assessment'.[147] While recognising that it is open to him to withdraw an assessment if an objection is allowed, it is contended that any 'withdrawal is an exercise of power that is separate from, and subsequent to, the exercise of the power to allow the objection';[148] and
   • the discretion to withdraw an assessment is 'not vested in the Commissioner for the purpose of making an assessment'.[149] Further, as that discretion is 'predicated on there being an extant, valid assessment', 'it cannot be said that the power to review the decision to make an assessment entails the power to withdraw an assessment'.[150]
3. The Commissioner contends that the decisions in Sudi and McKechnie 'both tend to support his contention' that the Tribunal's review jurisdiction does include power to withdraw an assessment under section 13.[151]
4. The Commissioner contends that, while Sudi related to the Tribunal's original jurisdiction, the court's decision is nevertheless 'generally instructive of how the Tribunal's powers - including in the exercise of its review jurisdiction - are to be construed'.[152] Sudi is said to 'confirm that the Tribunal's powers are ... to be discerned from what is expressly or by necessary implication positively conferred upon it'.[153] While an enabling enactment might specifically exclude a matter from VCAT's jurisdiction, the 'mere absence of an express exclusion' does not 'inexorably' lead to the conclusion that a matter is within jurisdiction (or 'fatal' to the contrary position) .[154]
5. By reference to his original submissions (see [116]), the Commissioner goes on to contend that an assessment is:[155]

11.1 at the centre of the review and appeal regime established by Part 10; > > 11.2 the subject of the critical analytical process on that review or appeal; and > > 11.3 the factum upon which the Tribunal's review jurisdiction depends.

6. Accordingly, the 'extant assessment forms a critical and focal part of the "matter" referred to the Tribunal under s 106'.[156] On the other hand, the decision 'whether to make the assessment is logically anterior to the assessment and any putative decision whether to withdraw the assessment is logically posterior to the assessment'.[157]
7. Further, the Commissioner submits it is 'not enough for [Mr Wilkinson] to establish no more than that the Tribunal conducts a review of "the Commissioner's determination of the Objection".'[158] Rather, in order '[t]o succeed', he 'must establish that the Tribunal has the power - when reviewing the controversy arising out of the Commissioner's determination of the ... objection ... - to review the decision not to withdraw an assessment'.[159] It is suggested that Mr Wilkinson has 'provided no direct authority in support of [the proposition that the Tribunal has that power], and it is directly contrary to the Tribunal's reasoning in Pitard'.[160]
8. The Commissioner submits that just because a taxpayer 'expressly requests in their objection that the Commissioner exercise his power [to withdraw an assessment] does not' mean that he 'necessarily made any decision not to exercise his power under s 13' or that the 'matter' referenced in section 96 'entails any review' of such a decision.[161] It is contended that a taxpayer cannot, by its request, 'expand the scope of the "matter" referred to the Tribunal for review, or expand the scope of the Tribunal's powers, beyond that which is conferred by the [Administration Act] and the VCAT Act'.[162]
9. Insofar as the decision in McKechnie is concerned, the Commissioner contends that the 'central feature' of Mr Wilkinson's first ground (i.e. that the Tribunal is 'invested with the power to withdraw an assessment perforce of s 51 of the VCAT Act') 'cannot be sustained in view of the Court's reasoning' in McKechnie to the effect that s 51 is facilitative of the Tribunal's powers of review' where 'VCAT already has jurisdiction', but 'cannot be exercised so as to create a jurisdiction for VCAT'.[163]
10. The Commissioner notes that Cavanough J's observation in McKechnie - that VCAT is 'not a primary administrator' - is drawn from Brennan J's decision in Re Brian Lawlor Automotive Pty Ltd v Collector of Customs (NSW) ('Lawlor')[164] in the context of the equivalent powers of the Administrative Appeals Tribunal. The latter decision is 'redolent of the conclusion ... that the Tribunal's powers under s 51 are contingent on, rather than productive of, its review jurisdiction'.[165]
11. The Commissioner points to section 42 of the VCAT Act which provides that the Tribunal's review jurisdiction is conferred on the Tribunal 'by or under an enabling enactment to review a decision made by a decision-maker'. On this basis, he contends that the review jurisdiction in state tax matters is 'thus to be found in, and is necessarily confined by, Part 10 of the [Administration Act]' and 'does not include review of a putative decision not to withdraw an assessment under s 13'.[166]
12. The Commissioner says it is 'at least conceivable' that section 96(2) does not operate to oust judicial review of a decision by the Commissioner refusing to withdraw an assessment.[167] Further, while that 'may well be [a] complex' issue, it is 'not necessary for the Tribunal to resolve that question in this proceeding'.[168]
13. While the Commissioner's written submissions did not specifically address whether any discretion found to exist ought be exercised, in her oral submissions Ms O'Gorman (senior counsel for the Commissioner) contended that:[169]

the mere fact that a taxpayer who does not take care to attend to formalities which the section provides and the mere fact that the taxing provisions are technical in their application and in their consequence provide no reason why the tribunal ought to exercise that broad discretionary power.

1. In Pitard, the Tribunal determined that it did not have the ability to step into the Commissioner's shoes and exercise any discretion available (i.e. under section 8 of the Administration Act) not to assess a taxpayer where a substantive tax liability arises under the relevant taxing legislation, explaining:[170]

[t]he inclusion of a discretion in section 8 ... should not ... be taken to signal a departure from the fundamental scheme of the legislation. That scheme prevents a challenge to the due making of an assessment once a notice of assessment is produced, with any challenge under Part 10 of the [Administration Act] limited to challenging the substantive liability under the assessment.

1. In subsequent cases, the Tribunal has determined that, for reasons of comity and consistency, the decision in Pitard should be followed 'unless and until it is overturned, or there is some new argument or authority advanced requiring it to be revisited'.[171]
2. While Mr Wilkinson relies on a different discretion - i.e. the discretion to withdraw an assessment under section 13 - the crux of his contention, namely that:
   • his dissatisfaction with the Commissioner's determination of his objection encompasses the failure to exercise a discretion available to the Commissioner under the Administration Act; and
   • the review therefore engages the full amplitude of the Tribunal's powers under section 51(1)(a) of the VCAT Act to step into the shoes of the Commissioner and exercise that function,

is the same or substantially similar to the contentions of the taxpayer in Pitard.[172]

1. However, as this is the first occasion since Pitard where the scope of the Tribunal's function on review has been put squarely in issue and addressed fulsomely in submissions, I consider it appropriate to revisit the question.
2. As indicated at [74], while Sudi and McKechnie related to different legislative contexts, they remain relevant in that they recognise that, as a statutory tribunal, VCAT obtains its jurisdiction from relevant enabling enactments which may operate to limit the decisions that are subject to review. Moreover, while VCAT has broad powers under the VCAT Act, those powers cannot be exercised at large or beyond the proper boundaries of the review envisaged by the enabling enactment.
3. The Commissioner's power to withdraw an assessment is found in section 13 of the Administration Act. It is found within Part 3 which deals with the 'assessment of tax liability', and which also includes section 8. For the reasons discussed in Pitard, the use of the word 'may' in the various provision of that Part connotes a discretion on the part of the Commissioner to exercise (or not exercise) the relevant power.[173]
4. However, it does not necessarily follow that a decision by the Commissioner to not exercise that power is a proper subject of objection, and hence of review by the Tribunal.
5. Section 96(1) specifies the relevant 'decisions' that may be objected to, which in the case of the Duties Act is limited to 'an assessment'. Unlike the situation under the Payroll Tax Act, there is no general power to object to other decisions of the Commissioner under the Duties Act. Further, section 96 does not provide an ability to object to a decision under the Administration Act (e.g. section 13).
6. Accordingly, the relevant focus of any objection is an 'assessment', a term which is defined in section 3(1) as an assessment made by the Commissioner of the 'tax liability of a person'. Of course, any tax liability is established (or not) under the terms of the relevant taxation law (i.e. in this case, the Duties Act). So much is made clear by section 7 (see [41]).
7. Any decision which the Commissioner makes under section 13 necessarily presupposes the existence of a valid and extant assessment of a tax liability that arises under a taxation law. This is because there would be nothing to withdraw if there was in fact no tax liability. Just as a decision to assess (i.e. under section 8) is logically anterior to the assessment,[174] any decision the Commissioner may make about the withdrawal of an assessment (or otherwise) is logically posterior to the assessment.
8. In those circumstances, I do not consider that a taxpayer's dissatisfaction with the decision to assess can properly encompass dissatisfaction with any subsequent decision not to withdraw that assessment.
9. While a taxpayer's right to seek referral of 'the matter' to VCAT for review is premised on the taxpayer's dissatisfaction with the determination of an objection, this does not mean that any matter raised in an objection (or considered by the Commissioner in his determination) is therefore part of the 'the matter' which is before VCAT for review. To adopt what Cavanough J said in McKechnie (see [70]), a stream (i.e. the review proceeding) cannot rise higher than its source (i.e. the proper subject of an objection).
10. In my view, the only proper subject of an objection is an assessment. In determining the objection, the Commissioner must consider whether the tax liability has been assessed in accordance with the relevant taxation law.
11. This analysis - i.e. that an assessment is the focus of the objection and hence the focus of any subsequent review - is supported by the observations in McKechnie (and drawn from Lawlor) that the Tribunal is not a primary administrator.
12. It was recognised in Inland Revenue Commissioners v National Federation of Self-Employed & Small Businesses Ltd,[175] that a revenue authority has:

a wide managerial discretion as to the best means of obtaining ... from the taxes committed to their charge, the highest net return that is practicable having regard to the staff available to them and the cost of collection.

1. Indeed, that case establishes that the managerial discretion extends to granting an amnesty from tax, provided that the revenue authority is 'acting solely for "good management" reasons and in the lawful exercise of [a] discretion which the statutes confer on [the revenue authority]'.[176]
2. While the Tribunal sits somewhere in the 'administrative continuum'[177] in undertaking its merits review function, it is self-evident that it is not positioned well or at all to exercise judgement as to what may be necessary or appropriate for the good management of the tax system as a whole.
3. Mr Wilkinson contends that imposing duty under the Sub-Sale Provisions in his particular circumstances operates to undermine public confidence in the State's taxation system. But how is the Tribunal to assess:
   • whether that assertion is correct;
   • if exercising any power to withdraw an assessment would have any discernible impact on public confidence in the system; and/or
   • the flow-on consequences for the State's finances if the power is exercised (noting the general obligation to treat taxpayers in like situations alike).
4. The conclusion that the Tribunal is not able to exercise any discretion to withdraw an assessment is also supported by section 14 of the Administration Act which requires that, '[i]f the Commissioner ... withdraws an assessment, the Commissioner must serve a notice of ... withdrawal on the taxpayer'. This is premised on the Commissioner both making the relevant decision and giving effect to it. The Tribunal has no ability to do so.
5. There is, of course, a mechanism in place for the Commissioner to give effect to a decision of VCAT following a review. In this regard:
   • section 114(1) provides that the Commissioner 'must take any action that is necessary to give effect' to the Tribunal's decision on review (assuming no appeal); and
   • section 115 provides that, where a taxpayer's review is upheld, 'the Commissioner must refund any amount paid under the assessment that is in excess of a requirement for payment under the relevant taxation law';

however, these provisions are facilitative, and again focused on a taxpayer's substantive tax liability.

1. I accept there is a basis for legitimate concern if section 96(2) operates to oust the ability of a taxpayer to seek judicial review of a decision refusing to withdraw an assessment (e.g. in circumstances where the Commissioner failed to take into account any relevant consideration). However, neither party has pointed to any case to this effect.
2. For these reasons, I do not consider that the Tribunal is able to exercise the discretion under section 13 to withdraw the Assessment.
3. While it is unnecessary to address the question of whether the discretion should be exercised, I would observe that:
   • when, in Pitard, it was suggested that any available discretion might be appropriately exercised where there was a single instance of inadvertent error,[178] that was premised on the error being 'promptly disclosed to the revenue authority'. In this case, Mr Wilkinson signed the Form 6A in June 2015 (see [10]) declaring that there had been no 'land development' (as defined) and there was no disclosure of the circumstances of the error until the Amended Objection was lodged in June 2020 (see [21]), long after the Assessment. This was so, despite the fact that Mr Wilkinson is an experienced property developer, had an experienced conveyancer involved in the transfer, briefed a lawyer to negotiate the Sale Contract and also used external advisers to recommend the appropriate SPV;[179]
   • while it may be true, in a colloquial sense, to refer to the nomination by Mr Wilkinson of WS Co as a 'family transaction', it does not fit within the established exemptions in the Sub-Sale Provisions (see [38]-[39]);
   • the absence of a commercial or avoidance purpose and any profit are not matters that, in my view, point to a favourable exercise of the discretion for the reasons discussed in Pitard;[180] and
   • as the definition of 'land development' expressly includes applications for planning permits (see [35]), it is not to the point that the Original PP Application was rejected or that there may have been no enhancement in the land's value between the time the Sale Contract was entered and the date of the Nomination.
4. For these reasons, even if I was to form the view that the Tribunal could exercise the discretion to withdraw the Assessment, I would not do so.

Ground 3: Did Mr Wilkinson take reasonable care in dealing with his duty liabilities or should penalty tax and interest be remitted?

1. In Mr Wilkinson's original submissions, he maintained his objection to the imposition of penalties and interest, 'on the same grounds as set out in the Amended Objection'.[181] The operative provisions relied upon were section 30(3)(a) of the Administration Act (in relation to his contention that he took reasonable care) and sections 28 and 35 (in relation to the discretion to remit interest and penalties, respectively).[182]
2. In his reply submissions, Mr Wilkinson rejected the 'accusation' that the Form 6A lodged by WS Co was 'false in material respects'.[183] He suggests that '[t]hese forms, and the type of detail required by the questions within them, are complicated and raise ... complex legal questions'.[184] He says the error was not identified by his legal manager until the time of the Commissioner's audit in August 2019.[185] Accordingly the error was also a 'product of [an] innocent mistake'.[186]
3. At the hearing, Mr Gioskos (junior counsel for Mr Wilkinson) handed up a document entitled 'Ground 3 (Penalty Tax and Interest): Applicant's Outline of Oral Argument' dated 16 April 2024 ('G3 Outline') which addressed the penalty and interest issues in somewhat greater detail.
4. Mr Wilkinson contends he took reasonable care, submitting:
   • The categories of reasonable care 'are not closed' and one way for a taxpayer to take reasonable care is 'relying on qualified in-house professionals and prescribed operating procedures'.[187] In this regard, reference is made to:
     • - the Micevski SD as to the procedures which have now been put in place, requiring any SPV to be established prior to any land acquisition contract being signed;[188]
     • - the fact that the in-house conveyancer was 'a qualified and licenced conveyancer';[189] and
     • - Mr Wilkinson's WS indicating that the normal operating procedure was relied on by him in 'all other property purchases'.[190]
   • Section 30(3)(a) requires that reasonable care be taken, but 'does not require that no duty liability arises',[191] noting the observation in Riverland Retreat Pty Ltd v Commissioner of State Revenue ('Riverland Retreat')[192] that '[m]istakes happen and no amount of system, supervision or oversight will ensure that they will not happen'. The error in this case was due to oversight, inadvertence or simple human error.[193]
   • The 'mere happening' of a tax default 'does not mean that a taxpayer is (or should be) penalised'.[194]
5. Mr Wilkinson contends that, in any event, the penalty ought to be remitted having regard to the following matters:
   • The discretion in section 35 is 'broad and general' and does not require 'exceptional circumstances'.[195]
   • In Riverland Retreat, it was accepted that if (as in this case) a taxpayer subjected their procedures to scrutiny and took steps to prevent future errors, these were matters to be considered in the exercise of the discretion.[196]
   • As in Riverland Retreat, there was no attempt by him to mislead the Commissioner (who treated him as having made a voluntary disclosure) and, as remedial steps have already been taken, there is no need to maintain a penalty 'to send a "compliance message".'[197]
6. Mr Wilkinson submits that interest should also be remitted, having regard to the following:
   • The power to remit interest is similar to the power to remit penalties,[198] and is wide and unconstrained as to both the market rate and premium rate.[199]
   • The considerations identified in relation to the remission of penalty.

1. The Commissioner submits that the Tribunal 'should refuse to remit the penalty tax'.[200]
2. Insofar as section 30(3) is concerned, the Commissioner contends the 'evidence does not appear to support the finding that the Applicant took reasonable care'.[201] In this regard, the Commissioner says Mr Wilkinson:
   • 'has not adduced any evidence of advice' as to the Sub-Sale Provisions, which is 'acute evidence of a failure to take reasonable care' given he signed the Form 6A in the presence of his solicitor and it was his standard practice to instruct external legal and financial advisors 'to establish a suitable land holding vehicle';[202]
   • 'is an experienced property developer' and 'ought to be well aware of the need to take care to ensure [the Form 6A] is completed consistently with the [Sub-Sale Provisions]'. Instead, it was 'false in material respects' (ie. that there was no land development and leaving the section on the subsequent purchaser blank);[203]
   • given the similarity between Mr Wilkinson's circumstances and those in Pitard, and the outcome of that case, 'it was particularly incumbent on Mr Wilkinson in this case to obtain advice'.[204]
3. No specific submission is made in relation to the remission of the penalty tax under section 35, although in her oral submissions, Ms O'Gorman contended that remission under that section was 'entirely inappropriate because no reasonable care was taken' and because of the 'incorrect answers' in the Form 6A.[205]
4. In relation to the remission of interest, the Commissioner notes that the premium rate has already been 'remitted in full' given that penalty tax has been imposed, while the market rate of interest was 'concessionally calculated from 29 June 2015 to when the Investigation commenced'.[206]
5. The Commissioner adds that Mr Wilkinson 'appears to have made limited, if any, efforts to ensure that the [Form 6A] was completed as [the Duties Act] required it to be'.[207]

1. While I accept that setting up appropriate procedures which support compliance with the Duties Act may provide some evidence as to the taking of reasonable care, that rather depends on how robust those procedures are.
2. Notwithstanding her experience in conveyancing, the in-house conveyancer was not a lawyer and, given the complexity of the Sub-Sale Provisions, it was inappropriate for Mr Wilkinson to simply have relied upon her to get the sequencing of the Nomination right and/or to accurately complete the Form 6A. This is particularly so in circumstances where it appears there were at least two sets of external advisers involved (i.e. a lawyer who assisted with the Sale Contract negotiations and a lawyer or accountant who recommended the establishment of WS Co to take the transfer).
3. The evidence of Mr Micevski does suggest that, for all other land purchases made by Mr Wilkinson between 1 July 2014 and 30 June 2017, a SPV was established and nominated as transferee well before any application for a planning permit.[208]
4. While it may be accepted that the failure to establish and nominate WS Co prior to the filing of the Original PP Application was a matter of oversight, it does not explain why this did not result in error being identified and disclosed to the Commissioner at the time of filing the Form 6A.
5. If there had been such disclosure, there would be a much stronger case for remission of the penalty tax. In the absence of that disclosure, I cannot accept that the existence of an internal procedure - which was not documented and proved to be faulty - amounts to 'reasonable care' in the sense used in section 30(3).
6. As to the remission of the penalty tax under section 35, I note that the Commissioner reduced the penalty tax from the default rate of 25%[209] to 20% on the basis that Mr Wilkinson made a voluntary disclosure in the course of the Commissioner's investigation.[210]
7. I am, however, mindful that the Commissioner's investigation commenced in August 2019, some four years after the Relevant Property had been transferred to WS Co and after its development had been completed and all the lots sold. While the evidence is that the PD Group made a profit on the development, the imposition of duty under the Sub-Sale Provisions can already be seen as a significant penalty in the context of an inadvertent error, resulting in a substantial reduction in the profit (of somewhere between 13% to 17%).
8. I also take account of the fact that, since the events in question, the PD Group has engaged Mr Micevski as General Counsel and he has put in place further, more robust, procedures (and associated training) to ensure the group addresses its duty obligations in future.
9. In these circumstances, I do consider it appropriate to allow some further reduction in the penalty.
10. Noting that, if there had been voluntary disclosure before the Commissioner's investigation the penalty would automatically be reduced to 5% (placing an effective 'floor' on the reduction of penalties where disclosure is not made before that time), I consider it appropriate in all the circumstances to remit the penalty tax to 12.5% of the duty, i.e. to $66,550.
11. I do not consider it appropriate to further remit the interest, having regard to the following matters:
    • the market rate represents the time value of money;
    • the Commissioner has already applied interest concessionally (i.e. for some but not all of the period of the tax default); and
    • I understand Mr Wilkinson has not taken any steps to pay the duty in dispute, despite an offer made by the Commissioner in 2021 to waive late payment interest if such payment was made.[211]

[2] Specifically, Administration Act, ss 8(2), 9, 13 and 63.