Commissioner of Land Tax v The Manors of Mosman Pty Ltd

[1995] 1 Leg Rep SL3

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(Judgment by: MASON CJ, GAUDRON J and McHUGH J)

COMMISSIONER OF LAND TAX, Applicant THE MANORS OF MOSMAN PTY LIMITED, Respondent

Court:

Judge:
MASON CJ, GAUDRON J and McHUGH J

Judgment date: 9 DECEMBER 1994

Sydney

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Judgment by:
MASON CJ, GAUDRON J and McHUGH J

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MR R.F. EDMONDS, for the applicant. (instructed by I.V. Knight, Crown Solicitor for New South Wales)

MR N.R. BURNS: If the Court pleases, I appear for the respondent. (instructed by Holman Webb)

MASON CJ: Mr Jackson.

MR JACKSON: Your Honours, the issue which it is submitted merits the grant of special leave relates to the nature of the concept of possession, where it appears in sections 26(1)(a) and 26(1)(b) of the Land Tax Management Act of New South Wales, and the Land Tax Acts of Victoria, Queensland and Western Australia are in relevantly similar form; I do not mean to convey they are exactly the same, but they are in relevantly similar form.

The terms of the provision, Your Honours, are set out at page 8 and if I could take Your Honours to that for just a moment. The words underlined in the provision are no longer material for present purposes and the two provisions which are material are paragraphs (a) and (b). Your Honours, what Your Honours will see is that the provision deals with circumstances where:

an agreement has been made for the sale of land - and in paragraph (a):

the purchaser shall be deemed to be the owner ..... so soon as he has obtained possession of the land -

and then the opposite side of the coin is referred to in paragraph (b)

Your Honours, our submission is, if I could put it broadly, that it is clear enough from the terms of the provision that the possession contemplated by the provision is the possession which the purchaser would ordinarily obtain on the completion, subject of course to the fact that completion has not at that point occurred. And that is a possession, Your Honours, which in cases such as the present would have a number of characteristics: one is that it would be a right of possession to the exclusion of the vendor; it would be a right which would not be affected in its utilisation by the vendor's requirements; and thirdly, the purchaser would be able to sublet or to assign the right to possession.

The terms of the licence granted in the present case are significantly different. Your Honours will see them extracted at pages 5 and 6 and at the bottom of page 5 Your Honours will see that there is the grant of a licence

and privilege to occupy the Unit -

that is paragraph 1. The Licensee has to bear various charges, paragraph 2. Then Your Honours, if I could go to paragraph 4 on page 6:

The Licensee shall at all times conform to the reasonable requirements of the Licensor in regard to the use and occupation of the Unit.

Your Honours will see paragraph 5, there is an inability to assign or sub-licence, and clause 5 also says that the instrument does not confer an estate or interest. Provisions of that kind, I should say, Your Honours - the last aspect - of course are not decisive if the document on its true construction would have the opposite effect, but it is relevant.

GAUDRON J: Do we not have to look slightly beyond the document in this case to the fact that the purchase price had been paid in its entirety and at least a trust arose?

MR JACKSON: Well Your Honour, the position, of course, was that, in terms of the licence agreement - if I can put it that way - as Your Honour will see on page 4, the position was that the Vendor had the right to require the entry into the licence agreement, the licence agreement was entered into, the purchase price paid over, a guarantee in return given to pay it back if the licence agreement should come to an end, a bank guarantee, and the situation which obtained in those circumstances were that the terms upon which the payment was made, whatever they might be in other cases, were in fact the terms set out on the various pages to which I have referred. So that, Your Honour, it is true to say, of course, the purchase price was paid; no doubt the purchase price had to be dealt with in accordance with the document, but the quid pro quo, Your Honours, was the giving of the guarantee referred to in paragraph (c) on page 4.

So, Your Honours, the situation which obtained, we would submit, is that in truth the arrangements were no more than those of a licence. Your Honours, these parts of section 26(1) have been before the Court before, in particular in Cam & Sons v. The Commissioner of Land Tax, 112 CLR 139 . If I could take Your Honours to that for just a moment. The meaning of the terms there adopted by the court appears at page 144. What the court did was to adopt what had been said by Mr Justice Sugerman in the New South Wales court, although His Honour's conclusion had been different. The principle Your Honours will see, commencing about point 5 on page 144, the sentence commencing "In the course of his judgment", and it goes down then, Your Honours, to about point 8 or point 9 on the page, concluding with that statement, "We agree". Your Honours, I shall not read out the passage, of course, but what we would submit is that if one looks at it it is clear that what was contemplated by the court was that the possession conferred would be as full as possible, bearing in mind the nature of the transaction in question.

Your Honours, an issue in relation to the then Commonwealth Act, which was again in similar terms, was also before the court in an earlier case. Your Honours, I will not take Your Honours to the case itself, because the relevant parts are extracted in Cam & Sons, and I will go to that in just a moment. That case is Highlands Limited v. Deputy Commissioner of Taxes (South Australia) (1931) 47 CLR 191 . The dicta in the case, Your Honours, appear in Cam at page 148, and Your Honours will see a reference at about point 3 on page 148 to Highlands Limited v. The Deputy Commissioner of Taxation and then the passages which are extracted go through to the end of that paragraph.

Now, Your Honours, might I just say something about the context in which those observations were made, that is in Highlands Limited; that is, the case was one where possession had been given to a purchaser of a property which was in the actual occupation of someone else. Your Honours, what we would submit is that the view taken by the Court of Appeal in the present case is, as we submit in paragraph 13 of our summary of argument, an approach which clouds in a sense the application of the principle, the principle being that the possession in contemplation is relevantly the right to the occupation of the property, which the vendor itself had.

If I could take Your Honours to the core passages in the reasons of the Court of Appeal. They commence at page 40. Your Honours will see a passage commencing at line 8 on page 40, going through to line 16. Then, at page 41, lines 16 to 41, and could we invite Your Honours to note the last sentence on page 41 which seems not to give full account to the parts of the document at page 4 because it is difficult to see how the purchaser could relevantly default when the purchaser had to pay the purchase price up front, as it were, in the way that Your Honour Justice Gaudron mentioned to me a moment ago.

Your Honours, what we would submit is that this is a case where the meaning of the provision is raised directly. It is the issue and it is an issue which, as I submitted earlier, arises in relation to other States. Your Honours, those are our submissions.

MASON CJ: Thank you, Mr Jackson. The Court need not trouble you, Mr Burns.

The Court is not persuaded that the proposed appeal enjoys sufficient prospects of success to warrant the grant of special leave. The application is therefore refused.

MR BURNS: Costs, Your Honour?

MASON CJ: You do not oppose that, Mr Jackson?

MR JACKSON: No, Your Honour.