Eastmark Holdings Pty Ltd v Chief Commissioner of State Revenue [2004] NSWADT 41

CITATION: Eastmark Holdings Pty Ltd v Chief Commissioner of State Revenue [2004] NSWADT 41 DIVISION: Revenue Division APPLICANT PARTIES: Eastmark Holdings Pty Ltd RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 036022 HEARING DATES: 29/10/2003 SUBMISSIONS CLOSED: 10/29/2003 DATE OF DECISION: 03/01/2004

BEFORE: Verick A - Judicial Member APPLICATION: Duties Act - surrender of an interest in land MATTER FOR DECISION: Principal matter Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Duties Act 1997 Taxation Administration Act 1996 CASES CITED: Handevel Pty Ltd v Comptroller of Stamps (Vic) 85 ATC 4706; Prime Wheat Association Ltd v Chief Commr of Stamp Duties 97 ATC 5015; Clyne v Commissioner of Stamp Duties [(1966) 85 W.N. (Pt. 1) (N.S.W.)] 171;Minister of Stamps v Townend [1909] AC 633; Chief Commissioner of State Reveneue (NSW) v Dick Smith Electronic Holdings Pty Ltd 2003 ATC 4978 APPLICANT REPRESENTATION: P Green, solicitor RESPONDENT J Renwick, barrister ORDERS: The objection decision under review is affirmed.

1 The applicant seeks a review of an objection decision made by the Chief Commissioner of State Revenue (the respondent) disallowing an objection lodged by the applicant against an assessment of duty amounting to $17,990 on a Deed of Agreement for Surrender of Lease and Transfer of Hotelier's Licence (the deed) between the applicant and Amrak Pty Ltd dated 21 August 2002. 2 The issue is whether a payment of a sum of $375,000 under the deed was for 'a surrender of an interest in land in New South Wales' within the meaning of s 8 of the New South Wales Duties Act 1997 (the Duties Act) and accordingly subject to duty. Factual background 3 The parties produced no evidence at the hearing of this matter. The only documents before the Tribunal were those furnished by the respondent under s 58 of the Administrative Decisions Tribunal Act 1997 (ADT Act). Submissions both in writing and viva voce were presented at the hearing. 4 The documents lodged pursuant to s 58 of the ADT Act included copies of the following documents: (1) Letter dated 4th April 2003 from the respondent to the solicitors of the applicant containing the objection decision made by the respondent. (2) Notice of Objection dated 8 January 2003 lodged by applicant's solicitors (3) Deed of Agreement for Surrender of Lease and Transfer of Hotelier's Licence dated 21 August 2003 (4) Notice of transfer of an interest in Hotelier's Licence 105932 known as Berry Street Tavern dated 30 August 2002 (5) A valuation report from Manenti Quilann and Associates Pty Ltd in respect of the Hotelier's Licence No 105932 (6) A Duties Application made by the applicant dated 19 September 2002 (7) The lease between DS Parklane Developments Pty Ltd and Amrak Pty Ltd dated 24 February 2000 5 From the documents supplied and submissions made by the parties made the facts are as follows. 6 On 1 August 1998, a lease was entered into between DS Park Lane Developments Pty Limited, as the applicant was then called, (as landlord), and Amrak Pty Limited (as tenant) over CT14947, Folio 89, being a tavern premises and parts of the goods lift and lift shaft on the land known as 'Shopping World', at 77 Berry Street, North Sydney, New South Wales.The term of the lease was 5 years, commencing on 1 August 1998 and ending on 31 July 2003. 7 On 21 August 2002 the landlord and the tenant signed a "deed of agreement for surrender of lease and transfer of hotelier's licence" (the deed). The deed recited that the landlord had requested the tenant to surrender the lease on and from the "surrender date" and that the "Tenant has agreed to surrender the Lease". The surrender date was stated in the "details" to be 30 August 2002 and the only monetary consideration mentioned in the details, described as the "Vacancy Sum", was "$375,000 (exclusive of GST)". The deed was entered into because the applicant had intended to develop a mixed-use development on the site and refurbish the existing building. 8 The following provisions of the Deed are the relevant clauses which need to be considered in dealing with the issue under review: " 1.1 Consideration (a) In consideration of the landlord giving the releases set out in clause 1.6 ("Release by Landlord") the tenant as beneficial owner agrees to surrender to the landlord free of all encumbrances all the tenant's estate, title and interest in the Lease and the Premises, and the Landlord agrees to accept the surrender on the Surrender Date subject to clause 4.2 ("obligations of landlord on vacation of premises") (b) In consideration of the Landlord paying the Vacancy Sum and transferring its interest in the Hotelier's Licence to the Tenant, the Tenant agrees to vacate the Premises in accordance with clause 1.3 ("what the tenant must do on the surrender date"). 1.2 Landlord's obligations Subject to clause 4.2, ("Obligations of Landlord on vacation of Premises"), the Landlord agrees to: (a) return the banker's guarantee to the Tenant on the Surrender Date; and (b) pay the Tenant the Vacancy Sum on the Surrender Date; and (c) release the Tenant and the guarantors under the Lease from their obligations under the Lease according to clause 1.6 ("Release by landlord"). Payments under this clause must be made by bank cheque. 1.3 What the Tenant must do on the Surrender Date On or before 5.00pm on the Surrender Date, the Tenant agrees to give the Landlord: (a) withdrawals in registrable form of any caveats lodged in respect of the Premises or the Lease (other than any caveat lodged by or on behalf of the Landlord); and (b) vacant possession of the premises; and (c) a form of surrender of the Lease in registrable form (but without the Landlord having executed it) and any other document or consent required to register the form of surrender; and (d) all keys, access cards and other security devices for the Premises or the Building held by or on behalf of the Tenant if the Tenant simultaneously receives from the Landlord: (e) the amount under clause 1.2(b) ("Landlord's obligations"); and (f) the Banker's Guarantee; and (g) and any other moneys due to the Tenant under this deed. 1.4 Vacate For the purposes of this deed, the Tenant is deemed to have vacated the Premises if: (a) it has provided the Landlord with vacant possession of the Premises; and (b) it has left no items in the Premises that are dangerous, hazardous or environmentally harmful on the Surrender Date. For the avoidance of doubt, the Landlord agrees not to object to the Tenant leaving any of the Tenant's items in the premises on the Surrender Date provided the items are not dangerous, hazardous or environmentally harmful. 1.5 Release by Tenant As from the surrender of the Lease, the Tenant releases the Landlord from., and agrees that the Landlord is not liable for, liability or loss arising from, and Costs incurred in connection with, the Lease or the use and occupation with, the Lease or the use and occupation of the Premises. 1.6 Release by Landlord As and from the surrender of the lease, the Landlord releases the Tenant and the guarantors under the Lease from, and agrees that the Tenant is not liable for, liability or loss arising from, and costs incurred in connection with the Lease or the use and occupation of the Premises except for: (a) any liability or loss arising from unlawful activities and breaches that may have been carried out on the Premises up to the Surrender Date (for which the Lessor may be held liable); and (b) the Tenant's failure to pay the Landlord all moneys payable under the Lease up to and including the Surrender Date. 1.7 Warranty by the Tenant The Tenant warrants that it has not caused any structural damage to the building in which the Premises are located as a result of its occupation of the Premises up to and including the Surrender Date. 1.8 Essential term This clause 1 is an essential term of this deed. 2 Acknowledgement and Indemnity 2.1 Tenant's acknowledgment The Tenant acknowledges that: (a) the Landlord intends to develop a mixed use development on the site of the North Sydney Shoppingworld at 77 Berry Street, including refurbishing existing retail and commercial areas of the building and residential towers above these areas; and (b) the Landlord requires the Premises to be vacated by the Surrender Date to enable the proposed mixed use development to proceed; and (c) the Landlord has requested that the Tenant agree to deliver vacant possession of the Premises, and the Tenant has agreed to do so in accordance with this deed, to enable the proposed mixed use development to proceed; and (d) vacation of the Premises by the Tenant in accordance with this deed is a fundamental and essential term of this deed and the agreement between the parties evidenced by it; and (e) the Landlord will be prevented from proceeding with the proposed mixed use development and may incur Costs, Liabilities, or suffer loss or damages as a result of the Tenant's failure to comply with this deed. 2.2 Tenant's indemnity for breach The tenant indemnifies the Landlord against any liability or loss arising from, and any Costs incurred in connection with: (a) a breach by the Tenant of any of its obligations under this deed; and (b) the Landlord exercising or attempting to exercise a right or remedy in connection with this deed or the Lease after a default by the Tenant. The Tenant agrees to pay amounts due under this indemnity on demand from the Landlord. 3 Tenant's obligations and covenants 3.1 Tenant's obligations (a) do all things necessary to vacate the Premises by the Surrender Date; and (b) comply with its obligations under the lease in respect of the payment of rent and any other moneys payable up to and including the Surrender Date; and (c) not assign the lease or sub-let the Premises or do anything else which might result in the Premises not being vacant and free of all rights of occupancy as from the Surrender Date. 4 Vacation by the Surrender Date 4.1 Failure to vacate by the Surrender Date If the Tenant does not vacate the Premises by the Surrender Date: (a) the Tenant is: (i) in breach under this deed; and (ii) deemed to be in default under the Lease; and (b) the Landlord: (i) may re-enter the Premises and remove or otherwise dispose of any of the Tenant's Property which remains within the Premises in its absolute discretion; and (ii) may exercise its rights as attorney under clause 8.2 ("what the attorney may do"); and (iii) is not required to comply with its obligations under clause 1.2 ("Landlord's obligations"); and (iv) may rely on and enforce the indemnity in clause 2.2 ("Tenant's Indemnity for breach"); and (c) the Tenant agrees to: (i) transfer its share of the Hotelier's Licence to the Landlord and complete and execute a Licence Transfer in favour of the Landlord; and (ii) co-operate with the Landlord for the purposes of filing an affidavit at the Licensing Court of New South Wales the day after the Surrender Date, and do anything else that may be necessary and sign all documents, to effect a transfer of its share of the Hotelier's Licence to the Landlord; and (iii) forfeit its right to the Vacancy Sum; and (iv) accept a termination of the lease immediately after the Surrender Date. 4.2 Obligations of the Landlord on vacation of Premises If, and only if, the Tenant vacates the Premises by the Surrender Date, the Landlord agrees to: (a) comply with its obligations under clause 1.2 ("Landlord's obligations"); and (b) transfer its share of the Hotelier's Licence to the Tenant free of all encumbrances; and (c) execute the Licence Transfer in favour of the Tenant and hand it over to the Tenant on the Surrender Date; and (d) co-operate with the Tenant for the purposes of filing an affidavit at the Licensing Court of New South Wales the day after the Surrender Date, and do anything else that may be necessary and sign all documents, to effect a transfer of its share of the Hotelier's Licence to the Tenant; and (e) notify the Tenant that it has filed the affidavit noted in paragraph (c) above within 2 Business Days after having done so; and (f) accept a surrender of the Lease on the Surrender Date. 9 The deed was lodged for stamping on 19 September 2002 by the applicant's solicitors on the basis that stamp duty was payable as follows: "2.1 Surrender of Lease Under clause 1.1(a) of the Deed, the Tenant agrees to surrender to the Landlord all of the Tenant's estate, title and interest in the Lease. The consideration payable for this transaction is giving by the landlord of the releases set out in clause 1.6 of the Deed. No monetary consideration is payable for the surrender of the Lease. As such, nominal duty of $10 is payable on the Deed in respect of the surrender of the Lease. 2.2 Vacation of the Premises Under clause 1.3 of the Deed, the Tenant agrees to vacate the premises. The consideration for this transaction is the payment of Vacancy Sum and the transfer of the Landlord's interest in the Hotelier's Licence to the Tenant: clause 1.1(b) of the Deed. The vacation of the premises is not a "dutiable transaction" as defined in section 8 of the Duties Act 1997(NSW)("Act"). As such, no duty is payable on the Deed in respect of the vacation of the Premises. 2.3 Transfer of the Hotelier's Licence Under clause 1.1(b) of the Deed, the Landlord agrees to transfer its interest in the Hotelier's Licence to the Tenant. The Landlord and the Tenant are joint owners of the Hotelier's Licence: refer to the Affidavit. The total value of the Hotelier's Licence is $250,00: refer to the Valuation Letter. As such, the value of the Landlord's interest is $125,000 (ie $250,00/2). Therefore, the amount of duty on the Deed in respect of the transfer of the Landlord's interest in the Hotelier's Licence is $2,865 (ie $1,290 + 3.5% x ($125,000 - $80,000)) under section 32 of the Act. Also nominal duty of $2 is payable on the Transfer under section 18(2) of the Act, being an instrument made in conformity with the Deed." 10 The respondent accepted the basis for assessment in respect of the transfer of the Hotelier's Licence but rejected the basis suggested for assessment of the Vacancy Sum. The respondent assessed the deed for duty of $17,992, $15,115 of which was referable to the assessment by the respondent's delegate that duty was payable on the "vacancy sum" of $375,000, because the deed evidenced a surrender of an interest in land, (namely, the lease), for which the vacancy sum was consideration. The objection is only in respect of the amount of $15,115 being the duty payable in relation to the consideration paid under the deed. 11 Initially in its written submissions, the applicant had taken the position that whether or not vacant possession occurred on the Surrender Date was not in evidence before the Tribunal. But at the commencement of the hearing, Dr Renwick for the respondent sought clarification on this issue because he submitted that it was important for his case that the issue be resolved, if necessary by evidence. Mr Green agreed to concede as a fact that vacant possession occurred on the surrender date but with the qualification that it was not material to his case. The relevant statutory provisions 12 Section 8 of the Duties Act imposes duty on certain transactions. It provides, relevantly, as follows: " 8 Imposition of duty on certain transactions concerning dutiable property 1. This chapter charges duty on; (a) a transfer of dutiable property, and (b) the following transactions: (i) an agreement for the sale or transfer of dutiable property, (ii) a declaration of trust over dutiable property, (iii) a surrender of an interest in land in New South Wales, (iv) a foreclosure of a mortgage over dutiable property, (v) a vesting of dutiable property by or as a consequence of a court order, (vi) the enlargement of a term in land into a fee simple under s.134 of the Conveyancing Act 1919." 13 The transactions set out in s 8(1) are taken to be dutiable transactions for purposes of the Duties Act. Section 9(1) provides that each transaction referred to in s 8 (1)(b) is to be charged as if it were a "transfer". 14 Because the duty imposed under the Duties Act is in respect of "transactions", it is under s 10 "immaterial whether a dutiable transaction is effected by a written instrument or by any other means, including electronic means". Section 12 sets out what is 'dutiable property" and includes an interest in land in New South Wales. 15 Liability to duty arises, under s 12, inter alia, where the transaction is effected by a written instrument, "when the instrument is first executed". In the absence of a written instrument, the liability to duty arises "when a transfer of dutiable property occurs". 16 "Dutiable value" of dutiable property "that is subject to a dutiable transaction is the greater of: (a) the consideration (if any) for the dutiable transaction (being the amount of monetary consideration or the value of non-monetary consideration), and (b) the encumbered value of the dutiable property." (s 21) 17 Under s 22, the consideration for the transfer of dutiable property includes the amount or value of all encumbrances. 18 The Chief Commissioner, in determining the dutiable value of any transaction, has power under s 24 to disregard arrangements that affect the dutiable value if "the Chief Commissioner is satisfied that a significant purpose of any party to the arrangement was the reduction of the dutiable value of the dutiable property". The Chief Commissioner's case 19 The respondent's case has been put in the following paragraphs of his written submissions: "5.2 On its true construction, the vacancy sum is in substance a payment for surrender of the lease and vacation of the premises both of which were to, and did, occur simultaneously on the surrender date. Thus clause 1.1(a) which refers to the consideration for surrender, is expressly subject to clause 4.2 which only operates if the tenants vacate the premises by the surrender date. 5.3 Had vacant possession not been given there would have been no payment of the dutiable sum under the Deed. 5.4 The Tribunal is however dealing with different factual circumstances, where vacant possession and the surrender occurred on the surrender date. In those circumstances, the findings of the NSW Court of Appeal in Clyne v Commissioner of Stamp Duties (1966) 85 WN (Part 1)(NSW) 171 are applicable. The Court said (172-3): "Are the instruments (agreements for sale or conveyance) within s.41 (1) since, it was submitted, the consideration payable there under attaches to the giving of vacant possession and not to the surrender of the tenancy? The agreements contain the following clauses: '3 … the tenant agrees to surrender his tenancy and give vacant possession of the premises on or before' (a stated date). '4 … Before vacant possession is given as aforesaid and in consideration thereof the purchaser will pay' (the agreed sum). But, although thus expressed, they are in substance agreements to surrender the tenancy in consideration of a promise of monetary consideration and not merely agreements for such consideration to give vacant possession. (emphasis added) 5.5 So, here, 'in substance' the giving of possession and the surrendering of the tenancy are bound up together by the Deed. In substance the payment of the vacancy sum is for the surrender of the lease – the giving of vacant possession is a corollary of the surrender in circumstances where the landlord does not need to approach the court (although he may choose to do so) in order to exercise his rights as the owner of the premises against the former tenant who had by then become a trespasser or a tenant at sufferance, which is not a tenancy at all but a "fiction of the law". ( SEAA Enterprises v Figgins Holdings Pty Ltd – [1998] 2 VR 90" The Applicant's case 20 The applicant takes the view that under the Deed, Amrak agreed "to accept separate and different considerations for each of the surrender and vacation of the Premises by the Requisite Time being: (a) in the case of the surrender, the release by the Applicant of Amrak from liability as provided in clause 1.6 (clauses 1.1(a) and 1.6); (b) in the case of the vacation of the Premises by the Requisite Time, the payment to Amrak of the Vacancy Sum of $375,000 and the transfer to Amrak of the Applicant's interest in the Hotelier's Licence (clauses 1.1(b), 1.2 and 4.2)." 21 The applicant submits that the consideration was given to obtain vacant possession "for any one or more of the following reasons: (a) By virtue of the combined operation of sections 8(1), 9(1) and 12(2) of the Duties Act 1997 ("NSW Act"), any liability for duty on the Deed arose at the time of first execution of the Deed (i.e; 21 August 2002) and must have been capable of determination on that date. Accordingly, the characterisation of the Vacancy Sum as consideration for the surrender of the lease or as consideration for the giving of vacant possession must be made as at the time at which the liability for duty on the Deed arose and not in light of the facts as they emerged at the later date on which the surrender occurred. This proposition is supported by any one or more of sections 293; 295(3) and 50A of the NSW Act, each of which presupposes that an instrument may be subject to a liability for duty which has arisen and been discharged by the payment of duty even though the transaction to be effected by the instrument does not subsequently occur, in which case a refund of the duty paid is to be made to the taxpayer. (b) The fact that surrender of the lease and vacation of the premises occurred on the same date (upon the assumption that this occurred) does not negate the provisions of the Deed dealing with the consequences if the surrender and vacation of the Premises did not occur on the same date. As already discussed in detail, the provisions of the Deed make it clear that, amongst a number of consequences (which on any view must be regarded as substantial), the Vacancy Sum would not have been paid to Amrak by the Applicant if vacant possession of the Premises were not given by the Requisite Time and this is so notwithstanding that the lease may have been surrendered. The relevance of this factor to the characterisation of the Vacancy Sum should not be disregarded simply because the surrender of the lease and the vacation of the Premises by Amrak occurred on the same date (assuming this to be so). Indeed, the fact that both occurred on the same date may well be attributable to the consequences for Amrak previously described if they had not both occurred on that date and by the Requisite Time. Accordingly, these consequences cannot simply be disregarded. (c) For the reasons previously given, the true construction of the Deed and, in particular, the provisions referred to do not support the conclusion that the Vacancy Sum is "in substance" a payment for surrender of the lease and not vacation of the premises. As previously noted, the parties recognised a distinction between the surrender of the lease and vacation of the Premises and provided for substantially different consideration for each and for substantially different consequences if the lease was surrendered and vacant possession was provided by the Requisite Time, on the one hand, and if the lease was surrendered but vacant possession was not provided by the Requisite Time, on the other hand. (d) The facts and Deed under consideration here are materially distinguishable from those under consideration by the NSW Court of Appeal in the Clyne Case in the following respects: (i) It appears from the judgment of the NSW Court of Appeal in the Clyne Case that the parties to the agreement under consideration there had not made the same substantial distinctions between the surrender of the lease and the furnishing of vacant possession and the consequences attaching to each as had been made in the Deed and previously discussed. (ii) In particular, the agreement in the Clyne Case required the party in the position corresponding with that of the Applicant to pay the stipulated consideration "before vacant possession is given" and, thus, payment would have been required even if vacant possession were not given. As already noted, by contrast, under the Deed the Applicant was not required to pay the Vacancy Sum unless vacant possession was provided and, furthermore, additional substantive sanctions followed if vacant possession were not furnished by the Requisite Time. Thus the very provision of the agreement under consideration in the Clyne Case , left it open to the Court to have regard to the substance of the arrangement whereas the provisions of the Deed are materially different and the substance of the arrangement corresponds with the form of the arrangements and the terms of the Deed. (e) The stamp duties legislation under consideration by the NSW Court of Appeal; viz; the Stamp Duties Act 1920-1963 differed in material respects from the NSW Act applicable to the Deed. In a number of provisions of the Duties Act the Commissioner is expressly required to have regard to the "substance" of the arrangement under consideration (see sections 18(6A); 25(1)(c); 57(2)(a); 104; 114(1)(a)(iii); 206(a)(iv); 220(1)(c); 223(5)(b) and 229(3)). Given these express statutory requirements, the Duties Act should not be construed or applied by reference to the "substance" of arrangements except in those specified instances. The characterisation of the consideration furnished by the Applicant is not one of those instances. By contrast, the Stamp Duties Act 19920-1963 did not make any express provision for the "substance" of arrangements to be taken into consideration and, hence, the substantive approach to characterisation adopted by the NSW Court of Appeal was impliedly restricted by the terms of the statute. (f) The judgments of the NSW Court of Appeal in Prime Wheat Association Ltd v Chief Commissioner of Stamp Duties 97 ATC 50015 and the majority of the High Court in Handevel Pty Ltd v Comptroller of Stamps 85 ATC 4706 support the view that stamp duties legislation should not be construed by reference to the "substance" of a transaction, as distinct from its form, unless provisions to that effect is made by the legislation." 22 The applicant also claims that the surrender of the lease would have merely extinguished the lawful right of the tenant to possession of the premises and that by itself did not ensure that the applicant would have also obtained vacant possession on the date of surrender. The applicant submits that "if the lessee had remained in occupation of the Premises following the Surrender, then it would have been necessary for the Applicant to take steps to secure vacant possession of the Premises". Reasons and Decision 23 I will first deal with the applicant's submission that, unless directed by a specific section of the Duties Act to consider the substance of a transaction, the Tribunal should rely entirely on the form of the relevant instrument and the arrangement between the parties. For this rather novel proposition, the applicant has cited two cases. 24 The first case that the applicant relies on is a decision of the High Court in Handevel Pty Ltd v Comptroller of Stamps (Vic) 85 ATC 4706. To raise funds a developer issued redeemable shares to various investors and also, as part of the arrangement, provided a security for the dividends that were to be paid for the shares and their ultimate redemption. The revenue sort to treat the arrangement as a mortgage or debenture. The majority of the High Court (Mason, Wilson, Deane and Dawson JJ) held that the instrument in question was not a mortgage or debenture. The majority took this view after examining the transaction against well settled principles of law including a statement by the Privy Council that the task of the court is first to look "at nature of the transaction which the parties have agreed" and that if "in form it is not a loan, it is not to the point to say that its object was to raise money for one of them or that the parties could have produced the same result more conveniently by borrowing and lending money". 25 In the second case, Prime Wheat Association Ltd v Chief Commr of Stamp Duties (NSW) 97 ATC 5015, as part of privatisation, the New South Wales Government sold to the appellant shares that it owned in NSW Grain Corporation Limited under a share sale agreement that allowed payment to be made of an amount described as "additional purchase price over a period of twenty years with interest". The share sale agreement also required the appellant to grant various mortgages over the shares and the property of the Grain Corporation. In the first instance Dunford J held that the share sale agreement also attracted liability to duty as a loan security in addition to duty on sale of the shares. On appeal, the NSW Court of Appeal, held that share sale agreement was not a debenture or loan security. The reasoning for this view is found in the following statement made by Gleeson CJ relying on the decision of the High Court in Handevel (at p 5020): "A sale on terms giving the purchaser time to pay is not a disguised loan. The essence of a loan is an obligation of repayment. Here what was involved on the part of the purchaser was payment, not repayment". 26 Both cases were cases under the old stamp duty legislation, which imposed "a tax upon instruments, not upon transactions" (cf Minister of Stamps v Townend [1909] AC 633 at 639). In the present matter we are considering the liability to duty of the applicant in respect of a transaction-based duty. That distinction, in my view, would make the reference to the observations in the above two cases of little relevance to the present matter. In any case, it should be observed that, nevertheless, in both cases the courts critically considered the substance of the transactions. This was necessary because, as observed by Gleeson CJ (p5016): "The characterisation of an instrument for the purpose of the Stamp Duties Act may require an understanding of the transaction from which the instrument emanates." 27 In both cases, the legal nature and effect of the relevant instruments as found by the courts was consistent with the substance of their respective arrangements. The cases accordingly are not examples of cases where the courts ignored the real transaction and decided entirely on the basis of the effect of the relevant instrument. The authorities, in my opinion, lend no support to the proposition suggested by the applicant that the Tribunal should not look at the substance of an arrangement when considering a liability to duty of a transaction under the Duties Act. 28 Although there is no direct authority that it is permissible and necessary to look at the substance of a transaction when determining liability under a transaction based duty, there is some support for that view from a short remark made by Meagher JA in the recent decision of the New South Wales Court of Appeal in Chief Commissioner of State Revenue (NSW) v Dick Smith Electronic Holdings Pty Ltd 2003 ATC 4978. In that case, the NSW Court of Appeal was required to determine the amount paid as consideration under a share acquisition agreement for purposes of the Duties Act. The purchase price was agreed by the parties to be an amount less the amount of a declared dividend in respect of the shares. The taxpayer who acquired the shares only paid the net amount, the full agreed amount minus the dividend amount. The vendors paid the dividend amount to the purchasers from an amount that the vendors had obtained by way of a loan from the purchasers. 29 The Chief Commissioner sought to impose duty on the amount that included the dividend amount on the basis that it was the consideration paid for purposes of s 21(1)(a) of the Duties Act. In the first instance Gzell J held that only the net amount was liable to duty. The Chief Commissioner appealed against that decision to the Court Of Appeal. The majority (Meagher JA and Sheller JA) dismissed the appeal. Meagher JA in dismissing the appeal, made the following observations (p 4978): 'There were, in fact, two transactions involved: a Sale of Shares ex dividend from the vendors to the respondent, and (as it turned out) a loan from the respondent to InterTan. As far as the sale is concerned, the consideration was $88,555,552. In this regard, the locus classicus on the meaning of the word "consideration" is that of Dixon J in Archibald Howie Pty Ltd v Commr of Stamp Duties (NSW) (1948) 77 CLR 143, who said) at 152): "In the context I think that the word 'consideration' should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts. The difference is perhaps not very material because the consideration must be in money or money's worth. But in the law of simple contracts it is involved with offer and acceptance: indeed properly understood it is perhaps merely a consequence of aspect of offer and acceptance. Under s 66 the consideration is rather the money or value passing which moves the conveyance or transfer." There is nothing in that magisterial utterance which would require the Court to uphold the appellant's submission.' 30 Meagher JA went on to say: (p.4981) 'The parties to the instant transactions have given it the form of a sale at a price. There is nothing misleading about that form. It is the substance as well as the form of the transaction.' 31 It is implicit in that statement that in determining liability under the Duties Act it is permissible to have regard to both the form and substance of a transaction. This approach is essentially different from that the courts had suggested when considering liability of instruments under the old stamp duties legislation. 32 The deed was presented for assessment to duty on 19 September 2003 some days after the surrender date. The surrender date had occurred on the 30 August 2003. On the surrender date the following four things happened: (1) the surrender of the lease by the tenant; (2) the giving of vacant possession of the premises by the tenant; (3) the transfer of the of the applicant's interest in the hotelier's licence to the tenant; and (4) the payment by the applicant of the vacancy sum to the tenant. 33 All these four events occurred simultaneously on the surrender date. For purposes of determining the duty payable the respondent was in those circumstances entitled to treat as a dutiable transaction, the surrender of the lease by the tenant. The respondent was entitled under sections 10 and 12(1) of the Duties Act to regard the surrender of the lease as a dutiable transaction if it had occurred independent of the deed. 34 But in the present matter that course is not available to the respondent as the liability has to be considered taking into account the terms of the deed and the date when the deed was first executed as required by s 12(2) of the Duties Act. Accordingly, I will now proceed to examine the provisions of the deed. 35 It is submitted by the applicant that there is a clear distinction between the consideration paid for the surrender of lease by the tenant and the giving of vacant possession by the tenant. The applicant relies on the terms of the deed and has not produced any other evidence to suggest that the amount of $375,000 described in the deed as a vacancy sum is compensation that is generally given in cases where vacant possession is given in like circumstances. 36 The applicant's case is based on the interpretation the applicant gives to clause 1.1. The applicant submits that, in respect of the surrender of the lease clause 1.1(a) provides that the consideration is the releases the landlord agrees to make under clause 1.6 and that the vacancy sum paid under clause 1.1(b) is the consideration for the vacation of the premises and transfer to the tenant of the applicant's interest in the Hotelier's Licence. The applicant relies on the terms of clauses 1.2 and 4.2 for this view. The submission was that the deed clearly discriminated between the surrender of the lease and vacant possession because payment of the vacancy sum under clauses 1.2 could only be made by the applicant, as required by clause 4.2, when vacant possession was given to the applicant. 37 Clauses 1.2 and 4.2 deal with the applicant's obligations as a landlord. Under clause 1.2 the applicant agreed to pay the tenant the vacancy sum, return the banker's guarantee previously provided by the tenant for the lease and release the tenant and its guarantors of their obligations under the lease. The applicant's obligations under clause 4.2 were subject to the tenant providing the applicant with vacant possession of the premises on surrender date. If and when that occurred on surrender date the applicant agreed to comply with its obligations under clause 1.2 and in addition do all things necessary to transfer the applicant's share of the Hotelier's Licence and accept the Surrender of the Lease. 38 I accept that securing vacant possession was fundamental and essential to the applicant's plans to develop the property, but in my view the terms of the deed referred to by the applicant do not support the submission that the monetary consideration was paid only for vacant possession. 39 The various clauses referred to by the applicant are drafted in a fairly clever manner to ensure that the applicant got vacant possession. But when they are examined in some detail it is clear that the surrender of the lease and vacant possession are linked so far as the monetary consideration is concerned. 40 Clause 1.1(b) broadly states that the vacancy sum is the consideration that the applicant will pay if the tenant agrees to vacate the premises. But clause 1.1(b) stipulates that its terms are subject to clause 1.3. The vacancy sum is to be paid as consideration if the premises are vacated in accordance with clause 1.3. In my opinion, clause 1.3 is the key provision in the whole deed. It sets out that on the Surrender Date, the tenant will: (a) withdraw any caveats lodged in respect of the premises or the lease; (b) give vacant possession of the premises, without leaving any dangerous, hazardous or environmentally harmful items on the premises; (c) give the landlord a form of surrender of the lease in registrable form, and any other document or consent required to register the transfer; (d) give over all keys, access cards and other security devices for the premises provided the tenant simultaneously received from the landlord the vacancy sum, the banker's guarantee or any other moneys due to the tenant provided the tenant simultaneously receives from the landlord: (e) the vacancy sum of $375,00 under clause 1.2(b); and (f) the Banker's Guarantee previously given for the lease; and (g) any other amount due to the tenant under the deed. 41 Clause 1.3 requires not just vacant possession from the tenant but very importantly, withdrawal of any caveats and a form of surrender of the Lease in registrable form in order for the tenant to simultaneously receive, inter alia, the vacancy sum. Clauses 1.2 and 4.2 referred to by the applicant in its submissions only operate in tandem with what is required from the tenant under clause 1.3. Clauses 1.2 and 4.2 cannot be read in isolation of clause 1.3. 42 In my opinion, the deed did not make any distinction between the surrender of the lease and giving of vacant possession. The Vacancy Sum was agreed to be paid as consideration for both the surrender of the lease and vacation of the premises, which the applicant concedes, occurred simultaneously on the surrender date and as agreed by the tenant under clause 1.3. The consideration that the applicant agreed to under clause 1.1 (a) was subject to clause 4.2 and the applicant's releases under clause 1.6 were accordingly subject to vacant possession. There was no independent consideration for these releases. 43 The deed when read as a whole is an instrument that essentially dealt with the surrender of a lease. I agree with the respondent that the following observations made by the New South Wales Court of Appeal (Sugerman, McLelland and Asprey JJ.A.) in Clyne v Commissioner of Stamp Duties equally apply in the present matter: 'Are the instruments "agreements for sale or conveyances" within s.41 (1) since, it was submitted, the consideration payable there under attaches to the giving of vacant possession and not the surrender of the tenancy? The agreements contain the following clauses: "3…. The tenant agrees to surrender his tenancy and give vacant possession of the premises on or before" (a stated date). "4…. before vacant possession is given as aforesaid and inconsideration thereof the purchaser will pay" (the agreed sum). But, although expressed, they are in substance agreements to surrender the tenancy in consideration of a promise of a monetary consideration and not merely agreements for such consideration to give vacant possession. Each agreement contains covenants by the other party that he is the tenant of the premises and that he will maintain his tenancy and refrain from any act which would determine it. The giving of vacant possession on payment of the consideration is here the equivalent of the giving of vacant possession on completion and payment of the purchase money under an ordinary contract for sale of the fee simple. The true consideration for the promise to pay is the promise of an assurance of the tenant's leasehold estate free of any outstanding interests such as would prevent the purchaser's obtaining vacant possession on completion; it is only in the sense that under such a bargain the purchaser is entitled to call for vacant possession in return for the payment of the purchase money, these being concurrent conditions, that it may be said that one is consideration for the other. In our opinion this point taken by the appellant fails.' 44 Under clause 1.3 the tenant had to on the Surrender Date surrender its lease and provide vacant possession. The tenant could not have given vacant possession without giving up its lease. There was no provision in the deed that allowed the tenant to just give vacant possession without the surrender of the lease. Nor was the tenant under the terms of the deed able to surrender the lease without giving vacant possession of the premises. The consideration, although labelled "Vacancy Sum" was in form and in substance consideration for both the surrender of lease and vacation possession to take place simultaneously on the Surrender Date, which in fact did occur at the same time. 45 I agree with the submission made by the respondent that "the giving of vacant possession is a corollary of the surrender in circumstances where the landlord does not need to approach the court (although he may choose to do so) in order to exercise his rights as the owner of the premises against the former tenant who had by then become a trespasser or a tenant at sufferance, which is not a tenancy at all but a 'fiction of the law' (SEAA Enterprises v Figgins Holdings Pty Ltd [1998]2VR 90)." 46 The applicant's fairly general submission that a mere surrender of a lease did not necessarily mean vacant possession would be given, is in the very special circumstances of this matter only academic and irrelevant in relation to the agreement reached under this particular deed. There was no provision in the deed for the tenant to surrender the deed independently of giving vacant possession. The deed reflected a fairly settled commercial arrangement between the parties and there was never the risk on the part of the landlord that it would be necessary for the applicant to take steps to secure vacant possession of the premises if the tenant had only surrendered the lease. 47 The applicant's submission that there was a distinction in the consideration paid is in my opinion based on a fairly selective reading of the terms of the deed. In particular, the applicant in making that submission did not consider clause 1.3 nor consider the deed as a whole. 48 The applicant also did not seek to quantify in monetary terms, as required by s 21 of the Duties Act, the consideration that it was suggested was given by the applicant under clause 1.6 to the tenant in respect of the surrender of the lease by the tenant. Nor was any attempt made by the applicant to show that the monetary consideration was a payment in commercial terms for vacant possession. The applicant has under s 100(3) of the Taxation Administration Act 1996 the onus in this application to demonstrate that the relevant assessment is excessive or erroneous in law. The applicant has chosen to rely entirely on the deed and has not produced any other evidence. 49 The applicant in my opinion has failed to discharge that onus of demonstrating that the monetary consideration paid was only in respect of vacant possession. 50 Although not considered by the respondent, it is in my view that this would have been an appropriate case for the respondent to disregard the instrument under s 24 of the Duties Act to determine the dutiable value of the dutiable property if by merely labelling the consideration as a "Vacancy Sum" no duty was payable in respect of the surrender of the lease. It is not necessary in the present matter to deal with the application of s 24, because in my opinion when the transaction is considered both in form and substance, the consideration paid in this matter is in respect of a transaction concerning dutiable property. 51 The objection decision is accordingly affirmed in this matter.