In a decision handed down on 30 January 2015, Sojitz Coal Resources Pty Ltd v Commissioner of State Revenue  QSC 9, the Queensland Supreme Court ruled on what constitutes an ‘interests in land’ under the Duties Act 2001 (Qld) (Act).
The Commissioner has historically taken a very broad interpretation of ‘interest in land’, extending it to catch any right, power or privilege, over or in relation to land. The Court has now ruled this approach to be incorrect, at least in the context of the (now superseded) land rich duty provisions, with the Supreme Court deciding that an ‘interest in land’ is in fact restricted to a proprietary interest in the land. It now remains to be seen whether the Commissioner will apply this decision more broadly in the transfer duty context.
The case related to the acquisition by Sojitz Coal Resources Pty Ltd (Sojitz) of more than 50% of the shares on issue in Minerva Coal Pty Ltd (Minerva). The Commissioner had assessed duty on the acquisition on the basis that Minerva was a ‘land rich’ corporation. In reaching the conclusion that Minerva was ‘land rich’, the Commissioner included the value of mining leases held by Minerva in its ‘landholdings’ for duty purposes.
The question in issue on appeal to the Supreme Court was whether, at the relevant time, a corporation’s ‘landholdings’ included an interest in a mining lease granted under the Mineral Resources Act 1989 (Qld).
At the relevant time, ‘landholdings’ was defined to mean a ‘corporation’s interest in land, and anything fixed to the land that may be separately owned from the land…‘. However an editor’s note in the Act referred to section 36 of the Acts Interpretation Act 1954 (Qld) which expanded the definition of ‘interest’ in relation to land or other property to include a ‘right, power or privilege over or in relation to, the land or other property‘.
The Commissioner submitted that this expanded definition of land should be read so as to include a mining lease in an entity’s landholdings for duty purposes.
Justice Philip McMurdo ultimately rejected the Commissioner’s submissions and held that Minerva was not a land rich corporation at the time of the acquisition of shares by Sojitz because its mining leases did not form part of its landholdings.
This conclusion was reached based on Justice McMurdo’s view that the expression ‘interest in land’ (as used in the relevant section of the Duties Act at the time) should be read in accordance with the ordinary meaning of that phrase – which is confined to a proprietary interest in the land and does not include a mining lease. As extrinsic material, the editor’s note could only be used in interpreting the expression ‘interest in land’ in circumstances where that expression was unclear or ambiguous.
It is interesting to note that the same editor’s note appears in section 10 of the Act (which relates to transfer duty) and the same rules of statutory interpretation will need to be applied in determining if a more restrictive definition of ‘interest’ is appropriate in that context as well.
The definition of land in the Act was amended in 2012 to specifically include reference to a ‘resource authority’ (which includes a mining tenement under the Mineral Resources Act 1989 (Qld)), so the relevance of this decision in the context of mining tenements is limited to transactions that occurred before that date.
However, the potential broader implications are significant. This decision certainly impacts on the scope of the landholder duty provisions and the same arguments may also be applied to limit the transfer duty payable in certain circumstances.
McCullough Robertson’s specialist duty and tax litigation teams were engaged by the taxpayer to act in this appeal and are happy to discuss the issues raised and the potential implications for future transactions.