Meaning of land for Queensland stamp duty purposes - Sojitz Coal Resources Pty Ltd v Commissioner of

Key takeaways

On 30 January 2015, the Supreme Court of Queensland (per McMurdo J) upheld an appeal by Sojitz Coal Resources Pty Ltd (Sojitz) against a decision of the Commissioner to impose land rich duty on its acquisition of a majority interest in a coal mining company.

Facts

Sojitz acquired a 51% interest in Minerva Coal Pty Ltd (Minerva) on 20 December 2010. At this date, Minerva owned real property valued at $3,435,000, two mining leases valued at $2,378,568 and other assets valued at $150,000. Accordingly, if the mining leases were included in the value of its landholdings, Minerva's land assets comprised 60% or more of the unencumbered value of all its property meaning that it was a land rich company and Sojitz would be subject to duty on the acquisition.

Submissions

Under s167 of the Duties Act 2001 (Qld) (Duties Act) a company’s landholdings is defined to mean its “interest in land” which would (in the absence of anything else) seem to require a proprietary interest in land.¹ However, the Commissioner submitted that the mining leases were “land in Queensland” on the basis of an editor’s note contained within s167(1)(a) of the Duties Act. This note referred to the definition of the term “interest” as it then appeared in s36 of the Acts Interpretation Act 1954 (Qld) (AIA). According to the Commissioner, the application of this definition to s167 resulted in the mining leases forming part of Minerva’s landholdings for the purposes of calculating land rich duty on the basis that it met the description in s36 of a “right, power or privilege over, or in relation to, the land”.

Sojitz submitted that this limb of the definition in the AIA should not apply to s167 of the Duties Act because it was inconsistent with the phrase "interest in land" contained in that section. Sojitz contended that the expression “interest in land” is well understood and was deliberately used in s167 to limit a corporation’s landholdings to its proprietary rights in land.

Decision

McMurdo J held that the expression “interest in land” in s167 of the Duties Act had its ordinary meaning and the definition of interest in s36 of the AIA ought not apply because the word “interest” was used “specifically and unambiguously in a way which was qualified by the words “in land”. It would defeat that express qualification to import the wider subject matter of any interest in relation to land”. If the definition of “interest” in s36 applied, McMurdo J considered it could “give rise to absurd or unreasonable consequences for companies whose assets could not be realistically described as landholdings in any ordinary sense”.

Implications

Land rich duty was abolished in Queensland when the landholder duty regime was introduced on 1 July 2011. Also, in 2012, the Duties Act was amended to incorporate a “resource authority” (which includes a mining tenement²) within the definition of land. However, while this limits the future application of the case to the acquisition of companies holding Queensland mining leases under the landholder regime, this decision is still relevant because it clarifies that an interest in land must be a proprietary interest for the purposes of landholder duty. For instance, it would appear to not extend to a tolling right.³ The decision is also relevant to duty on the transfer of land, given the same editor’s note regarding s36 of the AIA is contained in s10 of the Duties Act.

The Commissioner has not appealed this decision.

¹ In this regard, s10 of the Mineral Resources Act 1989 (Qld) makes it clear that a mining lease “does not create an estate or interest in land”.
² Mining tenement is defined in schedule 2 of the Mineral Resources Act 1989 (Qld) to include, among other things, a mining lease.
³ See CCM Holdings Trust Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 1072, albeit in the context of duty in New South Wales.