In brief

The High Court unanimously decided that contributions made by Lend Lease to VicUrban in relation to the Docklands Development should be included in determining the duty payable for the transfer of  specific parcels of Docklands land from VicUrban to Lend Lease. The High Court held that the arrangement between Lend Lease and VicUrban was a “single, integrated and indivisible” transaction and that it was not appropriate to separate the promises to make various other payments associated with the development from the purchase of the land.

What is the case about?

The case is about a development agreement over the Docklands area. Broadly, the arrangement was that Lend Lease would buy land in stages by entering into specific land sale contracts. Identifiable amounts were payable for the specific parcels of land. Lend Lease also agreed to pay other amounts pursuant to the development agreement which broadly included contributions for infrastructure, site remediation, public art and other amounts which would improve the land (Other Contributions).

The key issue was whether the Other Contributions were ‘consideration’ for the land transfers, and therefore subject to duty in Victoria.

What did the High Court decide?

The Court held that the Other Contributions should also be included as ‘consideration’. This was on the basis that it was necessary to search for “what was received by the vendor so as to move the transfer to the purchaser as stipulated in the Agreement” taking into account the whole arrangement and not just the land sale contract. This was the case not only because the arrangement was recorded in a single set of transaction documents, but because the rights and obligations in those documents were ‘interlocked’.

The Court focused on the interdependent nature of the obligations and the fact that non-fulfilment of any of these obligations would permit VicUrban to terminate the land sale contract. The Court held that regardless of how the Other Contributions were calculated or the connection in the agreements between some of those payments and work undertaken by VicUrban (including on land that would not be transferred to Lend Lease), it considered that VicUrban was only willing to transfer the land in consideration for Lend Lease making all of these payments. As a result, all of these payment obligations were part of the consideration for the land transfers and were included in calculating the duty payable.

Why is the case important?

This decision will be important not only for property developments but for any agreement with interdependent or interlocked obligations. This will include the types of arrangements commonly seen in the infrastructure industry, public private partnerships and retirement villages. In addition, given the broad statements made by the High Court in this case, there is also the potential that these principles will extend to a much wider range of transactions.

Other Updates

Queensland Transfer Duty Farm-in Concession – Proposed Legislation at last…

Almost two years after the Queensland (Qld) Government announcement making dealings in exploration authorities (eg EPC, EPM and ATP) subject to duty on 13 January 2012, and over a year after the interim arrangements for the farm-in concessions were put in place on 27 June 2013, a bill to legislate the farm-in concession is here. The Revenue and Other Legislation Amendment Bill 2014 (Qld) (the Bill) was introduced to the Qld Parliament on 26 November 2014. For the most part, the Bill is consistent with the administrative arrangement that has been in place for the last year. This means that there is still a great deal of complexity and administrative burden to qualify for, and obtain the benefit of, the concession.

Once passed, the amendments will apply for determining whether any farm-in agreement entered into since 13 January 2012 is eligible for the duty concession. For any farm-in agreements assessed under the existing administrative arrangement, there will be a window of 30 days from the date of assent of the amended legislation to object to this assessment. However, the Bill has been referred to a Parliamentary committee for further consideration and with Parliament not sitting again until 10 February 2015, it will still be some time before the amendments to the legislation are actually passed.

Abbott’s case: Personal rights in exploration licences are not an ‘interest in land’ for Western Australia landholder duty

In Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211 (Abbotts), the Court held that personal rights in respect of an exploration licence did not constitute ‘an estate or interest in a mining tenement’ within the definition of ‘land’ in the Duties Act 2008 (WA) (Duties Act). In this case, Abbotts acquired shares in Anuman Holdings Pty Ltd (Anuman) which held rights to various exploration licences under the Mining Act 1978 (WA) (Mining Act). Following an extensive analysis of the provisions  of the Mining Act that govern exploration licences and consideration of interaction of these provisions  with the Duties Act, the Court held that Anuman’s rights in respect of one of the four exploration licences did not include any proprietary rights over, affecting or in connection with that licence. This was based on specific provisions in the Mining Act which meant that these rights were held to be personal in nature. As a result these rights were not included for WA landholder duty purposes.

The decision emphasises that when seeking to determine the nature of, or rights in, items that are ‘creatures of statute’ such as mining tenements, it is important to consider the enacting legislation and the statutory scheme of which it is part of. In this situation, the Mining Act and the Duties Act comprised an overlapping scheme and each Act needed to be construed with regard to the other. Failure to do so can result in the application of legal principles that are inapt and inconsistent.