In the recent case of Commissioner of State Revenue v Lend
Lease Development Pty Ltd  HCA 51 the High Court was
asked to decide on the method of calculating transfer duty on a
major property project.
Victorian Urban Development Authority
(VicUrban) was the owner of a number of parcels of
land in the Docklands area of Melbourne.
Lend Lease agreed to buy the land from VicUrban and to design,
construct and sell large residential and commercial buildings on
the land. Lend Lease was required to contribute to the development
costs incurred by VicUrban. VicUrban also was to share in the gross
revenue Lend Lease would receive from the sale of the residences,
offices and other buildings which Lend Lease was to design and
The agreement provided for Lend Lease to make a number of
payments described as the stage land payments which were to be made
prior to title passing to it.
Lend Lease submitted that the only payments that should be the
subject of duty was the consideration payable for the transfer of
the parcels of land. The Commissioner submitted that the
consideration for the transfer was the total of the payments to be
made by Lend Lease both before and after the transfer of title.
The Duties Act 2000 (Vic) imposes duty on the dutiable
value of property. It defines dutiable value as being the greater
consideration for the dutiable transaction; and
unencumbered value of the dutiable property.
A similar definition is contained within the Duties Act
The Victorian Court of Appeal held that duty was only payable in
respect of the payments payable by Lend Lease prior to the transfer
The Court of Appeal placed reliance upon an earlier decision in
the case of Bambro. In Bambro the vendor
transferred land to the purchaser and the purchaser then engaged
the vendor to construct a shopping centre on the land. Separate
prices were agreed for the transfer and for the building works. In
that case it was held that duty was only chargeable on the price
allocated to the land and not on the price allocated to the
The Court of Appeal thought that the fact that the pieces of
land were undeveloped at the date of transfer to be most
The High Court held otherwise. The High Court took the view that
as it was the vendor who was the builder in Bambro it was
materially different from the Lend Lease case where the purchaser
was the builder. It stated that the consideration for the transfer
does not depend upon the state or condition of the land. The
consideration for the transfer was greater than the market value of
the land at the time of transfer.
It was Lend Lease's submission that the sums that were
payable by it as its contribution towards the cost of the
development work performed by VicUrban and the sums that were to be
paid by it as a share of the amount Lend Lease would receive from
the ultimate sale of the land did not form part of the
consideration for the transfer. This argument was rejected by the
The consideration which moved the transfer by VicUrban to Lend
Lease was the performance of all of the payment obligations set out
in the development agreement. It was only in return for the promise
to pay the total sums that VicUrban was willing to transfer the
land to Lend Lease.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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