Eshchenko v Commissioner of State Revenue [2023] QSC 100 (2023) 14 QR 350

SUPREME COURT OF QUEENSLAND CITATION: Eshchenko v Commissioner of State Revenue [2023] QSC 100 PARTIES: RUSLAN ESHCHENKO (appellant) v COMMISSIONER OF STATE REVENUE (respondent) FILE NO: BS No 4984 of 2022 DIVISION: Trial Division PROCEEDING: Appeal ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 18 May 2023 DELIVERED AT: Brisbane HEARING DATE: 26 April 2023 JUDGE: Cooper J ORDERS: 1. The respondent’s decision dated 31 March 2022 to disallow the appellant’s objection is affirmed. 2. The assessment dated 24 January 2022 is affirmed. 3. The appeal is dismissed. 4. The appellant pay the respondent’s costs of and incidental to the appeal to be assessed on the standard basis if not agreed. CATCHWORDS: TAXES AND DUTIES – STAMP DUTIES – TRANSACTIONS CONCERNING DUTIABLE PROPERTY – LAND RICH ENTITIES – QUEENSLAND – where the Commissioner of State Revenue issued an assessment of landholder duty in respect of the acquisition of an interest in a company – where the appellant lodged an objection to the assessment of duty – where the Commissioner of State Revenue disallowed the objection – where the appellant appeals the decision of the Commissioner of State Revenue pursuant to s 69(2)(a) of the Taxation Administration Act 2001 (Qld) – whether the interest acquired was an excluded interest within the meaning of s 179(6) of the Duties Act 2001 (Qld) – whether the decision of the Commissioner of State Revenue to disallow the appellant’s objection should be affirmed – whether the appeal should be dismissed -- 1 of 21 -- 2 Taxation Administration Act 2001 (Qld), s 47, s 69 Duties Act 2001 (Qld), s 158, s 159, s 160, s 161, s 162, s 163, s 164, s 165, s 165A, s 175, s 178A, s 179, Schedule 3 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41, applied Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297; [1981] HCA 26, considered Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28, applied Queensland Chamber of Commerce and Industry Ltd v Commissioner of State Revenue (2015) 108 ACSR 334; [2015] QSC 77, cited R v Wassmuth; Ex parte Attorney-General (Qld) [2022] QCA 113, cited Trust Company of Australia Ltd v Commissioner of State Revenue (2003) 197 ALR 297; [2003] HCA 23, cited Wakefield v Commissioner of State Revenue [2019] 3 Qd R 414; [2019] QSC 085, cited COUNSEL: D Russell KC for the appellant H Lakis for the respondent SOLICITORS: Ponting Hynes Lawyers for the appellant Clayton Utz for the respondent Introduction [1] Pursuant to s 69(2)(a) of the Taxation Administration Act 2001 (Qld) (TA Act), Mr Eshchenko has appealed the decision of the Commissioner of State Revenue to disallow his objection to the assessment of duty under the Duties Act 2001 (Qld) (Act) in respect of the acquisition of an interest in a company called Maylake Pty Ltd (Maylake). [2] The appellant argues that, upon objection, the assessment should have been reduced to nil because the interest acquired was, for the purposes of the Act, an excluded interest within the meaning of s 179(6) of the Act. That argument proceeds on the footing that the interest the appellant acquired in Maylake was an interest which was held by his father, a related person within the meaning of the Act,1 for more than three years,2 and which had been acquired by his father at a time when Maylake did not hold land in Queensland.3 [3] The parties have agreed the facts relevant to the determination of this appeal.4 They have also agreed that documents contained in an agreed bundle of documents5 are relevant and admissible on the hearing of the appeal.6 1 Act, s 164(1)(a). 2 Act, s 179(6)(a). 3 Act s 179(6)(b). 4 Court document 7. 5 Court document 8. 6 Court document 7, paragraph 25. -- 2 of 21 -- 3 [4] The issue in this appeal is whether, on its proper construction, s 179(6) of the Act applies to the agreed facts to exclude the interest the appellant acquired in Maylake from the calculation of the dutiable value of the relevant acquisition. Agreed facts [5] The facts agreed between the parties are relatively confined. I have set those facts out in full in paragraphs [6] to [28] below. [6] Maylake was incorporated on 29 July 1997, with a share capital of one redeemable preference share held by George Stephenson Gilltrap. At the time Mr Gilltrap was the company’s sole director. [7] On 6 August 1997, Leonid Eshschenko (“Leonid”) became the sole director and secretary of Maylake and was allotted one ordinary share. [8] Leonid is the father of the appellant. [9] As at 6 August 1997, Leonid held an entitlement to all distributions on the winding up of the company. [10] As at 6 August 1997, Maylake did not own any land in Queensland. [11] On 1 July 1998, Maylake allotted 2,999,999 ordinary shares to Leonid. Those shares were of the same class as the share which Leonid had held since 6 August 1997, and carried the same rights. [12] From 1 July 1998, the issued share capital of Maylake comprised 3,000,000 ordinary shares held by Leonid. [13] A resolution of the sole shareholder of Maylake dated 11 July 2013 (“2013 Shareholder’s Resolution”) added a new Article 88 to the Constitution of Maylake providing inter alia, that: (a) there would be two classes of shares comprising: (i) 3,990,000 ordinary shares; and (ii) 10,000 redeemable preference shares; (b) the 3,990,000 ordinary shares rank pari passu and (subject to the rights of the holders of redeemable preference shares) carried the right to receive all dividends and all distributions upon a winding up; and (c) the 10,000 redeemable preference shares rank pari passu and carried the right: (i) to receive 49% of any dividend declared by Maylake; and (ii) to receive 49% of any amount distributed to the members of Maylake upon a winding up. [14] Pursuant to a resolution of the directors of Maylake in writing dated 11 July 2013 (“2013 Directors’ Resolution”), it was resolved that 10,000 redeemable preference shares in Maylake be issued to the appellant. -- 3 of 21 -- 4 [15] The appellant acquired the 10,000 redeemable preference shares in his individual capacity. [16] By that issue of 10,000 redeemable preference shares, the appellant acquired an entitlement to a distribution of 49% of the property of Maylake upon its winding up. [17] As at 11 July 2013 the issued share capital of Maylake comprised: (a) 3,000,000 ordinary shares held by Leonid; and (b) 10,000 redeemable preference shares held by the appellant. [18] Pursuant to a special resolution dated 21 June 2021 (“2021 Special Resolution”) the shareholders of Maylake resolved that the share rights of the redeemable preference shares be varied so that the issued 10,000 redeemable preference shares carry between them the right: (a) to receive 100% of any dividend declared by Maylake; and (b) to receive 100% of any amount distributed to the members of Maylake upon a winding up. [19] By the 2021 Special Resolution, the appellant acquired an additional entitlement to a distribution of 51% of the property of Maylake upon its winding up. [20] As at 21 June 2021, Maylake was the registered owner of the following real properties in Queensland (“the Properties”): (a) Kay House located at 35-39 Scarborough Street, Southport Qld (being L1 RP188898) for commercial office use; (b) Elkhorn Centre West located at 29 Elkhorn Avenue, Surfers Paradise Qld (being L4 RP55078) for commercial office use; (c) Elkhorn Centre East located at 25 Elkhorn Avneue, Surfers Paradise Qld (being L3 SP266557) for commercial office use; (d) Scarborough Centre located at 89 Scarborough Street, Southport Qld (being L3 RP122602) for commercial office use; and (e) Oomoo Downs located at 1559 Mt Stanley Road, Avoca Vale Qld (being L1 RP896531, L12 CP CSH1822, L2 RP896538, L2 RP896531, L47 CP CSH1576) for cattle grazing property use. [21] The total market value of the Properties in accordance with valuations provided by the appellant is $30,700,000. [22] Maylake holds each of the properties in its individual capacity and not as trustee of any trust. [23] On 23 June 2021, Leonid transferred his 3,000,000 ordinary shares to the appellant. Leonid no longer has any shares in Maylake. [24] On 24 January 2022, the respondent issued an assessment of landholder duty in the amount of $880,802.50 (“Assessment”), reflecting a dutiable value of $15,657,000, which is 51% of $30,700,000. -- 4 of 21 -- 5 [25] On 15 February 2022, the appellant lodged an objection to the Assessment. [26] On 31 March 2022, the respondent made the decision to disallow the appellant’s objection. [27] On 3 May 2022 the appellant filed the notice of appeal in this proceeding. [28] In accordance with section 69(1)(b) of the TA Act, the appellant paid the whole of the amount of tax and any late payment interest payable under the Assessment prior to filing the notice of appeal in this proceeding. The legislative scheme [29] The appeal concerns the application of provisions found in Part 1 of Chapter 3 of the Act which concern the imposition of landholder duty. Those provisions impose duty on certain transfers of interests in companies which own land in Queensland with an unencumbered value exceeding $2,000,000, such companies being referred to in the Act as a “landholder”.7 A landholder that is an unlisted corporation is referred to in the Act as a “private landholder”.8 [30] As accepted by both parties,9 the object of the landholder provisions is to levy duty on the acquisition of an interest in a landholder at the rate which would apply if there had been an acquisition of the same proportionate interest in the land owned by the company. [31] The landholder provisions are engaged when a person makes what is referred to as a “relevant acquisition”. The circumstances in which a person will have made a relevant acquisition are set out in s 158, which provides: “158 What is a relevant acquisition (1) A person makes a relevant acquisition if— (a) the person acquires a significant interest in a landholder; or (b) the person acquires an interest in a landholder and, when the following are aggregated, the aggregation results in a significant interest in the landholder— (i) interests held by the person in the landholder; (ii) interests acquired or held by related persons of the person in the landholder; or (c) having acquired a significant interest in a landholder as mentioned in paragraph (a) or (b) for which acquisition landholder duty was imposed, the person’s interest in the landholder increases. 7 Act, s 165. 8 Act, s 165A(1). 9 Court document 11, paragraph 1; T1-3:20-43; T1-16:4-20. -- 5 of 21 -- 6 (2) To remove any doubt, it is declared that for subsection (1)(b), it is not relevant whether, immediately before the person acquires the interest— (a) an interest mentioned in subsection (1)(b)(i) or (ii) is, of itself, a significant interest in the landholder; or (b) the aggregation of any interests mentioned in subsections (1)(b)(i) or (ii), of itself, amounts to a significant interest in the landholder.” [32] A person has: (a) an “interest” in a private landholder if the person has “an entitlement as a shareholder … to a distribution of the landholder’s property … on its winding up”.10 (b) a “significant interest” in a private landholder if the person has an interest in the landholder of 50% or more.11 [33] The extent of the person’s interest is the person’s entitlement as a shareholder expressed as a percentage of the value of all of the landholder’s property that would be distributed if, immediately after the person acquires the interest, the company were to be wound up.12 [34] A person acquires an interest in a landholder if the person “obtains an interest, or the person’s interest increases, in the landholder regardless of how it is obtained or increased”.13 The Act then sets out, without limitation, several ways in which a person may acquire an interest in a landholder, including by the abrogation or alteration of a right for a share in the company.14 The Act declares, for the removal of doubt, that an acquisition of shares is not necessary to acquire an interest in a landholder.15 [35] Landholder duty imposed on a relevant acquisition must be paid by the acquirer. However, if a person makes a relevant acquisition because interests are aggregated under s 158(1)(b)(ii), the person and the related persons are jointly and severally liable for the payment of the landholder duty.16 [36] The amount of duty that must be paid upon a relevant acquisition of an interest in a private landholder is calculated by reference to a rate of landholder duty imposed on the dutiable value of the relevant acquisition.17 [37] The dutiable value of a relevant acquisition in a private landholder is worked out under s 179, which relevantly provides: 10 Act, s 159(1)(a). 11 Act, s 159(2)(a). 12 Act, ss 160(1)(a), 161(1). 13 Act, s 162(1). 14 Act, s 162(2)(c). 15 Act, s 162(3). 16 Act, s 175. 17 Act, s 178A and Sch 3. -- 6 of 21 -- 7 “179 Working out dutiable value of relevant acquisition (1) The dutiable value of a relevant acquisition in a private landholder is the interest in, or total of interests in, the landholder constituting the relevant acquisition, less any excluded interest of the person at the time of the acquisition, multiplied by the unencumbered value of all Queensland land- holdings of the landholder at the time of the acquisition. Note— See also section 14 (What is the unencumbered value of property). (2) Subsection (3) applies to the following relevant acquisitions— (a) a relevant acquisition mentioned in section 158(1)(c); (b) a relevant acquisition made by a person in the following circumstances— (i) the person together with related persons of the person had a significant interest in the private landholder immediately before the relevant acquisition; (ii) the interests of the person and related persons were previously aggregated so that duty under subsection (1) was paid for a relevant acquisition in the private landholder; (iii) since the relevant acquisition mentioned in subparagraph (ii), no other related person of the person has acquired an interest in the landholder. (3) For applying subsection (1) to a relevant acquisition mentioned in subsection (2), the interest is the increased interest in the private landholder that is acquired by the person by the relevant acquisition. Examples for subsections (2) and (3)— 1 A and B are related persons. A holds a 30% interest in a private landholder. B acquires a 25% interest and, when aggregated with A’s interest, a significant interest. If A acquires another 5% bringing its interest to 35%, for working out the dutiable value, the interest constituting the relevant acquisition is 5%. 2 A and B are related persons. A holds a 30% interest in a private landholder. B acquires a 25% interest and, when aggregated with A’s interest, a significant interest. If A acquires B’s 25% interest, for working out the dutiable value, the interest constituting the relevant acquisition is 25%. … -- 7 of 21 -- 8 (6) In this section— excluded interest, of a person who makes a relevant acquisition in a private landholder, is any interest constituting the relevant acquisition— (a) held by the person, or a related person of the person, on or before the day that is 3 years before the relevant acquisition, unless— (i) the interest was acquired as part of an arrangement; and (ii) the arrangement includes the interest most recently acquired as part of the relevant acquisition; or (b) acquired by the person, or a related person of the person, at a time when the landholder did not hold land in Queensland.” [38] The notice of appeal expressly states that it is not in dispute that:18 (a) the appellant acquired a significant interest in a private landholder (Maylake) within the meaning of s 158 of the Act; (b) if that interest was not an excluded interest within the meaning of the Act, its dutiable value was $15,657,000, that being the value upon which duty was assessed by the respondent. [39] From this, it follows (as already noted) that the sole issue in dispute is whether the 51% interest the appellant acquired in Maylake by reason of the 2021 Special Resolution was an excluded interest within the meaning of s 179(6) of the Act. The decision to disallow the appellant’s objection [40] The respondent disallowed the appellant’s objection to the initial assessment in a decision dated 31 March 2022 (Objection Decision).19 [41] The reasons given for disallowing the objection are set out in the following paragraphs of the Objection Decision:20 “35. The critical restriction is that [the term ‘excluded interest’ defined in s 179(6)] applies only to an interest constituting the relevant acquisition. Thus, it directs attention to s. 158(1) and the three circumstances that will trigger a relevant acquisition, whichever is applicable, being: a. the person acquires a significant interest in a landholder (s. 158(1)(a)); b. the person acquires an interest in a landholder and, when aggregated with interests held by the person in the 18 Court document 1, paragraph 7.1. 19 Court document 8, pages 266 to 279. 20 Emphasis in original, citations omitted. -- 8 of 21 -- 9 landholder, or interests acquired or held by related persons of the person in the landholder, results in a significant interest (s. 158(1)(b)); c. the person, having acquired a significant interest in a landholder as mentioned in paragraph (a) or (b), for which acquisition landholder duty was imposed, the persons’ interest in the landholder increases (s. 158(1)(c)). 36. The term ‘constituting’ is not defined in the Duties Act and therefore has its ordinary meaning, which is derived from ‘constitute’: ‘(of elements, etc.) to compose; form’. On this basis, I consider the term ‘constituting’ in the current context connotes a relevant acquisition composed of, or formed by, multiple interests resulting from the aggregation of various interests under s. 158(1)(b). 37. As noted above, the Commissioner’s delegate determined that the relevant acquisition arises, in this instance, under s. 158(1)(b). I concur with that finding. This is because, prior to the Special Resolution, the Taxpayer held a 49% interest in the Company on the basis that the RDPs had the entitlement to receive 49% of the Company’s property on its winding-up (a matter you do not dispute). The effect of the Rights Variation is that the Taxpayer acquired a further 51% in the landholder (being the entire interest held by Leonid in the landholder before the Relevant Date). By applying the relevant rule in s. 158(1)(b), the interest constituting the relevant acquisition is the aggregate of the interest acquired by the Taxpayer in the landholder under the Rights Variation (51%) and the Existing Interest held by the Taxpayer in the landholder prior to the Special Resolution (49%), which totals 100%. 38. Your submissions indicate to me that you consider the 51% interest acquired by the Taxpayer as a result of the Rights Variation is an excluded interest on the basis that it was an interest held by Leonid, a related person of the Taxpayer, more than three years before the relevant acquisition, or at a time when the landholder did not hold land in Queensland. Alternatively, you are saying transactions between related persons should be exempted or disregarded. However, these assertions fail to recognise that Leonid ceased to hold his interest when it was acquired by the Taxpayer on the Relevant Date. 39. As noted above, s. 162 specifies when a person acquires an interest in a landholder. While entitlement as a shareholder to a distribution of the corporation’s property is necessary for an interest, it is not necessary for a person to acquire a shareholding in a corporation to acquire an interest in a corporation. An interest is acquired if a person obtains an interest, or increases their interest, regardless of how this occurs. Section 162(2) sets out some of the ways a person may acquire an interest. The -- 9 of 21 -- 10 abrogation or alteration of a right for a share (as in this instance) is just one of those ways. 40. The cumulative effect of ss. 162 and 163 make it clear that the focus is on the person who has ‘acquired’ an interest in a landholder. Where the person acquires an interest from a related person (as in this instance), it ceases to be held by the related person and therefore, it does not count towards the interests (if any) to be aggregated under s. 158(1)(b). Interests held by related persons will only count as an interest constituting the relevant acquisition if held by the related person immediately before and after the relevant acquisition. There were no such interests constituting the subject relevant acquisition, only the Existing Interest held by the Taxpayer (see paragraph 37 above). 41. The landholder duty provisions are not designed or intended to reduce the dutiable value of a relevant acquisition to nil, or to exempt acquisitions between related persons. This would have an unintended effect or outcome not contemplated by the legislature, as it seeks to excise from the calculation of the dutiable value under s. 179(1) (by utilising s. 179(6)) the very interest for which landholder duty is required to be imposed on the basis that the Taxpayer has made a relevant acquisition in a landholder. 42. It is also important to note that the sum of the interests held or acquired by the person, and related persons of the person, in the landholder, can never exceed 100%. Following, the Rights Variation, the Taxpayer is now entitled to 100% of the Company’s property on its winding-up, compared to 49% prior to the Special Resolution. Landholder duty is intended to apply in these situations because the taxpayer has acquired a significant interest of 51% in a landholder. To not impose landholder duty in this instance is clearly not the policy intent when the statutory requirements are properly construed. 43. The policy of not including, for duty purposes, acquisitions that occurred more than three years before the relevant acquisition, or at a time when the landholder did not hold land in Queensland, ensures these interests are disregarded for working out the dutiable value of the relevant acquisition under s. 179(1). An exception applies where the interest is acquired under an arrangement which also involved the interest most recently acquired. 44. It follows, the dutiable value of the relevant acquisition worked out under s. 179(1) is the interest constituting the relevant acquisition (100%), less any excluded interest (49%), multiplied by the unencumbered value of the Queensland land-holdings of the landholder ($30,700,000), resulting in the landholder duty as reflected in the assessment ($880,802.50).” -- 10 of 21 -- 11 [42] The respondent observed, in a footnote to paragraph 37 of the Objection Decision, that s 158(1)(a) could have applied instead of s 158(1)(b) because the 51% interest acquired by the appellant was itself a significant interest but the result would be the same. Appellant’s submissions [43] The appellant submitted that the unambiguous language of s 179(6) should be given a literal construction.21 Adopting that construction, the interest the appellant acquired must be an excluded interest because, on the agreed facts, the 51% interest the appellant acquired by reason of the 2021 Special Resolution was an interest held by his father (a related person) who had: (a) held that 51% interest for more than three years before the relevant acquisition; and (b) acquired that interest at a time when Maylake did not hold land in Queensland. [44] It was argued that, by excluding intra-group acquisitions, this literal construction better achieved the legislative policy, given the presumption against double taxation22 and the adoption of aggregation of the interests of related persons as a criterion of liability to pay duty.23 [45] In addressing the reasons for disallowing his objection, the appellant submitted that the reference in s 179(6)(a) to an interest “held” by a relevant person should not be understood as meaning continually held notwithstanding that there had been an acquisition (as the appellant characterised the respondent’s position in paragraphs 38 and 40 of the Objection Decision). On the appellant’s argument, and contrary to the reasoning in paragraph 36 of the Objection Decision, nothing in the words of s 179(6) limits its operation to circumstances within s 158(1)(b) of the Act. Respondent’s submissions [46] The respondent submitted24 and the appellant accepted25 that, because the court may give such judgment on this appeal as it considers ought to have been given on the original disallowance of the appellant’s objection,26 neither the respondent nor the court is confined to the reasons given in the Objection Decision for disallowing the appellant’s objection. [47] In that context, the respondent submitted that references in the Objection Decision to the interest acquired by the appellant being one which was held by, and acquired from, his father27 misdescribed the circumstances of the relevant acquisition and were inconsistent with the broader reasoning in the Objection Decision which describes the 21 Court document 11, paragraphs 16 to 18. 22 Trust Company of Australia Ltd v Commissioner of State Revenue (2003) 197 ALR 297, 327-8 [121]. 23 Act, s 158(1)(b). 24 Court document 12, paragraphs 3.1 to 3.3. 25 Court document 13, paragraph 1. 26 Queensland Chamber of Commerce and Industry Ltd v Commissioner of State Revenue (2015) 108 ACSR 334, 352 [96]; Wakefield v Commissioner of State Revenue [2019] 3 Qd R 414, 425-6 [34]. 27 For example, paragraph 31(c) of the Objection Decision (Court document 8, page 271) and paragraph 40 of the Objection Decision extracted above at [41]. -- 11 of 21 -- 12 acquisition as occurring by a “Rights Variation” affecting the preference shares already held by the appellant. [48] On the respondent’s argument, for the interest the appellant acquired to come within the definition of excluded interest in s 179(6) it must simultaneously satisfy two temporal requirements. First, that it be held by the appellant, or by his father, at the time when the interest is acquired.28 Secondly, that it have been held by the appellant, or by his father, on or before the day that is three years before the relevant acquisition or before Maylake acquired land in Queensland. [49] The respondent submitted that, whether considered a relevant acquisition under s 158(1)(a) or s 158(1)(b), the 51% interest the appellant acquired in Maylake did not satisfy both temporal requirements. Two propositions were advanced in support of that submission. They were that, upon the making of the 2021 Special Resolution (that being the time of the acquisition): (a) the 51% increase in the appellant’s interest in Maylake accrued to him as a new entitlement attaching to the redeemable preference shares he already owned and was therefore different to the interest or entitlement the appellant’s father held pursuant to his ordinary shares; (b) the appellant’s father ceased to have any entitlement as shareholder to a distribution of Maylake’s property on a winding up and so held no relevant interest which constituted the relevant acquisition. [50] The first of these propositions is narrower in its effect as it focusses upon the manner in which the appellant acquired the interest in the circumstances of this case. The second proposition is broader because it would, if accepted, apply to other forms of acquisition, including acquisitions effected by share transfer. [51] Although these propositions were described in the respondent’s written outline as the “primary proposition” and the “secondary proposition” it was made clear in oral argument that the respondent placed equal emphasis on both propositions.29 Principles of statutory construction [52] The appellant cited Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation30 in support of his submission that s 179(6) should be afforded a literal interpretation. In that case, Gibbs CJ addressed the approach to statutory construction in the following terms:31 “It is an elementary and fundamental principle that the object of the court, in interpreting a statue, ‘is to see what is the intention expressed by the words used’. It is only by considering the meaning of the words used by the legislature that the court can ascertain its intention. And it is not unduly pedantic to begin with the assumption that words mean what they say. Of course, no part of a statute can be considered in isolation from its context – the whole must be considered. If, when 28 In this case, the appellant acquired the interest at the time the 2021 Special Resolution was made: see Act, s 163(2)(c). 29 Transcript 1-14:16-34. 30 (1981) 147 CLR 297 (Cooper Brookes). 31 Cooper Brookes, 304-5 (citations omitted). -- 12 of 21 -- 13 the section in question is read as part of the whole instrument, its meaning is clear and unambiguous, generally speaking ‘nothing remains but to give effect to the unqualified words’. There are cases where the result of giving words their ordinary meaning may be so irrational that the court is forced to the conclusion that the draftsman has made a mistake, and the canons of construction are not so rigid as to prevent a realistic solution in such a case. However, if the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust. To say this is not to insist on too literal an interpretation, or to deny that the court should seek the real intention of the legislature. The danger that lies in departing from the ordinary meaning of unambiguous provisions is that ‘it may degrade into mere judicial criticism of the propriety of the acts of the Legislature’, as Lord Moulton said in Vacher & Sons Ltd v London Society of Compositors; it may lead judges to put their own ideas of justice or social policy in place of the words of the statute. On the other hand, if two constructions are open, the court will obviously prefer that which will avoid what it considers to be inconvenience or injustice. Since language, read in its context, very often proves to be ambiguous, this last mentioned rule is one that not infrequently falls to be applied.” [53] Mason and Wilson JJ also referred to there being cases:32 “… in which inconvenience of result or improbability of result assists the court in concluding that an alternative construction which is reasonably open is to be preferred to the literal meaning because the alternative interpretation more closely conforms to the legislative intent discernible from other provisions in the statute.” [54] Their Honours held that the propriety of departing from the literal interpretation is not confined to situations where the operation of the statute could be described by labels such as ‘absurd’, ‘extraordinary’, ‘capricious’, ‘irrational’ or ‘obscure’, but extended to:33 “… any situation in which for good reason the operation of the statute on a literal reading does not conform to the legislative intent as ascertained from the provisions of the statute, including the policy which may be discerned from those provisions.” [55] Such observations accord with more recent High Court authority on the correct approach to statutory construction. [56] In Project Blue Sky Inc v Australian Broadcasting Authority,34 a majority of the High Court stated:35 32 Cooper Brookes, 320. 33 Cooper Brookes, 321. 34 (1998) 194 CLR 355. 35 (1998) 194 CLR 355, 381 [69] (citations omitted). -- 13 of 21 -- 14 “The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined ‘by reference to the language of the instrument viewed as a whole’. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that ‘the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed’. Thus, the process of construction must always begin by examining the context of the provision that is being construed.” [57] A similar statement was made in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue:36 “This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. ... The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.” [58] In summary, the proper approach to statutory construction requires that the court’s consideration focus on the text of the relevant provision, in context.37 The task must begin with a consideration of the text itself, although the meaning of the text may require consideration of the context, which includes the general purpose and policy of the provisions. Consideration [59] The appellant’s central argument on this appeal was that, adopting a literal interpretation of s 179(6), the legislative intention was to exclude, from the calculation of duty under s 179(1), an interest acquired from a related party which satisfied the requirements of ss 179(6)(a) or (b). I am unable to accept that submission. [60] The appellant’s argument faces an initial difficulty because the opening words of s 179(6) describe an “excluded interest” as being an interest “of a person who makes a relevant acquisition in a private landholder”. Adopting a literal interpretation of those words would limit the application of the definition to an interest held or acquired by the person who makes the relevant acquisition: in this case, the appellant. Plainly, that construction would not be correct given the further words of s 179(6) and, particularly, the references to interests “held by … a related person” (in s 179(6)(a) and to interests “acquired by … a related person” in s 179(6)(b). Consistently with the aggregation of interests in s 158(1)(b), the inclusion of these words indicate that interests held or acquired by a related person can, for the purposes of the landholder provisions, including s 179(6), be treated as an interest of the person who makes the relevant acquisition. 36 (2009) 239 CLR 27, 46-47 [47] (citations omitted). 37 R v Wassmuth; Ex parte Attorney-General (Qld) [2022] QCA 113 at [26]. -- 14 of 21 -- 15 [61] Two matters must be considered in order to determine whether, in applying s 179(6), an interest held or acquired by a related person is to be treated as an interest of the person who makes the relevant acquisition. [62] First, there is the requirement that the interest of the person used to calculate the dutiable value of the relevant acquisition under s 179(1), and any interest excluded from that calculation by the application of the definition in s 179(6), be an interest “constituting the relevant acquisition”. [63] As is clear from s 158(1), the interests which constitute the relevant acquisition are not limited to the interest acquired by the person at the time of the relevant acquisition. It might also include the following interests aggregated under s 158(1)(b): (a) an existing interest held by the person at the time the relevant acquisition is made; (b) an existing interest held by a related person at the time the relevant acquisition is made; (c) an interest acquired by a related person at the time the relevant acquisition is made. [64] Secondly, the time at which the interests which constitute the relevant acquisition are to be identified for the purpose of applying the definition in s 179(6) is the time of the relevant acquisition. That is because, under s 179(1), the dutiable value of a relevant acquisition is reduced by “any excluded interest of the person at the time of the acquisition”. [65] Understood in that way, the calculation of the dutiable value under s 179(1) requires two steps. [66] The first step is the identification of the component interests which constitute the relevant acquisition. Those interests will always include the interest acquired by the person at the time the relevant acquisition is made, but they might also include other interests held or acquired by the person or a related person which are aggregated with the interest the person acquires at the time the relevant acquisition is made. [67] The second step is to identify which, if any, of the component interests are excluded from the calculation of dutiable value by the application of the definition in s 179(6). In that regard, it is important that s 179(6) makes no reference to the interest acquired by the person at the time the relevant acquisition is made. The definition only refers to interests held by the person, or a related person, before the relevant acquisition was made or interests acquired by the person, or a related person, at a time when the landholder did not hold land in Queensland. [68] In my view, the legislative intention apparent from the words of s 179(6) was to exclude interests held by the person or a related person at the time of the relevant acquisition (as defined in ss 179(6)(a) and (b)), which were not acquired by the person at the time of the relevant acquisition, but which are aggregated with that acquired interest for the purpose of imposing landholder duty. The legislative intention was not to exclude interests the person acquires from a related person at the time of the relevant acquisition. -- 15 of 21 -- 16 [69] In that context, the references in s 179(6) to an interest “held by … a related person” or “acquired by … a related person” are references to such interests that are aggregated with the interest acquired by the person at the time the relevant acquisition is made, and thereby constitute components of the relevant acquisition. It is only those interests held by the related party which the Act treats as being an interest of the person making the relevant acquisition at the time the relevant acquisition was made. [70] On that construction, the 51% interest in Maylake which the appellant’s father ceased to hold upon the making of the 2021 Special Resolution was not an interest of the appellant which constituted the relevant acquisition for the purposes of s 179(6). That is so even if, contrary to the respondent’s primary contention, the interest previously held by the appellant’s father is accepted to be the same interest the appellant acquired by reason of the 2021 Special Resolution. [71] This construction accords with the broader context of the landholder provisions in Part 1 of Chapter 3 of the Act. [72] In particular, as recorded in Note 1 to s 157 of the Act, division 5 (ss 189 to 196) of the landholder provisions exempts specific acquisitions from the obligation to pay duty. If the legislative intention was to exempt certain acquisitions of interests from related persons then one would expect that to have been achieved by including a provision in division 5 and using the wording which appears repeatedly in that division to enact exemptions (“landholder duty is not imposed” on an acquisition or a relevant acquisition). In that context, it seems unlikely the legislative intention was to exempt the acquisition of certain interests from related persons by the wording of the definition of “excluded interest” in a provision which deals generally with the calculation of the dutiable value of relevant acquisitions. [73] The construction also accords with the legislative history which preceded the enactment of the landholder provisions. [74] When first enacted, Part 1 of Chapter 3 of the Act imposed what was referred to as “land rich duty” on relevant acquisitions of interests in a corporation which had land- holdings comprising a specified percentage of the unencumbered value of all of its assets.38 Under s 158 of the land-rich regime, a person would make a relevant acquisition if: (a) the person acquired a majority interest in a land rich corporation; or (b) the person acquired an interest in a land rich corporation which resulted in a majority interest when aggregated with: (i) interests acquired by the person in the land rich corporation in the preceding three years; (ii) interests acquired by related persons of the person in the land rich corporation if the interests were acquired in the preceding three years; (iii) interests held by related persons of the person in the land rich corporation if the person and the related persons became related persons in the preceding three years. 38 Originally the threshold was 80% of the unencumbered value of the company’s property. This threshold was subsequently reduced to 60%. -- 16 of 21 -- 17 [75] In this way, under the land rich regime, the interests which could be aggregated with the interest acquired when the relevant acquisition was made were subject to a three- year window. [76] It should be noted that s 179 of the land rich regime, which provided for the calculation of the dutiable value of a relevant acquisition, made no reference to “excluded interests”. There is no suggestion that, under the previous land rich regime, interests acquired from a related person at the time the relevant acquisition was made (as distinct from interests aggregated under s 158 with the interest acquired when the relevant acquisition was made) were exempt. [77] The land rich regime was replaced with the landholder provisions because the former regime gave rise to complex valuation and technical arguments. [78] As can be seen from the provision extracted at [31] above, when the landholder provisions were enacted, the interests aggregated under s 158(1)(b) for the purpose of determining whether a person had made a relevant acquisition were not limited to interests acquired within a three-year window. However, by excluding interests which the person, or a related person, acquired more than three years before the relevant acquisition from the calculation of the dutiable value of the relevant acquisition, the construction of s 179(6)(a) which I have adopted achieves a similar effect. The relevant question is whether the legislative intention in enacting the definition in s 179(6) was to go further by introducing into the landholder provisions an exemption, which did not exist under the land rich regime, for interests acquired from related persons at the time the relevant acquisition was made (as distinct from interests aggregated under s 158 with the interest acquired when the relevant acquisition was made). I can see nothing to indicate that this was the intention. [79] The appellant’s reference to the potential for the imposition of additional duty, if the construction of s 179(6) set out above were to be adopted, does not overcome the matters I consider support that construction. [80] The appellant’s concern was expressed repeatedly as arising in the context of interests of related persons being aggregated for the purposes of determining whether the person liable to pay duty made a relevant acquisition.39 Of course, that is not the case on the facts of this appeal. No interest held by the appellant’s father was aggregated under s 158(1)(b) with the 51% interest the appellant acquired upon the making of the 2021 Special Resolution. [81] In any event, ss 179(2) and (3) provide for circumstances where the interests of the person and related persons were previously aggregated so that duty was paid on an earlier acquisition. In the circumstances set out there, the interest upon which the dutiable value of the subsequent relevant acquisition is to be calculated is the increased interest in the landholder that the person acquires by that subsequent relevant acquisition. That excludes the interests in respect of which duty had already been paid from the calculation of the dutiable value of the subsequent relevant acquisition and thereby avoids the imposition of duty on the same taxpayer on multiple occasions for the same interest. 39 Transcript 1-7:36-44; T1-11:32 to T1-12:5. -- 17 of 21 -- 18 [82] The appellant sought to illustrate the potential liability for the imposition of duty on multiple occasions by two examples.40 [83] The first example involved the appellant and his father having together acquired Maylake while it was a landholder. In those circumstances, the appellant argues he would have been liable to pay landholder duty in respect of the acquisition of a 100% interest because of the aggregation of his and his father’s interests. The appellant then submits that, on the construction set out above, an absurd result would follow if he subsequently acquired his father’s interest because he would be liable to pay further duty in respect of the subsequent acquisition. [84] The second example involved the appellant and another related person (N) between them acquiring the appellant’s father’s 51% interest in the proportions 41% and 10%. By operation of s 158(1)(b), the appellant and N would each be regarded as having made a relevant acquisition of a 51% interest in Maylake. If the appellant subsequently acquired N’s 10% interest then he would be required to pay duty again on that increased interest with the result, on his argument, that he would have paid duty on 61% of the value of the landholder’s property, although he only acquired a 51% interest in the two acquisitions. [85] As submitted by the respondent, the appellant’s arguments ignore the operation of s 47 of the TA Act which applies, among other things, to the imposition of landholder duty under the Act. Section 47(1) provides that if two or more taxpayers are liable under a tax law to pay an amount, the respondent may recover the whole or part of the amount from any one or more of them. Section 47(2) confirms that this does not affect the right of a taxpayer who pays an amount to recover a contribution from another person jointly or severally liable for the whole or part of the amount. [86] I accept the respondent’s submission that the first example offered by the appellant is governed by ss 179(2)(b)(ii) and 179(3). On the first acquisition by the appellant and his father together, the aggregation of both men’s interests under s 158(1)(b) would have meant that both the appellant and his father made a relevant acquisition and, by reason of s 175(2), both men would be jointly and severally liable for the payment of landholder duty in respect of the acquisition of a 100% interest in Maylake. However, if the appellant paid 100% of the duty owed, he would be entitled to a proportionate contribution from his father and, upon receipt of that contribution, would have paid duty only to the extent of the interest he personally acquired. If the appellant subsequently acquired his father’s interest, that would be a separate relevant acquisition made only by the appellant. By operation of ss 179(2)(b)(ii) and 179(3), the interest used to calculate the dutiable value of that later relevant acquisition would be the increased interest the appellant acquired from his father. Having acquired a 100% interest in Maylake he would have also, across the two acquisitions, incurred duty calculated on that 100% interest. Duty is not imposed on the same taxpayer for the same interest on multiple occasions. [87] The same analysis applies to the appellant’s second example. While it is correct that the appellant would, by reason of s 175(2) be jointly and severally liable with N for duty assessed on the acquisition of a 51% interest in Maylake, the appellant’s argument ignores his entitlement to a 10% contribution from N if the appellant pays the full amount of duty assessed. Once that contribution is accounted for, the 40 Court document 11, paragraphs 20 and 21. -- 18 of 21 -- 19 appellant would only have paid duty to the extent of the 41% interest he acquired. Upon subsequently acquiring N’s 10% interest, the appellant would have made a separate relevant acquisition which attracts the operation of ss 179(2)(b)(ii) and 179(3). Again, the overall result across the two acquisitions would be that the appellant would have acquired a 51% interest in Maylake and have been assessed duty on that 51%. [88] The appellant also sought to support his submission for a literal construction by contrasting the existing words of s 179(6) with a recent amendment made to a similar provision in Western Australia. [89] Sections 188 and 189 of the Duties Act 2008 (WA) read as follows, with the underlined words in the chapeau to s 189(2) having been inserted by the relevant amendment: “188. Calculating duty payable (1) To calculate the amount of duty payable in respect of a relevant acquisition an amount is first calculated by applying the appropriate rate of duty under section 184(1) to the value of the interest of the acquirer in the landholder immediately after the relevant acquisition and then, if applicable, a reduction is made under section 189. (2) The resulting amount is the duty payable in respect of the relevant acquisition. (3) The value of the interest referred to in subsection (1) is the same percentage of the value of the landholder as the percentage of the interest of the acquirer in the landholder after the relevant acquisition. 189. Reduction for s. 188 (1) The amount calculated under section 188(1) is to be reduced by an amount determined by applying the appropriate rate of duty under section 184(1) to the value of the excluded interest or the sum of the values of each excluded interest. (2) An excluded interest is an interest of the acquirer in the landholder concerned after the relevant acquisition referred to in section 188, other than the interest acquired by that relevant acquisition, that is — (a) an interest, other than one which cannot be excluded because of subsection (4), that was held by the person or a related person, or by the person and a related person, before the day that is 3 years before the day on which the relevant acquisition occurred; or (b) an interest acquired by a relevant acquisition that occurred on or after the day first referred to in paragraph (a) if duty was chargeable in respect of that acquisition, but only to the extent to which the interest is held -- 19 of 21 -- 20 immediately before the relevant acquisition referred to in section 188; or (c) an interest in the landholder concerned acquired by an acquisition if immediately before the acquisition neither the landholder nor a linked entity in respect of the landholder was entitled to land in Western Australia. (3) The value of an excluded interest is the same percentage of the value of the landholder concerned as the percentage of all interests in the landholder that is represented by the excluded interest. …” [90] The Explanatory Memorandum for the Revenue Laws Amendment Bill 2018 (WA) presented in the Legislative Council, contained the following relevant statement:41 “A defect in the current provisions means that acquisitions between related persons are not always subject to duty. This is an unintended outcome of the transition from the land-rich model under the Stamp Act to the landholder model in the Duties Act. These amendments restore the policy intent by applying duty to relevant acquisitions between related persons.” [91] And in explaining the specific amendment:42 “Clause 87: Section 189 amended Section 188 provides that to calculate the duty payable for a relevant acquisition: • an amount is first calculated by applying the appropriate rate of duty to the value of the interest of the acquirer in the landholder immediately after the relevant acquisition; and • if applicable, the amount is reduced by the duty that applies to the value of any ‘excluded interest’. Excluded interests are defined in subsection (2) and are essentially interests: (a) held more than three years before the acquisition; (b) acquired within the period of three years before the acquisition and upon which duty was chargeable; or (c) acquired where the landholder was not entitled to land. The Commissioner considers the proper interpretation of section 189 is that an excluded interest must be an interest that is presently held at the time of the relevant acquisition; but does not form part of the interest acquired by the relevant acquisition. This clause amends section 189 to put this interpretation beyond doubt.” 41 At page 2 of the Explanatory Memorandum. 42 At pages 119-20 of the Explanatory Memorandum (underlining added). -- 20 of 21 -- 21 [92] The appellant submitted that the absence from s 179(6) of the Act of words similar to those inserted by amendment in the Western Australian legislation is telling, not because this court is in any way bound by the understanding of the legislature in Western Australia as to the meaning of its corresponding legislation, but because, as a matter of logic and reasoning, the words inserted into the Western Australian provision can be seen to have an effect.43 [93] Again, I cannot accept that submission. The explanation for the amendment in Western Australia suggests to me that the legislature in that state considered there to be some doubt about the interpretation of s 189 of the Western Australian legislation. The amendment was made to remove that doubt. [94] I do not hold the same doubt about the proper interpretation of s 179(6) of the Act. For the reasons I have set out above, the construction I have adopted is that which I consider best conforms to the legislative intent as ascertained from the text of the section read in the context of the landholder provisions in Part 1 of Chapter 3 of the Act more broadly and the object of those provisions as identified in [30] above. Conclusion [95] For these reasons, I have concluded that the 51% interest the appellant acquired upon the making of the 2021 Special Resolution was not an excluded interest within the meaning of s 179(6) of the Act. On that basis, having regard to the matters which were not in dispute on this appeal, the dutiable value of the relevant acquisition was $15,657,000. That was the value upon which duty was assessed by the respondent. [96] The construction I have adopted means the result is the same, whether or not the respondent’s primary submission is accepted (see [49](a) above). It is therefore not necessary to decide the correctness of that primary proposition. [97] The orders will be: 1. The respondent’s decision dated 31 March 2022 to disallow the appellant’s objection is affirmed. 2. The assessment dated 24 January 2022 is affirmed. 3. The appeal is dismissed. 4. The appellant pay the respondent’s costs of and incidental to the appeal to be assessed on the standard basis if not agreed. 43 Transcript 1-11:7-30. -- 21 of 21 --