Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51

The High Court has today (10 December 2014) unanimously upheld an appeal by the Commissioner of State Revenue from an earlier Victorian Court of Appeal decision.  The High Court held that the Commissioner was entitled to assess duty under the Duties Act 2000 (Vic) on several transfers of land “by reference not only to payments made under specified land sale contracts but also to payments made under a “development agreement””.

Facts

The land in question was part of the Docklands area in Victoria, and included part of an area on which there had been a gasworks.  It was transferred by the Victorian Urban Development Authority (VicUrban) to Lend Lease in 2001 under a development agreement and was to be the subject of a “large and complicated development”.  Lend Lease would buy the land, then design, construct and sell large residential and commercial buildings, and VicUrban would share in some of the profits from the sale.  There were also a series of interlocking obligations – VicUrban had to do some cleaning on the land, Lend Lease was required to spent money on public art, and both companies had to spend money on various forms of infrastructure for the development, including a major road extension, a bridge and a park.  Because of the scale and complexity of the development, it was split into various stages and subject to various forms of contract.

The Central Difference

The case revolved around the amount of duty that should be payable by Lend Lease under the Duties Act 2000.  Section 20(1) of the Act provides that:

The Commissioner assessed duty according to the consideration for each transfer of land, which it determined to be the total of the sums payable by Lend Lease to VicUrban under the development agreement (which included various payments apart from the “Stage Land Payment”, such as the “Minimum Gasworks Site Remediation Contribution” and the “Minimum External Infrastructure Contribution”).  However, Lend Lease objected to these assessments, saying that the consideration for the land was simply the “Stage Land Payment”, for which there were separate Land Sale Contracts.  Lend Lease appealed the initial assessments to the Supreme Court of Victoria, and lost, but succeeded in a further appeal to the Court of Appeal.  The Commissioner appealed to the High Court.

Decision

In a unanimous judgment, the High Court allowed the appeals.  They found that contrary to the holding of the Court of Appeal, the fact that the land was undeveloped was irrelevant.  They also held that the development agreement was a single, integrated and indivisible transaction.  Instead, the title to the land was only transferred when the various promises and payments were made (not just the Stage Land Payment), and that the Commissioner was correct in including these amounts when assessing the consideration.

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Commissioner of State Revenue v Lend Lease Development Pty Ltd; Commissioner of State Revenue v Lend Lease IMT 2 (HP) Pty Ltd; Commissioner of State Revenue v Lend Lease Real Estate Investments Limited [2014] HCA 51 (10 December 2014) & judgment summary