CITATION: Group and General Finance Pty Ltd v Chief Commissioner of State Revenue [2003] NSWADT 221 DIVISION: Revenue Division APPLICANT PARTIES: Group and General Finance Pty Limited RESPONDENT Chief Commissioner of State Revenue FILE NUMBER: 036014 HEARING DATES: 17/09/2003 SUBMISSIONS CLOSED: 09/17/2003 DATE OF DECISION: 09/23/2003 BEFORE: Block J - Judicial Member APPLICATION: Duites Act - exemption fo refinancing of loans MATTER FOR DECISION: Principal matter LEGISLATION CITED : Duties Act 1997 CASES CITED: APPLICANT REPRESENTATION: D Marks, solicitor RESPONDENT R Pepper, barrister ORDERS: The objection decision under review is set aside and the Applicant is entitled to the refinancing exemption sought. 1 The objection decision under review in this matter is the disallowance on 24 February 2003 by the Respondent of an objection by the Applicant dated 5 December 2002, and pursuant to which the Applicant claimed that a mortgage debenture (referred to in the Chronology and in these reasons as the "Debenture") is entitled to the refinancing exemption provided by section 220 of the Duties Act 1997 (the "Act"). 2 Each of the parties furnished the Tribunal with helpful and detailed written submissions. The Respondent as part of his submissions furnished a document entitled "Respondent's Chronology" ("the Chronology"). Mr. Marks in his opening argument informed me that in his view the relevant events were correctly summarised in the Respondent's Submissions and which is therefore included in these reasons as follows: 1. On 6 February 1990 the Applicant, then known as Vehicle Lease Pty Limited, entered into a fixed and floating charge in favour of PNC International Financial Services over all assets and undertakings. 2. On 28 March 1991, the charge was assigned to KE Financial Corporation Limited (subsequently known as Capital Corporate Finance Limited ("CCFL"). 3. On the same day, the Applicant and Vehicle Finance Pty Limited entered into a revolving cash advance facility with CCFL ("the First Loan Deed") (see Appendix A to the Applicant's submissions). 4. On the same day, Altomonte Holdings Pty Limited, Altomonte Artarmon Pty Limited and Vehicle Finance Pty Limited granted certain guarantees and indemnities to CCFL by way of security with respect to the First Loan Deed. 5. On 28 March 1994, the Applicant entered into a further revolving cash advance facility ("the Second Loan Deed") (see Appendix B to the Applicant's submissions). 6. On the same day, Altomonte Holdings, Altomonte Artarmon and Vehicle Finance granted certain guarantees and indemnities to CCFL to secure CCFL the performance of the Second Loan Deed. 7. On 31 October 1996 the Applicant changed its name to Group and General Finance Pty Limited. 8. On 1 May 1997 CCFL, the Applicant, Vehicle Finance (subsequently Amfin Finance Pty Limited), Altomonte Holdings and Altomonte Artarmon entered into a Deed of Variation in respect of the First and Second Loan deeds from $12,000,000.00 to $16,000,000.00 and releasing Altomone Artarmon and Vehicle Finance as guarantors (see Appendix C to the Applicant's submissions). 9. On 7 July 1999, the Applicant entered into a fixed and floating charge in favour of Capital Finance Australia Ltd ("CFAL") as agent for CCFL over all of its assets and undertakings (see Appendix D to the Applicant's submissions). 10. The total amount secured by this charge was $16,000,000.00 and a duty of $63,941.00 was paid in New South Wales. 11. On 27 September 2002, the Applicant together with 5 other companies belonging to the 'Alto' group of companies ("the customer") entered into a Facility Agreement with Australia and New Zealand Banking Group Limited ("ANZ") guaranteed by 15 other companies belonging to the 'Alto' group ("the guarantors") ("the Facility") (see Appendix E to the Applicant's submissions). 12. Pursuant to the Facility, on 27 September 2002 the Applicant granted a refinancing mortgage debenture over all of its assets in favour of ANZ ("the Debenture") (see Appendix F to the Applicant's submissions). 13. On 30 October 2002 the Applicant lodged an application for exemption from duty with the Respondent. 14. On 14 November 2002 the Respondent refused the application. 15. On 5 December 2002 the Applicant lodged an objection with respect to the refusal, which was subsequently disallowed by the Respondent on 24 February 2003. 16. On 7 April 2003 the Applicant filed an application for review of the Respondent's decision. Notwithstanding the fact that the Chronology sets out a detailed list of relevant events, it is necessary to have regard for the purposes of this decision in particular to clauses 9 to 12. 3 It is clear that this decision depends in the main on the proper interpretation of the Facility Agreement. Miss Pepper in particular took me through it in some detail; the salient provisions together with comment are set out in clauses 4 to 15 of these reasons. 4 The Facility Agreement commences by noting that it was made on 27 September 2002 between ANZ and the parties listed in Schedule 1 and who are collectively the Customer. Although the Guarantor is not separately listed in the opening part of the Facility Agreement as a party, the Facility Agreement as a whole makes it altogether clear that the Guarantor executed the Facility Agreement as a party to it; in addition the cover sheet lists all of the parties. Moreover this point was not (correctly in my view) raised as an issue; (I refer also in this context to clause 11 of the Chronology). The Guarantor consists of the parties listed in Schedule 2. 5 The commencing portion of and the Recitals to the Facility Agreement read as follows: FACILITY AGREEMENT DATE 22 July, 2002 PARTIES AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED ABN 11 005 357 522 OF Level 1, 20 Martin Place, Sydney NSW 2000 ("ANZ"). THE PERSONS LISTED IN SCHEDULE 1 (the "Customer"). RECITALS A. The Customer has requested ANZ to provide it with the Facilities set out in Schedule 3. B. Each Guarantor has agreed to guarantee the obligations of each Customer under the Guarantee and Indemnity. C. ANZ has agreed to provide or continue to provide the Facilities on the terms and conditions set out in this Agreement. 6 Those companies in a group (referred to as the Alto group), and who comprise the Customer are listed in Schedule 1 as follows: Altomonte Holdings Pty Limited (A.B.N. 18 000 821 910) Altomonte Artarmon Pty Limited (A.B.N. 97 000 767 233) Alto Prestige Pty Limited (A.B.N. 48 000 344 123) Box Valley Pty Limited (A.B.N. 64 003 060 562) Capricorn Constructions Pty Limited (A.B.N. 81 009 864 368) Group & General Finance Pty Limited (A.B.N. 87 000 903 257) 7 Thos companies in the Alto group who comprise the Guarantor are listed in Schedule 2; they include the Customer, and are: GUARANTOR(S): Georgio Altomonte Holdings Pty Ltd (ABN 18 000 798 943) Altomonte Holdings Pty Ltd (ABN 18 000 821 910) Altomonte Artarmon Pty Ltd (ABN 97 000 767 233) Alto Prestige Pty Ltd (ABN 48 000 344 123) Group & General Finance Pty Ltd (ABN 87 000 903 257) Capricorn Constructions Pty Ltd (81 009 864 368) Alto Automobiles Pty Ltd (ABN 45 074 810 763) Alto Auto Parts Pty Ltd (ABN 32 069 985 637) Alto Pennant Hills Pty Ltd (ABN 28 003 477 647) Larrijade Pty Ltd (ABN 70 078 429 151) Alto Artarmon Pty Ltd (ABN 65 092 730 099) Alto Rural Pty Ltd (ABN 36 056 230 052) Curumbene Stud Pty Ltd (ABN 27 100 066 822) Wantage Pty Ltd (ABN 63 002 904 681) Box Valley Pty Ltd (ABN 64 003 060 562) 8 Schedule 3 sets out the Facilities which were made available to the six Alto group companies comprising the Customer; four of them received one Facility each; one of them received eight Facilities, and the Applicant received two Facilities and described on the first page of Schedule 3 as "Variable Rate Commercial Bill Acceptance and Discount" (referred to in these reasons as the "Applicant Bill Facility") and an Interest Rate Swap in an amount of $1m. 9 The terms and conditions in respect of the two Facilities granted to the Applicant are set out in Schedule 3 as follows: Customer Name and ACN: Group & General Finance Pty Ltd (A.B.N. 87 000 903 257) Facility: VARIABLE RATE COMMERCIAL BILL ACCEPTANCE AND DISCOUNT FACIITY Facility Limit: AUD16,000,000 (representing the aggregate face value of the Bills). Approved Purpose: To fund the wholesale finance operations of Group & General Finance Pty Limited. Availability Period: Revolving subject to annual review. Termination Date: Not before the next Review Date. Pricing: Yield rate: For each Drawing of Bills, the rate determine by ANZ for the face value of the bills for the relevant tenor. For tenors of 30, 60, 90, 120, 150 or 180 days, the actual rate used in the calculation will be the Bank Bill Swap Rate – Average Bid (rounded to the nearest 2 decimal places) plus a margin. For any other tenor, the actual rate used in the calculation will be the rate that ANZ determines is the prevailing rate at which ANZ can discount Bills for the relevant term (rounded to the nearest two decimal places) plus a margin. If the customer gives ANZ an Instruction to accept and discount bills later than 4pm two (2) clear Business Days before the proposed Drawdown Date, then in ANZ agrees to accept and discount such Bills an additional margin reflecting: (a) any movement in ANZ Bill Swap Rate – Average Bid since its quotation on the BBSY screen of Reuters; plus (b) any additional costs incurred by ANZ that ANZ determines is attributable to the late provision of such Instructions (including but not limited to holding costs and costs associated with market liquidity conditions), may be applied. The Bank Bill Swap Rate – Average Bid is quoted on the BBSY screen of Reuters on the day the quote is given and is advertised in the Australian Financial Review the following Business Day. Full details of how the rate has been calculated will be given by ANZ on the quotation given. Fees: Line fee: 0.50% per annum on the Facility Limit, payable quarterly in advance, commencing on the date of acceptance of our Agreement. This fee is not rebatable. Bill Handling fee: ANZ agrees to waive the Bill Handling fee. Acceptance fee: For each Bill, an amount equal to 0.75% per annum on the face amount of the Bill calculated on the tenor of the Bill and payable on the Drawdown Date for the Bill. Parcelling Margin: A parcelling margin is generally applied dependent on the size of the bill parcel as follows: Less than $5,000,000.00 0.10% Between $5,000,000 and $10,000,000 0.05% Over $10,000,000.00 0.00% However, we have agreed to waive the parcelling margin provided your commercial bills are rolled over with common maturities (i.e: 30, 60, 90, 180 days). Facility: INTEREST RATE SWAP FACILITY Facility limit: AUD1,000,000 Approved Purpose: To allow the implementation interest rate hedging policies in accordance with your interest rate protection needs. Availability Period: Revolving subject to annual review. Termination date: Not before the next Review Date. Condition precedent: The Customer will only be entitled to use the Facility if ANZ agrees with the terms of each transaction and if the Customer executes all documents required by ANZ. Fees: As determined by ANZ Financial Markets. 10 Unless otherwise indicated in these reasons terms, defined in the Facility Agreement have the same meanings when used in these reasons. Moreover and as used in these reasons each of the terms "Customer" and "Guarantor" refers collectively to the parties comprising them, whereas any such term preceded by "a" or "that" or "each" or terms of similar import refer to one only of them, and in particular and in relation to each Facility to that Customer who is entitled to draw upon it; (It is my own view that documents such as this are easier to read and comprehend where the plural form is used collectively and so that the singular form is clearly restricted to one party only but this is of course a matter of personal style.) I note in this context that the opening words of Schedule 3 (importantly) provide:- "Unless otherwise stated, each Facility detailed below is only available to the Customer or Customers specified for that Facility." 11 Clause 1.1 of the Facility Agreement is entitled "Definitions"; the following definitions extracted from clause 1.1 are included for these reasons:- " Customer " means, in relation to each Facility or all of the Facilities, the person named as the Customer in Schedule 3 for that Facility (and any additional person agreed in writing by the Customer and ANZ from time to time). In this agreement, a reference to "Customer" must be read subject to clause 1.4. "Facility Outstanding" means, for a Facility, the principal amount (without converting the currency in which it is owed) actually or contingently owing by the Customer to ANZ under that Facility, and includes: (a) for bill facilities, the aggregate face value of all outstanding Bills; (b) for letter of credit or guarantee facilities, the aggregate of the undrawn amount under each unexpired Guarantee and any amounts drawn under a Guarantee which have not been repaid by the Customer to ANZ; and (c) for overdraft facilities, the aggregate of the debit balances (if any) of each overdraft amount at the close of business on the day on which the Facility Outstanding is to be determined, together with interest (including accrued by unpaid interest), Costs, all accrued but unpaid fees, and all other amounts outstanding under this agreement or any other Transaction Document in relation to that Facility. "Guarantee and Indemnity" means the Guarantee and Indemnity given under this agreement by each Guarantor in favour of ANZ (see clause 10 to 15 inclusive). "Guarantor" means, if applicable, each person described as such in Schedule 2 and, if there is more than 1 Guarantor, a reference to each of those persons individually and to any 2 or more of them together. "Event of Default" means an event or circumstance described in clause 16.1. "Guarantee and Indemnity" means the Guarantee and Indemnity given under this agreement by each Guarantor in favour of ANZ (see clause 10 to 15 inclusive). "Guarantor" means, if applicable, each person described as such in Schedule 2 and, if there is more than 1 Guarantor, a reference to "Guarantor" includes a reference to each of those persons individually and to any 2 or more of them together. "Review Date" means each date so specified in Schedule 2. "Termination Date" means, for a Facility: (a) the termination date for that Facility set out in Schedule 2; or (b) the ay that ANZ terminates its obligation to provide that Facility under this agreement. " Total Facility Outstanding " means, at any time, the aggregate of the Facility Outstanding under all the Facilities at that time. 12 The definition in the Facility Agreement of the term "Customer" contained in clause 1.1 makes it clear that it must be read subject to clause 1.4 of the Facility Agreement, which reads as follows:- "1.4 Joint and several obligations If there is more than 1 Customer or Guarantor under this agreement (for the purposes of this clause, each a "person"): (a) a liability of (or an obligation on) those persons under this agreement is joint and several; and (b) (subject to paragraph (c)) a reference to "Customer" or a reference to "Guarantor" includes a reference to each of those persons individually and to any 2 or more of them together; and (c) where a person is granted the use of a Facility, a reference to "Customer" is to that person only. Clause 1.4(c) specifies in particular that in relation to any Facility the term Customer refers only to the relevant company in the Alto group which received the grant of that Facility; as I have said, Schedule 3 makes it clear that the only party entitled to draw on a Facility is the party to whom it was granted." 13 The terms and conditions application to the Guarantee are contained in clauses 10 to 15; I include clauses 10 and 11 only as follows: "10 (i) Guarantee (a) Each Guarantor irrevocably and unconditionally guarantees payment to ANZ: the payment of the Total Facility Outstanding on time; and (b) the performance by each Customer of its obligations under each Transaction Document on time. (ii)Payment on demand If an Event of Default occurs, each Guarantor must immediately on demand by ANZ pay the Total Facility Outstanding to ANZ." 11. INDEMNITY 11.1 Each Guarantor irrevocably and unconditionally indemnifies ANZ on demand against any Loss by ANZ because: (a) Customer does not pay the Total Facility Outstanding on time or observe or perform its obligations under a Transaction Document on time; (b) of an Insolvency Event of any Customer; or (c) the Total Facility Outstanding (or money which would be Total Facility Outstanding if it were recoverable) is not recoverable from any Customer for any reason, whether or not ANZ knew or ought to have known anything about it; or (d) a liability to pay the Total Facility Outstanding is not enforceable against any Customer for any reason, whether or not ANZ knew or ought to have known anything about it. The Guarantor must immediately pay to ANZ the amount of the Loss demanded. 14 It will be noted then that under clause 10.2 of the Facility Agreement the Guarantor is liable for the Total Facility Outstanding only upon the occurrence of an Event of Default. Put in other words the obligation of the Guarantor is conditional upon the occurrence of such an event and without which ANZ cannot make a claim against the Guarantor. Although in the ordinary course each Customer only is liable to pay the Facility Outstanding for any Facility referable to that Customer, the Customer is obliged to pay the Total Facility Outstanding on the final Termination Date; clause 5.1 provides: "5. Repayment of the Facilities 5.1 Subject to any earlier repayment arrangements provided for in this agreement, on the Termination Date for a Facility, the Customer must pay to ANZ: (a) the Facility Outstanding for that Facility; and (b) all other amounts actually or contingently owing under this agreement and each other Transaction Document in relation to that Facility. (c) On the final Termination Date, the Customer must pay to ANZ the Total Facility Outstanding. 15 I include if only for the sake of completeness and because it was discussed at some length, clause 19.3 of the Facility Agreement which provides: "Effect of a Review Notice 19.3 If ANZ gives the Customer a Review Notice, unless ANZ agrees otherwise with the Customer: (a) the changes take effect from the day when the Customer accepts the changes in writing; or (b) if the Customer does not accept the changes before the end of the time period specified in the Review Notice, with effect from the end of the time period all the Facilities become repayable on demand by ANZ. All of the Facilities become repayable on demand, even if a Review Notice relates to only some of the Facilities. The effect of clause 19.3 is that if a Review Notice is given and the altered terms are not acceptable, all of the Facilities become due and payable, and notwithstanding the fact that a Review Notice might relate to some Facilities only. This clause does not in my view support a contention that the borrower in respect of the Applicant Bill Facility is not the Applicant only. 16 The Facility Agreement regarded as a whole is a lengthy agreement (although not unduly so) and to which ANZ, the Customer and the Guarantor are parties. In accordance with its terms each Customer received one or more separate Facility or Facilities. In respect of each Facility the Facility Agreement contains terms referable to that Facility only and also terms referable to all of them. 17 The six companies in the Alto group which comprise the Customer are also included as companies comprising the Guarantor. The overall effect is that for each Customer its indebtedness under the Facility or Facilities upon which it is entitled to draw has been guaranteed by all of the companies comprising the Guarantor, but not of course including itself, since a party cannot guarantee its own obligations. . Put another way the effect of the Guarantee is that all companies comprising the Guarantor, other than, in respect of any Facility its Customer, guarantees the obligations of that Customer under that Facility. The provisions as to Guarantee are sometimes referred to in the Facility Agreement as the "Cross Guarantee and Indemnity"; schedule 2 to the Facility agreement sets that one of the Securities to be provided is: "3. Cross Guarantee and Indemnity (incorporated in this document) by and between: (a) Georgio Altomonte Holdings Pty Ltd (b) Altomonte Holdings Pty Ltd (c) Altomonte Artarmon Pty Ltd (d) Alto Prestige Pty Ltd (e) Group & General Finance Pty Ltd (f) Capricorn Constructions Pty Ltd (g) Alto Automobiles Pty Ltd (h) Alto Auto Parts Pty Ltd (i) Alto Pennant Hills Pty Ltd (j) Larrijade Pty Ltd (k) Alto Artarmon Pty Ltd (l) Alto Rural Pty Ltd (m) Corumbene Stud Pty Ltd (n) Wantage Pty Ltd (o) Box Valley Pty Ltd (This provision confirms if confirmation be needed that the Guarantee is part of the Facility Agreement.) 18 Clause 26 of the Respondent's submissions provides: "The Respondent submits that the term "borrower", which is not relevantly defined in the Act, in the context of s 220 simply means "a person to whom money is lent" (or advance) and "necessarily implies repayment at some time and under some circumstances" : Butterworths Online Australian Legal Dictionary; Deposit & Investment Co Limited v Greenaway [1969] VR 714 at 718." That definition was accepted by the Applicant, in accordance with clause 2 of its written response. It was common cause then that the term "borrower" connotes a person to whom money is advanced and from whom repayment (as contrasted with payment) is required. The obligations of a guarantor are different from those of a borrower or principal debtor; it may become obliged to make a payment (but not a repayment) of the obligations of the borrower. There are of course significant differences between the legal positions of a borrower and a guarantor of a borrower's obligations; the defences open to a guarantor in respect of a claim are more extensive than those open to the borrower. During the course of the hearing mention was made by way of one example only, that a guarantor company might seek to contend that it did not receive a corporate benefit. Similarly it might seek to resist a claim on the grounds that conduct of the lender has prejudiced its position, or that there has been a waiver of the lender's rights. 19 The Facility Agreement makes it clear that each Customer is liable only for the repayment of its own Facility or Facilities. This is subject to clause 5.1(c) which requires the Customer to pay the Total Facility Outstanding on the final Termination Date. But even then each Customer who in these circumstances makes a payment of a Facility referable to another Customer would do so, on a proper construction of the Facility Agreement, as a guarantor but not as a borrower, simply because it did not borrow or draw down under that Facility at any time prior to the final Termination Date and indeed is not permitted under the Facility Agreement do so. 20 I was informed, in the course of the hearing, that the Alto group had sufficient negotiating strength to procure that payment under the Guarantee is conditional upon an Event of Default. In my view the provisions of clause 5.1(c) regarded in the context of the Facility Agreement as a whole (and as they must be regarded) cannot have the effect that the Customer in respect of all Facilities in general, and the Applicant Bill Facility in particular, is any party other than that Customer who is permitted to draw under it, (and in the case of the Applicant Bill Facility, the Applicant; as I have said, in respect of each Facility, only one party is permitted to draw under it. 21 The Facility Agreement regarded as a whole is no more than an "umbrella" document and pursuant to which a number of Facilities were granted and documented in relation to a number of Customers, in one document, and on the basis that in respect of all Facilities the Guarantor is liable for the Total Facility Outstanding. That in a group and in relation to each Customer, its fellow group members are required to guarantee its obligations is hardly unusual or surprising. The transaction as a whole could have been documented in relation to each Customer separately and with the Guarantor guaranteeing the obligations of each relevant Customer. To do so would have been unwieldy and would have required an unnecessarily large number of documents. The concept of an umbrella agreement was no doubt utilised as a matter of convenience; in my view it would have been surprising had it been done in any other way. There are obvious and unmistakeable advantages and including the fact that common terms applicable to all Facilities need be specified once, apart from the fact that one Guarantee only is required. The saving is resolution documentation alone might be significant. The use of documentation of this nature in a financing transaction such as this is in my experience (over 20 years as a partner in the banking and finance section of a large firm) standard and usual. The Facility Agreement in this matter was drawn in clear and comprehensive fashion by a firm is experienced in this area. 22 As I understand the Respondent's contentions both in writing and at the hearing he is of the view that the "borrower" under the Applicant Bill Facility is not the Applicant alone, but rather either the Customer and the Guarantor as a group, or the Customer. I reject any such contention. A number of provisions in the Facility Agreement which are to me standard and natural, were (in my view incorrectly) perceived as somehow advancing the Respondent's case. I refer to clauses 12 to 19 of the Respondent's written submissions reading as follows: Structure of the Facility and Debenture 12. Under the Facility it is not the Applicant alone who constitutes the "borrower" under that agreement rather it is the Applicant together with 5 other companies in the Alto group. Likewise, the total advance secured under the Debenture by the Applicant pursuant to the Facility, and for which the Applicant is liable, amounts not to $16,000,000.00 but to $60,230,000.00. 13. This is because: (a) The term "Customer" is defined under the Facility to mean (cl 1.1): In relation to each Facility or all of the Facilities, the person named as the Customer in Schedule 3 for that Facility…In this agreement, a reference to "Customer" must be read subject to clause 1.4; (b) The term "Facility" is defined in cl 1.1 to mean "any of the facilities specified in Schedule 2 and "Facilities" means all of them"; (c) The term "Facility Outstanding" is defined in cl 1.1 to mean, inter alia, the principle amount actually owing or contingently owing by the Customer to ANZ under that Facility, and includes the aggregate face value of all outstanding Bills, the aggregate of the undrawn amount under each unexpired Guarantee and the aggregate of the debit balances of each overdraft account at the close of business on the day the Facility Outstanding is to be determined; (d) The term "Guarantor" is defined in cl 1.1 to mean "each person described as such in Schedule 2 and if there is more than 1 Guarantor, a reference to "Guarantor" includes a reference to each of those persons individually and to any 2 or more of them together"; and (e) The term "Total Facility Outstanding" is defined in cl 1.1 to mean "at any time, the aggregate of the Facility Outstanding under all the Facilities at that time" (emphasis added). 14. Therefore under the Facility, the Applicant is both the Customer (see Schedule 1 of the Facility) and is a Guarantor (see Schedule 2 of the Facility) with joint and several liability: cl 1.4(a). 15. Moreover under the terms of the Facility the Applicant, as a Guarantor, irrevocably and unconditionally guarantees to ANZ the payment of the Total Facility Outstanding on time and the performance by each Customer of its obligations under each Transaction Document: cl 10.1. 16. Significantly, cl 15 of the Facility states that the Applicant, as a Guarantor, acknowledges and confirms that each security to which it is a party and is granted in favour of ANZ secures the "Total Facility Outstanding". That is, secures "the aggregate of the Facility Outstanding under all the Facilities at that time" (emphasis added). 17. The definitions of "Facility Outstanding" and "Facilities" in cl 1.1 (see above) make it clear that what is being secured is the total amount of the facilities granted by ANZ as listed in Schedule 3. 18. This aggregate liability of the Applicant is reinforced by the terms of the Debenture which in cl 2.1 (the charging provision) secures payment to ANZ of all monies owing by the Applicant to ANZ for any reason and comprises both money owed to ANZ under the Facility by either the Applicant or which the Applicant has guaranteed to be paid to ANZ under the Facility and which is owed by the other companies who additionally constitute the Customer under the Facility: see the definition of "secured money" and "principal money" in the Debenture. The Debenture is Not a "Refinancing Mortgage" for the Purposes of the Act 19. Simply put, the issue in this application for review is whether the Debenture dated 27 September 2002 and granted in favour of ANZ by the Applicant is a "refinancing mortgage" for the purposes of s 220 of the Act. The Respondent submits that it is not. 23 Dealing firstly with clause 13 (a) of the Respondent's written submissions, it is clear enough in my view that the definition of "Customer" is subject to clause 1.4 of the Facility Agreement which in its terms specifies that in relation to each Facility the term Customer relates only to that Alto group company which received that Facility. In the same context I do not comprehend clause 13 (b) as supportive of the Respondent; the drafting is conventional.. This applies also in relation to subclauses (c ) (d) and (e). If I understood her correctly, Miss Pepper saw something adverse to the Applicant in the definition of "Total Facility Outstanding"; in a transaction such as this it would be surprising if a definition of this nature were not included, since it is altogether necessary but its inclusion cannot possibly have the effect for which the Respondent contends. The Respondent's submissions in this context may be factually correct but do not assist his case. 24 As to clause 14 of the Respondent's written submissions I make the point that the Applicant as a Customer does not guarantee the Facility Outstanding under either Facility granted to it; this is not legallypossible. 25 It does not seem to me that the other contentions by the Respondent and to which I have referred, advance the Respondent's case. I have previously referred to clause 5.1(c) of the Facility Agreement; as previously noted the Customer is liable on the final Termination Date for the Total Facility Outstanding. The Customer is of course in any event liable as Guarantor but conditionally on the occurrence of an Event of Default. The effect is that it is conceivable that a Customer, but not the relevant Customer to whom a Facility was granted, may be required to pay under the Facility referable to the latter, but in that event must do so as a Guarantor but not as a borrower, since it did not borrow under that Facility. 26 In her oral submissions Miss Pepper sought to draw comfort from the indemnity provisions of clause 11. I do not agree that these standard form provisions, which are in any event contingent on Loss, can or should be construed in any manner which helps the Respondent's case. 27 Section 220 of the Act provides: (i) DUTIES ACT 1997 - SECT 220 Refinancing of loans 220 Refinancing of loans (1) In this section: "refinancing mortgage" means a mortgage that: (a) secures the amount of the balance outstanding under an earlier mortgage that is discharged or to be discharged as part of the arrangements for the new mortgage, and (b) is created to secure an advance to the same borrower as under the earlier mortgage, and (c) is over the same or substantially the same property or part of the property as the earlier mortgage. (2) For the purposes of subsection (1), mortgages are created to secure an advance to the same borrower if, either directly by the mortgages themselves or indirectly through one or more collateral arrangements, the same person obtains the advances secured by them. (3) A refinancing mortgage is taken to have been stamped with ad valorem duty as a mortgage in respect of the maximum amount payable under or secured by the previous mortgage (being an amount in relation to which mortgage duty has been paid or in relation to which an exemption from duty has been obtained), except as provided by subsection (5). (4) (not relevant): (5) (not relevant) (6) (not relevant). (8) Duty at the rate of $4 per $1,000 or remaining part of $1,000 is payable on the amount by which the advance made under a refinancing mortgage (not being a mortgage on which, by virtue of subsection (6) (b), no duty is chargeable) exceeds: (a) the maximum amount secured by the earlier mortgage, or (b) the proportion of that amount referred to in subsection (5), in the case of a refinancing to which subsection (4) applies. (8A) If a borrower is a related body corporate of a borrower under an earlier mortgage, the firstmentioned borrower is taken to be the same borrower or the same person for the purposes of subsection (1) or (2). (9) (not relevant) (10) (not relevant) (11) (not relevant) 28 In this instance the Applicant had given a fixed and floating charge over all of its assets to CFAL as security for its indebtedness in an amount of $16m. The Applicant repaid its indebtedness to CFAL after drawing down on the Applicant Bill Facility granted to it by ANZ. As security for the advance under the Applicant Bill Facility it granted the Debenture (as referred to in clause 12 of the Chronology) over all of its assets. The assets of the Applicant no doubt vary from time to time but in each case the Applicant charged all of its assets. On this basis the Debenture is clearly over the same or substantially the same property within section 220 (1) (c ) of the Act. (The provisions of this clause 28 are inserted for the sake of completeness; there is no issue between the parties as to the satisfaction of the provisions of section 220 (1) (c) of the Act.) 29 It is also clear to me that the Applicant satisfied the same borrower test contained in section 220 (1) (b) of the Act. The Applicant was indebted to CFAL; it drew down from ANZ under the Applicant Bill Facility and repaid its prior lender. The fact that the Applicant also guaranteed the obligations of its fellow group members and thereby undertook a further substantial (albeit contingent) liability as part of the cross-collateralisation arrangements involved, does not detract from this fundamental point. In respect of the Applicant Bill Facility it undertook an obligation to repay; in respect of the other Facilities it undertook an obligation in certain circumstances to pay and conditionally (clause 5.1(c) apart) upon the occurrence of an Event of Default. 30 There is no dispute as to the fact that duty was properly paid in respect of the total indebtedness, excluding the Applicant Bill Facility in amount of $16m. The fact that the refinancing mortgage in this case, and being of course the Debenture, secured more than $16m is hardly to the point given that this is a situation expressly catered for by section 220 (8) of the Act.. 31 Clauses 2.4 to 2.6 of the Applicant's submissions in reply (and with which I agree) are included as follows: 2.4 The Respondent submits that because each Alto company (including the Applicant) guarantees to ANZ the repayment of all facilities (including the new Facility): (a) each entity specified in the Facility Agreement is liable, as a Customer and Guarantor to repay all the monies under all individual facilities (paragraph 30 of the Respondent's Submission); and (b) "It is therefore proper to describe the particular monies listed in Schedule 3 as having been advanced to all of the entities listed in Schedules 1 and 2 because they are jointly and severally liable for the aggregate sum" (paragraph 31 of the Respondent's Submission). 2.5 The Applicant submits that this analysis is incorrect on the basis that the Respondent has failed to distinguish between a "borrower" of an advance and a guarantor of that advance. This is fundamental, and so is explained as follows. (a) Guaranteeing an advance does not mean that the guarantor has obtained or received the advance, nor that the guarantor is a person to whom the money has been lent or advanced (refer the definition of "borrower" in paragraph 2.1 above). (b) A Guarantor is not the person liable to "repay" the advance (as the Guarantor never obtained the advance). Rather, the guarantor guarantees that the relevant Customer will "repay" the advance. Further, the Guarantor's liability to pay under its guarantee is only triggered if there is an "Event of Default" (see clause 10.1 of the Facility Agreement). By contrast, a "borrower" is always liable to repay in the ordinary course, including where there is no Event of Default. It is submitted that an advance can only be "repaid" by the person who obtained it, namely the "borrower" (as per the agreed analysis in paragraph 2.1 above). (c ) The particular monies listed in Schedule 3 of the Facility cannot be said to have been advanced to "all of the entities listed in Schedules 1 and 2" because only the specified Customer for an individual facility can obtain the advance. It is not correct that any of these entities can obtain an advance under the Applicant's specified new Facility. Only the Applicant is the "borrower" for that new Facility. 2.6. The Applicant therefore submits that the Debenture was created to secure the advance of $16,000,000 to the Applicant, being the "same borrower". The Debenture also was created to secure (by way of the Applicant's guarantee) the total amount of the facilities advanced to the Alto group companies. This however does not detract from the fact that the Debenture was created to secure the advance of $16,000,000 to the Applicant. The Duties Act expressly contemplates that a refinancing mortgage may secure other monies other than those advanced under the earlier mortgage. Section 220(8) states that: 'Duty at the rate of $4 per $1,000 or remaining part of $1,000 is payable on the amount by which the advance made under a refinancing mortgage … exceeds…the maximum amount secured by the earlier mortgage' 32 Also in the interests of completeness I should perhaps refer to the Interest Rate Swap facility and being the other Facility granted to the Applicant. It was never mentioned during the hearing and I therefore assume that the Respondent does not intend to press a suggestion contained in a footnote to his written submissions that the amount advanced by ANZ was $17m and not $16m. I agree with clause 1.2 of the Applicant's response that in relation to that other Interest Rate Swap Facility its terms are such that there cannot be an advance. 33 I have not dealt specifically and in terms with each of the Respondent's contentions as contained in his written submissions simply because I do not think that it is necessary for me to do so. I note in particular however that I do not accept the Respondent's contention in clause 29 that the borrower under the Applicant Bill Facility is not the Applicant only, but rather "the Applicant in conjunction with the companies listed in Schedules 1 and 2 of the Facility Agreement" The fact that the Alto group companies other than the Applicant are involved in the overall security structure does not mean that they are in consequence borrowers. Nor does this conclusion follow from the fact that the Total Facility Outstanding is recoverable through the Guarantee from all of the other Alto group companies. It is not clear to me whether the Respondent contends that the same borrower test is not satisfied because the new borrower is the whole Alto group or, or because six Alto companies collectively constitute the Customer. In any event, and as I have demonstrated the Facility Agreement simply documents a number of Facilities in one Facility Agreement and which includes the Guarantee. In each case the Facility Agreement makes it clear that each Customer receives one or more Facilities under which it, and only it, can draw. The focus is and must be on the borrower and not on the companies which are or may be liable to pay the Total Facility Outstanding. When viewed in this light the fact that the Customer may become liable under clause 5.1(c ) of the Facility Agreement for the Total Facility Outstanding in the circumstances there set out becomes insignificant. It cannot have the effect that the new borrower in respect of all of the Facilities is the Customer. Put another way, and at the risk of labouring the point, it is important to distinguish between the actual borrowing and the obligation in respect of payment. It is the only the actual borrower who can repay; any other party who makes a payment cannot do so qua borrower and pays but does not repay. I might perhaps state that it is for this reason that I note (even though not in this matter required to do so) that my decision would have been the same even if recovery under the Guarantee were not conditional upon the occurrence of an Event of Default. Further in the interests of completeness I note that there is no issue as to the fact that a party who draws under a bill facility is a borrower; that this is so is clear from section 206 of the Act and pursuant to which a drawing under a bill facility constitutes an advance. Subject to the fact that I do not think that the fact that the Guarantee is so conditioned (i.e. upon the occurrence of an Event of Default) is crucial, the Applicant's analysis as contained in its written submissions appears to me to be correct. The Respondent's written submissions also contain towards the end, a contention as to avoidance which (again correctly) was not pursued.. 34 The sheer size of the documentation presented to me in this matter might suggest that this is a complex case. As I think I have shown it is not; there is only one issue and that is as to whether the same borrower borrowed under the Applicant Bill Facility, and in my view this is so. ( I should state in conclusion that in some clauses of these reasons, emphasis has been added by me). 35 Accordingly the objection decision must be set aside and the Applicant is entitled to the refinancing exemption in respect of an amount of $16m. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.