On 15 August 2014, the High Court granted special leave in the case of the Commissioner of State Revenue (Victoria) (VSRO) and various Lend Lease entities.

Why is the case important?

The case will not only be important for property developers and development agreements from a stamp duty perspective, but for any agreement with interdependent rights and obligations where consideration is provided for a variety of matters such as relevant to the infrastructure industry, public private partnerships and retirement villages.

What is it 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 constituted “consideration” for the land transfers, and therefore subject to duty in Victoria.

Supreme Court decision

Relying on two key cases, the Supreme Court focused on that which “moved” the transaction (the consideration) and the nexus between the consideration and transfer (what the payments were for). The court focused its attention on the development agreement as the comprehensive document which dealt with the total basket of rights and obligations between the parties. The Other Contributions were all part of, or ancillary to, the land acquired. They were required to be paid before title to the land was transferred. Much of the development work to which the payment related was to improve the land or its enjoyment before the transfer of the land. The integrated and interdependent nature of the rights and obligations under the development agreement led the court to conclude that the Other Contributions were part of the consideration “for” the transfer of land and therefore should be dutiable.

Court of Appeal decision

In a comprehensive judgment, the Court of Appeal disagreed with the Supreme Court. It said the Supreme Court wrongly started its analysis with the development agreement instead of the land transfer contract and didn’t fully appreciate the ongoing nature of the relationship between the parties. The Court of Appeal focused on the land transfer documentation and then asked what the Other Contributions were for. On that basis, the Other Contributions should have been properly characterised as payments for matters that were separate and distinct from the transfer of the land. The integrated and interdependent nature of the rights and obligations under the development agreement did not detract from this analysis.

Special leave hearing

In the special leave hearing, the Commissioner said the Court of Appeal was wrong to focus on the land transfer contract, as the Duties legislation was no longer an instrument based tax, but a transaction tax. It should have focused on what the vendor (Docklands Authority) received and if it had done so it would have reached the same conclusion as the Supreme Court. The Commissioner also said the Court of Appeal erred by focusing on the state of the land at the time of sale. It should have considered the land in its improved state because the arrangement was essentially about Lend Lease obtaining and benefitting from the land in its developed state. A substantive causative relationship existed between the Other Contributions and the transfer of land to say that the Other Contributions were consideration for the transfer of land.

In contrast, Lend Lease said the case raised no new principles of law. It was simply about the application of established principles and the language of the statute to a complex set of agreements, as set out in the Appeal Court decision. That is, the case was really about looking at the character and purpose of each of the payments and asking the question of what they were for.


The High Court decision will be important about understanding what “consideration is for” and therefore what is caught in the duty net (or not). From a broader commercial perspective, it will be about the duty implications of entering into agreements containing ongoing, integrated and interdependent rights and obligations. From a pure legal perspective, it is about asking the right questions, approaching the analysis in the correct way and understanding the nexus requirements between consideration and the transaction. We welcome the High Court’s decision on these matters.