ISPT Pty Ltd (ACN 064 041 283) as Trustee of ISPT Retail Australia Property Trust (FSREC Fund) v Chief Commissioner of State Revenue

1. [1]

   Before the Court is a review under s 97 of the Taxation Administration Act 1997 (NSW) (TAA) of a decision of the Chief Commissioner of State Revenue disallowing an objection by the plaintiff, ISPT Pty Ltd as trustee of a trust known as the ‘ISPT Retail Australia Property Trust (FSREC Fund)’, to an assessment of landholder duty made by the Chief Commissioner dated 16 February 2024 (the assessment).

2. [2]

   The dispute results from the acquisition by ISPT of an interest of 19.46% in a landholder trust known as Fort Street Real Estate Capital Funds (FSREC) on 22 July 2022 (July acquisition). At the time of the July acquisition FSREC was a ‘private landholder’ for the purposes of Ch 4 of the Duties Act 1997 (NSW) (Duties Act), and ISPT already held a 75.8% interest in FSREC which it had acquired on 18 February 2022 (February acquisition). At the time of the February acquisition FSREC was a ‘public landholder’ for the purposes of Ch 4 of the Duties Act. Following the July acquisition ISPT held a total interest of 95.26% in FSREC (together the acquisitions). When both acquisitions occurred FSREC owned land in NSW, with a total market value of $380,000,000 as at 30 June 2022.

3. [3]

   It was common ground that the February acquisition by itself was not subject to landholder duty on the basis that it was an acquisition of less than 90% in a ‘public landholder’ and therefore not a ‘relevant acquisition’ under section 156 of the Duties Act. It was also common ground that the effect of the February acquisition was to change the nature of FSREC from a ‘public landholder’ to a ‘private landholder’ within the meaning of s 146 of the Duties Act.

4. [4]

   The assessment assessed ISPT to landholder duty pursuant to Ch 4 of Part 2 of the Duties Act on the July acquisition by reference to ISPT’s aggregated interest of 95.26% in FSREC, being the sum of the interest acquired in the February and July acquisitions, in the amount of $19,893,540.

5. [5]

   ISPT objected to the assessment on two grounds. First, ISPT argued that the Chief Commissioner incorrectly applied Ch 4 of the Duties Act on the basis that the change in FSREC’s status from a ‘public landholder’ to a ‘private landholder’ does not mean that the February acquisition can be aggregated with the July acquisition for the purposes of determining the dutiable value in an assessment of the July acquisition. Alternatively, ISPT argued that the Chief Commissioner should exercise his discretion to grant a partial exemption in respect of the February acquisition under s 163H of the Duties Act, on the basis it ‘would not be just and reasonable’ to impose duty on the aggregated interest.

6. [6]

   The Chief Commissioner disallowed the objection. In relation to the first ground, the Chief Commissioner rejected this argument on the basis that because the February acquisition occurred within the 3-year ‘statement period’ prescribed by s 152(5) of the Duties Act it was required under s 152(3) to be disclosed in ISPT’s ‘acquisition statement’ for the July acquisition and aggregated in an assessment of the July acquisition, and so that duty is assessable on the entirety of the 95.26% interest acquired by ISPT in both acquisitions. In relation to the second ground, the Chief Commissioner was of the view that was not unjust or unreasonable to aggregate the two acquisitions because this result was consistent with the overall scheme of Ch 4, which is to capture prior acquisitions as interests without regard to the characterisation of the landholder at a particular time.

7. [7]

   The issues for determination are:

   1. (1)

      whether s 155(3) of the Duties Act requires aggregation of the February and July acquisitions in calculating the landholder duty payable on the July acquisition; and

   2. (2)

      if so, whether the discretion under s 163H of the Duties Act should be exercised to grant ISPT an exemption from duty for the February acquisition.

8. [8]

   Before addressing these issues, I will set out the factual background, the relevant statutory provisions, and some observations on the decision in Mertune Pty Ltd v Chief Commissioner of Stamp Duties (1994) 35 NSWLR 636 which dealt with a similar issue concerning aggregation of prior acquisitions under the previous stamp duties legislation.

9. [9]

   For the reasons which follow, I have concluded that s 155(3) of the Duties Act does require aggregation of the February and July acquisitions in calculating the landholder duty payable on the July acquisition, and this outcome is neither unjust nor unreasonable so as to enliven the exercise of discretion under s 163H.

Factual background

1. [10]

   The factual circumstances surrounding these proceedings are not in dispute and are set out in Revised Statement of Agreed Facts (SAF) filed with the Court on 23 May 2025. The following summary is taken entirely from the SAF, as no evidence was filed by ISPT and, in so far as the underlying documents for the transaction are concerned, the parties were content to rely on the summary of their terms contained in the SAF.

2. [11]

   FSREC comprised three unit trusts with stapled units:

   1. (1)

      Fort Street Real Estate Capital Fund I (ARSN 163 668 346), constituted under a deed dated 7 June 2013 (FSREC I);

   2. (2)

      Fort Street Real Estate Capital Fund II (ARSN 169 190 498), constituted under a deed dated 21 May 2014 (FSREC II); and

   3. (3)

      Fort Street Real Estate Capital Fund III (ARSN 605 335 957), constituted under a deed dated 14 October 2026 (FSREC III).

3. [12]

   The ‘stapling’ of the units in each of these unit trusts simply meant that a unit in each trust could only be dealt with together with the stapled unit in each of the other two trusts. Collectively, these unit trusts form the relevant ‘landholder’ for the purposes of Ch 4 of the Duties Act in respect of which the acquisitions were made.

4. [13]

   At all relevant times, the assets of the FSREC included interests in land in NSW, which were held through a complex arrangement comprising of wholly-owned sub-trusts and chains of wholly-owned sub-trusts. There is no issue in these proceedings that at the time of the acquisitions the assets of FSREC comprised six commercial properties and four residential properties in NSW (collectively the NSW Landholdings) with an unencumbered value of more than $2 million.

5. [14]

   There is also no dispute that the total unencumbered value of the NSW Landholdings as at 30 June 2022 (based on reports prepared by two valuation experts) was $380 million, being the sum of the values of the individual NSW Landholdings at that date set out in valuation reports prepared by two valuation experts.

6. [15]

   At all relevant times, including on 18 February 2022 and 22 July 2022, E&P Investments Limited (ACN 78 152 367 549) was the responsible entity of the unit trust comprising FSREC (the responsible entity) and the constitution of each unit trust was in substantially identical terms, including the following:

   1. (1)

      Under clauses 4.1(a)-(c) of each constitution, the beneficial interest in each unit trust was divided into units, which, subject to the liabilities of the unit trust, conferred an equal and undivided interest in the assets of the unit trust as a whole;

   2. (2)

      Under clause 9.5 of each constitution, a person who subscribes for units becomes the holder of the unit (Member) upon the units being issued by the responsible entity and recorded in the register of the relevant unit trust;

   3. (3)

      Subject to the amendments made by the Supplemental Deeds referred to below, clause 11.19 of each constitution provided that where the ‘Fund’ was not ‘Liquid’ and the units were not ‘Officially Quoted’, the responsible entity was required, on a date in October 2023, to convene a meeting to give the Members the opportunity to pass a resolution approving the winding up of the relevant fund (Liquidation Opportunity);

   4. (4)

      Under clause 26.3 of each constitution, upon the winding up of each fund, each Member was entitled to a distribution of assets or funds of each unit trust based on the number of units the Member held as a proportion of the total number of units in issue as at the time of the winding up.

7. [16]

   It is not in dispute that immediately prior to the February acquisition, FSREC was a ‘widely held trust’ within the meaning of cl 3 of the Dictionary to the Duties Act (as it had more than 3,000 unitholders none of whom, individually or together with any associated person, had more than 20% of the units in FSREC) and therefore a ‘public landholder’ under s 146 of the Duties Act.

8. [17]

   By a deed dated 16 December 2021, ISPT agreed with the responsible entity to subscribe between $240 and $320 million for units in FSREC (Proposed Subscription). One of the conditions of this transaction was that existing Members of FSREC accept an offer by the responsible entity to redeem units in a ‘Withdrawal Offer’ to a value at least equal to the minimum amount to be subscribed by ISPT (First Withdrawal Offer).

9. [18]

   On 17 December 2021, the responsible entity gave notice to the Members of FSREC to convene a meeting to consider proposed amendments to the constitution of each unit trust and to give effect to the Proposed Subscription with the proceeds from that subscription to fund the redemption of existing units held by the Members, of which there were approximately 3,916 at the time. On 4 February 2022 the Members approved these initiatives.

10. [19]

    Between 4 and 18 February 2022, the responsible entity executed Supplemental Deeds effecting the proposed amendments to the constitution of each unit trust comprising FSREC. The Supplemental Deeds provided, among other things, that the responsible entitle was not required to facilitate the Liquidation Opportunity in October 2023 if two conditions were met:

11. [20]

    On 18 February 2022 the responsible entity notified Members that the First Withdrawal Offer was oversubscribed with the result that ‘redemption requests will be scaled to approximately 88% of the redemption amount requested and accepted by the responsible entity’. Following the redemption of the relevant units by existing Members, new units in FSREC were issued to ISPT equivalent to 75.8% of all units issued in FSREC (being the February acquisition). Scaling the redemption requests to 88% of the redemption amount requested left FSREC with more than 3,700 Members after completion of the February acquisition.

12. [21]

    As a result of the February acquisition, FSREC was no longer a ‘widely held trust’ because it became a unit trust where one unit holder, ISPT, was entitled to more than 20% of the units in the trust. As such, it became a ‘private unit trust scheme’ and therefore a ‘private landholder’ within the meaning of s 146 of the Duties Act and that was the position immediately before the July acquisition.

13. [22]

    On 16 June 2022, the responsible entity announced a new ‘Withdrawal Offer’ open to all Members excluding ISPT (Second Withdrawal Offer) whereby ISPT committed to subscribe for the same number of units as the total of all Withdrawal Offer acceptances from other Members. The Second Withdrawal Offer was also popular with the remaining Members, and by reason of the acceptances by Members, on 22 July 2022 the responsible entity simultaneously:

14. [23]

    Following completion of the July Acquisition, ISPT held a total of 95.26% of the units in FSREC.

15. [24]

    As a result of Second Withdrawal Offer, the responsible entity had made withdrawal offers between December 2021 and October 2023 equal to the total number of units on issue at 17 December 2021 and was no longer required to facilitate the Liquidation Opportunity in October 2023.

Procedural history

1. [25]

   On 22 October 2022, ISPT provided an acquisition statement (acquisition statement) to the Chief Commissioner in respect of the July acquisition in the approved form as required by s 152(2) of the Duties Act.

2. [26]

   The acquisition statement disclosed the following in response to the information requested by the approved form — (a) ‘details of the relevant acquisition’: the date of the July acquisition and that the interest acquired was 19.46% by an issue of units; (b) ‘details of prior acquisitions by the same or associated persons’: that ISPT had made a prior acquisition of 75.8% on 18 February 2022; (c) ‘total interest held by the person who made the relevant acquisition and associated persons as at the date of the relevant acquisition’: 75.8%; (d) ‘details of NSW land holdings and goods of landholder … as at the date of the relevant acquisition’: $380 million.

3. [27]

   The acquisition statement was accompanied by a covering letter which made detailed submissions as to why duty was only payable in respect of the July acquisition and, in the alternative, seeking a partial exemption under s 163H of the Duties Act. That letter estimated that the duty payable was $4,051,340, arising out of the July acquisition, and this amount was paid on or shortly after 20 October 2022.

4. [28]

   On 16 February 2024, the Chief Commissioner issued the assessment to ISPT, assessing liability of $19,893,540 based on the cumulative interest of 95.26% of the value of FSREC’s NSW Landholdings, being the combination of the 19.46% interest ISPT acquired in FSREC via the July acquisition and the 75.8% interest it previously acquired in FSREC via the February acquisition. The reason given by the assessment for assessing duty on this amount was because s 155(3) of the Duties Act required the charging of duty on the ‘aggregate of amounts severally calculated… in respect of each interest required to be disclosed in the statement’. In making this assessment, the Chief Commissioner treated the unencumbered value of the land holdings and goods of FSREC at the time of both the February acquisition and the July acquisition as being $380 million based on the expert valuations provided with the acquisition statement, and the plaintiff does not dispute this approach.

5. [29]

   In addition, the Chief Commissioner also assessed interest in the amount of $2,419,759.65 in respect of the shortfall but agreed to reduce this amount to $739,175.36 if the outstanding amount of duty was paid before 8 March 2024, which it was.

6. [30]

   On 12 April 2024, ISPT objected to the assessment under s 86 of the TAA, and following the disallowance of the objection by the Chief Commissioner on 2 September 2024, ISPT commenced these proceedings by a summons filed on 1 November 2024.

Relevant legislative provisions

1. [31]

   Ch 4 imposes duty on ‘relevant acquisitions’ in a ‘landholder’ with the primary obligation to pay the duty imposed on the person who makes the relevant acquisition: s 148 and s 154(1)(a) and (2) of the Duties Act. Set out below is a summary of the relevant provisions of Ch 4 in its form at the time the July acquisition occurred. References below to statutory provisions are to the Duties Act (in that form) unless otherwise stated.

2. [32]

   The concept of a ‘relevant acquisition’ is defined in s 149 relevantly as follows:

3. [33]

   The meaning of the word ‘acquires’ is dealt with by s 151. Under s 151(1), ‘a person acquires an interest in a landholder if the person obtains an interest, or the person’s interest increases, in the landholder regardless of how it is obtained or increased’. Section 151(2) then gives examples of how this can occur, including by the purchase or issue of a unit or share (s 151(2)), and s 151(3) states that ‘to remove any doubt … a person may acquire an interest in a landholder without acquiring units or shares in the landholder’.

4. [34]

   The terms ‘interest’ and ‘significant interest’ have the following meanings:

   1. (1)

      a person will have an ‘interest’ in a landholder ‘if the person, in the event of a distribution of all the property of the landholder, would be entitled (without regard to any liabilities of the landholder) to any property distributed’: s 150(1); and

   2. (2)

      a person will have a ‘significant interest’ in a landholder ‘if the person, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, would be entitled (without regard to any liabilities of the landholder) to’ 50% or more of the property distributed (in the case of a private landholder) or 90% or more of the property distributed (in the case of a public landholder): s 150(2).

5. [35]

   The term ‘landholder’ is defined in s 146 as follows:

6. [36]

   By this definition a ‘landholder’ is a unit trust scheme or a company of a specified kind (a ‘unit trust scheme’, a ‘private company’ or a ‘listed company’ which are terms defined in the Dictionary) that has land holdings in NSW with an unencumbered value of $2 million or more: s 146(1). A ‘land holding’ is (subject to certain qualifications not presently relevant) an interest in land other than the estate interest of a mortgagee, charging or other secured creditor: s 147(1).

7. [37]

   An entity falling with the definition of ‘landholder’ is then classified as either private or public under s 146(2) and (3). In relation to a unit trust scheme, the relevant distinction is between a ‘private unit trust scheme’ and a ‘public unit trust scheme’. The Dictionary defines a ‘private unit trust scheme’ as a unit trust scheme that is not a public unit trust scheme, a ‘public unit trust scheme’ as a ‘listed trust’ or a ‘widely held trust’. Of these, a ‘widely held trust’ is the relevant category for present purposes, and this is defined in the Dictionary as ‘a unit trust scheme which has not less than 300 unit holders none of whom, individually or together with any associated person, is entitled to more than 20% of the units in the trust’.

8. [38]

   Ch 4 distinguishes between private and public landholders because the threshold for the acquisition of a ‘significant interest’, and therefore the making of a relevant acquisition, and the duty payable, is different depending on whether the landholder is classified as one or the other at the time a relevant acquisition occurs.

9. [39]

   It follows from the definition of private and public landholder that an entity can change from one type of landholder to the other as occurred in the present case. As a result of the February acquisition, FSREC went from being a widely held trust (and therefore a public landholder) to a private unit trust scheme (and therefore a private landholder).

10. [40]

    It follows from s 149 that there will be a relevant acquisition in one of four situations:

    1. (1)

       a person acquires an interest in a landholder that is itself a significant interest: s 149(1)(a);

    2. (2)

       a person acquires an interest in a landholder that when aggregated with other interests in the landholder held by the person or an associated person results in an aggregation which is a significant interest: s 149(1)(b);

    3. (3)

       a person who, either alone or with an associated person, already has a significant interest in a landholder acquires a further interest in the landholder: s 149(1)(c); or

    4. (4)

       a person acquires an interest under a scheme of the kind referred to in s 149(1A) which results in an aggregation that amounts to a significant interest: s 149(1A).

11. [41]

    It is not in dispute that (a) the February acquisition was not a relevant acquisition because, at the time it occurred, FSREC was a public landholder; and (b) the July acquisition was a relevant acquisition under s 149(1)(c) (the third alternative above) because by it ISPT acquired a further interest at a time when it held a significant interest in FSREC which was now a private landholder. The dispute relates to how duty is to be calculated in respect of the July acquisition.

12. [42]

    Where a relevant acquisition occurs, the person who made it is required to lodge a statement with the Chief Commissioner setting out the matters prescribed by s 152. Section 152 provides:

13. [43]

    The key provisions of s 152 in the present case are s 152(2) and (3) which set out the information which the acquisition statement must contain, being each of the following (emphasis added):

    1. (1)

       The name and address of the person who has acquired ‘the interest’: para (2)(a).

    2. (2)

       In relation to ‘each interest acquired’, the date on which it was acquired: para (2)(b).

    3. (3)

       If the relevant acquisition results from the aggregation of the interests of associated persons, particulars of the interests acquired by the person and any associated persons on the date of the relevant acquisition: para (2)(c).

    4. (4)

       Particulars of the total interest of the person and any associated person in the landholder at the date of the relevant acquisition: para (2)(d).

    5. (5)

       The unencumbered value of the land holdings and goods in NSW of the landholder as at two different times: firstly, the date of the relevant acquisition and secondly, if the landholder is a private landholder, as at the date of the acquisition of each interest acquired in the landholder during the statement period: para (3)(a).

    6. (6)

       Such other information as the Chief Commissioner may require: para (3)(b).

14. [44]

    In relation to item (5), the ‘statement period’ is the period of 3 years immediately preceding the date of the relevant acquisition, unless expanded under s 152(6) because the relevant acquisition is ‘related’ to an earlier acquisition before that 3-year period would otherwise commence.

15. [45]

    Under s 152(4), s 152(3) is excluded in the case of an ‘exempt acquisition’ which is defined in s 163I to mean an exempt acquisition under Part 4 of Ch 4 or an acquisition of an interest in a landholder which is exempt under Ch 11.

16. [46]

    The requirement to provide information as to the value of land holdings and goods in NSW of the landholder at the date of acquisition of each interest acquired in the landholder in the 3-years prior to the relevant acquisition under s 152(3)(a) has to do with the method of calculating the duty payable in respect of the relevant acquisition, to which I now turn.

17. [47]

    The charging provision where a relevant acquisition has occurred is s 155 in the case of a relevant acquisition in a private landholder and s 156 in the case of a relevant acquisition in a public landholder.

18. [48]

    Section 155 provided relevantly (emphasis added):

19. [49]

    In summary:

    1. (1)

       If the acquisition statement does not disclose ‘any other acquisitions in the statement period’, duty is payable at the general rate (ie that applicable under s 32 of the Duties Act for a transfer of dutiable property) on a dutiable amount determined by multiplying the unencumbered value of all the land holdings and goods of the landholder in NSW (calculated as at the date of the relevant acquisition) by the proportion of that value represented by the ‘interest acquired’ in the relevant acquisition: s 155(1). The ‘interest acquired’ includes the interests of associated persons’ where the relevant acquisition results from an aggregation of the interests of associated persons: s 155(2).

    2. (2)

       If, on the other hand, the acquisition statement does disclose ‘one or more other acquisitions in the statement period’, duty is payable at the transfer duty rate on ‘the aggregate of amounts severally calculated in accordance with s 155(1) in respect of each interest required to be disclosed in the statement: s 155(3).

    3. (3)

       The duty payable under s 155 is required to be reduced by the sum of the duty paid or payable under the Duties Act in respect of an acquisition during the statement period by the person or the associated person of an interest in the same landholder but only in proportion to the extent to which the duty paid or payable is attributable to the amount of duty payable under s 155: s 155(4).

    4. (4)

       There is also a reduction in the amount of duty which would otherwise be payable on the relevant acquisition where duty has been paid or is payable under the Duties Act (or like duty paid or payable in another Australian jurisdiction) in respect of a dutiable transaction in relation to the shares, or units, or a capital reduction or rights alteration or an allotment by direction by which an interest in the landholder was acquired: s 155(5).

20. [50]

    The plaintiff submits that the operative charging provision for the July acquisition is s 155(1) and not s 155(3), and that when s 155(1) says ‘does not disclose any other acquisitions during the statement period’, the ‘other acquisitions’ referred to must be acquisitions ‘in a private unitholder’ (picking up those words appearing earlier in the provision). This submission is dealt with in issue 1 below.

21. [51]

    Turning now to s 156, this section provided:

22. [52]

    In summary, in the case of a relevant acquisition in a public landholder (being an acquisition of an interest of 90% or more), duty is payable at a concessional rate of 10% of the duty which would be payable at the general rate on a transfer of all the land holdings and goods of the landholder in NSW (calculated as if the transfer had occurred at the date of the relevant acquisition), and no further duty is payable ‘in respect of any further acquisition made by that person in that landholder’.

23. [53]

    It is not in dispute that s 156 did not apply to either the February acquisition (as the interest acquired was less than 90%) or the July acquisition (as FSREC was no longer a public landholder).

24. [54]

    Part 4 of Ch 4, which is headed ‘Exemptions and concessions’, includes s 163H which confers a discretion on the Chief Commissioner to grant a full or partial exemption from the duty that would otherwise be payable in respect of an acquisition. Section 163H provides that:

Purpose of Ch 4

1. [55]

   The original precursor to Ch 4 was Div 30 of the Stamp Duties Act 1920 (NSW) (SDA). The purpose of Div 30 was to prevent the avoidance of duty on acquisitions of interests in land rich private companies and private unit trust schemes by the acquisition of shares or units rather than the underlying land: see Chief Commissioner of State Revenue (NSW) v Lee (2000) 45 ATR 130; [2000] NSWCA 246 (CCSR v Lee) at [9]. Div 30 was re-enacted as Ch 3 of the Duties Act when the SDA was repealed and replaced by the Duties Act on 1 July 1998, which was in similar terms to Div 30, and Ch 3 was re-enacted as Ch 4A via the Duties Amendment (Land Rich) Act 2004 (NSW).

2. [56]

   Ch 4 was inserted into the Duties Act by State Revenue Legislation Further Amendment Act 2009 (NSW) (Amending Act), in turn replacing former Ch 4A which imposed duty on the acquisition of interests in ‘land rich’ private companies and unit trusts. The explanatory note in the Bill which became that Act (Explanatory Note) included the following explanation of the amendments (emphasis added):

3. [57]

   It is apparent from the Explanatory Note that the purpose of Ch 4 as enacted by the Amending Act was different to Div 30 (and its later iterations before the Amending Act) in that the rationale of Ch 4 was now to treat an acquisition of shares in a company or units in a unit trust scheme owning land as an acquisition of the underlying land itself and tax it on the same basis: Winston-Smith v Chief Commissioner of State Revenue [2019] NSWCA 75 (Winston-Smith (CA)) at [43]. This included extending the taxing base to acquisitions of shares or units in a ‘public’ company or unit trust scheme albeit on a concessional basis. The scope of that concessional treatment is at the heart of the dispute in the present case.

4. [58]

   This concessional treatment was subsequently removed by an amendment to s 156(1) for relevant acquisitions on or after 1 July 2023 via the Revenue Legislation Amendment Act 2023 (NSW), although that is not relevant to the issues of statutory construction which arise in the present case.

Mertune’s case

1. [59]

   The Chief Commissioner relied, in relation to the first issue, on the decision in Mertune which concerned an aggregation of a prior acquisition under s 99F in Div 30 of the SDA which imposed duty on the acquisition of a ‘majority interest’ in a ‘designated landholder’. For present purposes, it is sufficient to refer to the following provisions of the SDA.

2. [60]

   By s 99A(1) of the SDA: (a) a ‘majority interest’ was an interest in a ‘landholder’ (being a private company or private unit trust scheme) which if the landholder were to be wound up would entitle the person who acquired the interest (either alone or with related persons) to more than 50% of the property distributable to the holders of all interests in the landholder; and (b) a ‘designated landholder’ was a ‘landholder’ whose landholdings (by unencumbered value) comprised at least 80% of its total assets (excluding some presently immaterial assets) and the unencumbered value of its land in NSW was not less than $1 million.

3. [61]

   Section 99E(1) of the SDA – the equivalent of s 155(1) of the Duties Act – set out when a person who acquired an interest in a ‘designated landholder’ was required to lodge an acquisition statement which, under s 99E(5) was chargeable with duty under s 99F. Section 99E(1) provided relevantly:

4. [62]

   Section 99F of the SDA set out how duty was chargeable on an acquisition statement with s 99F(1)(a) and s 99F(1)(b) being equivalent to s 155(1) and s 155(3) respectively of the Duties Act. Section 99F provided relevantly:

5. [63]

   By s 99A(1) of the SDA:

   1. (1)

      a ‘relevant acquisition’ was the acquisition by a person of an interest in a designated landholder which requires the lodgment of a statement under section 99E(1) by the person; and

   2. (2)

      a ‘prior acquisition’ was defined relevantly as follows:

6. [64]

   In Mertune the taxpayer acquired 100% of the shares in two companies by successive transfers of 50% of the shares in each company. The two transactions were materially the same and it is sufficient for present purposes to note the transfer of the initial 50% interest in each company to the taxpayer occurred on 23 August 1988 at a time when each company had entered into a contract to purchase land in NSW under which the deposit had been paid but the contract had not completed (first transfer). Then, on 15 November 1990, there was a transfer to the taxpayer of the remaining 50% interest in each company after the contract to purchase the land had completed (second transfer).

7. [65]

   It was common ground that each company was a designated landholder at the time the second transfer. The first transfer was not a relevant acquisition, on any view, because the taxpayer only acquired a 50% interest in the company. The second transfer was a relevant acquisition. The Commissioner had assessed duty on the acquisition statement lodged in respect of the second transfer under s 99F(1)(b) on the basis that the first transfer was a ‘prior acquisition’. The taxpayer objected to the assessment on the basis that it was liable to pay duty only on the second transfer under s 99F(1)(a) because the first transfer was not a ‘prior acquisition’. Smart J upheld the assessment.

8. [66]

   The first issue addressed by Smart J was whether the unencumbered value of the land to which the company was entitled at the time of the first transfer was equal to the deposit paid under the contract or the contract price. His Honour concluded, in light of the language of Div 30, the scheme of the SDA and the purpose of Div 30, the unencumbered value of the land to which the company was entitled at the time of the first transfer was equal to the contract price: see Mertune at 646. This conclusion has been criticised: see D G Hill, Stamp Duties (LBC Information Services, 1996), Vol 1 at [3.16160] and [3.16310]; R Giannone, ‘Stamp Duty Rewrite Land-Rich Provisions’ (1996) 19 UNSW Law Journal 94 at 113; see also Road Australia Pty Ltd v Commissioner of Stamp Duties (Qld) [2001] 1 Qd R 327; [1999] QCA 328 at [26]. I note that the question became academic following the replacement of the SDA by the Duties Act on 1 July 1998 due to the deeming provision in s 108(3) of the Duties Act as originally enacted, which is now found in s 160 of Ch 4.

9. [67]

   Smart J then went on the consider whether a landholder must be a ‘designated landholder’ at the time of the prior acquisition in order for aggregation under s 99F(1)(b)(ii) to apply, and concluded that it did not: see Mertune at 646-647. His Honour rejected the taxpayer’s argument that the ‘prior acquisition’ had to be an acquisition of an interest in a designated landholder when it occurred in light of the words used in both s 99F(1)(a) and (b) and the definition of ‘prior acquisition’ in s 99A(1), which the taxpayer contended imported a temporal requirement that the landholder had to be a designated landholder at the time of the prior acquisition. Smart J said at 647:

10. [68]

    As noted below, the Chief Commissioner relied on Smart J’s decision on this second issue on the basis that the wording of s 155 is very similar to s 99F of the SDA and the argument of the taxpayer in Mertune was substantially the same as the argument put by ISPT in the present case.

11. [69]

    ISPT submitted that Smart J’s reasoning on this second issue is obiter dictum given the outcome on the first issue (with which I agree), but in any event was wrong for essentially the same reasons advanced in support of ISPT’s case on the correct construction of s 155 dealt with below.

Issue 1: Interaction of s 152(3), s 155(1) and 155(3) and the question of aggregation

1. [70]

   The first issue turns on the proper construction of the words ‘any other acquisitions during the statement period’ in s 155(1) and ‘one or more other acquisitions during the statement period’ in s 155(3).

2. [71]

   Before considering the proper construction of those words, it is helpful to examine the interaction of s 152 and s 155 in the calculation of duty. It is convenient to do so by looking at various scenarios by which a relevant acquisition can occur, either by a single acquisition or several successive (or creeping) acquisitions, in a landholder which is a private landholder at all relevant times.

3. [72]

   Taking first the situation where there is a single acquisition in a private landholder which is a significant interest (Scenario 1): Assume X acquired a 50% interest in a private landholder (PL) on 1 July 2022, at a time when it (and any associated person) held no other interest. X made a relevant acquisition under s 149(1)(a) and must lodge a statement under s 152. The only interest required to be disclosed under s 152(2)(b) was the acquisition on 1 July 2022 together with the unencumbered value of the land/goods of PL at 1 July 2022 under s 152(3)(a). Duty is assessed under s 155(1) on 50% of the unencumbered value of the land/goods of PL on 1 July 2022.

4. [73]

   Consider next the situation where a relevant acquisition is made in a private landholder via creeping acquisitions:

   1. (1)

      Scenario 2: Assume instead X had acquired that interest in two separate acquisitions, the first being a 49% interest in PL on 1 January 2020 and then a further 1% interest in PL on 1 July 2022. The first was not a relevant acquisition and no statement was required to be lodged in respect of it, but the second acquisition was a relevant acquisition under s 149(1)(b) and therefore X must lodge a statement under s 152. Each of those interests was required to be disclosed under s 152(2) (see [98]-[99] below), together with the unencumbered value of the land/goods of PL at each acquisition date under s 152(3)(a). Duty is assessed in this case under s 155(3) on 1% of the unencumbered value of the land/goods of PL on 1 July 2022 and 49% of the unencumbered value of the land/goods of PL on 1 January 2022.

   2. (2)

      Scenario 2A (a variation on scenario 2): Assume instead X had acquired a 20% interest in PL on 1 January 2020, a further interest of 29% on 1 January 2021 and another further interest of 1% on 1 July 2022. The first two were not relevant acquisitions and no statement was required to be lodged in respect of them, but the third acquisition was a relevant acquisition under s 149(1)(b), and X must lodge a statement under s 152. Each of those interests was required to be disclosed under s 152, together with the unencumbered value of the land/goods of PL at each acquisition date under s 152(3)(a). Duty is assessed in this case under s 155(3) on the proportion of the unencumbered value of the land/goods of PL on 1 January 2020, 1 January 2021 and 1 July 2022 represented by each acquisition.

   3. (3)

      Scenario 3: Assume instead X acquired a 49% interest in PL on 1 January 2019 and a further 1% interest in PL on 1 July 2022, more than 3 years after the previous 49% acquisition. Again, the first was not a relevant acquisition and no statement was required to be lodged in respect of it, but the second was a relevant acquisition under s 149(1)(b), and X must lodge a statement under s 152. Each of those interests was required to be disclosed under s 152, but it is only the unencumbered value of the land/goods of PL on 1 July 2022 which needed to be disclosed under s 152(3)(a). Duty is assessed in this case under s 155(3) on 1% of the unencumbered value of the land/goods of PL on 1 July 2022.

5. [74]

   Consider now the situation where there are creeping acquisitions in a private landholder with the first being a relevant acquisition:

   1. (1)

      Scenario 4: Assume instead X had acquired a 75.8% interest in PL on 1 January 2020 and a further 10% interest in PL on 1 July 2022. The first was a relevant acquisition under s 149(1)(a) and X was required to lodge a statement under s 152 and pay duty under s 155(1) on 75.8% of the unencumbered value of the land/goods of PL as at 1 January 2020. The second was a relevant acquisition under s 149(1)(c), and X must lodge a statement under s 152. Each of those interests was required to be disclosed under s 152, together with the unencumbered value of the land/goods of PL at each acquisition date under s 152(3)(a). Duty is assessed in this case under s 155(3) on 10% of the unencumbered value of the land/goods of PL on 1 July 2022 and 75.8% of the unencumbered value of the land/goods of PL on 1 January 2020 but there is credit for the duty paid/payable on the earlier 75.8% acquisition on 1 January 2020 under s 155(4). In effect duty is only payable on the acquisition of the further interest of 10%.

   2. (2)

      Scenario 5: Assume instead X acquired a 75.8% interest in PL on 1 January 2019 and a further 10% interest in PL on 1 July 2022. The first was a relevant acquisition under s 149(1)(a), and X was required to lodge a statement under s 152 and pay duty under s 155(1) on 75.8% of the unencumbered value of the land/goods of PL as at 1 January 2019. The second was a relevant acquisition under s 149(1)(c), and X was required to lodge a statement under s 152 which disclosed each of those interests under s 152, but it is only the unencumbered value of the land/goods of PL on 1 July 2022 which needs to be disclosed under s 152(3)(a). Duty is assessed in this case under s 155(1) on 10% of the unencumbered value of the land/goods of PL on 1 July 2022.

   3. (3)

      Scenario 5A: This is the same as scenario 5 except that X acquires a further 10% interest on 1 August 2025, more than 3 years after the previous 10% acquisition. The statement required to be lodged in respect of the third acquisition is only chargeable with duty under s 155(1) in respect of that third acquisition, calculated on 10% of the unencumbered value of the land/goods of PL on 1 August 2025, with the first and second acquisitions being dutiable at the time they occurred as per scenario 5.

6. [75]

   These scenarios suggest that s 152(3)(a), when read with s 155(1) and s 155(3), performs a dual role.

7. [76]

   First, it deals with the assessment of duty where there are creeping acquisitions of a significant interest in a way that ensures that duty is paid on the relevant proportion of the unencumbered value of the land/goods of the landholder at the time each interest was acquired.

8. [77]

   Secondly, it contains a significant concession in the case of a creeping acquisition of a significant interest involving one or more prior acquisitions which are not themselves a ‘relevant acquisition’. The concession is that duty is not charged on a prior acquisition of less than a significant interest (ie 50%) which is more than 3 years prior to the later acquisition which gives rise to a relevant acquisition.

9. [78]

   The present case is factually similar to scenario 2 in the sense that just as the first acquisition in that scenario was below the threshold for a significant interest, so also the February acquisition in the present case was below the threshold for a significant interest at the time it occurred for the reason that the landholder was a public landholder at that time. The present case also bears some similarity to scenario 4 with the material difference being that the landholder was public not private when the first acquisition occurred. The issue is whether these features make any difference to the calculation of the duty on the second acquisition.

10. [79]

    The following is a summary of ISPT’s submissions in support of its contention that in determining the duty payable on the July acquisition, it was s 155(1) which applied and not s 155(3) because there were no ‘other acquisitions during the statement period’. ISPT focused on the interaction of s 152 and s 155 and the scheme of Ch 4 in demarcating between the duty payable on acquisitions of interests in private and public landholders.

11. [80]

    ISPT submitted that Ch 4 shows an evident policy of rendering some but not all acquisitions of underlying interests in land through acquiring interests in land owning companies and trusts liable to duty, and deliberately chose a limited application of the provisions to public landholders, in that there must be an acquisition of a 90% interest and once a 90% interest is acquired there is no further duty. There is also the relieving discretion formerly found in s 99B and s 99F(3) of the SDA and now in s 163H of Ch 4.

12. [81]

    In relation to s 152, ISPT submitted that the reference to ‘the interest’ in s 152(2)(a) is to the interest that was acquired in the relevant acquisition (which in the present case was the 19.46% interest under the July acquisition), and the reference to ‘each interest acquired’ in s 152(2)(b) must be to each interest acquired as part of the relevant acquisition given that it is the making of a relevant acquisition which triggers the requirement to prepare an acquisition statement (which in the present case was only the19.46% interest under the July acquisition).

13. [82]

    ISPT submitted that while s 152(3) requires the acquisition statement to include the unencumbered value of land holdings and goods at the date of ‘each interest acquired in the landholder in the statement period’ which is broader than the requirement of s 152(2)(b) on the plaintiff’s preferred construction. The explanation for this is said to be found in paragraph (i) of the Explanatory Note which indicates that the purpose of including ‘each interest acquired’ in the statement period is to facilitate consideration of whether or not multiple acquisitions in the landholder were the ‘result of an arrangement’. I do not accept that submission as it misreads paragraph (i) of the Explanatory Note which is merely referring to the effect of s 152(6) and (7) – they expanded the obligation to disclose prior acquisitions beyond the 3 year statement period in certain circumstances, which was a change made by the Amending Act, and hence s 152(6) and (7) make ‘further provision’ for disclosure of prior acquisitions.

14. [83]

    In relation to s 155, the plaintiff submitted:

    1. (1)

       The relevant charging provision in the present case is s 155(1), the scope of which is indicated by the opening words which state: ‘If an acquisition statement that discloses a relevant acquisition in a private landholder does not disclose any other acquisitions during the statement period...’. The reference to ‘other acquisitions’ must be to acquisitions in a ‘private landholder’ given the context in which those words appear, and also the noscitur a sociis principle of construction, being that the meaning of a word can be gathered from associated words (being here the earlier reference to ‘relevant acquisition in a private landholder’): see Lend Lease Real Estate Investments v GPT Re Ltd [2006] NSWCA 207 at [30]; Deputy Commissioner of Taxation v Dick [2007] NSWCA 190 at [12]-[13].

    2. (2)

       Section 153(3) is not the relevant charging provision here because it only applies to an acquisition statement ‘disclosing … one or more other acquisitions during the statement period’, and this must be a reference to ‘one or more other acquisitions’ in the ‘private landholder’ during the statement period (of which there were none here).

15. [84]

    This submission regarding s 153(3) was supported by the earlier submission that s 152 does not require the February acquisition to be disclosed in the acquisition statement. It was also supported by reference to the structure of Part 2 of Ch 4, in which ss 152 and 155 appear, which deliberately demarcates between the manner in which duty is to be charged on relevant acquisitions in private landholders (s 155) and public landholders (s 156) – in particular, that a different threshold for the charging of duty will apply to acquisitions of interests in public landholders (through the significant interest being 90%) and the duty where payable is charged at a concessional rate. It was said that the intention to treat acquisitions in private landholders and public landholders differently is reinforced by what is said in the Explanatory Note at paragraph (b).

16. [85]

    Further, it was submitted that while the approved form for an acquisition statement under s 152(2) at the relevant time required the taxpayer to disclose ‘details of prior acquisitions by the same or “associated persons” (as defined in Duties Act 1997)’, that requirement cannot displace the terms of Part 2 of Ch 4, because the approved form must be interpreted consistently with the terms of the statute under which it is provided: cf Antegra Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 107 at [87] (in relation to a guideline issued by the Treasurer for the purposes of another taxing statute). In my view nothing turns in this case on the approved form of the acquisition statement given the terms of s 152(2)(d) as explained above. I note also that this submission did not specifically address the relevance of s 152(3)(b).

17. [86]

    The following is a summary of the Chief Commissioner submission for why ISPT’s acquisition statement in respect of the July acquisition having disclosed (correctly) the February acquisition as a prior acquisition in the statement period, s 155(3) applies to aggregate the interests acquired, with the result that the assessment correctly charged duty on ISPT’s aggregate interest of 95.26% in the landholder, FSREC.

18. [87]

    Critically, the Duties Act does not require the landholder to have a particular status (private or public) at the time of prior acquisitions. Section 152(3)(a) simply requires disclosure of ‘each interest acquired in the landholder during the statement period’ where that landholder is a ‘private landholder’ at the time of the relevant acquisition. This requires that it be the same landholder – the same entity – at the earlier and later times, but it is not limited to interests acquired when the landholder was private. It refers to each interest in the landholder acquired during the 3-year ‘statement period’. The requirement to provide values ‘as at the date of acquisition of each interest acquired’ evinces an intention that all acquisitions during the ‘statement period’ would be relevant to the duty calculation.

19. [88]

    Similarly, s 155(3) refers to ‘one or more other acquisitions during the statement period’, without specifying any required status of the landholder – private or public – during that period or at the time of the other acquisitions. Likewise, the conclusion of s 155(3) requires that duty is chargeable ‘in respect of each interest required to be disclosed in the statement’ without any limitation by reference to the status of the landholder.

20. [89]

    In short, there is nothing in the aggregation provisions that would limit their application to acquisitions where the landholder was private at the time of the prior acquisition. That conclusion is supported by the decision in Mertune where the taxpayer argued that for the aggregation provision in s 99F(1)(b) of the SDA (the equivalent of s 155(3) of the Duties Act) the landholder must be a ‘designated landholder’ at the time of the ‘prior acquisition’ (as well as at the time of the relevant acquisition). Smart J rejected that argument, stating (at 647F):

21. [90]

    It was submitted that, applying similar reasoning to this case:

    1. (1)

       The critical date for determining whether the landholder is a ‘private landholder’ for the purposes of ss 152(3) and 155(3) of the Duties Act is the date of the relevant (later) acquisition. It is at that date that the question of whether the landholder is a ‘private landholder’ arises for consideration and not earlier.

    2. (2)

       At that later date, FSREC was indeed a ‘private landholder’.

    3. (3)

       Sections 152(3)(a) and 155(3) thus apply to require disclosure and aggregation of all ISPT’s acquisitions in the landholder (FSREC) during the 3-year ‘statement period’, irrespective of whether the landholder was private or public at the time of those prior acquisitions.

22. [91]

    This interpretation was said to be consistent with the anti-avoidance purpose of the landholder provisions, which seek to prevent the fragmentation of acquisitions to avoid or minimise duty. While it is not suggested ISPT had any duty avoidance motivation, a construction on which aggregation only occurs if the landholder was a ‘private landholder’ at the earlier time creates an obvious avoidance opportunity. For example, an acquirer could deliberately structure a transaction to acquire 89% of a public landholder (just below the 90% threshold), thereby converting it to a private landholder, then acquire a further interest (for example, another 6%) with duty calculated only on that subsequent acquisition. The resulting duty may be minimal (despite the acquisition of a large stake in a ‘private landholder’) and substantially below the 10% concessional rate of duty applicable to significant acquisitions in a ‘public landholder’. That outcome would subvert the evident legislative design of s 155(3), namely to treat multiple acquisitions in the same landholder within the statement period as part of a single economic acquisition, thereby preventing fragmentation of transactions to reduce duty.

23. [92]

    A range of general exemptions are set out in s 163A of the Duties Act, including s 163A(1)(k), which provides an exemption ‘if the interest concerned is an interest in a public landholder acquired before 1 July 2009’. It was submitted that this is a clear contextual indicator that interests in public landholders are not otherwise exempt from duty or aggregation.

24. [93]

    It was then submitted that the plaintiff’s construction of s 152(3) and s 155(3) should be rejected for a number of reasons:

    1. (1)

       It reads words into both provisions that are not there. The provisions refer simply to ‘the landholder’ and ‘other acquisitions’, without specifying that the landholder must be a ‘private landholder’ at the earlier time.

    2. (2)

       ISPT’s reliance on noscitur a sociis is misplaced. That principle applies when two or more words, susceptible of analogous meaning, are coupled together (eg, every dealing, transfer, alienation or charge). In those circumstances, the meaning of each of those words will be influenced by the other words. The application of this maxim does not involve departure from the meaning of the word, but ensures where there might be ambiguity, that the true meaning is ascertained: Edwards v Edwards (2009) 25 VR 40 at 49; [2009] VSC 190 at [28]. However, the phrases ‘each interest acquired in the landholder during the statement period’ and ‘other acquisitions during the statement period’ are not ambiguous and ought not to be read down. They refer to any other acquisitions (in the same landholder) made during the relevant 3-year period.

    3. (3)

       The suggestion that the 3-year disclosure requirement exists only to identify ‘related’ acquisitions conflates two distinct provisions. Section 152(3) of the Duties Act requires disclosure of all acquisitions within the statement period. Section 152(7) separately extends disclosure obligations to certain acquisitions outside that period (termed ‘earlier acquisitions’) if they are ‘related’ (in the sense of resulting from the same arrangement). The Explanatory Note at paragraph (i) expressly describes the ‘earlier acquisition’ provisions as a ‘[f]urther provision’, confirming they are separate and distinct. In any event, none of this supports ISPT’s construction.

    4. (4)

       It is not to the point that ss 155 and 156 of the Duties Act contain separate charging provisions for acquisitions in ‘private landholders’ and ‘public landholders’. There are different charging mechanisms because different rates and thresholds apply to private and public landholders. This does not mean that prior acquisitions in a ‘public landholder’ are irrelevant when calculating duty on a subsequent acquisition in a ‘private landholder’. To the contrary, Ch 4 of the Duties Act takes the ‘relevant acquisition’ as the focal point to which prior transactions, not by themselves dutiable, are then aggregated. This structure is inconsistent with the prior transactions escaping aggregation merely because of the landholder’s status at the earlier time. What is relevant is the landholder’s status at the time of the relevant acquisition, not at the earlier time.

25. [94]

    It is not in dispute that the meaning of a statutory provision is determined by paying close attention to its text, understood in context and in light of the statutory purpose (being what the provision is designed to achieve in fact): Palmanova Pty Ltd v Commonwealth of Australia [2025] HCA 35; (2025) 99 ALJR 1362 at [4]. Context includes the legislative history and the relevant extrinsic materials, but they cannot displace the meaning of the statutory text reflecting the need to give primacy to the statutory text: Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39].

26. [95]

    The critical words to be construed in s 155 are ‘any other acquisitions during the statement period’ in s 155(1) and ‘one or more other acquisitions during the statement period’ in s 155(3). They form part of a condition for the operation of s 155(1) or s 155(3), as appropriate, which is whether the acquisition statement under s 152 discloses such acquisitions. This takes the reader back s 152 to see what it requires.

27. [96]

    The plaintiff submits, and I accept, that the reference in s 152(2)(a) to ‘the interest’ is to the interest acquired which results in the acquirer making the relevant acquisition to which the statement relates.

28. [97]

    The plaintiff also submits that the reference in s 152(2)(b) to ‘each interest acquired’ is to each interest acquired as part of the relevant acquisition, which in the present case it says is only the interest of 19.46% acquired under the July acquisition.

29. [98]

    I do not accept that submission. The structure of the definition of ‘relevant acquisition’ involves a distinction between an interest acquired and (in the case of s 149(1)(b) and (c)) an interest already held which is to be aggregated with the interest acquired to determine whether a relevant acquisition has occurred. However, there is no reason to read the reference to ‘each interest acquired’ in s 152(2)(b) as limited to the former, in circumstances where the definition contemplates that the acquisition of interests over time will also give rise to a relevant acquisition and, in that case, each are relevant to the imposition and calculation of the duty.

30. [99]

    In any event, in my view nothing turns on this submission because s 152(2)(d) requires the statement also to include ‘particulars’ of the total interest of the person (and any associated person) in the landholder at the date of the relevant acquisition. While the word ‘particulars’ is not defined, its ordinary meaning in a context of this kind is ‘detailed information about a person or thing’ (Oxford English Dictionary, online ed). The particulars required under s 152(2)(d) would include the details of each interest already held by the person (or any associated person) at the time of the relevant acquisition.

31. [100]

    That conclusion is supported by s 152(3)(a) which requires the statement also to include the unencumbered value of all land holdings and goods in NSW of the landholder as at the date of: (a) the relevant acquisition: and (b) if the landholder is a private landholder, acquisition of each interest acquired in the landholder during the period of 3 years immediately preceding the date of the relevant acquisition (unless extended by the operation of s 152(6) and (7) in ways which are not presently relevant). The requirement to include this information regarding acquisitions of interests in the landholder prior to the relevant acquisition serves to confirm that s 152(2)(d) (if not s 152(2)(b)) requires the disclosure of particulars of those acquisitions being the quantum and date of those acquisitions.

32. [101]

    The question then becomes whether the requirement to disclose a prior acquisition of an interest in a landholder which is a private landholder at the time of the relevant acquisition for which a statement is lodged is affected by the fact that at the time of the prior acquisition the landholder was a public landholder. In my view it is not, for the following reasons.

33. [102]

    First, the requirement to disclose whether there has been one or more ‘acquisitions’ prior to the relevant acquisition under s 152(2) does not in terms require that the prior acquisition only be disclosed if the landholder was a private landholder at the time of the prior acquisition. In particular, the word ‘acquisition’ is used in Ch 4 to refer to the acquisition of an interest in a landholder regardless of whether the landholder is private or public at the time of the acquisition. The status of the landholder as private or public at the time of the acquisition of an interest in the landholder is of relevance only to the threshold for calculating a significant interest (and therefore whether a relevant acquisition has occurred) and the manner of calculation of the duty payable if a relevant acquisition has occurred (a matter dealt with by s 155 or s 156, depending on whether the landholder is private or public at the time of the relevant acquisition).

34. [103]

    Secondly, ss 152(3)(a) and (6) are the provisions within s 152 referring specifically to the disclosure of information about acquisitions in the statement period and they do not say that the acquisitions during the statement period are only required to be disclosed if the landholder was a private landholder when they occurred. To the contrary, where the landholder is a private landholder at the time of the relevant acquisition, what s 152(3)(a) requires is the disclosure of the unencumbered value of landholdings and goods of the landholder ‘as at the date of acquisition of each interest acquired in the landholder during the statement period.’ The focus is on the value of that property (for the purpose of calculating duty under s 155) at the time of an acquisition of an interest in the landholder, being the entity which comes within the definition of that term (being a ‘unit trust scheme’, a ‘private company’ or a ‘listed company’), rather than its classification as private or public at the time of the acquisition.

35. [104]

    In the present case the July acquisition was a relevant acquisition under s 149(1)(c). ISPT’s existing interest in FSREC of 75.8% at the time of the July acquisition was a ‘significant interest’ in FSREC at that time, because FSREC was now a private landholder. That existing interest was required to be disclosed in the acquisition statement lodged for the July acquisition under s 152(2) together with the information regarding the unencumbered value of the landholdings and goods of FSREC at the time it was acquired as required by s 152(3)(a).

36. [105]

    In my view, the words ‘other acquisitions during the statement period’ in s 155(1) and s 155(3) should be read as meaning ‘other acquisitions in the landholder during the statement period’. This is because those words are directed to the situation where an acquisition statement includes the information required by s 152(3)(a) and consequently the words ‘as at the date of acquisition of each interest acquired in the landholder during the statement period’ in s 152(3)(a) indicate what the ‘acquisitions during the statement period’ referred to in s 155(1) and s 155(3) are directed at.

37. [106]

    On this construction of ‘acquisitions during the statement period’ in s 155(1) and s 155(3), it is clear that s 155(3) applies where the acquisition statement discloses acquisitions in the landholder in the statement period irrespective of whether the landholder was private or public at the date of the acquisition. For this reason, as well as that identified by the Chief Commissioner in his submissions referred to earlier, the noscitur a sociis principle does not apply in the manner suggested by ISPT. Rather, the meaning of ‘acquisitions during the statement period’ in s 155(1) and s 155(3) is gathered from s 152(3)(a) to which those provisions are directly related, as well as the broader statutory context. Hence, as there is no relevant ambiguity the principle does not apply: Commissioner of Taxation v Whitehouse (1961) 104 CLR 25 at 31; [1961] HCA 10 per Dixon CJ, Fullagar and Kitto JJ (holding that ‘it is only in a case of ambiguity or doubt that help can be derived from the maxim noscitur a sociis’).

38. [107]

    This construction of s 155(1) and s 155(3) focuses on the statutory text of s 155 read with the closely associated provisions in s 152. It is supported by another aspect of the statutory context. Where a prior interest is aggregated under s 155(3), no duty is chargeable on it if it is an exempt acquisition: s 155(7). Section 163A(1) provides that an acquisition by a person of an interest in a landholder is an exempt acquisition in a number of situations including:

39. [108]

    The exemption referred to in s 163A(1)(g) was referred to in the Explanatory Note at paragraph (f). Formerly, under s 163D of Ch 4A before it was repealed by the Amending Act, an interest acquired before the landholder held land NSW was quarantined from the operation of Ch 4A. The Amending Act removed the quarantining of such an interest but preserved the exemption from duty on a prior acquisition made before the landholder held land in NSW through s 163A(1)(g). The Amending Act introduced the ‘exempt acquisitions’ referred to in s 163A(1)(j) and (k) which are directed at an aggregation arising under s 155(3) for a prior acquisition within the statement period. Importantly, paragraph (k) exempts an interest in a public landholder acquired before 1 July 2009, and not also an interest in a public landholder acquired after 1 July 2009 in circumstances where s 156 did not apply to that acquisition. The effect of ISPT’s argument would be to confer an exemption for such an acquisition in circumstances where, it may be inferred, the Amending Act chose not to do so.

40. [109]

    Contrary to ISPT’s submission, the above construction of ss 155(1) and 155(3) is supported by the statutory purpose of s 155 which is to charge duty on a relevant acquisition in a landholder which is a private landholder in a manner which takes into account prior acquisitions of interests in that landholder within 3 years of the relevant acquisition having occurred.

41. [110]

    Further, contrary to ISPT’s submission, this construction does not ignore the fact that Ch 4, through s 155 and s 156, demarcates and treats differently the acquisition of interests in private and public landholders. What is important is the manner in which that demarcation is effected, which is to confer a concession for the treatment of acquisitions of interests in a public landholder if certain straightforward conditions are met. If those conditions are not met, the concession falls away.

42. [111]

    By way of explanation of the last point, the purpose of s 156 was to extend landholder duty to the acquisition of a significant interest in a public landholder but on a concessional basis, both as to the level of the threshold for a significant interest (90%) and the rate to be applied (10%), together with an exemption from duty on further acquisitions if there had been an acquisition of a significant interest on which duty was chargeable under s 156. The condition for that concessional treatment was that the taxpayer acquired a significant interest of 90% in the landholder at a time when it was a public landholder. A consequence of that concessional treatment was that acquisitions below the 90% threshold would not be dutiable but only so long as the landholder was still a public landholder. In the case of a widely held trust, once there was an acquisition of an interest of more than 20% but less than 90%, the concession in s 156 would drop away for further acquisitions.

43. [112]

    Section 156 is silent as to the treatment of acquisitions in a landholder which was formerly a public landholder where it ceased to be a public landholder without duty being chargeable under s 156. But there is nothing in the structure of s 156, or the description of the purpose for its introduction in the Explanatory Note, to suggest that the concessional treatment under that section was to continue after the landholder had ceased to be a public landholder in circumstances where duty was not chargeable under s 156 because a significant interest of 90% had not been acquired while it was a public landholder.

44. [113]

    It is not necessary for me to address ISPT’s criticism of the reasoning in Mertune as that case concerned a different statute. Indeed, the significance of Mertune is not so much that it supports the construction of the corresponding provisions of Ch 4 but rather that it potentially invokes the presumption that where Parliament repeats words which have been judicially construed it is taken to have intended the words to bear the meaning already judicially attributed to them: Re Alcan Australia Ltd; Ex parte Federation of Industrial, Manufacturing and Engineering Employees (1994) 181 CLR 96 at 106-107; P Herzfeld & T Prince, Interpretation (3rd ed, 2024, Thomson Reuters) at [8.60]. That presumption can also be applied where the words are in substance, though not precisely, the same as those which received judicial construction: Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 at [99].

45. [114]

    In my view the presumption is strong in the context of the Duties Act because it is well-known that the Chief Commissioner was closely involved in the drafting of the Duties Act and the amendments made by the Amending Act. The terms of s 152 and s 155 are not identical to s 99E and s 99F of the SDA, but it was not suggested by the parties that they are materially different. Indeed the focus of ISPT’s submissions on the decision in Mertune was not that s 99E and s 99F were distinguishable from s 152 and s 153 but rather that the construction placed by Smart J on those provisions as they applied to ‘prior acquisitions’ was wrong, for similar reasons for its preferred construction of s 152 and s 155 of the Duties Act.

46. [115]

    I note, for completeness, that the words ‘other acquisitions in the statement period’ in each of s 155(1) and s 155(3) cannot be read as meaning ‘other relevant acquisitions in the statement period’. Not only is that contrary to the statutory text, it would also be contrary to a principal purpose of s 152(3) read with s 155(1) and s 155(3), which, as explained earlier, is to deal with the situation where a relevant acquisition is preceded by creeping acquisitions which were not themselves relevant acquisitions.

47. [116]

    For all these reasons, the plaintiff’s contention that the appropriate charging provision is 155(1) rather than 155(3) is not correct.

Issue 2: The discretion under s 163H

1. [117]

   Section 163H, set out earlier, confers a discretion on the Chief Commissioner to confer a full or partial exemption from duty ‘if satisfied that the application of [Ch 4] to an acquisition in a particular case would not be just and reasonable’. It is not in dispute that the standard of review under s 97 of the TAA is de novo review, such that the Court is to address afresh the question whether the discretion should be exercised in favour of ISPT having regard to the material before the Court: Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (NSW) (2011) 245 CLR 446; [2011] HCA 41 at [12]–[20]; Milstern Nominees Pty Ltd v Chief Commissioner of State Revenue (2015) 89 NSWLR 43; [2015] NSWSC 68 at [4]: Winston-Smith (CA) at [2].

2. [118]

   The purpose of s 163H was explained by Emmett AJA in Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773 at [49] (emphasis added):

3. [119]

   On appeal, Meagher JA (Payne JA and Sackville AJA agreeing) accepted that this paragraph sets out the rationale of s 163H: Winston-Smith (CA), at [17], [41], [45].

4. [120]

   The operation of s 163H has been considered in two cases in this court: Milstern Nominees and Winston-Smith.

5. [121]

   In Milstern Nominees the taxpayer had acquired 8 of the 9 issued shares in a company (Milstern Enterprises Pty Ltd) which was one of the discretionary objects in a discretionary trust, the trustee of which was a landholder. By virtue of s 159 of the Duties Act, Enterprises was taken to own or to be otherwise entitled to the property the subject of the trust for the purposes of Ch 4 of the Duties Act. As a result, Enterprises was taken to be a private landholder and the taxpayer had acquired a significant interest (of 8/9ths) in Enterprises, giving rise to a liability to duty at the general rate on 8/9ths the unencumbered value of Enterprises’ landholdings and goods in NSW which was taken to own under s 159.

6. [122]

   The taxpayer submitted that the dispensing power in s 163H should be exercised because (a) there was no intent to avoid duty; (b) the relevant acquisition (of shares in Enterprises) would have no practical consequence to the way in which the land held by the trustee would be appointed or enjoyed, because a single person, Mrs Phillips, controlled the trustee, the appointor and the guardian of the trust; and (c) the anti-avoidance purpose of s 159 did not arise in the present case: Milstern Nominees at [31].

7. [123]

   White J agreed. In relation to the nature of the discretion under s 163H, his Honour said at [29]:

8. [124]

   White J referred with approval to observations of Pagone J in Challenger Listed Investments Ltd v Commissioner of State Revenue [2010] VSC 464 at [27] and [29] in relation to s 85(2) of the Duties Act 2000 (Vic) (which was in similar terms to s 163H) in the context of its application to relieve a taxpayer from the operation of s 89C of that Act, to the effect that a relevant consideration in the application of the dispensing power in s 85(2) was whether the application of s 89C to the transaction in question was ‘within the policy the section was intended to cover’ (at [30]).

9. [125]

   An important consideration in White J’s reasoning for why the discretion in s 163H should be exercised in the taxpayer’s favour was that duty arose due to a deeming provision in Ch 4 (s 159) and that this provision, being an anti-avoidance measure, was not directed at a transaction of the kind at issue in that case. His Honour said at [52]-[53]:

10. [126]

    In Winston-Smith the issue was whether the discretion in s 163H should be exercised in circumstances where the taxpayer had acquired, pursuant to his mother’s will, 50% of the shares in Mac’s Pty Ltd and 100% of the shares in Town & Country Lands Pty Ltd (TCL). Mac’s was a private landholder, being a private company with landholdings in NSW having an unencumbered value of more than $2 million. TCL held the other 50% of the shareholding in Mac’s and also owned land and shares in its own right. The transfers of the shares to the taxpayer under the will were exempt from transfer duty under s 63(1)(a) of the Duties Act (and also from landholder duty if applicable under s 163A(d) of the Duties Act). A condition of the bequest of these shareholdings to the taxpayer was that he would enter into a deed with the executors of the deceased’s estate agreeing to pay certain amounts to his sister reflecting the value of TCL’s land and the share portfolio of Mac’s. The taxpayer entered into such a deed to satisfy the condition in the will and then chose, following taxation advice, to implement the deed by a transaction which involved the liquidation of TCL and the transfer to him by the liquidator of TCL’s 50% shareholding in Mac’s.

11. [127]

    The transfer of TCL’s shares in Mac’s to the taxpayer was the acquisition at issue in the proceedings. It was common ground that it was a relevant acquisition (being an acquisition of a 50% interest in a landholder, Mac’s) which was liable to duty under Ch 4 on 50% of the value of the land holdings and goods of Mac’s. The issue was whether the taxpayer should be relieved of this duty under s 163H.

12. [128]

    The taxpayer’s argument was essentially that the discretion should be applied in his favour because immediately before the transfer by the liquidator he already held indirectly the entire beneficial ownership of the land in Mac’s, and so that transfer of TCL’s 50% shareholding in Mac’s had not changed the underlying beneficial ownership in the land held by Mac’s. Further, there was no suggestion of any attempt on the taxpayer’s part to avoid duty on a conveyance of the land owned by Mac’s.

13. [129]

    Emmett AJA rejected this argument because the relevant acquisition changed the taxpayer’s underlying practical or economic interest in the underlying land to his advantage due to the removal of TCL from the chain of ownership: Winston-Smith at [66]-[71]. The Court of Appeal dismissed the appeal, accepting that the transaction had changed the taxpayer’s economic interest in Mac’s land: Winston-Smith (CA) at [32]-[33], [52]. In addition, Meagher JA identified a further consideration weighing against the exercise of the discretion under s 163H, which was that the existing underlying beneficial ownership and control of Mac’s land would not have continued but for the transfer because the liquidation of TCL was necessary to enable the payments to be made by the taxpayer to his sister: Winston-Smith (CA) at [28]-[29].

14. [130]

    A decision closer to the facts of the present case is CCSR v Lee, which was a decision under former Div 30 of the SDA about which the parties made submissions in oral argument. The case concerned a transfer of shares in the company owning land in NSW, with all its shareholders being members of the same family. At issue was the exercise of the discretion under former s 99F(3) in Div 30 (see out at [62] above).

15. [131]

    The factual background is summarised in the reasons of Meagher JA in CCSR v Lee at [17]-[24]. Relevantly:

    1. (1)

       The taxpayer (TML) was the mother of HJL and HML who each acquired 50% of the shares in the company on its incorporation, being 500 shares each;

    2. (2)

       On 1 September 1988, the company entered into a contract to buy land at Bankstown, NSW, for $886,000;

    3. (3)

       On 19 September 1988, before completion of the contract, the company issued further shares – 99,500 each to HJL and HML (taking each of their holdings to 100,000), 100,000 to THL, 100,000 to TML and 100,000 to HHL. As a result, each shareholder (including TML) held a 20% interest in the company;

    4. (4)

       On 29 September 1988, the company settled on the contract referred to in (2) and shortly afterwards acquired another property located in Enfield, NSW, having an unencumbered value of $383,000;

    5. (5)

       In June 1991, HJL transferred 30,000 of his shares to his mother, TML, which represented a transfer of a 6% interest in the company to avoid an adverse consequence under the thin capitalisation provisions of the income tax legislation. As a result of this transfer TML now held 130,000 shares in the company (a 26% interest);

    6. (6)

       The Chief Commissioner levied duty on the transfer of the 30,000 shares under Div 30 of the SDA in the amount of $51,117.64 calculated on the basis of an acquisition of 66%. At the time of the transfer, the unencumbered value of the company’s land, comprising the Bankstown and Enfield properties, was $2,875,000; and

    7. (7)

       The assessment proceeded on the basis on that TML’s acquisition of 6% was caught by s 99F(1)(b)(i) of the SDA, which was then aggregated with the 20% interest acquired by each of herself, THL and HHL on 19 September 1988 under s 99F(1)(b)(ii) of the SDA. The aggregation under the latter provision did not include the interests of HJL and HML through the exercise of the discretion under s 99F(3) because the effect of the allotment of shares to them on that date was to reduce their interest from 50% each to 20% each.

16. [132]

    As Meagher JA put it at [24], the Chief Commissioner ‘charged duties on the basis that there was a 66% change of ownership (either of the shares or of the land), whereas there was a transaction involving no more than 6% of either’.

17. [133]

    It is apparent from the facts summarised above that the company was not a designated landholder at the time of the earlier acquisitions which were aggregated under s 99F(1)(b)(ii) because the unencumbered value of its land in NSW was not at least $1 million at the time of the share allotment on 19 September 1988. That is so even on the basis that the unencumbered value of the company’s land was equal to the purchase price under the uncompleted contract to purchase the Bankstown land (reflecting the decision on the first issue in Mertune referred to earlier).

18. [134]

    There was no dispute on appeal that there was a relevant acquisition by the taxpayer of a 66% interest. Sperling J dealt with that issue at first instance when resolving ground 4 of the objection against the taxpayer: see Lee v Chief Commissioner of State Revenue (NSW) (1998) 41 ATR 1 at 8-9. Rather, the issue was whether the Court should exercise the discretion under s 99F(3) to reduce the duty payable: CCSR v Lee at [26]-[27]. It was held that the discretion should be exercised to reduce the assessment to duty on only the 6% interest acquired by TML under the transfer.

19. [135]

    Meagher JA (with whom Priestley JA and Clarke AJA agreed) said at [28]-[30]:

20. [136]

    Priestley JA in a short concurring judgment in which he agreed at [2] with the reasons of Meagher JA declined to comment on the example at [30] above. His Honour then set out some further reasons in support of the conclusion that the discretion in s 99F(3) should be exercised in favour of the taxpayer which focused on the need, given the purpose of Division 30, to ‘prevent any assessment of the amount of duty payable by the operation of Division 30 being greater than the amount that would have been payable if the land or interest in the land had been transferred directly rather than indirectly by the share transaction’: see CCSR v Lee at [3(3)].

21. [137]

    Two aspects of the decision in CCSR v Lee must be noted. First, central to the reasoning of both Meagher JA and Priestley JA was that the purpose of Div 30 which was to prevent a particular type of tax avoidance: see Meagher JA at [9], [28] and Priestley JA at [3]. As Payne JA said in Winston-Smith (CA) at [41], the determination of the rationale for s 163H in Ch 4 of the Duties Act following the Amending Act is not assisted by statements made about the legislative purpose of Div 30, which was different and now repealed legislation. For the same reason, the decision in CCSR v Lee is of limited assistance, one way or the other, in applying s 163H to the present case.

22. [138]

    Secondly, in CCSR v Lee the discretion under s 99F(3) was exercised to exclude from aggregation under s 99F(1)(b)(ii) the taxpayer’s prior acquisition of 20% on 19 September 1988 when the company was not a designated landholder. That the company was not a designated landholder as at the earlier time was not the reason for excluding her prior acquisition of 20%, as appears from the example given by Meagher JA at [30] and the fact that it is not one of the three reasons for exercising the discretion set out at [28].

23. [139]

    Ultimately, I consider that the Court does not gain any real assistance from CCSR v Lee in the present case, and I do not understand either party to have contended otherwise.

24. [140]

    The following is a summary of ISPT’s submissions for why the discretion under s 163H should be exercised in its favour if the Chief Commissioner was correct in applying the aggregation provisions of Ch 4 to reach the assessment. It was said that the assessment would bring within the scope of Ch 4 a transaction (being the February acquisition) which it was not intended to capture, referring to Milstern Nominees at [29] and Winston-Smith (CA) at [17]. This was for essentially two reasons.

25. [141]

    First, it was contrary to the legislative purpose as stated in the Explanatory Note (at paragraph (b) that ‘a different threshold for the charging of duty will apply’ for public landholders being ‘only if a 90% interest in the landholder is acquired’). The legislative purpose was only to charge duty where there was an acquisition of an interest of 90% or more in a public landholder and this is completely undone by the aggregation of the February acquisition (which was not dutiable when it occurred) with the July acquisition.

26. [142]

    Second, the aggregation was contrary to the legislative purpose in another way. Had the two acquisitions been carried out as a single acquisition by the plaintiff of a 95.26% interest in FSREC, duty would have been charged at the concessional rate of 10% of the duty that would be chargeable at the general rate pursuant to s 156(1), as immediately prior to this acquisition FSREC was a ‘public landholder’. Accordingly, the total duty payable would have been in the order of $2,088,420. However, the duty was instead charged on the cumulative interest of 95.26% in FSREC at the general rate (on the basis that FSREC was a ‘private landholder’ at the time of the second acquisition), resulting in the total duty payable being $19,893,540 (almost ten times the amount that would have been charged per the scenario in (b) above).

27. [143]

    Charging duty at the general rate on the cumulative interest of 95.26% was contrary to the statement in the Explanatory Note (at paragraph (b) that ‘duty on the acquisition of a significant interest in a public landholder will be charged at a concessional rate, being 10% of the rate that would be charged on a transfer of all the land holdings and goods of the public landholder’). By charging duty on the cumulative interest of 95.26% at the general rate, the plaintiff was denied the concessional rate.

28. [144]

    In light of these matters, it was necessary for there to be an exercise of the discretion in s 163H to grant a partial exemption of duty (for the February acquisition) because the assessment brought to duty through the aggregation provisions the February acquisition which it was not intended to catch (because that acquisition was not subject to duty when it occurred and duty was being charged without the benefit of the concessional rate) and consequently the provisions were ‘overshooting the intended mark’.

29. [145]

    The following is a summary of the Chief Commissioner’s submissions for why s 163H does not apply. First, the application of Ch 4 to the July acquisition, and aggregating the February acquisition, was consistent with the purpose of the landholder provisions. The provisions are designed to aggregate acquisitions over time to ensure appropriate duty is paid. The aggregation of all acquisitions (in the same landholder) during the 3-year ‘statement period’ is precisely what s 155(3) is designed to achieve. The aggregation in this case reflects the usual and intended operation of the provisions and is not an unjust or unreasonable outcome.

30. [146]

    Secondly, Ch 4 of the Duties Act takes the ‘relevant acquisition’ as the focal point to which prior transactions, not by themselves dutiable, are then aggregated. Duty should therefore be based on FSREC’s status as a ‘private landholder’ at the time of the relevant (July) acquisition and should not be reduced merely because of FSREC’s irrelevant status at the time of the February acquisition.

31. [147]

    To put it another way, the ‘relevant acquisition’ – which is the focal point for the operation of Ch 4 – saw ISPT acquire a total interest of 95.26% in a ‘private landholder’. It is both just and reasonable that duty be charged on that basis, reflecting the status of the landholder and the extent of the interest at the time of the ‘relevant acquisition’.

32. [148]

    Thirdly, there is no suggestion that ISPT’s decision to split the acquisition into two stages was unintended or mistaken such that it would be unjust for ISPT to bear the duty consequences of an oversight. Indeed, the amendments made to the constitution in February 2022 appear to have contemplated that ISPT would purchase all the units in the landholder trust: SAF [17]. It is difficult to see why ISPT should be relieved of the duty consequences of its planned acquisition strategy.

33. [149]

    Fourthly, ISPT should have been aware of the duty implications of its acquisition strategy. The current landholder provisions have been in place since 2009. The potential for aggregation of acquisitions within the statement period is clear – and a well-resourced commercial operator such as ISPT ought to be aware of them. ISPT has adduced no evidence that it was unaware of the duty consequences.

34. [150]

    Fifthly, granting a partial exemption in these circumstances would undermine the integrity of the landholder duty regime. It would encourage acquirers to structure transactions to take advantage of status changes, knowing they could seek discretionary relief if the duty consequences were unfavourable.

35. [151]

    Sixthly, the Chief Commissioner accepts that less duty would have been payable in that hypothetical circumstance. However, that does not make the application of Ch 4 unjust or unreasonable in the actual circumstances. ISPT made commercial decisions about the timing and structure of its acquisitions and cannot now complain that those decisions had duty consequences.

36. [152]

    Seventhly, the duty consequences should be assessed based on the transactions that actually occurred, not on what might have occurred if ISPT had made different commercial decisions with different duty consequences. Second thoughts are not a basis to reduce duty.

37. [153]

    Eighthly, the fact that the first redemption offer was oversubscribed, and a second offer was subsequently made is not to the point. The Supplemental Deeds that amended the constitution of FSREC to enable the February acquisition expressly contemplated that there may be more than one ‘Withdrawal Offer’ by which ISPT would acquire interests in FSREC. That is precisely what occurred, with a second ‘Withdrawal Offer’ made to enable the July acquisition. It is entirely just and reasonable that acquisitions forming part of a coordinated commercial strategy be aggregated for duty purposes, as the provisions intend.

38. [154]

    Ninthly, the submission that charging duty at the general rate denies ISPT the benefit of the concessional rate misunderstands the statutory scheme. The concessional rate in s 156 applies only to ‘relevant acquisitions’ in ‘public landholders’. ISPT’s February acquisition was not a ‘relevant acquisition’ as it did not meet the 90% threshold. ISPT is not being ‘denied’ a concession, because the concession simply does not apply to the acquisitions as structured.

39. [155]

    In my view, it is neither unjust nor unreasonable for duty to be imposed on the February acquisition through the aggregation of that acquisition with the July acquisition under s 155(3). Simply stated, that is because it is an outcome which results from how Ch 4 is intended to operate, and results in duty being payable on each acquisition in a manner reflecting the amount and value of the interest acquired in the underlying land holdings and goods of the landholder in each successive acquisition consistently with the purpose of Ch 4. This reflects the principles to be applied in exercising the discretion under s 163H stated earlier, in particular Winston-Smith at [49] and Milstern Nominees at [29] and [52]-[53].

40. [156]

    Duty would not have been payable on the February acquisition had ISPT arranged matters such that the later acquisition occurred more than three years after the February acquisition. There is no evidence before the Court to suggest that it was unable to arrange matters in that way. Nor is there evidence to suggest that ISPT was unable to structure the transaction to ensure that the first acquisition was of an interest of at least 90% and thereby bring the transaction within s 156. In effect, ISPT failed to take advantage of a concession available under Ch 4 (both under s 156 and through the aggregation mechanism in s 155(3) for a prior acquisition made more than 3 years previously). However, that does not make the application of Ch 4 to the February acquisition unjust or unreasonable.

41. [157]

    The aggregation of the two acquisitions is consistent with the intended operation of Ch 4 looked at in another way. The purpose of Ch 4 is to tax an acquisition of an interest in, relevantly, a unit trust scheme which owns land in NSW with an unencumbered value of $2 million or more as an acquisition of the underlying land and goods of the trust if a certain threshold interest is acquired. That threshold differs depending on whether the unit trust scheme is a private or public unit trust scheme when the acquisition occurs.

42. [158]

    Taking the case of a unit trust scheme which is public because it is a widely held trust, as in the present case, the threshold is higher for such a unit trust scheme (ie 90%) than for a private unit trust scheme (ie 50%). That reflects a concession conferred by Ch 4, and if that higher threshold is reached then a concessional rate of duty applies. But where the taxpayer acquires an interest of more than 20% but less than 90% thereby converting the unit trust scheme into a private unit trust scheme, no duty is payable under Ch 4 in respect of that acquisition (as a relevant acquisition has not occurred) but the benefit of the concessional threshold is lost for future acquisitions. From that time onwards, the only significance of the fact that the unit trust scheme was previously a widely held trust is that the taxpayer previously had the benefit of a higher threshold for the acquisition of a significant interest (90%) than the threshold which would otherwise have applied (50%).

43. [159]

    That benefit meant that the taxpayer was able to acquire an interest of anywhere between 50% and 89.9% without the payment of any duty at that time. Having had the benefit of the only part of the concession which applied to it (being the benefit of a threshold of 90% rather than 50%), it is not unjust or unreasonable for further acquisitions by the taxpayer to be taxed under Ch 4 in the same way as if the unit trust scheme had been private from the start.

44. [160]

    I also agree with the submissions by the Chief Commissioner summarised above as to why the ISPT’s contention that the application of s 155(3) in the present case is unjust and unreasonable should not be accepted.

Conclusion

1. [161]

   For the above reasons, the Court will order that the summons filed on 1 November 2024 be dismissed with costs.