BETWEEN : WORSLEY TIMBER 2000 PTY LTD (in liq) (ACN 089 404 320)

Stamp duty - Appeal against disallowance of objection to reassessment - Reassessment resulting in claw-back of exemption from duty - Reassessment by virtue of legislation with retroactive effect

Stamp duty - Exemption from stamp duty for transfers between associated bodies corporate - Application of claw-back where parties do not remain associated for five years - Qualification on application of claw-back

Stamp duty - Refusal of exemption where instrument relates or likely to relate to "duty avoidance arrangement" - Two forms of "duty avoidance arrangement" - Whether "duty avoidance arrangement" represented by circumstances of case involving transfer of assets with a view to ultimate resale and carrying on business in the interim in the context of resolution of family dispute and distribution of assets of group to individuals ultimate beneficial owners of shares in group companies

Stamp duty - Meaning of "duty avoidance arrangement" in each of its two forms - Whether meaning for one form to be derived from considerations of business purpose of arrangement - Whether meaning for other form to be derived from the doctrine of "fiscal nullity" - Whether meaning to be derived from uses of exemption otherwise than as the legislature intended - Whether "reconstruction" described the uses so intended - Whether "reconstruction" not apt to cover circumstances of this case - Whether "reconstruction" not apt to cover "asset stripping or asset packaging" - Meaning of "asset stripping or asset packaging"

Stamp duty - Exemption from stamp duty for transfers between associated bodies corporate - Requirement for consideration for transfer not to be received directly or indirectly by person not one of the parties or an associated body corporate - Whether requirement not met in the circumstances of this case

Stamp duty appeals - Whether question of application of requirement as to receipt of consideration for transfer for exemption from stamp duty for transfers between associated bodies corporate properly part of the appeal

Interpretation of statutes - The mischief rule - "The modern approach to statutory interpretation" - The approach by reference to purpose - Use of extrinsic materials in interpretation - Limitations on the use of such materials

Acts Interpretation Act 1901 (Cth), s 51AA, s 51AB

Income Tax Assessment Act 1936 (Cth), s 260

Interpretation Act 1984 (WA), s 18, s 19, s 32, s 55

Revenue Laws Amendment (Assessment) Act 2000 (WA), s 2, s 8, s 12, s 13, s 14

Rules of the Supreme Court 1977 (WA), O 77 r 6(1)

Stamp Act 1921 (WA), s 16, s 31, s 31AA, s 32, s 33, s 70, s 73AA, s 74A, s 75J, s 75JAA, s 75JA, s 75JB, s 75JD, s 75JDA, s 75JE

Taxation Administration Act 2003 (WA), s 16

Trade Practices Act 1974 (Cth), s 4D, s 4F

1 This is an appeal under Stamp Act 1921 (WA), s 33, as it stood at the time of the appeal.

2 The appeal is against a decision of the Commissioner ("the respondent") to reassess the relevant instruments to stamp duty. The respondent had previously exempted those instruments from stamp duty and assessed them to nil duty.

3 Absent the respondent's exemption, the instruments were chargeable with stamp duty on an ad valorem basis, as a conveyance or transfer on a sale of land or other property.

4 The respondent's exemption had followed from the respondent having been satisfied that the requirements for the application of the relevant provision of the Stamp Act in respect of the conveyance or transfer were met. Those requirements were for the conveyance or transfer to be one between associated bodies corporate to which the other relevant requirements of the Stamp Act applied.

5 The respondent's reassessment arose out of subsequent amendments to the Stamp Act allowing for retrospective annulment of the respondent's exemption.

6 The amending legislation came into force in the relevant respects after the grant of the exemption. It added to the Stamp Act a new provision providing that the respondent might refuse to grant an exemption for a conveyance or transfer if the respondent considered that the relevant instrument related or was likely to relate to a "duty avoidance arrangement" as defined by the amending legislation. The respondent could do this even if the requirements for the application of the provision of the Stamp Act for the exemption referred to were met.

7 That amending legislation also provided for a "transitional period" to run prior to the coming into operation of the new provision empowering the respondent to refuse the exemption. If the respondent had granted an exemption during that period, and considered it would not have been granted if he had had the new power of refusal, then the exemption was annulled.

8 The respondent's exemption in this case was granted during that transitional period.

• whether or not under the amending legislation the respondent had the power reasonably to consider that the exemption would not have been granted other than by reference to whether or not the relevant instrument related or was likely to relate to a "duty avoidance arrangement" as defined by the amending legislation;
• if the respondent could do so, whether or not it was open to the respondent to argue for the dismissal of this appeal on that ground;
• if the respondent could do so, whether or not in this case the respondent could reasonably consider that the exemption would not have been granted;
• whether or not in this case the respondent could reasonably consider that the exemption would not have been granted by reference to whether or not the relevant instrument related or was likely to relate to a "duty avoidance arrangement" as defined by the amending legislation.

11 I begin by reviewing the facts, from the statement of agreed facts dated 18 July 2006 filed for the purposes of this appeal. I conclude that statement by reviewing the history of these proceedings.

12 I then consider the remainder of the complex statutory framework for this appeal, by way of elaboration of the matter with which I commenced this Introduction. In particular, I reproduce the text of the principally relevant statutory provisions.

13 I then turn to consider the issues in this appeal, in the order given, except that, for reasons which will become clear, I address the issue listed third at the end of my reasons.

14 The final section of my reasons is my conclusion.

15 Worsley Timber 2000 Pty Ltd ("the appellant") was incorporated as an Australian company on 6 September 1999. It was registered in Western Australia. At that time, the appellant was a member of a group of Australian companies having their registered offices in this State. The group has since been largely, if not entirely, dissolved, leaving the Appellant and a number of other companies. The vast majority (approximately 86 per cent) of the issued shares in the appellant are apparently now held by the beneficiaries of a trust ("the Trust") the settlor of which was Gustav Victor Johnson ("G V Johnson"), and the original beneficiaries of which were GV Johnson's wife, Lucy Hazel Johnson, their four children and the grandchildren of GV Johnson ("the Johnson Family") and any trust created by the trustee. It appears that there was no such trust at any time material to me, and therefore the beneficiaries of the Trust were the Johnson Family.

16 The detail I now provide is of the state of affairs as at 6 September 1999, the date of incorporation of the appellant.

17 What might be described as the head company of the group of which the appellant was a member was Occidental Investments Pty Ltd ("Occidental Investments"), which held all of the issued shares of Johnson & Lynn Pty Limited ("Johnson & Lynn").

18 All of the voting shares of Occidental Investments ("the A class shares") were held by GVJ Pty Ltd. The A class shares carried no right to receive any dividends, or to participate in any way in any distribution of profits or assets of Occidental Investments, on a winding up or reduction of capital or otherwise. GVJ Pty Ltd thus was the holding company of the Group.

19 All of the shares of Occidental Investments ("the C - H class shares") that carried no voting rights, but did carry the right to receive dividends and the right in any distribution of the assets of the company to receive in full the capital paid up on such shares (but without any right to participate any further in any distribution), in a winding up or otherwise, were held by the Johnson Family.

20 All of the remaining issued shares of Occidental Investments ("the B, I and J class shares") carried no voting rights, but did carry all other rights, including the right to participate in full in any distribution of the profits and assets on a winding up or otherwise, and were held by Wincold Nominees Pty Ltd, the trustee of the Trust ("the Trustee").

21 Johnson & Lynn in turn held approximately approximately 86 per cent of the issued shares of Hotham Investments Pty Ltd ("Hotham Investments"). Johnson & Lynn also held 100 per cent of the issued shares of Amalgamated Collieries of WA Pty Ltd ("Amalgamated Collieries") and of Adelaide Timber Co Pty Ltd ("Adelaide Timber"). The remaining issued shares of Hotham Investments were held by heirs of the late Frederick Thomas ("the Thomas Family") who are not related to the Johnson Family.

22 Hotham Investments owned all of the shares of Qualeup Investments Pty Ltd ("Qualeup Investments"). Qualeup Investments owned all of the issues shares of Chadoora Investments Pty Ltd ("Chadoora Investments"). Chadoora Investments owned all of the issued shares of Pindalup Investments Pty Ltd ("Pindalup Investments"). Pindalup Investments owned all of the issued shares of Quindanning Investments Pty Ltd ("Quindanning Investments"). Quindanning Investments owned all of the issued shares of Worsley Investments Pty Ltd ("Worsley Investments"). Worsley Investments owned all of the issued shares of Worsley Timber Pty Ltd ("Worsley Timber"). Worsley Timber owned all of the issued shares of the appellant.

23 Thus, through six interposed bodies corporate, Hotham Investments owned all of the issued shares of the appellant.

24 The companies I have named comprised the group of companies of which the appellant was a member, the head company of which was Occidental Investments, and the holding company of which was GVJ Pty Ltd ("the Group").

25 At the end of these reasons in an appendix I set out a chart, showing the relationships between the companies in the Group and between them and the Trust, and the dates of incorporation of all of the companies, as well the positions of the Thomas Family and the Johnson Family, on the incorporation of the appellant.

Factual background: the assets of the Group

26 Apart from shares in its member companies, the Group's assets included assets related to timber businesses, including land and buildings in the south west of this State, as well as other lands and buildings in Mandurah and Strathearn in this State, cash, and shares in a publicly listed company, Futuris Corporation Limited ("Futuris"). As at the time of the dissolution of most of the companies in the Group which I will shortly reach, the total value of its assets excluding intra-group holdings was over $190 million.

27 Until November 1999 the Group's timber business ("the Group Timber Business") was carried on through Worsley Timber and Adelaide Timber.

28 On 1 November 1999, Worsley Timber's timber assets were certain afforested lands with stands of millable timber ("the Land"), and a timber milling business at Palgarup in the South-West of this State ("the Timber Mill"), which included a timber mill, a timber contract between the Department of Conservation and Land Management ("CALM") and Worsley Timber, a lease and mill plant and equipment.

29 The Land comprised all of the land in Lot 102 and Lot 103 in the Shire of Collie, being all of the lands the subjects, respectively, of Certificate of Title Vol 2153 Folio 260 and Certificate of Title Vol 2153 Folio 261.

30 On the same date, 1 November 1999, Adelaide Timber's timber assets comprised certain licences, timber contracts with CALM and two timber mills, at East Witchcliffe and Wilga, both in the South-West of this State.

Factual background: the transfer of certain assets of the Group to the appellant

31 At its incorporation on 6 September 1999, the appellant's issued capital comprised one share, held by Worsley Timber. I note in passing there are references to that incorporation date as 3 September 1999 in some of the papers for this appeal. I take 6 September 1999 from the statement of agreed facts for the appeal.

32 By agreements dated 1 November 1999 the assets of the timber business carried on by Worsley Timber and the shares of Johnson & Lynn in Adelaide Timber were sold to the appellant.

33 The sale by Worsley Timber to the appellant was by two agreements.

34 By an Agreement for Sale of Land dated 1 November 1999 ("the Agreement for Sale of the Land"), Worsley Timber sold to the appellant, which agreed to buy, the Land. The total purchase price was $13.5 million. The consideration was paid by the issue and allotment at settlement to Worsley Timber of 2,700,000 ordinary shares of the appellant.

35 By an Agreement of Sale dated 1 November 1999 ("the Agreement for Sale of the Timber Mill"), Worsley Timber sold to the appellant, which purchased, the Timber Mill as a going concern. The net purchase price was $1.7 million. The consideration was paid by the issue and allotment at settlement to Worsley Timber of 340,000 shares of the appellant.

36 It is the stamp duty reassessed on the Agreement for Sale of the Land and Agreement of Sale of the Timber Mill (collectively "the Sale Agreements") just described which is the subject of the present appeal.

37 The only further issued shares of the appellant were 360,000 shares, issued on 3 November 1999 to Worsley Timber by subscription.

38 On 1 November 1999 Johnson & Lynn transferred all of the issued shares of Adelaide Timber to the appellant, for a purchase price of $1.3 million. It appears that the price was paid in cash.

39 It will be noted that the effect of the transactions I have just described was that by 3 November 1999 the appellant had acquired the timber business of Worsley Timber and the shares of Adelaide Timber, for a consideration of the issuance of additional shares of the appellant, and for other consideration. Throughout the appellant was a wholly owned subsidiary of Worsley Timber. The appellant itself had thereby acquired a wholly owned subsidiary, Adelaide Timber. The appellant became the company which itself or though a wholly owned subsidiary carried on the Group Timber Business.

40 Below I will indicate in more detail the context to these transactions involving the Sale Agreements.

41 On 3 November 1976, G V Johnson, in his capacity as governing director of GVJ Pty Ltd, passed a resolution varying the rights and entitlements of certain of the classes of shares in Occidental Investments ("the November 1976 Resolutions").

42 A family dispute ensued concerning the validity of the November 1976 Resolutions and the rights of the Johnson Family to assets of the Group on their distribution.

43 The dispute was resolved by an arrangement for the ratification of the November 1976 Resolutions, the voluntary liquidation of Occidental Investments and its subsidiary companies (except for the appellant and Adelaide Timber), and the distribution to the beneficiaries of the Trust of assets (and income) of the Trust as derived through its shareholding in Occidental Investments. That distribution was to be pro rated on the holdings of the C - H shares of Occidental Investments held by the beneficiaries of the Trust.

44 Below I will indicate in more detail the context to this arrangement for the resolution of the family dispute.

Factual background: the liquidation of companies in the Group and the ultimate holding of the shares of the appellant

45 On 7 January 2009 Occidental Investments was placed into voluntary liquidation.

46 On 1 February 1999 Hotham Investments was placed into voluntary liquidation.

47 On 24 September 1999 Johnson & Lynn was placed into voluntary liquidation.

48 On 10 November 1999 Worsley Timber was placed into voluntary liquidation.

49 By 17 November 1999 all of the companies interposed between Worsley Timber and Hotham Investments had been placed into liquidation. On that day the liquidator of each of the interposed companies in turn distributed the assets of the company up to its sole shareholder, with the result that on that day Hotham Investments became the sole shareholder of Worsley Timber.

50 On 8 December 1999 the sole assets in Worsley Timber were cash on deposit and 3,400,001 shares in the appellant. On that day, the liquidator of Worsley Timber resolved to distribute the cash and the shares in specie to Hotham Investments. The cash was to be paid and the shares transferred no later than 9 December 1999.

51 On 9 December 1999, in accordance with the resolution referred to, the cash - except for cash with which to pay debts - and the shares in the appellant were distributed to Hotham Investments.

52 As a result, on that day, 9 December 1999, Hotham Investments had assets in the form of cash on deposit, and the shares in the appellant formerly held by Worsley Timber.

53 On the previous day, 8 December 1999, the liquidator of Hotham Investments had resolved to distribute the company's assets to be paid and transferred no later than 9 December 1999. As I have indicated, approximately 14 per cent of the issued shares of Hotham Investments were held by the Thomas Family, and the remaining issued shares, about 86 per cent of the issued shares of that company, were held by Johnson & Lynn.

54 On 9 December 1999, the liquidator of Hotham Investments distributed the assets of the company to its shareholders. This included an in specie distribution of the 3,400,001 shares of the appellant, as to 478,672 shares (approximately 14 per cent of the total) to the Thomas Family, and as to 2,921,329 shares (approximately 86 per cent of the total) to Johnson & Lynn.

55 On 24 December 1999, the liquidator of Johnson & Lynn resolved to distribute the assets of the company to its sole shareholder, Occidental Investments.

56 On 25 December 1999, the liquidator of Johnson & Lynn made the distribution of the assets of the company to Occidental Investments. Those assets were cash, the Mandurah and Strathearn lands previously referred to, shares in Amalgamated Collieries, the 2,921,329 shares of the appellant received by Johnson & Lynn from Hotham Investments, and shares in Futuris.

57 I was told at the hearing that the shares in Futuris were held for the most part by Amalgamated Collieries, and for the rest by Johnson & Lynn. As part of the liquidation of the other companies in the Group, Amalgamated Collieries was liquidated, and its assets distributed to its shareholder. It was not in contest the effect of this was that all of the Group's shares in Futuris ultimately came to rest in the hands of the Johnson Family, as I will shortly indicate.

58 On 26 December 1999, the liquidator of Occidental Investments resolved to distribute the assets of the company to its shareholders.

59 On 27 December 1999, the liquidator of Occidental Investments distributed the assets of the company to its shareholders. He did this by paying the paid up capital of the C - H class shares to their holders, and by distributing the balance of the cash and other assets of the company to the Trustee, as the holder of the B, I and J class shares. The distribution of that balance included the 2,921,329 shares in the appellant.

60 On 27 December 1999 the Trustee resolved to distribute, and distributed, the assets of the Trust to the beneficiaries of the Trust, the Johnson Family. This represented an in specie distribution of the 2,921,329 shares in the appellant to 18 beneficiaries, as well as the land and buildings at Mandurah and Strathearn (to two beneficiaries), and the shares in Futuris.

61 The result was that, on 27 December 1999, the shares in the appellant, representing all of its issued shares and formerly held by Worsley Timber as a member of the Group, had been distributed, as to 478,672 shares to the Thomas Family, and as to 2,921,329 shares to 18 beneficiaries of the Trust who were members of the Johnson Family.

Factual background: the transfer of the land held by the appellant

62 It will be recalled that by the Agreement for Sale of the Land Worsley Timber had sold the Land to the appellant.

63 On 1 November 2002, the appellant for its part sold the Land to Fieldon Pty Ltd for $17.5 million. Fieldon Pty Ltd was not at any material time a company related to the appellant.

The assessment to stamp duty consequences other than those appealed from

64 I put aside the stamp duty assessment and reassessment in respect of the Sale Agreements, to which I return below.

65 The remaining transactions are the distributions of assets up the chain of companies in the Group, the distribution of assets by the Trustee, and the sale of the Land by the appellant.

66 There was apparently no contest that the transactions of all of these types were correctly assessed to stamp duty, in the following ways.

67 In the cases of the distributions of assets by each of the companies in liquidation the respondent reduced the duty otherwise payable to zero. This was the result of the following provisions of the Stamp Act.

68 At all relevant times (which I return to below), Stamp Act, s 74A(1)(c), made a conveyance or transfer of any property by a liquidator of a company to any of its shareholders in the course of a distribution of its assets as a consequence of its winding up, other than a transfer or conveyance to which s 74A(1)(b) applied, chargeable with duty in accordance with Item 4 of the Second Schedule to the Act. I return to Item 4 of the Schedule below, which made the conveyance or transfer chargeable with ad valorem duty. Stamp Act, s 74A(1)(b) provided for distributions by a liquidator of a company to any of its shareholders pursuant to a right to a right attaching to any of its shares to receive any particular property of the company, and had no application here.

69 However, Stamp Act, s 74A(2), provided as follows (emphasis supplied):

"(2) If in a case to which subsection (1)(c) applies, the Commissioner is satisfied that the corporation is not being wound up as part of an arrangement or scheme designed with the collateral purpose of reducing the duty otherwise payable on the conveyance or transfer of the property, the Commissioner may deduct from the unencumbered value of the property an amount calculated under subsection (4) but in any event not greater than the unencumbered value of the property."

70 As will become apparent below, the words emphasised assumed some significance in the argument before me.

71 Stamp Act, s 74A(3), added:

"(3) In considering whether or not he or she is satisfied for the purpose of subsection (2), the Commissioner may have regard to

(a) the duration of the shareholder's shareholding in the corporation;

(b) whether or not the shareholder held shares in a related corporation of the corporation that owned the property before it was owned by the corporation;

(c) the period for which the property has been owned by the corporation or a related corporation of the corporation;

(d) any dealing in shares of the corporation or a related corporation of the corporation -

(i) by the shareholder or a related corporation of the shareholder;

(ii) by a previous owner of the property;

(e) whether there is any commercial efficacy to an arrangement or scheme of transactions involving any one or more of -

(i) the corporation;

(ii) the shareholder;

(iii) a related corporation of the corporation or the shareholder;

(iv) a substantial shareholder (as defined in Part 6.7 of the Corporations Law) of a person referred to in subparagraph (i), (ii) or (iii),

in relation to the winding up, other than to reduce the duty otherwise payable on the conveyance or transfer;

(f) any other matters he or she considers relevant."

72 Stamp Act, s 74A(4), provided for a calculation by reference to the shareholder's proportion of the unencumbered value of the property which was the subject of the conveyance or transfer chargeable to duty.

73 In the cases of the distributions between members of the Group up to the distribution to Occidental Investments, and the distribution by Occidental Investments to those of its shareholders which I previously described, the respondent was satisfied in the terms of Stamp Act, s 74A(2), and using the calculation from s 74A(4) he reduced the duty otherwise payable to zero.

74 I take the relevant times for the purposes of the inter-corporate distributions referred to be the respective dates of those distributions, between 17 November 1999 and 24 December 1999. I take the relevant time for purposes of the distribution by Occidental Investments to its shareholders to be the date of that distribution, 26 December 1999.

75 In the case of the distribution of the assets of the Trust to its beneficiaries, the respondent determined the conveyances or transfers were chargeable with nominal duty under the following provisions of the Stamp Act.

76 At the relevant time (which I have taken as 27 December 1999, the date of the distribution) Stamp Act, s 73AA(1)(d), provided that a conveyance or transfer as described there was chargeable with duty in accordance with Item 6 of the Second Schedule. That Item provided for duty at the lesser of $20 or the duty under Item 4 of the Schedule, if the conveyance or transfer were chargeable with duty under that Item.

77 Stamp Act, s 73AA(1)(d), described the conveyance or transfer attracting that treatment as follows:

"(1) A conveyance or transfer -

...

(d) made by a discretionary trustee, in exercise of a power of appointment over the property conveyed or transferred, to a beneficiary who is a natural person for his own use and benefit, if -

(i) at the time when the discretionary trustee acquired the property conveyed or transferred the beneficiary was named or described in the instrument which created the power of appointment as a beneficiary or as a member of a class of beneficiaries in whose favour the discretionary trustee was empowered by that instrument to appoint the property; and

(ii) evidence of the acquisition by the discretionary trustee, as such trustee, of the property conveyed or transferred is produced to the respondent with that conveyance or transfer."

78 Finally, as to the sale of the land of the appellant to Fieldon Pty Ltd, stamp duty at the ad valorem rate provided for by Stamp Act, Second Schedule, Item 4, was assessed and duly paid on the conveyance, in the amount of $956,300.

79 By a Stamp Duty Assessment issued 30 December 1999 ("the First Stamp Duty Assessment"), the Sale Agreements were each assessed to nil duty. There had been an earlier application for exemption under Stamp Act, s 75JD, to which I return below, and that exemption had been granted by the respondent, under Stamp Act, s 75JB(3), which it is common ground had resulted in that assessment.

80 By Stamp Duty Requisition issued 18 July 2000 and a further Stamp Duty Requisition issued 19 July 2000 the respondent notified the solicitors for the appellant as follows:

"As a result of recent amendments to the Stamp Act, your exemption to stamp duty in the above matter has now been retrospectively disallowed."

81 It was not in contest that the reference to the amendments in question was to those made by Revenue Laws Amendment (Assessment) Act 2000 (WA), No 29 of 2000 ("the Revenue Act"), to the material provisions of Pt 2 in which I will return, below.

82 It was common ground that, by Stamp Duty Assessment issued on 21 August 2000 ("the Second Stamp Duty Assessment"), the Sale Agreements were assessed to stamp duty of $726,883.55.

83 By notice of objection dated 29 September 2000, and sent under cover of a letter dated 29 September 2000 from the solicitors for the appellant to the respondent, the appellant objected to the Second Stamp Duty Assessment.

84 The procedure for making and responding to Objections at 29 September 2000 was provided for in Stamp Act, s 32, which in material part at that date read as follows:

"(1) A person who is dissatisfied with an assessment made by the Commissioner for the purposes of this Act, may, within a period of 42 days after the date of issue of that assessment, object to the assessment by forwarding to the Commissioner a statement in writing of the grounds of his objection to the assessment.

...

(3) The Commissioner shall consider any objection and may allow or disallow the objection wholly or in part and may modify or confirm the assessment to which the objection relates.

(4) The Commissioner shall inform the person by whom the objection was made, in writing, of his decision on the objection and the grounds for that decision.

(5) If an assessment of duty is modified under subsection (3), the amount of duty payable shall be such amount as is fixed by the Commissioner; and the Commissioner shall refund the amount of any excess of duty which may have been paid in accordance with the assessment and the amount of any excess of any fine charged under section 20 or 31AC.

(6) For the purposes of this section and sections 33 and 34A the term assessment shall include a reassessment issued under section 31AA or 76AW and any determination or decision made or purported to be made, or direction given or purported to be given, by the Commissioner under the provisions of this Act other than under this section, section 33, section 75JA(3) or section 75JB(7)."

85 As will become apparent below, the respondent's case that the assessment appealed against can be sustained rests in part on this provision. I will return to it in that context.

86 By letter dated 31 October 2001 from a representative of the respondent to the solicitors for the appellant, the appellant was informed that its objection to the Second Stamp Duty Assessment had been disallowed and reasons were provided.

87 By letter dated 7 November 2001 from the solicitors for the appellant to the respondent, those solicitors, "pursuant to the provisions of Section 33 of the Stamp Act and the Rules of the Supreme Court of Western Australia Order 77", gave the respondent notice of appeal and requested him to treat the objection to the Second Stamp Duty Assessment as an appeal to the Court against his decision to disallow the appellant's objection. It was not in contest that this is the date I should consider to be that of the commencement of the appeal.

88 As at 7 November 2001, the Stamp Act, s 33, read as follows:

"(1) A person who is dissatisfied with the decision of the Commissioner on an objection by the person may, within 42 days after service of notice of the decision of the Commissioner, appeal to the Supreme Court against that decision.

(2) A person entitled to appeal against a decision of the Commissioner on an objection by that person may, whether before or after the expiry of the time for appealing, apply for an extension of time, and the Commissioner may, for reasonable cause shown by that person, extend the time for appealing for such period as the Commissioner considers reasonable in the circumstances.

(3) The Supreme Court shall hear and determine an appeal under subsection (1).

(4) Where the Supreme Court determines that the assessment of duty to which the appeal relates is in error, it shall assess the duty chargeable under this Act, recalculate any fine charged under section 20 or 31AC, and order the Commissioner -

(a) if the Court determines that the instrument has been charged with excess duty, to refund the amount of any of that excess of duty which may have been paid and the amount of any excess of any fine charged under section 20 or 31AC_;_ or

(b) if the Court determines that the instrument has been charged with insufficient duty, to reassess the instrument under section 31AA."

89 At the material time O 77 r 6(1)(c) and (d) read as follows:

"(1) With the notice of objection the Commissioner shall forward to the Registrar -

...

(c) copy of the notice of the disallowance of the objection;

(d) a statement by the Commissioner setting out

(i) the facts on which the assessment is based;

(ii) the reasons for the Commissioner's decision on the objection; and

(iii) the questions of law and fact which the Commissioner considers will require to be determined on the appeal

(e) the request to forward the objection to the Court; and

(f) any other documents in his possession or power that are necessary for the hearing of the appeal."

90 After 7 November 2001 Stamp Act, s 33, was amended in a number of ways, none material for my purposes. Ultimately, on 1 July 2003, the right of appeal in s 33 was subsumed in a broader right of appeal, in other legislation. Since 1 January 2005, that latter right of appeal has not been to this Court, but to the State Administrative Tribunal. Order 77 was repealed at that time.

91 I describe that history in slightly greater detail in TEC Desert Pty Ltd v Commissioner of State Revenue [2006] WASC 300 at [8] - [15], where I also consider the implications of the conferral of jurisdiction on the SAT were an appeal like the present one to be affected by that change.

92 However, for the reasons given in TEC Desert at [10] - [15], which in my view equally apply in this case, I consider that the present appeal is governed by Stamp Act, s 33, as it stood at the time of the commencement of the appeal.

93 The correctness of the views expressed in the previous paragraph was not contested by the parties for the purposes of the hearing before me.

94 It follows, both that Stamp Act, s 33, as it stood at 7 November 2001, and the former O 77, as it stood at that date, apply to this case. I return to the implications of the application of both for which the parties contended below.

The Stamp Act and the application for an exemption

95 In this section of my reasons I elaborate upon the provisions briefly referred to in my Introduction. I also set out some additional factual background, to indicate the parties' views at the time of how these provisions were then seen to be relevant. Those views are relevant to me by way of further elaboration on the factual background I have already provided. The additional detail in that elaboration assumed some significance in the argument at the hearing.

96 When I consider the issues I described at the outset, I will return to the matter of the provisions' relevance as it was put to me at the hearing.

97 It is convenient to start with a letter dated 21 September 1999 from the then solicitors for the appellant to the respondent. In that letter the solicitors explain that, following the entry of Occidental Investments, as the "parent company" of the Group, into voluntary liquidation, by members' resolution of 7 January 1999, documents "are in the process of being prepared and executed to effect the winding up of the [Group], and the distribution of assets". The liquidator, it was indicated:

" ... would like to make submissions to you in respect of the stamp duty implications of the winding up, so that as soon as instruments relating to the winding up are executed and forwarded to your office Stamp Duty Assessments may be issued with the least possible time lag."

98 After describing the Group, the solicitors, in describing the Timber Mill, said this:

"However, given the current state of the timber industry and recent changes in Government policy in relation to the industry it is difficult to assess the value of the timber mill accurately. We understand that the timber mill includes a timber licence which has approximately 3 years to run."

99 The solicitors also indicated that "[t]he Group is being wound up as a result of a family dispute between some members of the Johnson family", and further indicated:

"[i]t is desired by the family to sell the assets of the Group except for the [shares in the listed public company], which it is desired to distribute through to family members or their associated entities. Many of the Group assets have been sold recently. However, due to problems associated with the logging industry in WA, it appears unlikely that the timber assets held by [Worsley Timber] and Adelaide Timber can be sold for any reasonable price in the immediate future."

100 I return to the "problems" referred to, and their implications for the design of the arrangements ultimately settled upon, below, when I refer to certain affidavit evidence, from the governing director of GVJ Pty Ltd.

101 In describing the winding up of Johnson & Lynn, of Amalgamated Collieries, of the companies interposed between Worsley Timber and Hotham Investments, and of those two companies and Occidental Investments, the letter indicated the reasons why Stamp Act, s 74A(2), should be applied to the distributions of their assets to their shareholders. The letter did this by reference to the factors listed in s 74A(3), which I have previously set out. One such factor referred to was the "commercial efficacy to the arrangements involving [the companies], being that the winding up is to settle a family dispute and transfer ownership of the assets to separate family entities".

102 The letter also repeated the difficulty for Worsley Timber "to efficiently dispose of its timber milling property and interests on the open market in the near future, due to current problems in the logging industry" and went on:

"Because it is desired to distribute the substantial cash held by [Worsley Timber], the winding up of this company should not be delayed. However it is not considered desirable or feasible that the timber assets should be distributed in specie up the chain, as these assets are part of a cohesive operating enterprise, which should be run by one company, and could not be efficiently operated if subject to fragmentation in the hands of various Johnson family members and members of the Thomas family.

Accordingly, a new Group company, [the appellant] was incorporated ... The purpose of [the appellant] is to hold some of the Group's timber milling interests, these interests currently held by [Worsley Timber]."

103 I return to the "fragmentation" and alternatives to it below, by reference to the affidavit evidence I referred to.

104 The letter enclosed for review drafts of the Sale Agreements. The letter concluded with an invitation to the respondent, if he required "any further information", to "not hesitate to contact us". There was no such contact to which I was referred.

105 The letter dated 21 September 1999 included a review of the exemptions from stamp duty otherwise chargeable on the Sale Agreements for "certain corporate reconstructions". Those exemptions were in Stamp Act, Pt IIIBAAA, as it stood at the relevant time, to which I will return.

106 It is first necessary to note the stamp duty to which the Sale Agreements would otherwise have been subject. The letter does not indicate the relevant provisions. However, it was common ground before me that, absent Stamp Act, Pt IIIBAAA, the Sale Agreements would have been chargeable to ad valorem duty as a conveyance or transfer of property, as provided for by s 16, read with s 70, under Item 4 of the Second Schedule.

107 It was also common ground before me that the relevant exemption in Stamp Act, Pt IIIBAAA, was that provided for in s 75JB(3) read with the relevant provisions in s 75JB(1), and with s 75J(2). However, account also needed to be taken of the possibility for s 75JE's "claw-back" (as it is called in the heading to the section) of the exemption. That possibility required account to be taken of s 75JB(5). Most of these provisions are referred to in the letter of 21 September 1999. I will now go over them in detail, as, with provisions added to Pt IIIBAAA after the date of the Sale Agreements, and a provision in the legislation that made the additions, they are at the heart of this appeal.

Stamp Act, Pt IIIBAAA****

108 Stamp Act, Pt IIIBAAA, is headed "Exemptions for Corporate Reconstructions". The term "corporate reconstruction" is, however, nowhere defined in Pt IIIBAAA, or elsewhere in the Stamp Act. The term is only used in the texts of the provisions in Pt IIIBAAA in s 75JA, as I will indicate shortly. I will consider the term again below, as it assumed some significance in the argument for the respondent.

109 Stamp Act, s 75JA, headed "Corporate reconstructions: exemptions", provides, in the circumstances it describes in s 75JA(1) or (1a), as applicable, for an exemption in respect of the instrument of transfer, or, if the acquisition is a "relevant acquisition" under Pt IIIBA, in respect of the Pt IIIBA statement lodged in respect of the acquisition of shares. (As I will indicate below, Stamp Act, Pt IIIBA, is concerned with certain transfers of shares of what were called before me, and in some of the materials extrinsic to the Stamp Act to which I was referred, "land rich companies".)

110 The acquisition in s 75JA(1) and (1a) is referred to in each as one "in connection with a scheme for the reconstruction of a body corporate or the amalgamation of bodies corporate". However, it is common ground that s 75JA as it stood at any time material to this case had no application in this case. Rather, the relevant provision for an exemption in Pt IIIBAAA, as that provision stood at all times material to this case, was s 75JB.

111 Stamp Act, s 75JB, is headed "Corporate reorganizations: exemption from duty on conveyances between associated bodies corporate". However, unlike s 75JA, the text of the section makes no use of the term "corporate reorganizations", or "corporate reconstructions" for that matter.

112 Stamp Act, s 75JB(3)(a), read at all times material to this case as follows:

"(3) If on an application under section 75JD it is shown to the satisfaction of the Commissioner that this section applies, then -

(a) the Commissioner shall exempt an instrument executed on or after 1 October 1996 to which this section applies from duty under item 4, 4A, 13(3) or 19 of the Second Schedule."

113 There was also provision for an exemption in s 75JB(3)(b). It is common ground that had no application to this case. From now on, my references to the exemption under s 75JB(3) should be understood as to the exemption granted in this case under s 75JB(3)(a).

114 Stamp Act, s 75JD, provided for an application for an exemption under s 75JB to be in a form approved by the respondent lodged with him within 12 months after the execution of the instrument concerned.

115 By separate applications, both dated 1 November 1999, in respect of the Agreement for the Sale of the Land and the Agreement for Sale of the Timber Mill respectively, the appellant made application for an exemption on the form provided for. Those applications were provided to the respondent under cover of a letter from the solicitors for the appellant dated 24 November 1999. That letter referred to other matter relevant to the application.

116 There are questions listed in the application forms, and the forms lodged set out answers to those questions. Most of the answers are in "Yes" or "No" form. Some of the answers and their significance will be considered below when the relevant provisions of the Stamp Act are set out.

117 For now, I note that each application, for the item 2 "full facts and circumstances surrounding the transaction including reason therefore [sic]", in Annexure "A" responded as follows:

"The group of companies of which the transferor is a member is in the process of being wound up, due to a dispute between some members of the family who are some of the ultimate beneficiaries of the shareholding in the group of companies of which the transferor forms part. Although the family has attempted to resolve the dispute, it has become apparent that the only solution is to dissolve the whole group, which is in the process of voluntary liquidation.

As part of that process the transferor has been placed into voluntary liquidation. Its assets will be distributed to its shareholder. In particular the distribution of the substantial cash held by the transferor should not be delayed.

Due to current uncertainty and problems in the timber industry the transferor was not able to efficiently dispose of its timber milling property and interests on the open market.

It is not desirable or feasible that the timber assets should be distributed in specie up the chain of companies in the group, as these assets are part of a cohesive operating enterprise, which should be run by one company, and could not be efficiently operated if subject to fragmentation in the hands of various owners.

Accordingly, a new group company being the transferee, was incorporated to continue to hold and operate the timber milling interests previously held by the transferor."

118 It will be noted that this response in these respects provides substantially the same matter as in the letter of 21 September 1999, above.

119 It will be noted from s 75JB(3) that it must be shown "to the satisfaction of the [respondent] that this section applies". It was not in contest before me that this required the respondent to act reasonably in determining whether or not he was so satisfied: Kruger v the Commonwealth [1997] HCA 27; (1997) 190 CLR 1, per Brennan CJ, at 36; Ex parte Taylor [2001] HCA 51; (2001) 207 CLR 391, per Gummow and Hayne JJ, at [167]. It was further not in contest before me that reasonableness required the respondent to apply the relevant statutory provisions on their proper construction: see Phil Winkless Pty Ltd v Commissioner of State Taxation (WA) (1986) 86 ATC 4556, per Burt CJ, at 4557. Whether or not the construction as contended for by counsel for the respondent that would have enabled the respondent, on the factual background I have described, to act as he did in respect of the reassessment appealed against was the proper construction was the central question in this case.

120 The reference to the application of Stamp Act, s 75JB, was to s 75JB(1). It was common ground that the relevant provisions in s 75JB(1) were s 75JB(1)(a), (b), (c), (d)(ii)(B) and (f)(i). I set these out with brief introductory commentary on each.

121 Stamp Act, s 75JB(1)(a) provided:

(a) an instrument conveys, transfers or assigns a beneficial interest in property from one body corporate ('A') to another body corporate ('B')."

122 It was not in contest before me that this requirement was met, nor that "A" was Worsley Timber and "B" the appellant.

123 Stamp Act, s 75JB(1)(b) provided:

"(1) This section applies if -

...

(b) the instrument does not convey, transfer or assign any other interest or property which if separately conveyed, transferred or assigned would not be exempt under this Act."

124 It was not in contest before me that this requirement was met.

125 Stamp Act, s 75JB(1)(c), provided:

"(1) This section applies if -

...

126 It was not in contest that this requirement was met, through the following description of when, for the purposes of Stamp Act, Pt IIIBAAA, "2 bodies corporate are associated".

127 That description appeared in Stamp Act, s 75J(2)(a)(i), read with s 75J(2)(b), as follows:

"(2) In this Part, unless the contrary intention appears -

(i) one of them beneficially owns (directly or indirectly) at least 90% of the issued share capital of, and has voting control over, the other;

...

(b) a body corporate ('A') has voting control over another body corporate ('B') if A is in a position to cast or control the casting of at least 90% of the maximum number of votes that might be cast at a general meeting of B (excluding any power to vote by any person by virtue of the provisions of any debentures or a trust deed securing the issue of such debentures)."

128 Stamp Act, s 75JB(1)(d)(ii) provided:

"(1) This section applies if -

...

(d) at the date of execution of the instrument, A and B have been associated bodies corporate for at least the qualifying period unless -

...

(ii) A and B have been associated since A acquired at least 90% of the issued share capital -

...

(B) of B as a body corporate incorporated in Australia that had been dormant since it was incorporated,

and B has been dormant from when A and B became associated until B resolved to acquire the beneficial interest."

129 The "qualifying period" referred to in Stamp Act, s 75JB(1)(d), is, broadly, a maximum of three years (s 75JB(2)). However, it appears to have been common ground before me that that period had no application in this case, because of s 75JB(1)(d)(ii)(B).

130 The meaning of "dormant" was to be gathered from Stamp Act, s 75JAA. It was not in contest before me that "B" (the appellant") was "dormant" at all times material to the application of the term.

131 Stamp Act, s 75JB(1)(f)(i) provided:

"(1) This section applies if -

...

(f) the instrument was not made pursuant to or in connection with an arrangement under which -

(i) the consideration, or any part of it, for the conveyance, transfer or assignment was to be provided or received, directly or indirectly, by a person other than A or B or a body corporate that at the time the instrument was executed was associated with either A or B."

132 In relation to this requirement, there is a substantial contest before me, both as to whether or not the requirement was met in this case, and, if it was not, whether or not, by virtue of the Revenue Act provisions I will reach shortly, the respondent was in a position to invoke that shortfall in relation to the assessment appealed against in this case. Thus, I will need to return to this requirement.

133 For now, I note that in the appellant's applications under Stamp Act, s 75JD, there were two questions, 11 and 12, which appear to be drawn from the requirement in s 75JB(1)(f)(i).

"Was the consideration (or any part of it) for the transfer of the property provided directly or indirectly by a non group member?"

135 The answer to this question on each of the two applications was "NO". The contest between the parties does not appear to relate to this aspect of the application of Stamp Act, s 75JB(1)(f)(i).

"Was the consideration (or any part of it) for the transfer of the property received directly or indirectly by a non group member?"

137 The answer to this question on each of the two applications was "NO". The contest between the parties related to this aspect of the application of Stamp Act, s 75JB(1)(f)(i), as will become apparent below.

The Stamp Act with respect to a "claw-back"

138 At the time of the application for and the grant of the exemption in this case, the Stamp Act, Pt IIIBAAA, provided for a "claw-back" of an exemption granted under s 75JB(3). As I have indicated, that is the provision under which the exemption applied for this in this case was granted.

139 It was common ground that the relevant provision of the Stamp Act describing the effect of a claw-back was s 75JE, which applied "if the claw-back applies" (s 75J(2)(c)(i)).

140 Stamp Act, s 75JE provided in material parts follows:

(a) the instrument shall be deemed not to have been exempted;

(b) the instrument shall be charged with a fine equal to 20% per annum of the duty chargeable on the instrument calculated from the date of the execution of the instrument to the date the Commissioner is notified under section 75JB(4), or if the Commissioner is not so notified, to the date an assessment for that duty and fine is issued by the Commissioner;

...

(2) The Commissioner may remit wholly or in part a fine chargeable under subsection (1)."

141 It was common ground the provisions of the Stamp Act relevant to when the "claw-back applies" were s 75JB(4)(a) and (5), which were as follows:

"(4) If within 5 years after the execution of the instrument or the date of the relevant acquisition -

(a) A and B cease to be associated;

...

A and B, or B, or the person (as the case requires) shall notify the Commissioner in writing in a form approved by the Commissioner within one month after the relevant event.

(5) If within 5 years after the execution of the instrument or the date of the relevant acquisition A and B cease to be associated then the claw-back applies unless A and B cease to be associated in circumstances where A has no assets or no assets other than cash or money in an account at call or on deposit with any person or a negotiable instrument."

142 In the appellant's applications under Stamp Act, s 75JD, there was a question 13 which appears to have been drawn from s 75JB(5). That question read:

"13. Does the transferee intend to remain continuously associated with the transferor for a period of no less than 5 years after the property is transferred?"

143 There was a provision, in item 13.1 in the applications in case the answer to the question was "NO", in which to provide "full details and circumstances pertaining to your answer". After the appellant's answer to question 13, "NO" in each application, the following appeared, at 13.1:

"The transferor and the transferee will probably cease to be associated within 5 years after the transfer due to the winding up of the transferor. However the companies will cease to be associated in the circumstances where the transferor will have no assets other than cash."

144 It was common ground that, following the First Stamp Duty Assessment in relation to the Sale Agreements, the solicitors for the appellant, by letter dated 5 January 2000, provided the notification called for by s 75JB(4), as anticipated by that answer at item 13.1, in respect of Worsley Timber and the appellant, as follows:

"On 9 December 2000 [Worsley Timber] and [the appellant] ceased to be associated for the purposes of Part IIIBAAA of the Act, by the transfer of shares in [the appellant] from [Hotham Investments], being the sole shareholder of [Worsley Timber], to its shareholders."

145 It was common ground before me that the answer in the applications for exemption at item 13.1 foreshadowed the application of that qualification, and that qualification was met in this case.

146 That is, I take it for the purposes of this case that no question of the application the claw-back arose in this case until the coming into force of the legislation amending the Stamp Act I reach next.

The Stamp Act, the Revenue Act and the assessment objected to

147 I note that when the First Stamp Duty Assessment was provided to the appellant, the respondent foreshadowed the possible effect, on the exemption that lay at the heart of the assessment, of possible future amendments to the Stamp Act.

148 The respondent did this in the letter dated 30 December 2000 which attached the Stamp Duty Assessment issued 30 December 2000. That letter in material part said this:

"You may be aware that the Hon GM Evans, Minister for Finance issued a media statement on 25 October 1999, indicating that amendments to close an avoidance scheme involving the corporate reconstruction exemption would be introduced by the Government.

The Minister stated that the amendments would include an anti-avoidance provision and would be retrospective to 25 October 1999.

As these amendments have not yet become law, the exemption can only be administered on the basis of its current requirements. However, if enacted as intended, these amendments may affect your corporate reconstruction exemption in the following manner:

The corporate reconstruction exemption application for the transfer of assets from [Worsley Timber] to [the appellant] made on 24 November 1999 involves circumstances that are considered by [the respondent] to be outside the intent of the corporate reconstruction exemption, to the extent that it does or could permit asset packaging by the company.

Accordingly, once the amendment mentioned above commences, your exemption is likely to be retrospectively disallowed and reassessed, resulting in a requirement to repay the amount of duty exempted under this transaction."

149 In the event, the "amendments" referred to became those made by the Revenue Act. By s 2, provisions in the Revenue Act that included those in its relevant part, Pt 2, came into force on the date the Act received the Royal Assent. That date was 6 July 2000.

150 Revenue Act, Pt 2, Div 2, headed "Corporate Reconstructions", contained provisions amending provisions in Stamp Act, Pt IIIBAAA. Among those amendments were ones to s 75J, s 75JB and s 75JE. It appears to have been common ground before me that none of those amendments were directly relevant to this case.

151 Revenue Act, Pt 2, Div 2 also added a number of provisions to Stamp Act, Pt IIIBAAA. It was common ground that the only such addition applicable to this case, through Revenue Act, s 8(2) and (3), was that made by s 8(1), adding a new Stamp Act, s 75JDA. That provision, so added, is at the heart of this appeal, with Revenue Act, s 8(2) and (3).

152 Stamp Act, s 75JDA, was amended subsequently to its addition by the Revenue Act. However, it was common ground that the provision as so added is the version relevant to this appeal.

153 Stamp Act, s 75JDA, as added to the Stamp Act at 6 July 2000 by the Revenue Act, s 8(1), read in material parts as follows:

(a) avoiding or circumventing the operation of the provisions of this Part so far as they make the availability and continued effect of an exemption under section 75JB dependent on bodies corporate having been associated for a particular period or remaining associated for a particular period; or

(b) having as its purpose, or one of its purposes, the reduction of duty that might otherwise become payable.

...

(3) Even if on an application under section 75JD it is shown to the satisfaction of the Commissioner that section 75JB applies, the Commissioner may refuse to grant an exemption under section 75JB(3) in respect of an instrument or a Part IIIBA statement if the Commissioner considers that the instrument or statement relates or is likely to relate to a duty avoidance arrangement.

..."

154 The application of this provision in relation to an assessment made prior to the provision's coming into force was the result of Revenue Act, s 8(2) and (3), which read as follows:

'transitional period' means the period beginning on 25 October 1999 and ending when subsection (1) comes into operation.

(3) If an exemption under section 75JB of the Stamp Act 1921 has been granted during the transitional period and the Commissioner is of the opinion that it would not have been granted if subsection (1) had come into operation on 25 October 1999, the claw-back under Part IIIBAAA of that Act applies."

155 It was common ground before me that "the claw-back under Part IIIBAAA" in the context of this case was a reference to Stamp Act, s 75JE, reproduced in material part above.

156 I have previously referred to the issue on 18 and 19 July 2000 of Stamp Duty Requisitions notifying the appellant's solicitors that "[a]s a result of recent amendments to the Stamp Act, your exemption to stamp duty ... has been disallowed".

157 I have also previously referred to the Second Stamp Duty Assessment for duty in the amount of $726,878.55 on the Sale Agreements. It is common ground that that assessment contained no element of the fine allowed for by Stamp Act, s 75JE(1)(b), above. I presume the respondent exercised his power, in s 75JE(2), above to remit such a fine "wholly".

158 I conclude this section of my reasons by noting that by attachment to a letter from the solicitors for the appellant to the respondent dated 13 November 2007 a cheque in the amount of $726,883.55 "on account of the stamp duty assessed on 29 September 2000, the subject of the Objection" was sent to the respondent. It was indicated in the letter that the amount was "paid under protest and subject to the appeal".

159 I note that the reference in that letter to the "stamp duty assessed on 29 September 2000" appears to be an error. The notice of objection dated 29 September 2000 stated that the objection was to "the assessment of stamp duty in the amount of $726,878.55 made by the [respondent] and issued on 21 August 2000". That latter date was the date of the Second Stamp Duty Assessment.

160 I also note that the amount of the cheque is $5.00 greater than the assessment. I was not addressed on that amount. I will treat that sum as part of the amount at stake in this appeal, subject to anything the parties wish to put to me as to it.

The question as to Stamp Act, s 75JB(1)(f)(i)

161 In argument before me there was some difference between the parties as to the questions properly before me for resolution in the appeal. The difference is over whether or not the question of the respondent's reasonable satisfaction as to the application of Stamp Act, s 75JB(1)(f)(i) was properly before me.

162 To consider this difference, I need to indicate the question both parties agree is properly before me, before turning to the difference.

163 For the purposes of that consideration, I must identify the "assessment", within Stamp Act, s 32, to which the objection was taken by the appellant. That "assessment" is in my view, as I will explain in somewhat more detail below when I consider an alternative view, the Second Stamp Duty Assessment.

164 For the purposes of the consideration of the question both parties agree is properly before me, I also must identify the "decision" of the respondent, within Stamp Act, s 33, against which the present appeal was brought. That "decision" is in my view the respondent's confirmation on 31 October 2001, of the Second Assessment. I did not take it there was any contest as to that matter.

165 The Second Stamp Duty Assessment contained no reference to the provisions of the Stamp Act or any other analysis on which that assessment was based. However, the cover letter to the assessment, of the same date, from the respondent to the appellant, read (in its entirety) as follows:

"Re: Sale of Certain Worsley Timber Assets

Please find attached an assessment of the abovementioned matter as the result of the retrospective disallowance of the corporate reconstruction exemption."

166 As required by Stamp Act, s 32(1), the appellant in its objection dated 29 September 2000 to the Second Stamp Duty Assessment set out grounds of objection. There were nine so set out, "on one or more or all of [which]" the assessment was "incorrect". The last two of these, numbers 8 and 9, were discontinued before me.

"1. The Assessment was not authorised by any of the provisions of the Act or the provisions of any other enactment.

1. The Sale Agreements were correctly determined by the [respondent] to be exempt from duty under section 75JB(3) of the Act on 30 December 1999.
2. The provisions of Section 75JDA(3) of the Act do not apply to the Sale Agreements and would not have applied to the Sale Agreements if section 75JDA had been in force on 1 November 1999.
3. If the provisions of section 75JDA(3) of the Act had applied to the Sale Agreements had these provisions been in force on 1 November 1999 (which is not admitted) then in the circumstances of the Sale Agreements the [respondent] could not reasonably have exercised the discretion granted by those provisions to refuse to grant the exemption applicable under section 75JB(3).
4. Section 8(3) of the Revenue Laws (Amendment) Assessment Act No 29 of 2000 ('Act No 29 of 2000') does not apply to the Sale Agreements.
5. The Sale Agreements did not relate to and are not likely to relate to any duty avoidance arrangement of the type described in section 75JDA(1) of the Act.
6. If the [respondent] has formed an opinion as referred to in section 8(3) of Act No. 29 of 2000 (which is not admitted) that opinion was wrong, alternatively formed unreasonably, alternatively was so unreasonable that no reasonable person could have formed it, in that if section 8(1) of Act No. 29 of 2000 had come into operation on 25 October 1999 the exemption under section 75JB of the Act would still have been granted, alternatively the [respondent] could not properly have refused to grant the exemption under section 75JB, in that:

(a) the Sale Agreements did not relate to and were not likely to relate an arrangement:

(i) Avoiding or circumventing the operation of the provisions of Part IIIBAAA of the Act so far as they make the availability and continued effect of an exemption under section 75JB dependent upon bodies corporate having been associated for a particular period or remaining associated for a particular period; or

(ii) Having as its purpose, or one of its purposes, the reduction of duty that might otherwise become payable ..."

168 I did not understand the appellant to treat grounds 3 and 5 as separate from grounds 4, 6 and 7. Further, I did not understand the appellant to treat grounds 4, 6 and 7 as other than expressing what is most fully expressed in ground 7. To the extent that the language in ground 7 (specifically the "which is not admitted" language) indicates it was denied the respondent had purported to have formed an opinion of the sort referred to in Revenue Act, s 8(3), the appellant did not, as I understood its argument, press any such claim.

169 It was common ground, as I have indicated, that the respondent's decision on that objection, for the purposes of the appellant's appeal to the Court under Stamp Act, s 33, set out in full above, was that in the letter dated 31 October 2001 from the respondent to the appellant's solicitors.

170 I take the letter dated 31 October 2001, which was included in the transmission of objection document before me, to be the statement of the respondent's "reasons for the Commissioner's decision on the objection" for the purposes of O 77 r 6(1)(d)(ii).

171 That letter sets out the basis for the respondent's conclusion that "the subject transaction [those of the Sale Agreements] relates to and forms part of a duty avoidance arrangement" for the purposes of Stamp Act, s 75JDA(1), to be considered pursuant to Revenue Act, s 8(2) as part of the Stamp Act during the transition period for the purposes of Revenue Act, s 8(3).

172 It is common ground that the question of whether or not the respondent's conclusion just described was correct is properly before me.

173 However, the letter dated 31 October 2001 went on as follows:

"In any event [the Sale Agreements] did not satisfy the requirements of section 75JB(1) in that they were made pursuant to or in connection with an arrangement of the kind referred to in section 75JB(1)(f)(i) [set out in full above]. The ultimate recipients of the consideration for the assets transferred by [Worsley Timber] to [the appellant] (new shares in [the appellant]) were the beneficiaries of the GV Johnson Trust No 2 [(the Trust)], as to 86%, and the Thomas family as to 14%, not [Worsley Timber] or [the appellant] or a body corporate associated with either of them at the time [the Sale Agreements] were executed."

174 The appellant put to me that the respondent had had no power under Revenue Act, s 8(3), or otherwise, to issue the Second Stamp Duty Assessment other than by reference to whether or not the respondent considered the Sale Agreements were or were likely to relate to a duty avoidance arrangement within the meaning of s 75JDA(1). In particular Revenue Act, s 8(3), gave the respondent no power to consider whether or not the s 75JB(3) exemption ought to have been refused because s 75JB did not apply, by reference to s 75JB(1)(f)(i) (or any other aspect of s 75JB(1)).

175 That is, the respondent could not rely on Revenue Act, s 8(3), to correct any error it had made in that respect in not refusing the s 75JB(3) exemption. Nor did any other provision of the Stamp Act or any other written law give the respondent any such power in the circumstances of this case.

176 Furthermore, the respondent had not claimed any such power of correction when it issued the Stamp Duty Assessment of 21 August 2000.

177 I put aside the appellant's last argument immediately. The terms of the Assessment did not contain any reference to any claimed basis for it. The letter accompanying the Assessment dated 21 August 2000, previously quoted from, simply referred to a "retrospective disallowance of the corporate reconstruction exemption . This letter should, however, be read in conjunction with the earlier letter from the respondent dated 19 July 2000, also previously quoted from, requesting the Sale Agreements be returned to the respondent for reassessment. That letter indicated the exemption had been "retroactively disallowed" and that this was "[a]s a result of recent amendments to the Stamp Act". This, on my reading, did not exclude the correction of an earlier error, by reliance on the amendments or another source of power. To the extent the letter made no reference to any such power of correction, such as Stamp Act, s 32, it seems to me that the respondent is not precluded from seeking to justify what it did in such terms, even if the respondent had not in fact at the time thought what he did could also be so justified. I note the body of authority that supports the proposition that "the doctrine of estoppel cannot be invoked, in relation to income tax assessments, by a taxpayer so as to prevent the Commissioner assessing pursuant to his duty to do so": AGC (Investments) Ltd v Federal of Taxation (1991) 21 ATR 1379, Fed Ct, Hill J, at 1396, referring to other authorities.

178 The submission of the appellant, even considered apart from the last aspect of it, if accepted, meant the respondent could not seek to uphold the Stamp Duty Assessment of 21 August 2000 other than by reference to the scope and application of s 75JDA(1).

179 The respondent put to me that, while there was no other law (with the exception of Stamp Act, s 32, which I reach next) that gave him the power to consider whether or not a s 75JB(3) exemption previously granted ought to have been refused, and reassess an instrument accordingly, Revenue Act, s 8(3), did give him such power. That power could be exercised with reference to any basis on which that exemption could have been refused at the time the exemption was granted, including, but not limited to, the considerations in s 75JDA(1). Thus, the power could be exercised to reassess an instrument to duty on the basis he ought not to have been satisfied that s 75JB applied,

180 In any event, the respondent said, in the case of an appeal against a decision to disallow an objection to an assessment, like the Stamp Duty Assessment of 21 August 2000, Stamp Act, s 32(3), gave him an equivalent power.

181 Stamp Act, s 32(3), set out in full above, provided that, after considering an objection, the respondent (emphasis added):

" ...may allow or disallow the objection wholly or in part and may modify or confirm the assessment to which the objection relates."

182 This subsection should be read with s 32(5), also set out in full above, for the consequence of modification of an assessment, as follows:

"If an assessment of duty is modified under subsection (3), the amount of duty payable shall be such amount as is fixed by the Commissioner; and the Commissioner shall refund the amount of any excess of duty which may have been paid in accordance with the assessment and the amount of any excess of any fine charged under section 20 or 31AC."

183 The respondent put to me that the emphasised words in s 32(3) empowered the respondent to uphold an assessment the respondent would not otherwise have been able to issue. As I have indicated, it is against this decision, to confirm the earlier assessment, that the appeal under s 33 is brought.

184 The respondent was not able to identify any authority in relation to the latter argument other than those on Interpretation Act 1984 (WA), s 55, which I reach shortly. Indeed, the principal authority on that provision, Venture Management Ltd v Commissioner of State Taxation (1991) 4 WAR 283, Franklyn J, at 290, and 295 - although it does not appear to reach the possible application of Stamp Act, s 32 the respondent contended for - seems to me to be against the respondent. I go into this authority in that respect in more detail below.

The argument from Stamp Act, s 32

185 I consider that I should begin my consideration of the difference between the parties on the questions properly before me by considering the argument on Stamp Act, s 32. I return to the argument on Revenue Act, s 8(3), below.

186 I have concluded that I should not accept the argument of the respondent that rests on Stamp Act, s 32.

187 It seems to me that Stamp Act, s 32, is a provision in relation to the disposition of an objection to an "assessment". Stamp Act, s 32, is not itself a provision giving a power to assess an instrument to stamp duty by reference to any other matters than those involved in giving effect to that disposition. Any power to assess, or confirm an assessment, by reference to such other matters must be found outside s 32.

188 As I have indicated, it is my view that the "assessment" in this case for the purposes of Stamp Act, s 32, was the Second Stamp Duty Assessment. It also appears to have been common ground before me that (Stamp Act, s 32, and Revenue Act, s 8(3), aside) there was no power for the respondent to undertake the assessment of the Sale Agreements to stamp duty again, to amend the assessment or to reassess the instruments to duty.

189 However, in his written submissions counsel for the respondent put it that there was a power to correct an error, by reference to Stamp Act, s 31 read with Interpretation Act, s 55.

190 As at 21 August 2000, Stamp Act, s 31, read as follows:

"(1) Subject to subsection (6), the Commissioner shall, if required by any other person, or may, of his own volition, express his opinion with reference to any executed instrument -

(a) on whether or not that instrument is chargeable with any duty; and

(b) if he is of the opinion that that instrument is chargeable with any duty, on the amount of duty with which that instrument is chargeable.

(2) Having expressed his opinion under subsection (1), the Commissioner shall -

(a) if he is of the opinion that the instrument concerned is chargeable with duty, issue an assessment of duty in respect thereof; and

(b) endorse on the instrument concerned his opinion -

(i) on the amount of duty with which that instrument is chargeable; or

(ii) that that instrument is not chargeable with duty,

as the case requires.

...

(4) Subject to section 31AA, an instrument on which the duty has been assessed by the Commissioner shall not, if it is unstamped or insufficiently stamped, be stamped otherwise than in accordance with the assessment of duty issued under subsection (2) in respect of that instrument."

191 As I will indicate shortly, Stamp Act, s 31AA (now in a modified form Taxation Administration Act 2003 (WA), s 16), was introduced by the Revenue Act and provided the respondent with the power to reassess an instrument to duty. However, also as I will indicate, s 31AA had no application in this case.

192 I note that, in oral argument, counsel for the respondent appeared to put the argument drawing on s 55 by reference to s 32, without reference to s 31.

193 In any event, I consider that s 31 would not be of any assistance to the respondent. I particularly note s 31(4).

194 I also note Peko-Wallsend Operations Ltd v Respondent of State Taxation (WA) (1989) 89 ATC 4569 (Full Ct, WA), where the Court held that Stamp Act, s 33, as it then stood did not allow for the Court on an appeal to direct the respondent to declare that the respondent's assessment was too low. The wording of s 33 then differed from s 32 in expressly referring only to a "refund" of any "excess duty". However, I note the following, per Brinsden J, Kennedy J agreeing (at 4584), at 4583:

"There is no provision in the Act giving the Commissioner power to amend an assessment or to reassess, and the absence of those powers strongly supports the view that the Supreme Court is not called upon to determine an assessment and to make a declaration of its determination on occasions when the assessment of the Commissioner may, in fact, be too low."

195 I note that Stamp Act, s 33, was amended by Revenue Act, s 14, apparently to overcome the effect of the decision in Peko-Wallsend (supra). The result was s 33(4)(b), in force at the time of the commencement of this appeal: see the text of s 33 set out above. However, as I will indicate shortly, s 33(4)(b) has no application to this appeal.

196 It is true that the Court in Peko-Wallsend did not expressly consider the possibility that s 32 might be the source of a power to modify or confirm an assessment. Indeed, s 32 expressly gave the respondent the power to modify an assessment. However, it seems to me to be difficult to reconcile the approach taken by the members of the Court referred to, in relation to the effect of appeals against an error made by the respondent, with the respondent's submission that, as I will explain, in effect would permit the respondent to correct an error other than that on which the appellant relied in the appeal.

197 It does not seem to me that the reference to modification or confirmation in Stamp Act, s 32(3), is apt to carry a power to undertake the assessment of an instrument to stamp duty afresh, that is, other than by reference to the objection to that assessment, so as to determine if it ought to be modified or confirmed on some other basis.

198 The language is rather that of modification or confirmation of "the assessment", and "assessment" is a defined term: see s 32(6). Further, the language of s 32(3) suggests that the modification or confirmation it refers to follows from the respondent's decision to "allow or disallow the objection" (my emphasis). Such an objection carries with it "the statement of grounds" provided for in s 32(1).

199 If the decision were to allow the objection, with the result that the assessment appealed against was found to be in error, the power to modify or confirm that assessment would seem to be one to correct the error revealed by the objection.

200 Whether or not the respondent could resort to a power to assess an instrument to duty afresh would be a question falling to be answered on other law. Apart from Stamp Act, s 32, the only other law put to me as having an application in this case is Revenue Act, s 8(3), to which I return.

201 However, counsel for the respondent invoked two further considerations, either of which it was said was sufficient, under Stamp Act, s 32, to ground a power to assess an instrument afresh, so as to correct an error. The first was Interpretation Act, s 55. The second was the ground numbered "2." in the appellant's notice of objection, above.

202 Interpretation Act, s 55, provides as follows:

"Where a written law confers a power or imposes a duty upon a person to do any act or thing of an administrative or executive character or to make any appointment, the power or duty may be exercised or performed as often as is necessary to correct any error or omission in any previous purported exercise or performance of the power or duty, notwithstanding that the power or duty is not in general capable of being exercised or performed from time to time."

203 The respondent accepted that that provision, standing on its own, was insufficient to given him the power contended for. Indeed, Venture Management (supra), Franklyn J, at 295 would appear to be squarely against the contrary view. I will return to that part of the judgment below. For now, I note the reference to his Honour's view in Mount Lawley v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 (Full Court, Steytler, Templeman and Simmonds JJ), at [57], where the Court noted his Honour's decision was "not relevant", and went on to say:

"There his Honour (at 295) concluded that s 55 did not extend to a case where the respondent had not sought to correct an error, but rather to change his opinion and issue a new assessment to stamp duty based on facts available to him at the time of the original assessment."

204 I consider this directs my attention to the terms of his Honour's judgment, which indeed has relevance for my purposes.

205 However, I agree with the respondent that neither authority considers the question before me, of whether or not Stamp Act, s 32, when read with Interpretation Act, s 55, has the effect of giving the respondent the power he contended for.

206 In my view, however, the reasoning in Venture Management (supra) is fatal to the respondent's contention. Further, it seems to me that reasoning is correct.

207 In Venture Management (supra), the Commissioner argued that Interpretation Act, s 55, gave him the power to reassess a transfer of land to duty which had first been assessed on the stated consideration, but which the Commissioner had reassessed relying on Stamp Act, s 75, and former s 75A (the latter appears now to be Taxation Administration Act 2003 (WA), s 21 and s 22). Franklyn J dealt with the argument as follows (at 295, the passage apparently referred to in Mount Lawley (supra), at [57]: I have not sought to update the Stamp Act references in the judgment, as the parties did not contend before me that the statutory context had changed in any way material to His Honour's reasons):

"The Commissioner further relies on s 55 of the Interpretation Act 1984 ...

He submits that his reassessment of duty was a subsequent exercise of the power and duty conferred by the Stamp Act to assess the Deed with the full amount of duty chargeable necessary to correct an error made in the first assessment. I am not satisfied that there was an error on the facts of the present case. The Commissioner formed an opinion as to the amount of duty chargeable according to law and issued an assessment in respect thereof. It is not in question that the Appellant had declared all relevant facts and circumstances. Subsequently, for reasons which are not clear, the Commissioner purported to apply the provisions of s 75A. I am told by his counsel that the reassessed duty was calculated in accordance with s 75(2). Thus it seems that subsequent to the issue of the first assessment he changed his opinion as to the amount of duty chargeable at law because he concluded that a substantial benefit of the nature specified in s 75(2) was conferred by the Deed on the Appellant. Whether that conclusion is right or wrong is one of fact, but it was a conclusion open to him before the making and issue of the first assessment. In my opinion, having regard to the nature of the duty specified in s 23 and s 31(1)(b) and (2)(a) and (b), and that he chose not to exercise the powers conferred by s 75A prior to the first assessment, it cannot be said that the issue thereof was an error within the meaning of s 55. Rather, the second assessment resulted from a change of opinion occasioned by a decision taken subsequent to the issue of the first assessment, to make further enquiries as to the value of the land in question as at the date of the agreement. This conclusion is supported by the decision in Triton Textiles Ltd v Minister of Trade and Industry (1987) 6 NZAR 261 in which Smellie J considered a similar provision under the New Zealand Interpretations Act."

208 It seems to me that the question of the application of s 75JB(1)(f)(i) was clearly before the respondent when the application for the s 75JB(3) exemption was granted. This is indicated by the responses to the Questions 11 and 12 in the appellant's application for the exemption under s 75JD, responses I reproduced above. There was no suggestion made to me that the respondent had not been provided with the factual material necessary for it to evaluate the sufficiency of the appellant's responses to those questions. It does not seem to me any such suggestion could be made in view of the contents of the letter from the appellant's solicitors to the respondent referred to and quoted from above.

209 As will become apparent below, counsel for the respondent put the respondent's reconsideration of the grant of an exemption under Stamp Act, s 75JB(3), by reference to s 75JB(1)(f)(i), on the basis of a construction of the sub-paragraph I will consider. That basis was one of correction of an error of law. The present case, it appears to have been suggested, is distinguishable from that in Venture Management (supra) in that respect.

210 However, it seems to me that the cases are not distinguishable. As I have previously indicated, it is not in dispute that the reference to the "satisfaction of the respondent" in Stamp Act, s 75JB(3), is one to a satisfaction formed reasonably. A conclusion formed by the respondent, subsequent to the issue of an assessment and stamping of the document, that he ought not to have proceeded because his view of the law has changed does not, it seems to me, indicate the issue of the assessment and the stamping were "an error within the meaning of s 55", in terms of the passage from Franklyn J's judgment in Venture Management (supra), at 295, quoted above.

211 Further, it seems to me that the alternative view appears to be at odds with the scheme of the Stamp Act with respect to dealing with the contesting of the bases of assessments. The scheme of the legislation appears to have been one of providing for objection to an assessment by the taxpayer; consideration of the objection by the respondent; and appeal, by the taxpayer, against the decision on that consideration, to the Court. The provisions of s 32 were a part of that scheme.

212 I note that the Revenue Act, s 12, inserted in the Stamp Act, as from 6 July 2000, a provision, s 31AA, to which I made earlier reference. That provision was one to permit the respondent to issue reassessments to duty. The provision stated that, if, on or after that date, he had expressed an opinion under Stamp Act, s 31(1), in relation to an instrument, he could, if directed by a Court determining an appeal under s 33 or expressing an opinion under s 34, or, subject to exceptions, including the one I reach shortly, of his "own volition", "reconsider" whether an instrument was chargeable to duty. The provision for a direction by a Court determining an appeal under s 33 was in the context of the amendment of s 33 by the Revenue Act, s 14, apparently as I have said, to overcome Peko-Wallsend (supra). That amendment gave the Court power to order the respondent to so proceed "if the Court determines that the instrument has been charged with insufficient duty" (Stamp Act, s 33(4)(b), previously quoted as part of the form of s 33 applicable to this appeal).

213 If the respondent had previously considered the instrument was not chargeable with duty, but was on the reconsideration of the contrary view, he was to issue a reassessment accordingly (Stamp Act, as amended, s 31AA(4)). However, if he was proceeding on his own volition, he had no such power to reassess if his previous opinion was "based on ... an interpretation of the applicable law ... that was generally applied to instruments of that kind when the opinion was expressed" (s 31AA(2)(a)).

214 It was common ground that s 31AA had no direct application to this case. That was because the respondent had under s 31 expressed his opinion in the First Assessment of 30 December 1999, a date prior to the date the Revenue Act had received the Royal Assent (6 July 2000). As a result, the provisions in s 31AA(1)(a) for reconsideration by direction of the Court under s 33(4)(b) had, for the purposes of this appeal, no application. Similarly, the provisions in s 31AA(1)(b) for reconsideration "of his own volition" had, for the purposes of the Second Assessment, no application.

215 However, it seems to me that the interpretation of s 32 contended for by the respondent would not be easy (in the case of a modification of an assessment objected to) to reconcile with the limitation in s 31AA(2)(a) on the power of the respondent to reassess when proceeding on his "own volition". That is, the amendment might be seen to cast some light on the interpretation of the other provision, which was not amended in any respect by the Revenue Act other than (by Revenue Act, s 13), in effect, to provide that an objection under s 32 could be taken to a reassessment under s 31AA, and to make a consequential provision for a refund of duty under s 32(5). See Grain Elevators Board (Vic) v Dunmunkle Corp [1946] HCA 13; (1946) 73 CLR 70, per Dixon J, at 85 - 86; and Pearce D C and Geddes R S, Statutory Interpretation in Australia, 6th ed, 2006, at [3.33].

216 The respondent contended, however, that in any event the objection to the assessment of 21 August 2000 had put in issue the correctness of the application of s 75JB in the ground numbered "2" in the appellant's notice of objection, above. Thus, even if s 32 should not be read as the respondent contended, the assessment could be confirmed as here by reference to the respondent's disallowance of the appellant's contention in that ground.

217 In my view, the ground numbered "2" does not put in issue the correctness of the application of s 75JB as contended. It seems to me the ground is more readily to be understood as a confirmation that the assessment being objected to was not the First Assessment, but the later one. It is difficult to understand why the appellant would wish to put in issue an assessment which was of nil duty. In any event, I did not understand counsel for the respondent to press this argument in his oral submissions to me.

The argument from Revenue Act, s 8(3)

218 I turn now to the respondent's argument from Revenue Act, s 8(3), with its reference to the respondent being of the opinion an exemption granted under s 75JB during the transitional period "would not have been granted if [s 8(1)] come into operation" at the beginning of that period.

219 The respondent's argument rested on the following emphasised words in s 75JDA(3) as added to the Stamp Act by Revenue Act, s 8(1). I note that subsection is the only provision, of those added by s 8(1), which empowers the respondent not to grant an exemption under s 75JB. It seems to me that the condition for the formation of the respondent's opinion represented by the "even if" clause in Revenue Act, s 8(3), can only be understood as a reference to s 75JDA(3) and the other amendments to the Stamp Act related to it. I did not understand the respondent to be contending otherwise.

220 Stamp Act, s 75JDA(3), as so added by the Revenue Act, already set out in full, provided (emphasis added):

"(3) Even if on an application under section 75JD it is shown to the satisfaction of the respondent that section 75JB applies, the Commissioner may refuse to grant an exemption under section 75JB(3) in respect of an instrument or a Part IIIBA statement if the Commissioner considers that the instrument or statement relates or is likely to relate to a duty avoidance arrangement."

221 However, it seems to me that the ordinary meaning conveyed by the emphasised words is that the consideration that is, by s 75JDA(3), made a condition of the refusal to which that subsection refers (the refusal to grant an exemption under s 75JB(3)), is independent of the formation of the opinion on which the grant of an exemption in s 75JB(3) is, by that subsection, made to rest. There was no need to restate that the formation of that opinion was a condition for such a grant, as there was no amendment to s 75JB(3) by the Revenue Act. Still less was there a need to re-authorise the respondent to consider whether or not he was able to form the opinion referred to, with the effect that the exemption would or would not be granted, thereby duplicating s 75JB(3).

222 Nor was I directed to any extrinsic material capable of assisting with the construction of s 75JDA(3) in the respect contended for by counsel for the respondent, assuming I was in a position to consider such material, under either the common law or the provisions of the Interpretation Act I reach below in relation to the construction of s 75JDA(1).

223 However, having concluded neither of the two bases put to me by the respondent was sufficient to establish that the question of the proper application of Stamp Act, s 75JB(1)(f)(i) (or of any other aspect of s 75JB(1)) was properly before me in this appeal, I should note that there was substantial argument devoted to answering the question. This argument was from both appellant and respondent, without, of course, the former conceding the question was properly before the Court.

224 In view of that argument, and in the event I am in error as to whether or not the question is properly before me, I will indicate below my views as to that answer. I will do this, after considering the question that is properly before me, of the application of Revenue Act, s 8(3) to this case, by reference to Stamp Act, s 75JDA(3), which, as I have explained, takes me to s 75JDA(1).

225 I conclude these sections of my reasons to do with whether or not the question of Stamp Act, s 75JB(1)(f)(i) is properly before me in this appeal by indicating that I have not to this point made reference to the "questions which the respondent considers will be required to be determined on the appeal". These form, at par 23, part of the "Commissioner's Statement" filed for the purposes of this appeal. I take it that the matters listed there as comprising those questions, being items "(a)" to "(g)", were so listed for the purposes of O 77 r 6(1)(d)(iii). I have not made previous reference to that listing, as my attention was not drawn to it in the argument before me on the difference I have considered.

226 I also note that a number of the items listed are on any view no longer questions before me. Those are items "(a)", "(b)" and "(d)". I say no more about them.

227 The item "(g)" was the question of the costs of this appeal.

228 I note that the respondent appears to have raised in that listing, as items "(c)" and "(f)", what I have called the s 75JB(1)(f)(i) question. Those items are as follows:

"(c) If there was no determination under section 75JC [one of the matters no longer before the Court], should the Respondent have exercised his discretion under section 75JDA(3) to allow the exemption?

...

(f) Did section 75JB(1)(f) apply to disqualify the sale agreements from exemption?"

229 I note the respondent does not assert that the respondent ever exercised any discretion under Stamp Act, s 75JDA(3), which on its terms did not fall for exercise in this case. Rather, I took the reference in (c), read in the context of the reference to s 75JC, to be a reference to the respondent's previous grant of an exemption under s 75JB(3). To the extent that referred to an appeal against the previous allowance of that exemption in this case, there had been no objection to that allowance, as I have explained. I understood item (c) as a reference to the question of the application of s 75JB, restricted in the case as presented to me to the question, forming part of item (d), of the application of s 75JB(1)(f)(i).

230 I do not consider that the respondent's statement of the questions before the Court was conclusive of the matter for my purposes, and I did not understand the contrary to have been put to me.

231 The remaining matter forming part of the respondent's listing is item "(e)", which is what I have described as the s 75JDA(1) question, and reads as follows:

"(e) Was the Respondent correct in determining that the provision of section 75JDA were applicable to the sale agreements, that is, was there a duty avoidance arrangement?"

The meaning of s 75JDA(1)

233 The question, it was agreed before me, requires separate attention to be paid to the two limbs of Stamp Act, s 75JDA(1). At the same time, on the respondent's argument, sight should not be lost of the overall purpose of the provision, which is at least to describe a "duty avoidance arrangement", of either of the two sorts represented by those two limbs.

234 I begin by considering s 75JDA(1) as a whole, by reference to the relevant principles of statutory construction. While there appeared to be no significant difference between the parties as to those principles, there was, of course, substantial difference in how a number of them should be applied in this case.

235 I undertake this consideration by setting out the sequence of steps comprising the approach to the present question of statutory construction that I consider I must use, and by describing the results of taking each step in this case.

The meaning of s 75JDA(1) in light of mischief and purpose

236 I must first attempt to construe the provisions of s 75JDA(1) using the principles of statutory construction to be drawn from the common law, but approaching their use in the light of Interpretation Act, s 18. The common law commends attention, not only to the literal words of the provision, but also to both the mischief s 75JDA(1) was intended to remedy as well as to the purpose of the provision, while Interpretation Act, s 18, directs attention to purpose.

237 I begin with s 18. That provision, which is also Acts Interpretation Act 1901 (Cth), s 51AA, and Interpretation of Legislation Act 1984 (Vic), s 35(a), authorities in relation to which I will consider below, is as follows:

"In the interpretation of a provision of a written law, a construction that would promote the purpose or object underlying the written law (whether that purpose or object is expressly stated in the written law or not) shall be preferred to a construction that would not promote that purpose or object."

238 The relationship between s 35(a) of the Victorian Act and the common law is described in a widely referred to passage in Mills v Meeking [1990] HCA 6; (1990) 169 CLR 214, per Dawson J, at 235. That passage is set out in Pearce and Geddes (supra) at [2.9]. The passage is as follows (with my emphases):

"The literal rule of construction, whatever the qualifications with which it is expressed, must give way to a statutory injunction to prefer a construction which would promote the purpose of an Act to one which would not, especially where that purpose is set out in the Act. Section 35 of the Interpretation of Legislation Act must, I think, mean that the purposes stated in Pt 5 of the Road Safety Act are to be taken into account in construing the provisions of that Part, not only where those provisions on their face offer more than one construction, but also in determining whether more than one construction is open. The requirement that a court look to the purpose or object of the Act is thus more than an instruction to adopt the traditional mischief or purpose rule in preference to the literal rule of construction. The mischief or purpose rule required an ambiguity or inconsistency before a court could have regard to purpose: Miller v The Commonwealth [(1904) [1904] HCA 34; 1 CLR 668, at p 674]; Wacal Developments Pty Ltd v Realty Developments Pty Ltd [(1978) [1978] HCA 30; 140 CLR 503, at p 513]. The approach required by s 35 needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction. Reference to the purposes may reveal that the draftsman has inadvertently overlooked something which he would have dealt with had his attention been drawn to it and if it is possible as a matter of construction to repair the defect, then this must be done. However, if the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman. Section 35 requires a court to construe an Act, not to rewrite it, in the light of its purposes."

239 However, I note the statement of what has been called (see Pearce & Geddes (supra), at [3.7]) "the modern approach to statutory interpretation" in the common law in CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, per Brennan CJ, Dawson, Toohey and Gummow JJ at 408:

"The modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy [Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 at 461, cited in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd [1985] HCA 48; (1985) 157 CLR 309 at 312, 315]. Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd [(1986) 6 NSWLR 363 at 388], if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent [Cooper Brookes (Wollongong) Pty Ltd v Federal of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 320-321]."

240 There is no statement of the purpose of Stamp Act, s 75JDA(1). However, I note the context of that provision, in the words appearing at the beginning of s 75JDA(3), "[e]ven if on an application under section 75JD it is shown to the satisfaction of the respondent that section 75JB applies".

241 I consider those words indicate that the purpose of s 75JDA(1) is to permit the respondent to go beyond the literal words of s 75JB to determine whether or not to refuse to grant an exemption under s 75JB(3). I did not understand either party to disagree. They did disagree, however, as to the approach that s 75JDA(1) required the respondent to take in doing so.

242 I consider that I do not need to resort to any consideration of the mischief which s 75JDA(1) was intended to remedy to arrive at the conclusion as to the purpose of s 75JDA(1) I have just described.

243 However, I note that such consideration tends to confirm that conclusion. More importantly, however, such consideration also brings to light rather more detail as to the mischief, in the perceived inadequacy of the literal words of s 75JB which s 75JDA(1) was intended to remedy.

244 The extrinsic materials in relation to s 75JDA(1) to which I was referred, to the extent they go to the mischief the provision was meant to remedy, appear to me to consist in the Second Reading speech for the Revenue Laws Amendment (Assessment) Bill 2000 of the Minister assisting the Treasurer, the Hon Graham Kierath, MLA ("the Second Reading speech for the 2000 Bill"), and the Explanatory Memorandum for the Bill ("the EM for the 2000 Bill").

245 In the Second Reading speech for the 2000 Bill, Hansard, Thursday, 25 May 2000, at 7274, the Minister said this:

"Corporate reconstructions: The second set of changes contained in this Bill affect Part IIIBAAA of the Stamp Act, which relates to exemptions for corporate reconstructions. In 1996, the Government introduced this exemption to remove the stamp duty burden which would otherwise prevent groups of companies from adopting a more efficient corporate structure, providing there was little or no change in the underlying ownership. However, the policy of this exemption was, and still is, aimed at excluding relief where the purpose of the reconstruction is to strip the assets of previously unrelated companies or to package group assets for on-sale to unrelated parties. Late last year, certain practices emerged indicating that attempts were being made to manipulate the exemption in order to package assets into a company structure under the guise of corporate reconstruction, greatly reducing the amount of stamp duty otherwise payable on the sale of assets to an unrelated purchaser.

The Government takes a dim view of these practices and in no way apologises for the additional constraints placed around the exemption by the measures in this Bill. The amendments in this Bill are consistent with the overall policy of the exemption, but reinforce the integrity of the conditions that the body corporate receiving the exemption for an asset transfer should have a three-year pre-association and remain associated with the corporate group for a period of five years after the transfer. The amendments proposed are twofold. They seek to close down a potential weakness in the legislation exposed by a particular exemption application which sought to circumvent these conditions by a series of transactions which had no commercial efficacy apart from the minimisation of stamp duty. They also introduce a general anti-avoidance provision designed to deny the exemption where transactions are considered to provide stamp duty relief where none was intended to be given. This would include attempts to asset strip or asset package, or where the restructure would otherwise assist with the avoidance of stamp duty.

In this regard, it should be noted that the legislation was initially drafted in 1996 with a public-interest test, which would have allowed an exemption to be disallowed where it was considered that a transaction was not consistent with this principle. However, as a result of consultation with industry prior to the introduction of the legislation, the provision was removed. The industry views that resulted in the removal of the provision from the earlier draft were based on the principle that the black-letter law should be robust enough to withstand non-qualifying purposes. Industry considered that an anti-avoidance provision created uncertainty in the exemption, with parties to transactions never having any degree of comfort that qualifying transactions would be exempted. It is apparent from the transactions that triggered these amendments that, in the absence of an anti-avoidance provision of the type proposed, the black-letter law was not robust enough to repel concerted efforts by practitioners operating in this area to defeat the association requirements of the exemption. Those practitioners who are unhappy with the new requirements associated with this exemption, including the uncertainty created by the anti-avoidance provision, should look firstly to their own to cast blame.

The Government originally introduced the exemption with an expectation that it would be used for the purposes it was intended. It is now clear that such expectations have not been met, with the consequence that the previous degree of certainty surrounding the exemption will no longer exist."

246 The EM for the 2000 Bill, at page 2, contains very similar language.

247 I note that the detail in the Minister's speech also goes to matters of legislative purpose, to the relevance and effect of which I return below.

248 I consider the analysis of the purpose I set out before the passage from the Second Reading speech for the 2000 Bill just quoted, and the detail as to the mischief s 75JDA(1) was intended to remedy apparent from that passage, are of assistance to me in indicating that there might be more than one possible meaning to the provision, as I will now indicate.

249 It is apparent to me any meaning of s 75JDA(1) must take account of its apparent breadth in light of s 75JDA(3)'s opening words, most obviously by reference to s 75JDA(1)(b), but also by reference to s 75JDA(1)(a). That breadth, as well as its language of "duty avoidance arrangement", indicates that s 75JDA is an anti-avoidance provision, but applicable only when a duty payer seeks the exemption under Pt IIIBAAA from stamp duty otherwise payable, and in the terms I must construe. In this respect, s 75JDA differs from Stamp Act, s 31AA, which I have previously considered, and which like s 75JDA was introduced into the Stamp Act by the Revenue Act. Stamp Act, s 31AA, was about the correction of errors, subject to the limitations in s 31AA(2). Stamp Act, s 75JDA(1) was about "duty avoidance arrangements".

250 So reading s 75JDA creates an immediate difficulty, however. It is reconciling that reading with the apparent intention of the other provisions of Pt IIIBAAA to provide for the elimination of stamp duty otherwise chargeable. Any reading of s 75JDA must resolve that difficulty.

251 There is a particular form of that difficulty represented by s 75JDA(1)(a), to which the argument of counsel for the appellant drew my particular attention. That difficulty has to do with accounting for the "unless" clause in s 75JB(5). That clause, as I have indicated, qualifies the requirement the transferor body corporate and the transferee body corporate remain associated after the transfer for the period stipulated. I note that there is a similar difficulty in relation to the provision for dispensing with the period the bodies corporate must have been associated before the transfer, in s 75JB(1)(d)(ii), the part of which relevant to this case I set out earlier in these reasons. Those provisions allow for arrangements which may be exempted and may remain exempted notwithstanding those qualifying periods are not met.

252 Counsel for the appellant in his written and oral submissions to me took the position that the proper reading of s 75JDA(1) that would resolve the difficulties of these sorts was the one he contended for, which as I will indicate is based on the literal words of the provision informed (in the absence of authority on the present provision) by authorities on a similar provision in other legislation.

253 Further, that reading was one, it was said, that was the only possible reading of s 75JDA(1), such that any resort to extrinsic material to assist with the determination of its meaning under Interpretation Act, s 19(1) and (3), was not warranted by those provisions. I return to them below.

254 In the alternative, it was said, any such resort was not capable of assisting with the determination of the meaning of the provision, as I will consider below when I return to Interpretation Act, s 19(1) and (3).

255 I also understood this argument to be, in relation to any submission as to any support for any other reading to be gained from the purposes of s 75JDA(1), that, in the language from Mills (supra), per Dawson J, at 235, quoted and emphasised above:

"If the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman. Section 35 [Interpretation Act, s 18] requires a court to construe an Act, not to rewrite it, in the light of its purposes."

256 Counsel for the respondent contended that there was more than one reading open on s 75JDA(1), or at least its meaning was obscure, and, whether or not the reading contended for by the appellant was open on the language of the provision, there was at least another, that contended for by the respondent. That reading was to be preferred, as the meaning that, on the extrinsic material to which s 19(1) and (3) allowed resort, was intended for s 75JDA(1), and gave effect to its purpose, where the appellant's reading did not.

257 The reading proffered by counsel for the respondent was one I understood to rest on the language in the Second Reading speech for the 2000 Bill that was concerned with the perceived abuse of the exemption in Pt IIIBAAA. Of course, the literal words of s 75JDA(1) might be seen as the legislature's description of the means necessary to address that abuse, which in my view (as I will explain) would direct me to the reading of counsel for the appellant. However, as I understood the argument of counsel for the respondent, an understanding of that abuse of the sort, to be obtained through analysis of the Second Reading speech for the 2000 Bill and other relevant extrinsic material, would reveal a construction that would better address the prevention of such abuse than the reading contended for by counsel for the appellant.

258 I consider that, at this point in my analysis, at least the possibility of alternative constructions of s 75JDA(1) has been shown. This requires me to explore the alternative constructions as they were put to me by counsel for the parties. This is with a view to seeing whether they are both open on the language of the provision, and (in the case of any construction open but not readily apparent on the literal words of the provision) sufficiently emerge from the extrinsic materials to which I am referred. In the event that more than one construction emerges in this way, I must determine which is to be preferred, with the assistance of my appreciation of the purposes of the provision, and those extrinsic materials.

259 I note the dependence of my conclusion on my consideration of the mischief which s 75JDA was intended to remedy.

260 I also note that there is a distinction between the mischief which a statute was meant to remedy and the purpose of that statute, although there is also an overlap between the inquiries to ascertain the two: see Pearce & Geddes (supra), at [3.8].

261 The extract from the Minister's Second Reading speech for the 2000 Bill I set out above appears to me, as I have already said, to address both mischief and purpose. To the extent the extract addresses purpose, I must note that, whether or not the common law allows resort to extrinsic material to ascertain the purpose of a statute absent ambiguity (see Pearce & Geddes, at [3.6] and [3.8]), the provisions of the Interpretation Act I am about to set out might appear to allow for only limited resort to such material to ascertain purpose.

262 The parties to this appeal appeared to proceed on the basis that I could only resort to such material to ascertain purpose where the statute so allowed. On my conclusions in this appeal, I do not consider I need to consider further whether or not such a manner of proceeding is required by the statute. That is because I consider, as I will explain, that s 19 does permit me to resort to extrinsic material in relation to determining purpose.

Reading s 75JDA(1) in terms of business purposes: s 75JDA(1)(b)

263 It is convenient to start with the reading of s 75JDA(1)(b) counsel for the appellant put to me.

264 For reasons that will appear, I will characterise this reading as one associating s 75JDA(1)(b) with arrangements with business (including family) purposes. It will also become apparent that counsel's reading of s 75JDA(1)(a) is of a similar, but not identical, sort.

265 Counsel for the appellant put to me that the difficulty I referred to in respect of s 75JDA(1)(b) should be met by reading that paragraph as introducing into the Stamp Act provision for the respondent to refuse to grant an exemption where (and it seems only where) the relevant arrangement met the test frequently referred to in connection with the application of the general anti-avoidance provision in the Income Tax Assessment Act 1936 (Cth), s 260. That test was taken from Newton v Federal of Taxation [1958] UKPCHCA 1; (1958) 98 CLR 1, Privy Council, the judgment of the Board delivered by Lord Denning, at 8.

266 Income Tax Assessment Act, s 260(1), is as follows:

"Contracts to evade tax void

(1) Every contract, agreement, or arrangement made or entered into, orally or in writing, whether before or after the commencement of this Act, shall so far as it has or purports to have the purpose or effect of in any way, directly or indirectly:

(a) altering the incidence of any income tax;

(b) relieving any person from liability to pay any income tax or make any return;

(c) defeating, evading, or avoiding any duty or liability imposed on any person by this Act; or

(d) preventing the operation of this Act in any respect;

be absolutely void, as against the respondent, or in regard to any proceeding under this Act, but without prejudice to such validity as it may have in any other respect or for any other purpose."

267 The test from Newton (supra), per Lord Denning, at 8, which is quoted with approval in Federal Commissioner of Taxation v Gulland [1985] HCA 83; (1985) 160 CLR 55, per Gibbs CJ, at 66, is as follows:

"In order to bring the arrangement within the section you must be able to predicate - by looking at the overt acts by which it was implemented - that it was implemented in that particular way so as to avoid tax. If you cannot so predicate, but have to acknowledge that the transactions are capable of explanation by reference to ordinary business or family dealing, without necessarily being labelled as a means to avoid tax, then the arrangement does not come within the section."

268 I note that this does not require that, to be caught by s 260, the transactions must be capable of explanation only in terms of a means to avoid tax. In Gulland (supra), Gibbs CJ, says this, at 68:

"If tax avoidance is one of the main purposes of the arrangement in the sense it is not inessential or merely incidental, that is enough."

269 See also Peate v Federal Commissioner of Taxation (1964) 111 CLR 443, per Kitto J, McTiernan and Owen JJ agreeing, at 469.

270 In any event, I note the language of s 75JDA(1)(b), which is of an arrangement "having as its purpose, or one of its purposes" (emphasis added) the reduction of duty otherwise payable.

271 At this point, a question arises as to how to read "purpose" and "purposes" in s 75JDA(1)(b). It is whether the "purpose" or "purposes" are those to be gathered only from the terms of the arrangement and their effects (what was called before me the "objective" approach); or rather those to be gathered from all of the evidence as to the intentions of those who were the parties to the arrangement, which would allow for gathering purpose from the evidence of the parties themselves (what was called before me the "subjective" approach).

272 I note that the objective approach appears to be the one followed in relation to Income Tax Act, s 260, on Newton (supra), per Lord Denning at 7 - 9:

"Their Lordships are of opinion that the word 'arrangement' is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons--a plan arranged between them which may not be enforceable at law. But it must in this section comprehend, not only the initial plan, but also all the transactions by which it is carried into effect - all the transactions, that is, which have the effect of avoiding taxation, be they conveyances, transfers or anything else. It would be useless for the commissioner to avoid the arrangement and leave the transactions still standing. The word 'purpose' means, not motive, but the effect which it is sought to achieve - the end in view. The word 'effect' means the end accomplished or achieved. The whole set of words denotes concerted action to an end - the end of avoiding tax.

But, said Sir Garfield [counsel for the taxpayers], if such a wide interpretation is given to the words, where is the section to stop? Does it enable the commissioner to avoid all transactions by which a man seeks to escape a liability to tax which is about to fall on him? He gave numerous illustrations to show that the Parliament of Australia cannot have intended so sweeping a result. Take the case of a man who sells shares cum dividend -because he does not wish to pay the tax on the dividend when received: or of a private company which is turned into a non-private company in order to escape Div. 7 tax: and so forth. Can the commissioner go behind those transactions?

The answer to the problem seems to their Lordships to lie in the opening words of the section. They show that the section is not concerned with the motives of individuals. It is not concerned with their desire to avoid tax, but only with the means which they employ to do it. It affects every "contract, agreement or arrangement" (which their Lordships will henceforward refer to compendiously as 'arrangement') which has the purpose or effect of avoiding tax. In applying the section you must, by the very words of it, look at the arrangement itself and see which is its effect - which it does - irrespective of the motives of the persons who made it. Williams J. put it well when he said "The purpose of a contract, agreement or arrangement must be what it is intended to effect and that intention must be ascertained from its terms. These terms may be oral or written or may have to be inferred from the circumstances but, when they have been ascertained, their purpose must be what they effect" [(1957) 96 CLR, at 630]. In order to bring the arrangement within the section you must be able to predicate - by looking at the overt acts by which it was implemented - that it was implemented in that particular way so as to avoid tax. If you cannot so predicate, but have to acknowledge that the transactions are capable of explanation by reference to ordinary business or family dealing, without necessarily being labelled as a means to avoid tax, then the arrangement does not come within the section. Thus, no one, by looking at a transfer of shares cum dividend, can predicate that the transfer was made to avoid tax. Nor can anyone, by seeing a private company turned into a non-private company, predicate that it was done to avoid Div 7 tax, see W P Keighery Pty Ltd v of Taxation [(1958) [1957] HCA 2; 32 ALJR 118; 11 ATD 359]. Nor could anyone, on seeing a declaration of trust made by a father in favour of his wife and daughter, predicate that it was done to avoid tax, see Deputy Federal of Taxation v Purcell [(1921) [1921] HCA 59; 29 CLR. 464]. But when one looks at the way the transactions were effected in Jaques v Federal of Taxation [(1924) [1923] HCA 70; 34 CLR 328]; Clarke v Federal of Taxation [(1932) [1932] HCA 46; 48 CLR 56], and Bell v Federal of Taxation [(1953) [1952] HCA 34; 87 CLR 548] - the way cheques were exchanged for like amounts and so forth - there can be no doubt at all that the purpose and effect of that way of doing things was to avoid tax."

273 I note that the subjective approach has been followed in relation to Trade Practices Act 1974 (Cth), s 4D(1), in News Ltd v South Sydney Football Club [2003] HCA 45; (2003) 215 CLR 563. That subsection provided, inter alia, that a provision in a contract, arrangement or understanding should be taken to be an "exclusionary provision" for the purposes of the Act if the contract, arrangement or understanding was between persons any two or more of whom were competitive with each other and "the provision has the purpose" of the sorts described. For my purposes, the most detailed exposition of the subjective approach followed is in the judgment of Gummow J, at [59] - [62] (the emphases are those of his Honour), which particularly usefully for my purposes appears to contrast the subjective approach with the objective approach in Newton (supra), by a "cf" reference to the case in a footnote to [60]:

"Purpose

Section 4D speaks of 'the purpose' of the contract, arrangement or understanding, rather than any deleterious effect which it might have on competition. In so providing, the Parliament did not implement the recommendations of the 1976 Trade Practices Act Review Committee Report which commented [Commonwealth, Report to The Minister for Business and Consumer Affairs, August 1976, par [4.116]. In 1993, the Independent Committee of Inquiry recommended against any change to the purpose element: Commonwealth, National Competition Policy, August 1993, p 46]:

'We consider that a collective boycott, ie an agreement that has the purpose of or the effect of or is likely to have the effect of restricting the persons or classes of persons who may be dealt with, or the circumstances in which, or the conditions subject to which, persons or classes of persons may be dealt with by parties to the agreement, or any of them, or by persons under their control, should be prohibited if it has a substantial adverse effect on competition between the parties to the agreement or any of them or competition between those parties or any of them and other persons.'

'Purpose' is not defined in the Act. At trial, Finn J stated [South Sydney [2000] FCA 1541; (2000) 177 ALR 611 at 659]:

'While the purpose of a provision may be evidenced in the effects it produces, the purpose for its inclusion in a contract etc is not to be determined necessarily by, or simply by reference to, its effects [Dowling v Dalgety Australia Ltd (1992) 34 FCR 109]. What is to be ascertained is the reason (or reasons) for its inclusion. And that reason, or those reasons, can be determined by ascertaining the effect or effects the parties subjectively sought to achieve through the inclusion of the provision in the understanding, etc [cf ASX Operations Pty Ltd v Pont Data Australia Pty Ltd [No 1] (1990) 27 FCR 460 at 475].'

It will be noted that Finn J focused on the subjective reasons of the parties to the contract in which the relevant provision is contained. At first glance, such an approach might appear to conflict with the terms of s 4D(1)(b), which speaks not of human or corporate actors but of the provision itself having the purpose of preventing, restricting or limiting the supply or acquisition of the relevant goods or services. A construction which fixes upon subjective intent also may be difficult to apply to a multipartite contract, arrangement or understanding. However, s 4F of the Act doubtless has a role to play in such circumstances.

Nevertheless, Finn J's construction is not without support [Hughes v WA Cricket Association (Inc) [1986] FCA 357; (1986) 19 FCR 10 at 37-38; ASX Operations Pty Ltd v Pont Data Australia Pty Ltd [No 1] (1990) 27 FCR 460 at 474-477; Adamson v NSW Rugby League Ltd [1991] FCA 425; (1991) 31 FCR 242 at 245, 261, 283; cf Newton v Federal of Taxation [1958] UKPCHCA 1; (1958) 98 CLR 1 at 8; [1958] AC 450 at 465 (in the context of s 260 of the Income Tax and Social Services Contribution Assessment Act 1936 (Cth)] and was accepted as correct by each member of the Full Court [South Sydney [2001] FCA 862; (2001) 111 FCR 456 at 472, per Heerey J; at 487, per Moore J; at 518, per Merkel J]. Moreover, there are good reasons for a construction of s 4D which focuses upon the effect or effects the parties sought to achieve through the inclusion of the impugned provision in the contract, arrangement or understanding. Such a construction gives full effect to s 4F of the Act [Inserted by s 6 of the Amendment Act]. That section, which, with s 4D, is found in Pt I of the Act, is headed 'References to purpose or reason'. Like s 4D(2), s 4F uses the term 'deemed'. It does so, not to create a 'statutory fiction', but for the definitional purpose identified by Windeyer J in Hunter Douglas Australia Pty Ltd v Perma Blinds [(1970) [1970] HCA 63; 122 CLR 49 at 65. See also Esanda Finance Corporation Ltd v Peat Marwick Hungerfords [1997] HCA 8; (1997) 188 CLR 241 at 308; Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 at 320 [96], namely to 'state the effect or meaning which some matter or thing has'.

Section 4F relevantly states:

'(1) For the purposes of this Act:

(a) a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, or a covenant or a proposed covenant, shall be deemed to have had, or to have, a particular purpose if:

(i) the provision was included in the contract, arrangement or understanding or is to be included in the proposed contract, arrangement or understanding, or the covenant was required to be given or the proposed covenant is to be required to be given, as the case may be, for that purpose or for purposes that included or include that purpose; and

(ii) that purpose was or is a substantial purpose.' (Emphasis added.)'

The operation of s 4F upon provisions stated to have a particular purpose is significant. The phrase 'the provision was included in the contract ... for that purpose or for purposes that included or include that purpose' suggests that s 4F requires examination of the purposes of the individuals by whom the provision was included in the contract, arrangement or understanding in question [ASX Operations Pty Ltd v Pont Data Australia Pty Ltd [No 1] (1990) 27 FCR 460 at 476]. Moreover, s 4F contemplates that a provision may be included in a contract, arrangement or understanding for a plurality of purposes and, in such circumstances, directs that the relevant purpose must be 'substantial'. This is a further indication that the Act requires examination of the purposes of individuals, the inevitable multiplicity of which may be contrasted with an examination of the 'objective' purpose of an impugned provision. In this way, the introduction of a 'substantial purpose' test avoids difficulties in discerning the relevant purpose of multiple parties to a contract, arrangement or understanding."

274 It seems to have been common ground before me that in this case it does not matter which approach is followed.

275 It also appears to be common ground that in any event no assistance with determining which approach was intended by s 75JDA(1) to be the one to be followed is to be gained from the extrinsic materials on that provision to which I was directed.

276 Although then it is not necessary for me to do so, I would conclude, from the authorities I have referred to, and given that there is no equivalent to Trade Practices Act, s 4F, in the Stamp Act, that the objective approach is to be preferred as a matter of construction (on ordinary meanings) of Stamp Act, s 75JDA.

277 As I have indicated, the parties appear to have agreed it makes no difference to the determination of the purpose or purposes of the arrangement to which the Sale Agreements related which approach is followed. Both approaches indicate that the purpose or purposes was or were to resolve the family dispute by distribution of the assets of the companies in the Group up to the Thomas Family and the Johnson Family, while leaving the timber assets of Worsley Timber and the shares in Adelaide Timber in the hands of a newly formed company, the appellant, pending the sale of those assets and shares if possible.

278 As to the subjective approach, I note that the evidence as to the intentions of the parties to the arrangement to which I was directed was the affidavit of Walter Hubert Johnson ("Walter Johnson") sworn 5 September 2006.

279 Walter Johnson deposes his late father was G V Johnson, and on the death of his father he became governing director of GVJ Pty Ltd, as consequence of which he assumed "full control of Occidental [Investments] and its related companies" until Occidental was voluntarily wound up "following the resolution of the family dispute" (par 3).

280 He further deposes that, at about the time of resolution of the family dispute, to which I earlier referred, and which resulted in the ratification on 23 December 1998 by all the shareholders of Occidental Investments of the November 1976 resolutions which I earlier described, he had made efforts, described in the affidavit, to dispose of the timber assets of Worsley Timber and of Adelaide Timber (collectively in his affidavit "the Timber Assets") "profitably".

281 Those efforts had been unsuccessful. He deposes that at about that time the State government (par 6):

" ... was in the process of reviewing and introducing a forest management strategy that involved a consolidation of the timber industry and a reduction of the number of timber milling licences. I perceived that the value of the Group's investment in its timber assets could be seriously affected by any inability to react to, and take advantage of, the timber exist strategies that I anticipated would be imposed by the Government. In my view this could best be done if the Timber Assets were held in a company."

" ... due to the changes being implemented by the government and the uncertainty in the timber industry at the time, it was not possible to secure a realistic offer for the disposal of the Timber Assets to third parties in the market."

283 Walter Johnson goes on to depose that in those circumstances there appeared to him at the time to be three alternative ways of proceeding.

284 The first was to pass the timber assets of Worsley Timber in specie, following distributions on the liquidations of other interposed companies in the Group, to the Thomas Family and the Johnson Family. They would hold the timber assets of Worsley Timber as tenants in common.

285 The second alternative was to leave the Timber Assets in Worsley Timber and Adelaide Timber as companies in liquidation, whose liquidator would continue to operate the timber businesses in each "until it was possible to dispose of the remaining Timber Assets efficiently and profitably" and the proceeds distributed. To the extent the assets were not sold they would be distributed in specie up the chain as for the first alternative.

286 The third alternative was the one selected, involving the incorporation of the appellant to hold the timber assets of Worsley Timber and the shares in Adelaide Timber. Walter Johnson deposes that alternative was selected as a way of keeping (par 12)

" ... a cohesive operating enterprise ... under one corporate roof. There were clear commercial advantages of operating the timber businesses in a restructured company structure, which included the ease of operation."

287 This arrangement would avoid the "greater difficulty" that management by a committee of tenants in common would represent (par 11), while also avoiding having third parties dealing with a company or companies "in liquidation" (par 10).

288 Walter Johnson further deposes that the alternative finally selected was not "for any collateral purpose of avoiding stamp duty that would otherwise have arisen" (par 18).

289 As to the objective approach to "purpose", I note that there is no express or implied term in the arrangement to which my attention was drawn which described its purpose or purposes. So far as the effects of those terms are concerned, I have already indicated they involved the passing of the assets of the Group up to the Thomas Family and the Johnson Family. This was with the exception (certain cash aside) of the timber assets of Worsley Timber and the shares in Adelaide Timber, which were retained in the newly incorporated Appellant. A sale of the timber assets of Worsley Timber ultimately occurred. An inference that these effects were intended is readily to be drawn in the circumstances, and it is common ground that the inference should be drawn.

290 I consider it is difficult to see any material difference between the purpose or purposes of the arrangement determined subjectively or objectively.

291 Having determined the purpose or purposes of the arrangement as I have indicated, it then becomes necessary to determine if they or any of them qualify as "the reduction of duty that might otherwise become payable" within s 75JDA(1)(b).

292 Counsel for the appellant noted that in the reading for which he was contending the disqualifying "purpose" in s 75JDA(1)(b) was to reduce duty other than the duty from liability to which the exemption was sought. That is, such duty was the referent of the duty "that might otherwise become payable" in the paragraph (emphasis supplied). In the present case, such duty might be that on the ultimate transfer of the property transferred by Worsley Timber to the appellant, or that on the transfer of shares in the appellant.

293 As I will indicate when I consider the meaning of s 75JDA(1)(b) contended for by counsel for the respondent, there is support for the reading of counsel for the appellant in the present respect in the extrinsic materials on the Revenue Act to which I will refer.

294 To understand the submissions of counsel for the appellant as they apply to the present case, I need to consider each possibility those submissions refer to separately.

295 In the case of duty on the ultimate transfer of the property transferred by Worsley Timber to the appellant there were was no purpose to reduce that duty. Indeed, as I have already indicated, full ad valorem duty as provided for by Stamp Act, Second Schedule, Item 4, had been paid on the conveyance, in December 2002, of the Land by the appellant to the purchaser of that land, Fieldon Pty Ltd.

296 In the case of the shares in the appellant, there were two sets of transfers of concern here.

297 In the case of the transfers of the shares of the appellant that occurred on the windings up and distributions in the chain of windings up and the distributions that led to the shares ending up with the Thomas Family and with the Trustee the respondent had, as I have also previously indicated, determined pursuant to Stamp Act, s 74A(2), that the companies concerned had not been wound up as part of "an arrangement or scheme designed with the collateral purpose of reducing the duty otherwise payable on the conveyance or transfer of the property".

298 I agree with counsel for the appellant that, in the face of this determination, it would not be possible for the respondent reasonably to conclude that the instrument for the exemption that had been previously granted in this case was one that "relates or is likely to relate to a duty avoidance arrangement" (s 75JDA(3)) consisting in an arrangement "having as its purpose, or one of its purposes, the reduction of duty that might otherwise be payable" on those transfers of shares. See Dilatte v MacTiernan [2002] WASCA 100, per Malcolm CJ, Wallwork J and White AUJ agreeing, at [60] - [62] on consistency in administrative decision-making.

299 It is perhaps a closer question whether the same should be said in respect of other transfers of the shares. There were two possibilities.

300 One, which resulted in what occurred in this case, was the distribution of the shares of the appellant by the Trustee to the Johnson Family. However, if that were not for present purposes subsumed by the determination under s 74A(2), then it should be noted that, as I have previously indicated, the duty payable on that transfer in accordance with s 73AA(1)(d) under Second Schedule, Item 6, had been assessed and duly paid.

301 It is common ground that the other possibility was not involved in this case. It was the acquisition of a majority interest in the appellant as a company to which Stamp Act, Pt IIIBA, Div 2 applied otherwise than by an acquisition of such an interest on a distribution of assets on a winding up.

302 It is not in contest that at all material times the appellant was a company to which Stamp Act, Pt IIIBA, Div 2 applied, by virtue of s 76AI. Such a company was referred to (as such companies are in some of the extrinsic materials before me) as a "land rich WA company" or simply a "land rich company". On the acquisition of a "majority interest" in such a company (called a "relevant acquisition", as defined in s 76AJ, read with related provisions defining some of the terms it uses), the person acquiring the majority interest must, by s 76AG, prepare and lodge with the respondent a statement in respect of that acquisition. The statement is chargeable with duty at the rate for a conveyance or transfer of land, in Second Schedule, Item 4(1), as provided for in s 76AH. That rate is higher than the highest rate provided for a transfer of shares in Second Schedule, Item 4A.

303 It was common ground before me that no such acquisition was intended or resulted here, except to the extent that a distribution on a winding up of a company in the Group involved such an acquisition. Such a distribution attracted its own treatment for stamp duty purposes, as I have indicated.

304 I should indicate at this point that the reading of Stamp Act, s 75JDA(1)(b) contended for by counsel for the appellant is one that in my view has considerable attraction as that to be derived from the ordinary meaning of the words used. That attraction arises out of the consideration of the authorities on which counsel for the appellant relied for his reading.

305 Further, on that reading, it is clear to me that the respondent could not reasonably form the opinion referred to in Revenue Act, s 8(3) by reference to Stamp Act, s 75JDA(1)(b).

306 However, on the submissions of counsel for the appellant, a different reading was necessary with respect to s 75JDA(1)(a). I reach that reading next.

Reading s 75JDA(1) in terms of business purposes: s 75JDA(1)(a)

307 For the purposes of the reading of this paragraph contended for by counsel for the appellant, my attention was drawn to the statement in Gulland (supra), per Gibbs CJ, at 66 - 67, immediately following the quotation from Newton (supra) appearing in his Honour's judgment, which qualifies that test as follows:

"The question, according to this test, is whether the arrangement, on its face, must necessarily be labelled as a means to avoid tax. That test is a useful one, and it has often been applied, but it does not provide a guide to the decision of every case. An arrangement which is not capable of explanation by reference to ordinary dealing and which on its face is obviously designed to bring about the result that less tax will be paid may nevertheless do no more than take advantage of an opportunity to reduce tax which the Act itself provides. A line of decisions illustrates that if the Act offers to the taxpayer a choice of alternative tax consequences, either of which he is free to choose, or offers certain tax benefits to taxpayers who adopt a particular course of conduct, the choice of the advantageous alternative or the adoption of the beneficial course does not mean that s 260 is attracted. Stephen J in Mullens v Federal of Taxation [(1976) [1976] HCA 47; 135 CLR 290, at p 318] summed up in that way the effect of the earlier authorities which included W P Keighery Pty Ltd v Federal of Taxation [(1957) [1957] HCA 2; 100 CLR 66]; Federal of Taxation v Sidney Williams (Holdings) Ltd [(1957) [1957] HCA 1; 100 CLR 95]; and Federal of Taxation v Casuarina Pty Ltd [(1971) [1970] HCA 30; 127 CLR 62]. The subsequent authorities - Federal of Taxation v Patcorp Investments Ltd. [(1976) [1976] HCA 67; 140 CLR 247, esp. at pp 298-299]; Slutzkin v Federal of Taxation [(1977) 140 CLR 314]; and Cridland v Federal of Taxation [(1977) [1977] HCA 61; 140 CLR 330] - are all consistent with this formulation. As Stephen J further said in Mullens v Federal of Taxation [(1977) [1977] HCA 61; 140 CLR 330]:

'Section 260 of the Act, in performing its task of "protecting the general provisions of the Act", cannot be allowed to negative the Act's specific and particular provisions ... .'

These cases apply the principle of construction expressed in the maxim generalia specialibus non derogant. They show that Lord Denning's statement in Newton v Federal of Taxation needs to be understood subject to the qualification which I have indicated, but do not otherwise detract from the authority of that statement."

308 Counsel for the appellant pressed on me the argument that the "unless" clause in s 75JB(5) is an example of a specific and particular provision which it cannot have been the intention of s 75JDA(1)(a) to negative. Indeed, I note some further assistance with the argument is to be derived from the language used in s 75JDA(1)(a) of arrangements circumventing or avoiding (emphasis added):

" ... the operation of the provisions of this Part [Part IIIBAAA] so far as they make the availability and continued effect of an exemption under section 75JB dependent on bodies corporate having been associated for a particular period or remaining associated for a particular period."

309 Counsel appeared to be putting to me that the resolution of the issue of construction posed by s 75JDA(1)(a) lay in reading it to require the respondent to consider whether or not, in relation to an arrangement like the present one, the arrangement contrived the appearance of leaving Worsley Timber with no assets other than in cash when in substance it had control over other assets.

310 To the extent this goes to whether or not the position of Worsley Timber was in that respect a sham, it seems to me that such a reading cannot be correct. The doctrine of ignoring shams is already well established in stamp duty law: see Snook v London & West Riding Investments Ltd [1967] 2 QB 786, per Diplock LJ at 802, quoted with approval in Peko-Wallsend (supra), per Brinsden J, at 4577 - 4578; see also Wallace J, at 4597. I would not readily conclude that the legislature intended simply to state the need for its application in the present context.

311 However, I understood counsel for the appellant to be putting to me that in any event s 75JDA(1)(a) should be read as importing into the Stamp Act for its purposes considerations of the sort subsumed by the doctrine of "fiscal nullity". That doctrine goes further than the doctrine of ignoring shams. It also appears to be more restricted than the approach in Newton (supra), as that approach is understood in terms of its allowance for an arrangement which has a main purpose, if not its only main purpose, that is a tax avoidance one.

312 Moreover the doctrine, like (at least implicitly) s 75JDA(1)(a), is expressed in terms of denial of effect to what would otherwise be an arrangement complying with the relevant condition for the relevant tax treatment.

313 The doctrine of "fiscal nullity" is that associated with W T Ramsay Ltd v Inland Revenue Commissioners [1981] UKHL 1; [1982] AC 300. The doctrine has been applied in the context of provisions respecting stamp duty which were rather similar to those in Stamp Act, Pt IIIBAAA, although those provisions did not include a provision like s 75JDA. That application of that doctrine, to the provisions in the stamp duty legislation in Hong Kong, was in Collector of Stamp Revenue v Arrowtown Assets Ltd [2003] HKCFA 46 (Court of Final Appeal of the Hong Kong Special Administrative Region).

314 The doctrine of "fiscal nullity" was considered in John v Federal Commissioner of Taxation [1989] HCA 5; (1989) 166 CLR 417 in relation to the Income Tax Assessment Act, where the doctrine was described as follows, per Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ at 434:

"The principle which has come to be known as 'the principle of fiscal nullity' derives from the decisions of the House of Lords in W T Ramsay Ltd v Inland Revenue [supra]; Inland Revenue v Burmah Oil Co Ltd [(1981) 54 TC 200; [1982] STC 30]; and Furniss v Dawson [[1984] AC 474]. The principle was stated in Furniss by Lord Brightman [[1984] AC, at 527]:

'First, there must be a pre-ordained series of transactions; or, if one likes, one single composite transaction. This composite transaction may or may not include the achievement of a legitimate commercial (ie business) end ... Secondly, there must be steps inserted which have no commercial (business) purpose apart from the avoidance of a liability to tax - not "no business effect". If those two ingredients exist, the inserted steps are to be disregarded for fiscal purposes. The court must then look at the end result. Precisely how the end result will be taxed will depend on the terms of the taxing statute sought to be applied.'"

315 I note that in the original passage in Lord Brightman's judgment in Furniss v Dawson [1983] UKHL 4; [1984] AC 474, at 527, the word "purpose" in the phrase "commercial (business) purpose" was emphasised, as was the word "effect" in the phrase "no business effect". This was to emphasise that doctrine could apply notwithstanding that the inserted step might have an enduring business effect. The step in the case was the creation of a company which would on-sell the assets it received from the tax payers for which it issued its shares to them. The company would continue for an indefinite period without the consideration it received for the on-sale reaching the taxpayers in the absence of the subsidiary's liquidation or reduction of capital (at 524).

316 I note that this passage is also quoted in Arrowtown (supra), per Lord Millett SPJ, Li CJ and Bokhary, Chan and Ribeiro PJJ agreeing, at [124] as that in which Lord Brightman "summarised the circumstances in which the Ramsay [(supra)] approach was appropriate".

317 In John (supra), their Honours considered (at 434 - 435) that the general anti-avoidance provision in Income Tax Assessment Act, s 260, excluded by implication the application of the doctrine of fiscal nullity as a principle of statutory construction so as to further limit what a taxpayer might do or not do for the purpose of gaining a taxation advantage.

318 As I understood the argument of counsel for the appellant before me, the relevant context in the Stamp Act differed from that in the Income Tax Assessment Act. Stamp Act, s 75JDA(1), represented two different anti-avoidance provisions. The provision in s 75JDA(1)(a) was concerned with arrangements whose avoidance or circumvention of the requirements for the exemption of either of the sorts described the respondent should disregard, thereby causing him to refuse the exemption. The provision in s 75JDA(1)(b) was concerned with arrangements otherwise qualifying for the exemption whose purpose or one of whose purposes as identified by the paragraph should cause the respondent to refuse the exemption.

319 The point I understood counsel for the appellant to be making was one I understood him to illustrate by reference to the facts and holding in Arrowtown material for my purposes. I should briefly consider that authority.

320 Arrowtown (supra) concerned the application of Stamp Duty Ordinance, Cap 117 (Hong Kong), s 45. That provision was described by Lord Millett NPJ (at [75]) as "for relief from stamp duty in the case of a transfer of the beneficial interest [in immoveable property] from 'one associated body corporate to another'". His Lordship indicated (at [79]) that the relief was "lost if the transferor and transferee cease to be 'associated' within a period of two years after the execution of the instrument in question".

321 The provision stated (in s 45(2)) that two bodies were "associated" if one was "beneficial owner of not less than 90 per cent of the issued share capital of the other". It appears to have been accepted in Arrowtown this included indirect beneficial ownership by the transferor (Shiu Wing) through a chain of wholly owned bodies corporate the penultimate one of which (Prepared) in turned held all of the shares of the transferee body corporate (Arrowtown).

322 Shiu Wing had transferred a beneficial interest in immoveable property to Arrowtown. Pursuant to an arrangement made prior to the transfer with a company (Calm Seas) with which Shiu Wing would joint venture in the development of the land sold, and shortly after that transfer, Shiu Wing was to be a minority shareholder of what would become the joint venture vehicle, Prepared. Lord Millett described how this was to be achieved as follows (Arrowtown (supra), [55]):

"This was to be achieved by the reorganisation of the share capital of Prepared so that it had a nominal capital of HK$1,010 consisting of 1,000 ordinary shares of HK$0.01 each and 100,000 'B' non-voting shares of HK$0.01 each. Following the sale of 980 of the 1,000 ordinary shares to Calm Seas, therefore, Super Charge would retain only 2% of the ordinary shares but more than 99% of the total issued share capital of Prepared after the 'B' non-voting shares are taken into account."

323 The question in Arrowtown relevant for the purposes of the submissions of counsel for the appellant, as that question was described by Lord Millett (at [81]), was whether or not under the doctrine of fiscal nullity as I have described it the "B" non-voting shares "should be disregarded in determining what was at the material times [Prepared's] issued capital".

324 Lord Millett described the "B" non-voting shares, and his answer to the question in respect of them, as follows (at [62] and [155]):

"Under the Articles of Association of Prepared which Shiu Wing was required to procure Prepared to adopt and which were set out in Annex B to the Share Sale Agreement, the 'B' non-voting shares were rendered effectively valueless. They had a right to dividend only for a year in which the net profits of Prepared exceeded HK$1 million billion (said to be a sum larger than the gross national product of the USA) and a right to distribution on a winding up only after the holders of all other shares had received the somewhat more modest distribution of HK$100,000 billion per share. In reality, the ordinary shares carried 100% control of the business of Prepared together with the right to the whole of its capital and profits. The holders of the 'B' non-voting shares had voting rights only on resolutions varying their rights (which they would have had in any case under the provisions of the Companies Ordinance as members of a separate class).

...

In my opinion the present case falls squarely within the Ramsay approach. The creation and issue of the "B" non-voting shares formed part of a larger transaction under which the Development Land was to be sold and transferred to a joint venture company in which Shiu Wing would retain a small 2% equity stake. The shares were created and issued in order to meet the qualifications for exemption from stamp duty in s 45 of the Ordinance. This was explicitly stated in the Heads of Agreement. They had no other purpose. This was not seriously disputed. Leaving aside for the moment their nominal value and the right to appoint a director of Prepared and Arrowtown which was attached to them, they had no commercial content at all. They carried no rights to dividends or capital on a winding up. If shares are considered as a bundle of rights, they had barely even a shadowy existence."

325 On the analysis of Arrowtown (supra) by counsel for the appellant, as I understood it, an arrangement which included a transaction which fell under the "unless" clause in Stamp Act, s 75JB(5), or under the dispensation in s 75JB(1)(d)(ii), where in either case the transaction had no purpose that was a business purpose, but was simply to take advantage of the relevant qualification on the requirement for bodies corporate remaining associated or having been associated for the purposes of the person seeking it continuing to enjoy, or qualifying for, the s 75JB(3) exemption, would be a duty avoidance arrangement within s 75JDA(1)(a). The particular facts of Arrowtown, transposed to the context of the Stamp Act, as counsel for the respondent pointed out to me, would not require resort to the doctrine of fiscal nullity. This was in view of the terms of s 75J(2) on what it means for the purposes of the Western Australian Act for two bodies corporate to be "associated".

326 In this case, there was no such purpose, on the same analysis as that previously undertaken for the purposes of s 75JDA(1)(b). This is not to say, as I understood the argument of counsel for the appellant, that the two paragraphs of s 75JDA(1) covered the same ground, even if they allowed for a similar inquiry. That inquiry was into whether or not there were business (including family) purposes to the arrangement to which the instrument related. A purpose that was qualification for the exemption provided for under s 75JB(3) would not be a purpose that was "the reduction of duty that might otherwise become payable" (emphasis supplied). I presume Arrowtown (supra) would be an example.

327 Counsel for the appellant offered, as what I took to be an example of a case where s 75JDA(1)(a) would not be available to the respondent, but s 75JDA(1)(b) would, a case where land assets whose total unencumbered value was at or above the threshold for the purposes of s 76AI(2)(a) ($1 million at all material times) were transferred from the company in the group that previously held them to other companies in the group with which the first company was and would remain associated for the purposes of s 75JB. The transfers were with the result that that no transferee had land assets whose unencumbered value was at or above the threshold for the purposes of s 75AI(2)(a). No avoidance or circumvention of the association requirements of Part IIIBAAA was or would be involved.

328 On counsel's reading, if the arrangement to which the transfer related was incapable of explanation as other than one to qualify the on-sale of shares giving control of the companies holding the land assets for the level of stamp duty for transfers of marketable securities, then s 75JDA(1)(b), but not s 75JDA(1)(a), would be engaged.

329 I note that the doctrine of fiscal nullity appears to require that there is no business purpose that can be predicated for the arrangement. I have already indicated that this does not appear to be a requirement for the engagement of s 75JDA(1)(b). Nothing was made of this by either counsel, and in any event, even if there is no difference between the two paragraphs in this respect, that would not affect the outcome in this case.

330 I note there is an apparent distinction between s 75JDA(1)(a) and (b) other than the apparent breadth of the latter relative to the former. As counsel for the responded pointed out, the former is expressed in terms of "avoiding or circumventing", where the latter is expressed in terms of "purpose". It might be suggested that the former is the language of effect, by contrast with the language of the latter.

331 However, I consider the distinction is less significant than might at first sight appear. That is because of the use s 75JDA's "arrangement avoiding or circumventing", which I consider to be purposive language. Further, I note that, on Gulland (supra), per Gibbs CJ, at 66, no distinction is drawn between the language of purpose and effect in relation to the application of the approach in Newton (supra), and its qualification. In terms of the way in which, as I have indicated, the objective approach to the determination of purpose is to proceed, this is readily understandable.

332 In any event, I did not understand counsel for the respondent to contend that, simply because the effect, or one of the effects, of an arrangement was that a body corporate that had been a transferor was liquidated and its assets distributed, in circumstances meeting the "unless" clause in s 75JB(5) or the provisions of s 75JDA(1)(d)(ii), the present (or indeed the next) reading of s 75JDA(1)(a) was engaged.

333 Rather, the effect on the corporate group of the liquidation and distribution had to be considered, to see if it was outside the effect the legislature intended to cater for by the provision of the "unless" clause.

334 Here I note that I consider that that the reading of Stamp Act, s 75JDA(1)(a) contended for by counsel for the appellant is one that in my view has considerable attraction as one that can fairly readily be derived from the ordinary meaning of the words used. That attraction arises out of the consideration of the authorities on which counsel for the appellant relied for his reading.

335 Further, on that reading, it is clear to me that the respondent could not reasonably form the opinion referred to in Revenue Act, s 8(3) by reference to Stamp Act, s 75JDA(1)(a).

336 This takes me to the reading of s 75JDA(1) contended for by counsel for the respondent.

Reading s 75JDA(1) in terms of intended uses of Pt IIIBAAA

337 Counsel for the respondent's reading, like that of counsel for the appellant, was one in terms of the arrangements the instruments in relation to which the legislature had by the enactment of s 75JDA intended to ensure the exemption in s 75JB(3) not provide. However, counsel for the respondent's reading involved that the instruments which the broad language of s 75JDA should be taken to have disqualified for the purpose of s 75JB(3) fell to be determined by reference to the relevant extrinsic materials on the passage of the Revenue Act, the Second Reading speech for the 2000 Bill and the EM for the 2000 Bill rather than by reference to the case law, on anti-avoidance provisions, and that concerned with fiscal nullity, on which the appellant relied. That is because s 75JDA(1), read literally, led to the difficulties to which I earlier referred. Those difficulties represented ambiguity, or at least obscurity, which allowed for resort to extrinsic materials to assist with the determination of the meaning of the provision. Counsel also referred to an absurdity to which it was said the reading contended for by the appellant led. Under Interpretation Act, s 19(1), such ambiguity, obscurity or absurdity would permit resort to extrinsic material on the Revenue Act as I indicate below.

338 The reading contended for by counsel for the respondent was one I understood to emerge principally from the particulars as required by consent orders dated 28 September 2004, to which my attention was directed by counsel for the appellant, as well as the written and oral submissions of counsel for the respondent.

339 The reading contended for by counsel for the respondent is, for s 75JDA(1)(b), that the "reduction of the duty otherwise payable" is indeed (in the present context) capable of referring to the duty from which exemption is sought, and should be understood to refer to a purpose to use the exemption in a way in which it was not intended to be used.

340 The reading contended for by counsel for the respondent is, for s 75JDA(1)(a), that the "avoidance or circumvention" is a reference (in the present context) to the use of the qualifications (in s 75JB(1)(d)(ii) and s 75JB(5), respectively) to the having been associated or remaining associated requirements in a way in which the relevant qualification was not intended to be used.

341 In neither case is the legislative intention that identifies the relevant ways in which the exemption was intended to be used to be readily discerned from the language of the s 75JDA(1), although counsel for the respondent argued that the context to the provision, as I will indicate, might be seen to offer some assistance.

342 I should immediately note that there is a problem with reading the language of s 75JDA(1)(a) and (b) in the ways indicated. That is because, to the extent counsel's reading indicates that the difficulties referred to should not be resolved by reference to the literal words as the readings of counsel for the appellant do, there is a modification of the language of the provisions referred. The modification is by the introduction of wording directing attention to use of the exemption in unintended ways. It seems to me that, consistently with Mills (supra), per Dawson J, at 235, I must at least be able to extract those meanings as precisely the ones intended by the legislature for the provisions in question. Further, it would not be enough, in my view, that it was the legislature's expectation that those provisions would prevent the abuse of concern. The language it has chosen must be adequate for that purpose, having regard to Interpretation Act, s 19(1) and (3). See also R v Bolton; ex parte Beane [1987] HCA 12; (1987) 70 ALR 225, per Mason CJ, Wilson and Dawson JJ, at 227 - 228.

343 Interpretation Act, s 19(1) and (3), provide as follows:

"(1) Subject to subsection (3), in the interpretation of a provision of a written law, if any material not forming part of the written law is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material -

(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law; or

(b) to determine the meaning of the provision when -

(i) the provision is ambiguous or obscure; or

(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law leads to a result that is manifestly absurd or is unreasonable.

(3) In determining whether consideration should be given to any material in accordance with subsection (1), or in considering the weight to be given to any such material, regard shall be had, in addition to any other relevant matters, to -

(a) the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law; and

(b) the need to avoid prolonging legal or other proceedings without compensating advantage."

344 On my analysis thus far, it appears to me that there is an ambiguity or obscurity within Interpretation Act, s 19(1)(b)(i), in relation to Stamp Act, s 75JDA(1), which would engage the permission in Interpretation Act s 19 to consider extrinsic materials, but subject to the other limitation in s 19(1) to which I return below, and the limitation in s 19(3), to which I also return.

345 It is less clear that there is an absurdity within Interpretation Act, s 19(1)(b)(ii). Counsel for the respondent contended that the appellant's reading would give Stamp Act, s 75JDA(1)(a) no scope of operation in relation to the remaining associated qualification in s 75JB(5). I consider, however, that the appellant's reading, at least by reference to the doctrine of fiscal nullity, does allow for a scope of operation. In any event, I do not consider that resort to extrinsic material under Interpretation Act, s 19, depends upon s 19(1)(b)(ii).

346 It is clear, from s 19(2)(f) and (e), respectively, that where resort to extrinsic material is permissible, such extrinsic material may include a Minister's Second Reading speech, and the explanatory memorandum relating to a bill, as counsel for the respondent contends for here. There is further material, as is clear from the other paragraphs in s 19(2), which might also be resorted to in suitable case. As I will explain, s 19(2)(h) appears to have been invoked in this case.

347 I note that under s 19(1) there is the limitation that consideration of any extrinsic material may only be given to that material if it is "capable of assisting in the ascertainment of the meaning" of s 75JDA(1), (a) or (b). Further, in determining "whether consideration should be given" to the material, and "the weight to be given" to that material, I also need to have "regard" to the matters referred to in s 19(3).

348 I note that counsel for the appellant appeared to contend that s 19 prevented me considering the purposes for s 75JDA(1) that might be established from the extrinsic materials referred to. In this case, as I have indicated, the purposes of s 75JDA(1) relied upon by counsel for the respondent went to the uses of the exemption in s 75JB(3) the legislature intended by the language it employed in s 75JDA(1) to preclude.

349 As counsel for the appellant pointed out to me, there is authority that no provision in Acts Interpretation Act, s 51AB (corresponding to Interpretation Act, s 19), permits a court to resort to extrinsic material to determine purpose or object for the purposes of s 51AA (corresponding to Interpretation Act, s 18): NAQF v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 781; (2003) 130 FCR 456, Lindgren J, at 471 - 472.

350 However, I do not consider that authority persuasive against my consideration of extrinsic material, like the Second Reading speech for the 2000 Bill and the EM for the 2000 Bill (or indeed the other material to which I will refer), with a view to ascertaining the purpose or purposes of s 75JDA(1).

351 I note that in NAQF (supra), his Honour, while considering it "questionable" that a court was permitted to consider extrinsic material of concern to me, did not find it necessary to resolve the question. Further, he said this (at 472):

"But it may be appropriate to consider the Explanatory Memorandum and the Second Reading Speech for the purpose of identifying the mischief which s 357A [the provision of the Migration Act 1958 (Cth) his Honour had to construe] was intended to address, as part of the general law purposive approach to statutory interpretation, and in the course of doing so to identify the purpose or object underlying the Act for the purposes of s 15AA; cf Saraswati v The Queen [1991] HCA 21; (1991) 172 CLR 1 at 21 per McHugh J."

352 I also note that, as a matter of strict construction of Interpretation Act, s 19(1), it may be that a distinction needs to be drawn between the permission to consider extrinsic evidence afforded by s 19(1)(a) and s 19(1)(b)(ii), on the one hand, and that afforded by s 19(1)(b)(i), on the other: see Pearce & Geddes (supra), at [3.15]. The permission in the case before me derives, as I have indicated, from s 19(1)(b)(i).

353 Further, there is contrary authority to NAQF: see Moradian v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1590, Gray J, at [35]. I consider that authority sets out the preferable view on the current matter.

354 I turn then to consider the ways in which counsel for the respondent contends the extrinsic materials are of assistance with the construction of the two limbs of s 75JDA(1). I follow the same order as with the discussion of the construction of s 75JDA(1) contended for by counsel for the appellant.

Reading s 75JDA(1) in terms of intended uses of Pt IIIBAAA: s 75JDA(1)(b)

355 Counsel for the respondent drew to my attention, not only the quoted passage from the Second Reading speech for the 2000 Bill, but also the EM for the 2000 Bill, which refers to what became s 75JDA(1) as follows:

"Subsection (1) provides a definition of the term 'duty avoidance arrangement' which is used in this section.

A "duty avoidance arrangement" can be explained as being an arrangement whereby:

• the pre-association or post-association requirements of the exemption is or would be defeated by the arrangement; or
• the purpose, or one of the purposes of the arrangement is to reduce the amount of duty that would be payable if the exemption did not apply.

This is notwithstanding that the arrangement would otherwise fit within the other legislative parameters necessary to qualify for the exemption.

This broad provision is considered necessary to ensure that a mechanism exists whereby the Commissioner can strike down arrangements that are outside the intention of the legislation and which violate the integrity of the pre and post association tests.

Moreover, if the relief under Part IIIBAAA is being used as part of a wider intention to subvert other provisions of the Act (eg to defeat the land rich provisions), the Commissioner can likewise deny the relief."

356 The last paragraph, counsel for the respondent appeared to indicate to me, at the least would, or at least might, indicate that a transaction involving the transfer of land to different members of a corporate group to as to have those companies not meet the threshold for s 75AI would engage s 75JDA(1)(b). In this respect the respondent's meaning overlapped with that of the appellant. Further, the extrinsic material appears to offer support for the reading contended for by the appellant of the word "otherwise" in s 75JDA(1)(b).

357 However, counsel for the respondent submitted the meaning of s 75JDA(1)(b) went further than that, in extending to the use of the exemption to reduce the duty on the transfer of the shares themselves between the two companies, where such use was not in other respects the way in which the exemption was intended to be used. I took this to be a reference to the generality of the language in the passage quoted from the EM for the 2000 Bill, "the amount of duty that would be payable if the exemption did not apply", as well as to the general language of the Second Reading speech for the 2000 Bill, previously quoted, which as I have previously indicated is also substantially reproduced in the EM for the 2000 Bill. The language in the latter extrinsic material that I took to have been referred to was the purpose that the exemption remove:

" ... the stamp duty burden which would otherwise prevent groups of companies from adopting a more efficient corporate structure, providing there was little or no change in the underlying ownership."

358 Counsel for the respondent submitted that such a reading, which is rather different from that suggested by the words, or the example in the extrinsic materials first quoted, meant the corporate group should continue, involving it carrying on the former business or substantially that business, even although the entity or entities through which that was done might have been changed. That reading was said to reflect the intention that might be seen to underlie Pt IIIBAAA itself, as well as particular provisions in it. It was also said to encompass particular types of transaction referred to in the Second Reading speech for the 2000 Bill as having been intended to be excluded from the exemption. Those types of transaction were involved here.

359 As to Pt IIIBAAA itself, counsel said, it was notable that the heading to the Part was "Exemptions for corporate reconstructions". The heading, which is to be considered part of the Act (Interpretation Act, s 32(1)), would appear to qualify all of the provisions in the Part, although, as counsel for the appellant pointed out, some sections, such as s 75JB, used section headings expressed in terms of "Corporate reorganizations". I do not take anything from that, not because section headings are not to be taken as part of the Act (see Interpretation Act, s 32(2); but see Pearce & Geddes (supra), at [4.49]), but because the Part itself indicates that "corporate reorganizations" is used interchangeably with "corporate reconstructions" (see for example s 75JC, applicable to both s 75JA and s 75JB).

360 Counsel for the respondent contended that "reconstruction" carried the meaning, as put by a leading authority on corporate reconstructions also referred to by the appellant, that, after the reconstruction, "substantially the same business shall be carried on and substantially the same persons shall carry it on": In re South African Supply and Cold Storage Company [1904] Ch 268, Buckley J, at 288.

361 However, I consider that no great assistance can be derived for counsel's argument from this quotation, or the language of "reconstruction" or "reorganization". It seems to me that, as the quotation seems to me to indicate, the language is capable of covering relocation of a business within a group of a business for the purposes of carrying it on for the benefit of the ultimate shareholders in the group with a view to its advantageous resale. This, in terms of the EM for the 2000 Bill, was to adopt a "more efficient corporate structure" for such an undertaking. In this case there was no emphasis on the dealings with other assets of the Group as indicating that "substantially the same business" was not to be carried on, nor on the way the assets of the Group were distributed between the Thomas Family and the Johnson Family as indicating that "substantially the same persons" were not to carry it on. The focus in this case was on the Group Timber Business, for this, as for other purposes. In any event, it seems to me that the language of South African Supply and Cold Storage (supra) and of Stamp Act, Pt IIIBAAA, is capable of covering the reconstruction of a corporate group so far as concerns a discrete business of the group without regard to the balance of the activity of the group.

362 Further, the language of South African Supply and Cold Storage (supra) does not, it seems to me, carry the meaning the group must continue, so as to exclude cases of removal of all of the companies between the remaining operating company and the ultimate individual shareholders of the group (with the result that there is no longer a "group"). There is a corporate reconstruction, it seems to me, when all of the companies but one in the group are removed, or are collapsed into one: on the scope of the term "reconstruction" in those respects, see Ford, H A J, Austin R P and Ramsay I M, Ford's Principles of Corporations Law, LexisNexis Butterworths, looseleaf, at [24.020], "Reconstructions and amalgamations". Whether in a particular context a more limited meaning in either of the two respects I have noted is required would depend on that context.

363 Counsel for the respondent also relied on what he said were the intentions underlying the provisions within Pt IIIBAAA itself which pointed to a use of the exemption only where there was no question of the business or any significant part of it the subject of what would otherwise be a reconstruction being dealt with by reference to the benefit of third parties who were not associated bodies corporate, as with a view to the sale of the business or that part to such parties, or provision of the consideration for the transfer to be received by them. Counsel for the respondent also pointed to extrinsic material on Pt IIIBAAA when it was introduced which he appeared to submit was to this effect. I took these references to be to the context which would give a "reconstruction" within Pt IIIBAAA the more limited meaning in both of the respects I noted.

364 I agree that, if Stamp Act, s 75JDA(1)(b) should be read so as to apply to such an arrangement, then there was a reasonable basis for the opinion of the respondent in this case.

365 To evaluate the arguments for the reading contended for, I turn first to the particular provisions in Pt IIIBAAA relied upon by counsel. They were the provisions on having been associated and remaining associated (s 75JB(1) read with (2); and s 75JB(5), respectively); and the provision on arrangements for persons other than the associated transferor and the transferee bodies corporate or other associated bodies corporate providing or receiving the consideration or any part of it for the transfer or conveyance (s 75JB(1)(f)(i)).

366 It seems to me that again no great assistance can be drawn from these provisions for present purposes.

367 As I have already indicated, the provisions on association are subject to qualifications.

368 I return to the construction of s 75JB(1)(f)(i) below. I conclude there that it refers to consideration that is provided pursuant to an arrangement for it or any part of it to move up a chain of interposed companies to the ultimate individual shareholders of the group. I do not consider, however, that this indicates the uses of the exemption at which s 75JDA(1)(b) was directed should be understood as the respondent contends. Rather, s 75JB(1)(f)(i) indicates that qualifying for the exemption requires that there be no such arrangement. If that requirement is not met, there is no question of or need for the use of the exemption of the sort that led to the enactment of s 75JDA(1) to preclude such a use. To put the matter another way, the mischief against which s 75JDA was directed was not to be found here.

369 I was also referred to extrinsic material on the Revenue Laws Amendment (Assessment) Bill (No 2) which as enacted introduced Pt IIIBAAA to the Stamp Act. In the Second Reading speech for that bill ("the Second Reading speech for the 1996 Bill"), the following appears (Mr C J Barnett, Hansard 29 August 1996, at 4858, 4859):

"Part 5 of the Bill seeks to amend the Stamp Act. A number of amendments to this Act are proposed. The most important of these is the stamp duty relief for corporate reconstructions, which was announced as part of the 1996-97 Budget. Corporate reconstructions generally involve the transfer of property between commonly owned companies. If one lifts the 'corporate veil', there is little or no change in the underlying ownership of the property in such circumstances. However, in many cases the stamp duty required to be paid on such transfers can be a major barrier to the reconstruction proceeding. The objective of the corporate reconstruction scheme contained in these amendments is to remove the stamp duty impediment to the achievement of a more efficient ongoing structure for a company group.

...

Companies must have a common shareholding and voting control of 90 per cent or more to be viewed as "associated" for the purposes of this exemption. To discourage the use of these provisions for the purpose of asset stripping, the companies must generally meet a three year pretransfer association test and remain associated for five years after the date of the instrument or transaction to which the exemption applies. Failure to meet the post-transfer association test will void the exemption and trigger clawback of the duty, plus a penalty interest."

...

This measure is an important initiative which will assist companies to improve the efficiency of their operations and with a consequent benefit to the state economy."

370 It will be seen that much of this language is very similar to that used in the Second Reading speech for the 2000 Bill. However, counsel for the respondent would appear to have had me take particular note of the words I have emphasised in the phrase "achievement of a more efficient ongoing structure for a company group".

371 However, again I am unable to draw any great assistance from this source. I accept that my resort to it, in light of the references in the Second Reading speech for the 2000 Bill to the uses to which the exemption in Pt IIIBAAA was originally intended by the legislature, is permissible within Interpretation Act, s 19(2)(h), if not within the general words of s 19(2). However, the language, to the extent it qualifies the understanding of "reconstruction" from South African Supply and Cold Storage Company (supra) by reference to the need for there to be an intention a "corporate group" continue for at least some time, would it seems to me be met here by the intention to have at least a group made up of two companies, in the appellant and its wholly owned subsidiary, Adelaide Timber, to continue for an indefinite time. It is true the applications for the s 75JB(3) exemption dated 1 November 1999, above, referred to the "solution to dissolve the whole group". However, I consider that was not directed to the question whether a group of companies might survive to carry on a discrete part of the Group's business.

372 Counsel for the respondent also drew to my attention the references in the Second Reading speech for the 2000 Bill which it appears to have been said was illustrative of the application of the further reading contended for. Those references were to "excluding relief where the purpose of the reconstruction is to strip the assets of previously unrelated companies or to package group assets for on-sale to unrelated parties".

373 It will have been seen there was also a reference to discouraging the use of Pt IIIBAAA "for the purpose of asset stripping" in the Second Reading speech for the 1996 Bill. Asset stripping or packaging, it appears to have been put to me, was an example of a case where there would be a question of the business or any significant part of it the subject of what would otherwise be a reconstruction being dealt with by reference to the benefit of unrelated third parties, in this case with a view to a sale to such parties. The reconstruction in this case was said to be one with just that purpose. On that view of asset stripping or packaging, I agree with that last submission.

374 However, while I accept that the references to asset stripping and packaging could be understood in the way described, and thus as an instance to which the further meaning contended for applied, neither than understanding nor that meaning is easily extracted from the extrinsic materials, which nowhere in them to which I was referred set either the understanding or the meaning out. I return to the matter of the understanding of asset stripping and packaging in connection with the reading of s 75JDA(1)(a) counsel for the respondent contended for.

375 Further, the extrinsic materials do not seek to relate the further meaning contended for to the words of s 75JDA(1)(b).

376 Finally, the meaning contended for is not in my view reconcilable with the wording of the paragraph.

377 It seems to me that it is one thing to suggest it is a possible meaning of the paragraph that it is concerned with excluding certain uses of the exemption otherwise possible. It is another to assert that the paragraph should be construed as counsel for the respondent contends.

378 This is to say the extrinsic materials, to which it is contended I should resort so as to arrive at the further meaning contended for, in my view are not, within s 19(1), "capable of assisting in the ascertainment of the meaning of [Stamp Act, s 75JDA(1)(b)]". I note that it is indeed the case that the further meaning contended for would, at least arguably, have the effect that the respondent could have formed the conclusion that s 75JDA(1)(b) applied in this case, causing the annulment of the exemption under Revenue Act s 8(3). However, the words of s 75JDA(1) in my view are not capable of bearing that meaning. It has been said that "the words of the statute, not non-statutory words seeking to explain them, have paramount significance": Nominal Defendant v GLG Australia Pty Limited [2006] HCA 11, per Gleeson CJ, Gummow, Hayne and Heydon JJ, at [22] where, however, the non-statutory words were considered not to reach the issue in question. However, as I have indicated, the non-statutory words in question, while at least arguably reaching the issues in question, here are not clearly expressed as seeking to explain the statutory ones, and in any event, taken as such an explanation, are in my view not capable of being squared with the statutory words.

379 Counsel for the respondent put to me that the approach to determining whether or not the statutory words could be read to have the meaning he contended that the extrinsic materials indicated they should bear, should be more accommodating where the context was an exemption from taxation than where the context was imposition of liability to taxation. However, he conceded there is no direct authority for that proposition. Nor does it immediately commend itself to me: the context represented by s 75JDA is that of constriction of an exemption otherwise available. Indeed, there is authority that the "same rules of construction" as to giving the words of the statute a "fair and reasonable construction, without leaning one way or the other" applies to both words imposing liability and words excepting or exempting from liability: Western Australian Trustee, Executor and Agency Co Ltd v Commissioner of State Taxation (WA) [1980] HCA 50; (1980) 147 CLR 119, per Gibbs J, at 126 - 127.

380 It is undoubtedly the case, as counsel for the respondent also put to me, that the approach that I should adopt to construing a provision directed at avoidance of taxation should not be that associated with what has been called the traditional approach to the construction of taxation legislation. The principal authority for the approach I should adopt appears to be Federal Commissioner of Taxation v Students World Travel [1978] HCA 1; (1978) 138 CLR 251, per Mason J, at 265, where the following appears:

"Although the traditional rule has been that clear words are required to impose a tax, so that the taxpayer has the benefit of any doubts or ambiguities, a provision introduced by way of an attack on tax avoidance should be given the wide meaning evidently intended; it should not be cut down in the interest of precision (Greenberg v Inland Revenue [[1972] AC 109, at 137]; Inland Revenue v Joiner [[1975] 1 WLR 1701, at 1706; [1975] 3 All ER 1050, at 1055])."

381 These dicta were quoted with apparent approval in Federal Commissioner of Taxation v Lutovi Investments Pty Ltd [1978] HCA 55; (1978) 22 ALR 519, High Court, per Gibbs and Mason JJ, Murphy J agreeing, at 527; and were also referred to as a statement of "general application" in Federal Commissioner of Taxation v Cooper Brookes (Wollongong) Pty Ltd [1979] FCA 45; (1979) 25 ALR 511, Federal Court, per Fisher J, Brennan and Deane JJ agreeing, at 529, the appeal from the decision in which was dismissed without discussion of this point in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297.

382 However, that approach does not, in my view, require me to depart from the range of meanings that the words of a provision like s 75JDA(1)(b) can reasonably bear.

383 In any event, I note again the difficulty in extracting the meaning contended for. I note the matters in s 19(3) to which I am to have regard in determining whether to give consideration to the extrinsic materials, and the weight of the consideration, being

" ... the desirability of persons being able to rely on the ordinary meaning conveyed by the text of the provision taking into account its context in the written law and the purpose or object underlying the written law."

384 It seems to me that the first meaning proffered by counsel for the appellant to in relation to s 75JDA(1)(b), having to do with the use of the exemption to reduce stamp duty otherwise payable, is the "ordinary meaning" referred to. Indeed this appears to be the explanation of the words of s 75JDA(1)(b) the extrinsic materials speaking directly to the paragraph (the words in the passage from the EM for the 2000 Bill above, beginning "Moreover") gives, as I have earlier indicated.

385 The meaning just described does not, for the reasons I have previously given, extend to the circumstances of this case.

Reading s 75JDA(1) in terms of intended uses of Pt IIIBAAA: s 75JDA(1)(a)

386 For this purpose, I took counsel for the respondent to focus my attention on the passages from the extrinsic materials I quoted at the beginning of the previous section of these reasons.

387 In particular, counsel put to me, I should draw from those materials that s 75JDA(1)(a) was directed at having the respondent consider whether or not the instrument before him related or likely related to a "true corporate reconstruction" in the relevant respect. That respect was the association between Worsley Timber and the appellant.

388 I consider I have already dealt with counsel's argument from the concept of a reconstruction. As I have indicated, the arrangement in this case was capable of being described as a reconstruction, and consideration of the statutory context did not call for a revision of that conclusion, at least in view of the fact that the appellant and Adelaide Timber remained from the Group, carrying on the Group Timber Business.

389 However, counsel for the respondent laid heavy emphasis on the passages from the extrinsic materials above which refer to the purpose of s 75JDA(1) as denying the exemption where there were "attempts to asset strip or asset package" (Second Reading speech for the 2000 Bill, Hansard, Thursday, 25 May 2000, at 7274) or similar. I have already referred to the use of this language in the previous section of my judgment.

390 Counsel for the respondent put to me that asset stripping involved removing an asset from a previous holder with a view to its sale to an unrelated third party or return of the proceeds to others or both; I understood the references to asset packaging to be the assembly of assets in corporate hands, whether or not preceded by asset stripping, with the same view for that package of assets.

391 I accept that those references in the extrinsic materials to s 75JDA(1)'s striking at asset stripping and asset packaging appear (if not clearly) to be referred to s 75JDA(1)(a). I also accept that asset stripping and asset packaging might be understood as counsel for the respondent contended for, at least by considering those terms in connection the having been associated and remaining associated requirements in Pt IIIBAAA (again, not without some difficulty), which is of course the subject matter of s 75JDA(1)(a). (However, I note again that nowhere in the extrinsic materials to which my attention was drawn is this understanding spelt out.) In those respects, the reading of s 75JDA(1)(a) contended for by counsel for the respondent might be said to be open where his reading of s 75JDA(1)(b) for was not.

392 Further, as I previously indicated, if asset stripping or packaging is understood as counsel for the respondent contended, then the reconstruction in this case could reasonably be considered to engage that understanding.

393 However, I consider the reading of s 75JDA(1)(a) contended for is not arrived at without considerable difficulty. It was not contended that a transfer of assets is itself a form of asset splitting or asset packaging. As I understood the contention of counsel for the respondent, it was the intentions of the parties with respect a resale or subsequent dealing with proceeds or both that was of the essence of what was meant to be dealt with by s 75JDA(1)(a), if not the only matters it was meant to deal with. I consider there is very great difficulty reading s 75JDA(1)(a) in such a way as to strike at transfers with any of those intentions.

394 There is authority that the fact a meaning is a "strained" one will not prevent the Court giving effect to that meaning in certain circumstances. They are described in Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85, per McHugh J at 113:

"Extrinsic material cannot be used to construe a legislative provision unless the construction of the provision suggested by that material is one that is 'reasonably open' [CIC Insurance Ltd (1997) 187 CLR 384 at 408]. Even if extrinsic material convincingly indicates the evil at which a section was aimed, it does not follow that the language of the section will always permit a construction that will remedy that evil. If the legislature uses language which covers only one state of affairs, a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances. As Brennan CJ and I said in IW v City of Perth [(1997) [1997] HCA 30; 191 CLR 1 at 12], even when a court adopts a purposive construction to remedial legislation it 'is not at liberty to give it a construction that is unreasonable or unnatural'.

Nevertheless, when the purpose of a legislative provision is clear, a court may be justified in giving the provision 'a strained construction' [Kingston (1987) 11 NSWLR 404 at 422; Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd [1938] Ch 174 at 201] to achieve that purpose provided that the construction is neither unreasonable nor unnatural."

395 However, I do not consider the meaning of asset stripping and packaging contended for is "clear", and I consider the construction of s 75JDA(1)(a) contended for is "unnatural" if not "unreasonable". Further, I refer to the matters from Interpretation Act, s 19(3), I need to have regard to in such circumstances.

396 In view of the matters I have described in the previous paragraph, I consider that the language of s 75JDA(1)(a) should not be construed as counsel for the respondent contended, to address asset stripping and asset packaging as he described them.

397 If s 75JDA(1)(a) is not so construed, it was not put to me there was another construction than those already considered on which the respondent could have arrived at the conclusion he did for the purposes of Revenue Act, s 8(3).

398 I have already described the way in which the respondent had invoked this provision as an alternative basis for his decision the subject of the present appeal. I have also described my conclusion that the respondent had no authority upon which he could draw for this purpose, and that any such question is not before me. Thus, as I have indicated, it is unnecessary for me to indicate my views as the correctness or otherwise of his decision on that basis.

399 However, I also indicated I would set out those views, in deference to the argument put to me, and in case I am in error on the conclusion described. My views follow.

400 I set out again the way in which the respondent invoked Stamp Act, s 75JB(1)(f)(i) as an alternative basis for his decision the subject of the present appeal, from the letter dated 31 October 2001 from the respondent to the appellant's solicitors:

"In any event [the Sale Agreements] did not satisfy the requirements of section 75JB(1) in that they were made pursuant to or in connection with an arrangement of the kind referred to in section 75JB(1)(f)(i) [set out in full above]. The ultimate recipients of the consideration for the assets transferred by [Worsley Timber] to [the appellant] (new shares in [the appellant]) were the beneficiaries of the GV Johnson Trust No 2 [(the Trust)], as to 86%, and the Thomas family as to 14%, not [Worsley Timber] or [the appellant] or a body corporate associated with either of them at the time [the Sale Agreements] were executed."

401 I set out again Stamp Act, s 75JB(1)(f)(i):

"(1) This section applies if -

...

(g) the instrument was not made pursuant to or in connection with an arrangement under which -

...

(ii) the consideration, or any part of it, for the conveyance, transfer or assignment was to be provided or received, directly or indirectly, by a person other than A [Worsley Timber] or B [the appellant] or a body corporate that at the time the instrument was executed was associated with either A or B."

402 No issue was taken with the respondent's identification of the "ultimate beneficiaries" of the "consideration" for the transfer between Worsley Timber and the appellant, nor that those beneficiaries were not each "a person other than" those listed in s 75JB(1)(f)(i).

403 Rather the issue was whether or not there was an "arrangement" of which the Sale Agreements were a part under which that consideration was to be "received, directly or indirectly" by the beneficiaries.

404 Counsel for the appellant put to me that the "arrangement" in this case, under which the beneficiaries took the shares in the appellant, was one for the distribution of the assets of Hotham Investments (to the Thomas Family), or the Trust (and then on to the Johnson Family), as the case may be, of which the shares in the appellant which were the consideration for the transfer under the Sale Agreements from Worsley Timber to the appellant were simply a part. Those shares had ceased to have the character of such consideration on their receipt by Worsley Timber, which in receiving the shares was not acting as a nominee, agent, trustee or similar of the beneficiaries.

405 For the purposes of this submission, I was referred to Melville v Mutual Life and Citizens Assurance Co Ltd [1980] FCA 114; (1980) 31 ALR 649, Federal Court, Lockhart J. That case concerned the prohibition in Life Insurance Act 1945 (Cth), s 39(2). That prohibition related to the "assets of a statutory fund", being all amounts received by a company in respect of any class of life insurance business after the company had established the fund: per Lockhart J, at 651. The prohibition was in the following terms:

"The assets of a statutory fund shall not, without the sanction of the court, be invested directly or indirectly in any share or interest in any company or undertaking carrying on life insurance business whether in Australia or elsewhere."

406 In Melville assets of a statutory fund of MLC Insurance had been invested in the purchase of shares of a holding company (APA Holdings Ltd) for a group of companies, substantially more than one-half of the assets, profits and shareholders' funds of which was accounted for by those of a member of the group which carried on life insurance business in Australia.

407 Lockhart J determined that the prohibition was not engaged. The investment of the assets of the statutory fund had been "directly" in the holding company, not the member of the group carrying on life insurance business, or an "undertaking" doing so: the purpose or object of the investment, if it was to derive a benefit from the principal asset of the holding company, was "not to the point" under the Life Insurance Act: Melville (supra) at 654.

408 Nor was the investment "indirectly" in the member of the group carrying on life insurance. Lockhart J explained that conclusion at 655, a passage heavily relied upon by counsel for the appellant, as follows:

"The phrase 'directly or indirectly' appears not infrequently in legislation: see for example s 67 of the Companies Act 1961 (NSW) in relation to financial assistance. In the context of s 39(2) it refers to, and is qualified by, the word "invested" that immediately precedes it and relates to the subject matter of the investment. It is intended to bring within the ambit of the prohibition investments, not only by the company itself directly in shares or interests in a company or undertaking carrying on life insurance business, but investments made by the company through the medium of a nominee, agent, trustee or the like. In no sense could it be said in the present case, and it was not contended, that APA Holdings was a nominee, agent or trustee of or for the respondent. There is nothing to suggest that the respondent and APA Holdings were otherwise than at arms length."

409 Here, counsel for the appellant put to me, the direct recipient of the consideration for the transfer to the appellant was Worsley Timber. Under the arrangement of which the transfer formed a part Worsley Timber was not, in receiving that consideration, acting as "nominee, agent or trustee of or for" the ultimate recipients of assets including the shares that had been that consideration. Nor was Worsley Timber acting in a "like" capacity. The fate of the shares subsequently was thus not within the scope of s 75JB(1)(f)(i). Indeed, it was submitted, the unless clause in s 75JB(5), already considered, should be seen as support for that reading. That subsection allowed for the assets making up the consideration to be passed on by the transferor.

410 I take the last point first. It seems to me that the unless clause in Stamp Act, s 75JB(5) offers no support for the reading contended for. It was concerned with the qualification of the requirement for the transferor and the transferee to remain associated provided for in the subsection. The character of the recipient of the assets passed on and the basis for the receipt are not addressed, and I do not consider an inference as to their irrelevance can be drawn from that.

411 I also note that the authority of Melville (supra) on the matter of what "indirectly" might address in the present context is not clear. It has been said, in the context of Trade Practices Act 1974 (Cth), s 50, where "indirectly" is used in the phrase "directly or indirectly acquire", that the meaning of "indirectly" from Melville could be seen to be encompassed by "acquire". To give it meaning, the word "indirectly" should be read to have been intended to extend the scope of "acquire". Such extension should be seen to encompass acquisitions by a wholly owned subsidiary of an acquirer, even although the acquirer had no legal or beneficial interest in such acquisitions: see Australia Meat Holdings Pty Ltd v Trade Practices Commission (1989) ATPR 40-932, Full Court Federal Court, per Davies J, at 50,094; and Commissioner of State Revenue v Politis [2004] VSC 126, Nettle J, referring to that view as "the better view" of s 50. I do not consider that a distinction can be drawn for my purposes between "acquire", or acquired, and "received".

412 I take from the authorities that the meaning of the phrase "directly or indirectly" should be taken from its context. No extrinsic material that might assist me with construing the phrase was brought to my attention: compare Politis (supra), per Nettle J, at [12], [14].

413 It seems to me that the context is not simply that of "provided or received", the words immediately preceding "directly or indirectly". The context is, more fully, "an arrangement under which the consideration ... was to be provided or received". The arrangement in this case was one whereby the appellant would be incorporated, it would acquire the Timber Assets in return for the issue of its shares, and those shares would be passed up a chain of companies, with other assets, ultimately to reach the Thomas Family and the Johnson Family.

414 In that context, it seems to me that under that arrangement the shares would represent "consideration, or any part of it, ... received indirectly [through the chain of distributions]" (my emphasis) by those persons, whom the respondent had called in his decision the "ultimate beneficiaries". I derive some support for this view from Politis (supra).

415 Politis concerned the application of Duties Act 2000 (Vic), s 31, which in material part read as follows:

"31. Sub sales of land

(1) If -

(a) a person ('the vendor') agrees to transfer any dutiable property referred to in section 10(1)(a) or (d) ("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 transfer executed by the vendor transfers the whole or any part of the 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 property -

the transfer is not chargeable with duty in respect of the transfer from the vendor to the transferee ..."

416 In Politis Nettle J said this, at [14] (footnotes omitted):

"I take as the starting point that whatever may or may not be within the reach of s 31, it is apparent from the Second Reading Speech that the section was intended to apply to 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. That was the paradigm at which the section was said to be directed; for as it was put by the Treasurer in the Second Reading Speech for the bill for the introduction of s 67 A of the Stamps Act 1958 [(Vic)]:

'The provisions which relate to sub-purchases of real property and the use of nominee clauses upon the purchase of real estate will be clarified. The amendment will prevent the use of nominee clauses as a device to avoid stamp duty.'

However, the genuine use of a nominee clause to enable the purchase of real property on behalf of a family member, a family company or a company related to the purchaser will not be affected.

Plainly, however, 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.

Some nomination clauses do result in the substitution of the nominee for the purchaser. But even there the nominee would not acquire the purchaser's rights under the contract. The substitution of the nominee for the purchaser would work a novation of the agreement, and as I have observed already that means that the acts that were to be performed by the parties to the original contract in accordance with their rights and obligations under the original contract would be performed by the parties to the new contract in accordance with their rights and obligations under the new contract. Once again, within the meaning of the general law, the nominee would not acquire any right or interest of the purchaser under the contract.

How then does one construe the terms of s 31 in order to accommodate such a case and yet give to the section the effect which it was said it was intended to have? The answer appears to me to be to construe the words 'acquire ... directly or indirectly, the whole or any part of the rights or interest of the first purchaser under the agreement' as embracing not only the acquisition directly or indirectly of the very rights or interest of the purchaser (as, for example, by direct assignment or indirectly by a chain of assignments) but also the acquisition directly or indirectly of equivalent rights or interest (as, for example, by nomination or novation or perhaps even by the acquisition of shares in a company which holds the rights or interest or by acquisition of an interest in a trust of which the trustee holds the rights or interest)."

417 In my context, there was no equivalent cited to me of the extrinsic materials cited to his Honour, as I have indicated. However, I take from his judgment that the phrase "directly or indirectly" is capable of application as I have indicated for Stamp Act, s 75JDA(1)(f)(i). Further, I consider the word "arrangement" used in that provision makes apparent that the provision should be read in Stamp Act, s 75JDA(1)(f)(i), as I have indicated. In arriving at that conclusion, I consider that the approach to construction referred to in Students World Travel (supra), per Mason J, at 265 is the one I should employ, as I consider s 75JB(1)(f)(i) on its face to be a provision concerned with a form of avoidance of the requirements for the exemption in s 75JB(3).

418 It follows I consider the respondent, had he had the authority to do so at the relevant time, being the time of the assessment the subject of the appellant's notice of objection, could have denied the exemption in s 75JB(3) on the basis that s 75JB(1)(f)(i) was engaged. However, as I have indicated, he did not have any such authority, nor is the matter of whether the original grant of the exemption in error one that is before me.

419 For the reasons I have set out, I have concluded that Revenue Act, s 8(3), read with Stamp Act, s 75JDA, did not provide the respondent with sufficient authority to reassess the Sale Agreements to duty. As he did not have that authority, the original assessment of the Sale Agreements, based as it was on an exemption under Stamp Act, s 75JB(3), was not disturbed.

420 It follows that I would allow the appeal. I will hear from the parties as to the orders that should be made following from these reasons.