Benidorm Pty Ltd v Chief Commissioner of State Revenue

[2020] NSWSC 471

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:	Benidorm Pty Ltd v Chief Commissioner of State Revenue [2020] NSWSC 471
Hearing dates:	18 December 2019
Date of orders:	30 April 2020
Decision date:	30 April 2020
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	1.   The defendant’s assessment dated 6 March 2019, which assessed a deed made on 29 January 2015 between the plaintiff and Derek Stubbs (described as “Declaration of Trust by Nominee” with ad valorem duty, be revoked pursuant to s 101(1)(a) of the Taxation Administration Act 1997 (NSW). 2.   The defendant repay any duty paid under the Principal Assessment with interest pursuant to s 101(1)(e) of the Taxation Administration Act 1997 (NSW). 3. The defendant pay the costs of this proceeding pursuant to s 101(1)(e) of the Taxation Administration Act 1997 (NSW) and s 98 of the Civil Procedure Act 2005 (NSW).
Catchwords:	REVENUE — Stamp duties — whether declaration of trust dutiable transaction where only acknowledges statutory vesting   REVENUE — Stamp duties — duty on declaration of trust — application of exemptions and nominal duty provisions
Legislation Cited:	Corporations Act 2001 (Cth) Duties Act 1997 (NSW) ss 8, 9, 11, 18, 50, 54, 55, 63, 652, 163H Duties Act 2008 (WA), s 11 Probate and Administration Act 1898 (NSW), ss 44, 47 Real Property Act 1900 (NSW) Stamp Duties Act 1894 (Qld) Stamp Duties Act 1920 (NSW)
Cases Cited:	Barron (Inspector of Taxes ) v Littman [1953] AC 96 Boensch v Pascoe [2019] HCA 49; (2019) 375 ALR 15 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 45 NSWLR 639 Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240; [2011] NSWCA 48 Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4 Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1 Commissioner of Stamp Duties (Queensland) v Hopkins (1945) 71 CLR 351; [1945] HCA 14 Commissioner of State Revenue v Rojoda Pty Ltd [2020] HCA 7 Crowther v Commissioner of Stamp Duties (NSW) [1978] 1 NSWLR 82 Davidson (Collector of Imposts) v Chirnside (1908) 7 CLR 324; [1908] HCA 65 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; [1982] HCA 14 Fair Work Ombudsman v Spotless Services Australia Ltd [2019] FCA 9 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Federal Commissioner of Taxation v Clark (2011) 190 FCR 206; [2011] FCAFC 5 Fremantle Lawyers Pty Ltd v Sarich (2019) 54 WAR 113; [2019] WASCA 48 Harvey v Barton (No 4) [2015] NSWSC 809 King v Denison (1813) 1 Ves & B 260 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360; [1979] HCA 61 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; [1990] HCA 45 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Re Blow [1914] 1 Ch 233 Rinehart v Rinehart [2020] NSWSC 68 Rojoda Pty Ltd v Commissioner of State Revenue [2018] WASCA 224; (2018) 368 ALR 734 Stokes v Churchill; Estate of Fryer (1994) NSW ConvR 55- 694 Toohey’s Ltd v Commissioner of Stamp Duties (1960) 60 SR (NSW) 539 Tooheys Limited v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602; [1961] HCA 35 Walsh Bay Developments Pty Ltd v Commissioner of Taxation (Cth) (1995) 31 ATR 15 Wedge v Acting Comptroller of Stamps (Victoria) (1941) 64 CLR 75; [1941] HCA 1 Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773
Texts Cited:	J D Heydon & M J Leeming, Jacobs’ Law of Trusts in Australia (7th ed, LexisNexis Butterworths, 2006) J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) Justice R White, “The Nature of a Beneficiary’s Equitable Interest in a Trust” [2007] New South Wales Judicial Scholarship 12 The Macquarie Dictionary (3rd ed, 1997, Macquarie Library)
Category:	Principal judgment
Parties:	Benidorm Pty Ltd (Plaintiff) Chief Commissioner of State Revenue (Defendant)
Representation:	Counsel: C Bevan with I Sethi (Plaintiff) R Seiden SC with S Kanagaratnam (Defendant)   Solicitors: Piper Alderman (Plaintiff) NSW Crown Solicitor’s Office (Defendant)
File Number(s):	2019/00192019
Publication restriction:	Nil

Judgment

1. HER HONOUR: Before me for hearing in December last year was an application by the plaintiff, Benidorm Pty Ltd (Benidorm), for review of a Notice of Assessment of Duty dated 6 March 2019 (the Assessment) issued by the defendant, the Chief Commissioner of State Revenue (Chief Commissioner).

2. The Assessment assessed for ad valorem duty a deed made on 29 January 2015 between Benidorm (as trustee) and Derek Stubbs (as beneficiary) (the Second Declaration of Trust), by which Benidorm declared that it held certain property (a penthouse apartment on Macquarie Street, Sydney, to which I will refer as the Macquarie Street Apartment) as nominee on trust for Mr Stubbs. The principal question for determination in the present proceeding is whether the Second Declaration of Trust constituted a dutiable transaction, which turns on whether it falls within the statutory definition of “declaration of trust” pursuant to s 8(3) of the Duties Act 1997 (NSW) (Duties Act). If so, then the question then arises as to whether any exemption or concession (under ss 18(6), 18(6A) or 63(1)(a)(i) of the Duties Act) applies.

3. The procedural background to the present proceeding is not uncomplicated by reason of the fact that previously, in 2018, the Chief Commissioner had issued Notices of Assessment of Duty to Mr Stubbs himself in respect of the Second Declaration of Trust. There was a hearing on 14 February 2019 (in what I will refer to as the Stubbs Proceeding) of a similar application by Mr Stubbs to the application presently brought by Benidorm. Mr Stubbs there sought the review of those 2018 Notices of Assessment of Duty, raising broadly the same issues as are here raised for consideration. The Stubbs Proceeding was dismissed (by consent) when it was appreciated that the party liable for duty (assuming the Second Declaration of Trust was dutiable) would not be the beneficiary in question (Mr Stubbs) but, rather, the declarant (Benidorm); and the Chief Commissioner then withdrew those 2018 Notices of Assessment.

4. The present proceeding was commenced following the issue of a fresh (in effect, replacement) assessment notice, again assessing the Second Declaration of Trust for ad valorem duty; and the rejection of Benidorm’s objection (on the same basis as the previous objection) in relation to that assessment.

5. One consequence of the delay caused by the abovementioned procedural complication (caused by the issue of the initial assessment notices to the wrong taxpayer) was that, in the interim, the High Court of Australia had granted special leave and heard an appeal from a decision of the Court of Appeal of the Supreme Court of Western Australia (Rojoda Pty Ltd v Commissioner of State Revenue [2018] WASCA 224; (2018) 368 ALR 734 (Rojoda (WA)), on which decision reliance had here been placed by Benidorm (as I will explain in due course). In the period after judgment was reserved in the present proceeding, the High Court published its decision overturning (by majority) the decision in Rojoda (WA) (see Commissioner of State Revenue v Rojoda Pty Ltd [2020] HCA 7 (Rojoda (HC)). That decision is of relevance on the principal issue before me now (again, as I discuss in due course).

Background

6. The factual background to the dispute (which is not controversial) may be summarised as follows.

7. On 1 May 2007, Mr John Phillip Dawson, a solicitor acting on instruction from Mr Robinson (a resident of Guernsey, now deceased), caused Benidorm to be incorporated for the purpose of Benidorm being used as a vehicle for the purchase of the Macquarie Street Apartment. Mr Dawson was the sole director and shareholder in Benidorm.

8. On 16 May 2007, immediately before entry into the contract for the purchase of the Macquarie Street Apartment by Benidorm, a declaration of trust was executed by Mr Dawson (as the sole director and shareholder of Benidorm), by which Mr Dawson acknowledged that he held his shares in the capital of Benidorm (the Benidorm Shares) as a mere nominee for Mr Robinson absolutely (the First Nominee Declaration).

9. Benidorm then, on the same day, entered into the contract for the purchase of the Macquarie Street Apartment for the sum of $12,050,000 (the Contract). It is accepted by both parties that Mr Robinson was the “real” purchaser of the Macquarie Street Apartment, having provided the whole of the purchase price to Benidorm, the apparent purchaser. The Contract was duly stamped with ad valorem duty (the First Assessment).

10. On 31 May 2007, Benidorm (as the trustee) and Mr Robinson (as sole beneficiary) entered into a deed of trust (the First Declaration of Trust) whereby Benidorm declared that it had entered into the Contract for the purchase of the Macquarie Street Apartment at the request, and at the cost, of Mr Robinson and declared that it would hold the title to the Macquarie Street Apartment as trustee for Mr Robinson. The First Declaration of Trust, inter alia, provided as follows:

THE TRUSTEE

The Trustee hereby declares that the Trustee holds the property in trust for the Beneficiary and hereby agrees that the Trustee will at the request and cost of the Beneficiary convey the land to such person, firm or corporation at such time or times and in such manner and make such applications and execute all such instruments and do all acts and things and otherwise deal with the same as the Beneficiary shall at any time direct.

THE BENEFICIARY

The Beneficiary will at all times indemnify and keep indemnified the Trustee and in the case of the Company, its successors and assigns and in the case of a person, his legal representatives against all liabilities which the Trustee may incur by reason of the property being acquired and held in the name of the Trustee and in particular (without limiting the foregoing) will pay or cause to be paid the balance of the purchase moneys for the property, and stamp duty and costs for the purchase of the property and all rates, taxes and other outgoings applicable to the property which the Trustee its successors and assigns or his personal representatives may be or become liable to pay in respect of the property.

11. Benidorm contends that the First Declaration of Trust operated to confirm the resulting trust over the Macquarie Street Apartment (arising from the fact that Mr Robinson had provided the whole of the purchase price for the property – to which I will refer as the Apartment Resulting Trust) and thereby converted it into an express trust (the Apartment Express Trust).

12. Also on 31 May 2007, an agreement was entered into between Benidorm, Mr Dawson and Mr Robinson under which arrangements were made for the ongoing management and control of the Macquarie Street Apartment by Benidorm as the property’s custodian and for the management and control of Benidorm as the trustee of the Macquarie Street Apartment (the Custodian Agreement).

13. On 27 June 2007, as adverted to above, the sale of the Macquarie Street Apartment was completed and ad valorem duty of $783,994.00 was paid on the Contract.

14. On 13 September 2013, Mr Robinson died in Guernsey. By his last will and testament dated 11 September 2013 (the Will), Mr Robinson appointed Mr Stubbs (the late Mr Robinson’s partner) as his sole executor and beneficiary. On 6 December 2013, the grant of probate of the Will issued in Guernsey and on 23 December 2014 the grant of probate was resealed in this Court.

15. On 29 January 2015, Mr Dawson executed a document described as a declaration of nominee in respect of the Benidorm Shares (the Second Nominee Declaration). In the Second Nominee Declaration, Mr Dawson declared that, in consequence of Mr Robinson’s death and the terms of the Will, Mr Dawson now held the Benidorm Shares on trust for Mr Stubbs absolutely as sole beneficiary and as the sole executor of Mr Robinson’s estate.

16. Also on 29 January 2015, Benidorm (as “Trustee”) and Mr Stubbs (as the “New Beneficiary”) executed the document the subject of the present proceeding, namely, the Second Declaration of Trust, by which it was declared that, in consequence of Mr Robinson’s death and the terms of the Will, Benidorm “will hold” the Macquarie Street Apartment on trust as “Nominee” for the “New Beneficiary” (Mr Stubbs) on the same terms as the First Declaration of Trust. (Benidorm points out that no revocation of the Custodian Agreement was made, so that it continued to operate after the death of Mr Robinson for the benefit of Mr Robinson’s testamentary successor, Mr Stubbs.) Relevantly, the Second Declaration of Trust provided as follows:

IT IS HEREBY ACKNOWLEDGED AND DECLARED that

1.    The Trustee will hold the property as Nominee for the New Beneficiary [Mr Stubbs] absolutely in the place of and as successor to the Original Beneficiary [Mr Robinson] and on the same terms as set out in the Original Trust Deed as though each reference therein to the Beneficiary were to the New Beneficiary.

2.    The New Beneficiary will indemnify the Trustee and its successors against all liabilities which the Trustee may incur in respect of the Property including (without limitation) all rates taxes levies and other outgoings applicable to the Property and all (if any) taxes in respect of income or profits derived from the Property.

3.    The Trustee will transfer the Property to the New Beneficiary or to his nominee on receipt of his written request or direction subject to the prior of simultaneous repayment and discharge of all monies owing under any mortgage, charge or other security over the Property or by the Beneficiary to the Trustee under clause 2 above including (without limitation) as may become payable by the Trustee as a result of the transfer of the Property.

17. By letter dated 16 November 2016, the Chief Commissioner notified the lawyers then acting for Mr Stubbs (Carneys Lawyers) that: the First Nominee Declaration was determined to be liable to nominal duty of $10.00 pursuant to s 55(1)(a) of the Duties Act; and the First Declaration of Trust was determined to be liable for nominal duty of $50.00 pursuant to s 55(1)(a) of the Duties Act.

18. On 21 March 2018, the Chief Commissioner issued: a Notice of Assessment for the First Nominee Declaration for $10.00; and a Notice of Assessment for the First Declaration of Trust for $10.00. (Pausing here, as can be seen, this is a different amount from that which the Chief Commissioner had indicated in the letter of 16 November 2016. It appears that the correct amount payable at the relevant time under the section was $10.00, the subsequent Notice of Assessment was for $10.00 and that amount was duly paid.)

19. On 8 March 2019 by letter, following the withdrawal of the original assessment notices issued to Mr Stubbs, the Chief Commissioner issued a Notice of Assessment for the Second Declaration of Trust for $982,682.84, being ad valorem stamp duty of $710,490.00 and interest for late payment of $272,312.84 less an adjustment for a credit of $120.00) (the Principal Assessment).

20. On 13 March 2019, Benidorm objected to the Principal Assessment by its solicitors’ letter of that date (the Objection). On 16April 2019, Benidorm supplemented the Objection with further grounds of objection by letter of that date from its solicitors (Piper Alderman). On 17 May 2019 the Chief Commissioner partially disallowed the Objection (partially allowing the Objection to the extent of remitting part of the interest) and gave reasons for the disallowance by letter of that date (the Objection Decision).

21. On 20 June 2019, Benidorm commenced this proceeding.

Relevant provisions of the Duties Act 1997 (NSW)

22. It is convenient here to set out the relevant provisions of the Duties Act in force at the time the Second Declaration of Trust was executed. At the outset, it is relevant to note that the object of the Duties Act is “to create and charge a number of duties” and that s 8 does so by way of a general charging provision over various dutiable transactions (not instruments) as set out in the section. It is not therefore necessary (or relevant) to look behind the dutiable transaction in question to ascertain why it occurred in a certain way or the motivation for the adoption by parties of a particular structure or course of action (see Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1 (Pendal Nominees) at 15, per Mason CJ; at 19, per Brennan J (as his Honour then was)).

23. More specifically, s 8 of the Duties Act concerns the “imposition of duty on certain transactions concerning dutiable property” and charges duty on “a transfer of dutiable property” and certain specifically identified “transactions” including, relevantly at s 8(1)(b)(ii), “a declaration of trust over dutiable property”. In terms, the provision is relevantly as follows:

8      Imposition of duty on certain transactions concerning dutiable    property

(1)     This Chapter charges duty on:

(a)     a transfer of dutiable property, and

(b)     the following transactions:

(i)     an agreement for the sale or transfer of dutiable          property,

(ii)     a declaration of trust over dutiable property,

(iii)     a surrender of an interest in land in New South Wales,

(iv)     a foreclosure of a mortgage over dutiable property,

(v)     a vesting of dutiable property by or as a consequence of an order of a court of this or another jurisdiction, whether inside or outside Australia,

(vi) the enlargement of a term in land into a fee simple under section 134 of the Conveyancing Act 1919,

(vii)     a vesting of land in New South Wales by, or    expressly authorised by, statute law of this or another jurisdiction, whether inside or outside Australia,

(viii)     a lease in respect of which a premium is paid or agreed to be paid.

(c)    (Repealed)

[…]

(2)     Such a transfer or transaction is a dutiable transaction for the    purposes of this Act.

[…]

24. Section 8(3) of the Duties Act then defines “declaration of trust” (and both parties accept that this is an exhaustive definition) as follows:

declaration of trust means any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration.

25. Pausing here, it is accepted by the parties that the statutory definition of a declaration of trust (at s 8(3)) is wider than what might be considered a declaration of trust at general law. Certainly, the statutory definition of “declaration of trust” is wide enough to cover a declaration of trust over property that has yet to come into existence (see Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240; [2011] NSWCA 48 (Platinum), which affirmed duty charged on a declaration of trust over shares that did not exist at the time the relevant deed was executed, albeit under the previous revenue legislation).

26. For present purposes, the issue in contention is whether the definition is wide enough to cover what might be considered a mere acknowledgement (or confirmation) of the operation of the general or, as will be seen, statutory law (say, in the case of a resulting trust). As will be explained below, the Chief Commissioner says that the definition is so wide (otherwise, a real question would arise over the utility of specific provisions such as ss 18(6), 18(6A), 50, 50A, 54 and 55 Duties Act, each of which are directed at specific circumstances which give rise to concessional rates of duty). Benidorm says that it is not.

25. Also relevant to note (since they are relied upon by Benidorm if it does not succeed on its principal contention in this case) are various relieving provisions contained in the legislation. Section 18 of the Duties Act provides, relevantly, as follows:

18   No double duty

(1)     If a dutiable transaction is effected by more than one instrument, one instrument is to be stamped with the duty payable on the dutiable transaction and each other instrument is chargeable with duty of $50.

Note. Instrument includes a written statement.

[…]

(6)     The duty chargeable on a declaration of trust that declares the same trusts as those upon and subject to which the same dutiable property was transferred to the person declaring the trust is $10 if ad valorem duty has been paid on the transfer.

(6A)     The duty chargeable on a declaration of trust is $50 if the Chief Commissioner is satisfied that:

(a)     the declaration of trust supersedes another declaration of trust in respect of which duty has been paid and declares the same trusts as were declared under the superseded declaration of trust, and

(b)     the beneficiary under the declaration of trust is the same as under the superseded declaration of trust, and

(c)    the dutiable property subject to the declaration of trust:

(i)   is wholly or substantially the same as the property that was the subject of the superseded declaration of trust at the time of the declaration of the superseded declaration of trust, or

(ii)   represents the proceeds of re-investment of property that was the subject of the superseded declaration of trust at the time of the declaration of the superseded declaration of trust, or

(iii)   is property to which both subparagraphs (i) and (ii) apply.

[…]

28. It is also relevant to note s 55, which provides that:

55   Property vested in an apparent purchaser

(1)     Duty of $50 is chargeable in respect of:

(a)     a declaration of trust made by an apparent purchaser in respect of identified dutiable property:

(i)     vested in the apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property, or

(ii)     to be vested in the apparent purchaser upon trust for the real purchaser, if the Chief Commissioner is satisfied that the money for the purchase of the dutiable property has been or will be provided by the real purchaser, or

(b)     a transfer of dutiable property from an apparent purchaser to the real purchaser if:

(i)     the dutiable property is property, or part of property, vested in the apparent purchaser upon trust for the real purchaser, and

(ii)    the real purchaser provided the money for the purchase of the dutiable property and for any improvements made to the dutiable property after the purchase.

(1A)     For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser.

(1B)     This section applies whether or not there has been a change in the legal description of the dutiable property between the purchase of the property by the apparent purchaser and the transfer to the real purchaser.

Note. For example, if the dutiable property is land, this section continues to apply if there is a change in the legal description of the dutiable property as a consequence of the subdivision of the land.

(2)     In this section, purchase includes an allotment.

29. Section 63 provides as follows:

63   Deceased estates

(1)     Duty of $50 is chargeable in respect of:

(a)     a transfer of dutiable property by the legal personal representative of a deceased person to a beneficiary, being:

(i)     a transfer made under and in conformity with the trusts contained in the will of the deceased person or arising on an intestacy, or

(ii)     a transfer of property the subject of a trust for sale contained in the will of the deceased person, or

(iii) an appropriation of the property of the deceased person (as referred to in section 46 of the Trustee Act 1925) in or towards satisfaction of the beneficiary’s entitlement under the trusts contained in the will of the deceased person or arising on intestacy, and

(b)       (Repealed)

(c)     a transmission application by a devisee who is also the sole legal personal representative, and

(d) a declaration by an executor of a will under section 11 of the Trustee Act 1925 if the Chief Commissioner is satisfied that the declaration is consistent with the entitlements of beneficiaries under the trusts contained in the will.

[…]

Issues

30. The issues identified by Benidorm as here arising for consideration, which are broadly the same as those raised in the Stubbs Proceeding (see the plaintiff’s appeal statement filed 20 June 2019, as refined in Benidorm’s opening submissions) are as follows.

31. First, whether the Second Declaration of Trust constituted a “declaration of trust” within the meaning of the definition of that term in s 8(3) of the Duties Act (referred to by Benidorm as the “declaration of trust issue”).

32. Second, whether, if the Second Declaration of Trust is a declaration of trust under s 8(3) of the Duties Act, it is a “transaction” within the meaning of s 8(1)(b)(ii) of the Duties Act which is liable to duty under s 8(1) of the Duties Act (referred to by Benidorm as the “transaction issue”).

33. Third, whether, if the first two issues are answered in the affirmative, the Second Declaration of Trust is liable to nominal duty:

1. of $10.00 under s 18(6) of the Duties Act because it declares the same trust as the resulting trust under which Mr Robinson acquired the Macquarie Street Apartment on 16 May 2007;

2. of $10.00 under s 18(6) of the Duties Act because it declares the same trust as declared in the First Declaration of Trust; or

3. of $50.00 under s 18(6A) of the Duties Act because: it supersedes the First Declaration of Trust; it declares the same trusts as the First Declaration of Trust declared; the beneficiary in each trust is the same; and the trust property in each trust is the same

(referred to by Benidorm as the “superseded trust issue”).

34. Fourth, whether, if the Second Declaration of Trust is a declaration of trust under s 8(3) of the Duties Act and is a dutiable transaction within the meaning of s 8(1)(b)(ii) of the Duties Act which is otherwise liable to duty under s 8(1) of the Duties Act, the Second Declaration of Trust is liable only to nominal duty of $50.00 pursuant to s 63(1)(a)(i) of the Duties Act as a transfer made under and in conformity with the trusts of the Will (referred to by Benidorm as the “transfer under the Will issue”).

35. As explained in due course, the complexity of the above framework of issues is perhaps more apparent than real.

Benidorm’s submissions

Ownership of the Macquarie Street Apartment in consequence of the death of Mr Robinson

36. Benidorm’s starting position is that (which is not disputed), prior to his death, Mr Robinson was the beneficial owner of both of the Benidorm Shares and the Macquarie Street Apartment, in each case pursuant to a resulting trust of which Mr Dawson was the trustee or nominee by reason of Mr Robinson having paid the purchase price for the Benidorm Shares (the issue price of the shares) and the Macquarie Street Apartment, respectively. In this regard, Benidorm relies on a statutory declaration made by Mr Dawson on 9 June 2015. The respective resulting trusts are referred to by Benidorm as the Shares Resulting Trust and the Apartment Resulting Trust.

37. Benidorm says that the Shares Resulting Trust arose by operation of law but is evidenced by the First Nominee Declaration. It is said that, to that extent, the Shares Resulting Trust became an express trust in consequence of it having been confirmed in writing. Similarly, it is said that, although the Apartment Resulting Trust arises by operation of law, it is evidenced by and was converted into an express trust by the First Declaration of Trust (and, hence, that, to that extent, the Apartment Resulting Trust is now an express trust in consequence of it having been confirmed in writing).

38. Benidorm says that the Shares Resulting Trust and the Apartment Resulting Trust are bare trusts because there are no active trust duties on the part of the trustee (Benidorm), apart from the obligation to preserve the trust property and transfer it to the beneficiary when required by the beneficiary (referring to the First Nominee Declaration at [1] and [2] and the First Declaration of Trust at [1]); and therefore that it holds the trust property without any beneficial interest therein (other than that existing by reason of the trustee’s office and title as trustee and without any further trust duty to perform, except to convey the relevant property upon demand to the beneficiary or as directed by him or her). It is submitted that, as a result of the two resulting trusts being bare trusts, the beneficiary of each of those trusts (at all material times until his death, being Mr Robinson) has a vested indefeasible and absolute entitlement in the trust property (namely, the Benidorm Shares and the Macquarie Street Apartment).

39. Upon Mr Robinson’s death, his beneficial interest in the Benidorm Shares and the Macquarie Street Apartment pursuant to the two resulting trusts formed part of his real and personal estate.

40. Benidorm notes that s 44 of the Probate and Administration Act 1898 (NSW) (the Probate Act) provides that, upon the grant of probate of the will of the estate of any person dying after the passing of the Probate Act, all real and personal estate which any such person dies seised or possessed of, or entitled to, in New South Wales shall, as from the death of such person, pass to and become vested in the executor to whom probate has been granted. Benidorm further notes that s 44 of the Probate Act operates retrospectively so that, upon the granting of probate to an executor, the deceased’s property vests in the executor as from the death of such person.

41. Benidorm says that s 44 of the Probate Act therefore operates to cause the executor to whom probate is granted to hold the whole of the legal estate in the property of the deceased. It says that this statutory vesting in the executor (Mr Stubbs) of all of the legal and equitable estate of Mr Robinson as the testator included the beneficial interest in the Macquarie Street Apartment held by Mr Robinson under the terms of the trust over the Macquarie Street Apartment (the Apartment Trust) at the date of his death.

42. Thus, Benidorm submits that, by the operation of s 44 of the Probate Act, upon the date of the grant of probate (but taking effect retrospectively to the date of death of the deceased) the whole of the real and personal estate of Mr Robinson vested in Mr Stubbs as executor and Mr Stubbs therefore held a proprietary interest in the real and personal estate of the late Mr Robinson, as his legal personal representative, as from 13 September 2013. That real and personal estate of course included Mr Robinson’s beneficial interest in the Benidorm Shares and the Macquarie Street Apartment.

43. Thus, by reason of s 44 of the Probate Act, it is said that: the beneficial interest which Mr Robinson held in the Benidorm Shares pursuant to the terms of the Shares Resulting Trust and the beneficial interest which Mr Robinson held in the Macquarie Street Apartment pursuant to the terms of the Apartment Resulting Trust and Apartment Express Trust each vested in Mr Stubbs as from 13 September 2013 as the executor of the Will.

44. Benidorm next points to s 47 of the Probate Act which provides that the real estate of every deceased person devising it by will shall be held by the executor according to the trusts and dispositions in the will; and that s 47 is engaged on death of the deceased.

45. It is submitted by Benidorm that the combined operation of ss 44 and 47 of the Probate Act is that, on the instant of the death of Mr Robinson, the beneficial interest which he held at the date of his death in the Macquarie Street Apartment (but not the legal interest) passed to Mr Stubbs: first, as sole executor under s 44 of the Probate Act; and, second, in the same instant, as sole beneficiary under s 47 of the Probate Act (because s 47 requires the vesting that occurs under s 44 take effect subject to the terms of existing trusts declared by the First Nominee Declaration and the First Declaration of Trust), so that those express trusts relating to the Macquarie Street Apartment ceased to inure for the benefit of Mr Robinson and, henceforth, following his death, they inured for the benefit of Mr Stubbs as the sole beneficiary of the Will.

46. Therefore, it is submitted by Benidorm that, as from 13 September 2013: Mr Dawson held the Benidorm Shares on an express trust for Mr Stubbs (in lieu of Mr Robinson) pursuant to the First Nominee Declaration; and Benidorm held the Macquarie Street Apartment on an express trust for Mr Stubbs (in lieu of Mr Robinson) pursuant to the First Declaration of Trust. It is said that Mr Stubbs was the beneficiary of the Shares Resulting Trust and also the beneficiary of the Apartment Resulting Trust as from 13 September 2013.

47. Benidorm argues that, by reason of these facts, no other instrument was either necessary or effective, under the principles of trust law on the creation of express trusts, to vest a beneficial interest in the Benidorm Shares or in the Macquarie Street Apartment in Mr Stubbs as executor; those interests already being so vested in Mr Stubbs as the sole executor (pursuant to s 44 of the Probate Act) and as the sole beneficiary (pursuant to s 47 of the Probate Act) of the Will of Mr Robinson.

48. It is thus said that, at the time of execution of the Second Nominee Declaration on 29 January 2015, the Benidorm Shares were already held by Mr Dawson upon the trust evidenced by the First Nominee Declaration for Mr Stubbs because the beneficial interest of the late Mr Robinson in the Benidorm Shares was then vested in Mr Stubbs pursuant to ss 44 and 47 of the Probate Act, the vesting having occurred on 13 September 2013.

49. Accordingly, Benidorm’s position is that it was not possible for Mr Dawson to declare an effective further trust over the Benidorm Shares for Mr Stubbs on 29 January 2015, or to “re-declare” the very same trust, because Mr Dawson already held the Benidorm Shares on trust for Mr Stubbs as executor of the Will as from 13 September 2013; and hence there was no available dutiable property which could become the subject of a further (or a re-declared) declaration of trust made by anyone in respect of the Benidorm Shares. Benidorm says that any document executed after the First Declaration of Trust could operate as nothing more than an acknowledgement or confirmation of the original declaration of trust creating the trust and of the requisite trust obligations to bind the trustee to hold the Macquarie Street Apartment upon trust for Mr Robinson, in the first instance, and subsequently, for the benefit of the sole beneficiary of his Will, Mr Stubbs.

50. In other words, it is said that the beneficial interest in the Benidorm Shares was, on 29 January 2015, already vested in the person in favour of whom the Second Declaration of Trust was expressed to operate (namely, Mr Stubbs) and, at best, all that the Second Nominee Declaration could do was formally to record (in a manner which could have no stamp duty consequences) the historical fact that the beneficial interest of the late Mr Robinson in the Benidorm Shares had already vested in Mr Stubbs as the sole executor of the Will on 13 September 2013. Benidorm thus submits that the Second Nominee Declaration had no possible work to do and, to the extent that it purported to confirm the trust over the property which is the subject of the shares resulting trust, namely, the Benidorm Shares, it was invalid and cannot create any possible liability to ad valorem duty.

51. To similar effect, Benidorm relies on the fact that the Macquarie Street Apartment was, at the time of the Second Declaration of Trust (that is, 29 January 2015), already held by Benidorm upon the trust evidenced by the First Declaration of Trust for Mr Stubbs (because the beneficial interest of Mr Robinson in the Macquarie Street Apartment was vested then in Mr Stubbs pursuant to ss 44 and 47 of the Probate Act in the two capacities he then held, such vesting having occurred on 13 September 2013).

52. Again, Benidorm argues that it was not possible, as a matter of equitable doctrine, for Benidorm to declare an effective trust over the Macquarie Street Apartment on 29 January 2015. Benidorm says that, as at 29 January 2015, Benidorm already held the Macquarie Street Apartment on a fixed trust for Mr Stubbs as sole executor of Mr Robinson’s estate as and from 13 September 2013, as trustee of the trust under which Mr Stubbs (as sole beneficiary) held a vested and indefeasible interest in the Macquarie Street Apartment, being an interest which would vest in possession the moment title to it is transferred to him by the trustee, Benidorm.

53. Again, Benidorm argues that the Macquarie Street Apartment was already vested in the person in respect of whom the Second Declaration of Trust was expressed to operate (namely, Mr Stubbs) as at 29 January 2015; and that, at best, all that the Second Declaration of Trust could do was record the historical fact that the beneficial interest which the late Mr Robinson held in the Macquarie Street Apartment had already vested in Mr Stubbs as the sole executor of the Will on 13 September 2013.

54. Thus, Benidorm says that the Second Declaration of Trust had no work to do as a matter of law, apart from confirming the original declaration of trust made in the First Declaration of Trust and says that, to the extent that it purported to acknowledge or confirm an existing trust over the property which is the subject of the Apartment Resulting Trust (i.e., the Macquarie Street Apartment), it was of no effect as a trust instrument and cannot support any charge to ad valorem duty under the Duties Act.

55. Benidorm argues that the only person who could validly deal with the beneficial interest in the Benidorm Shares and the beneficial interest in the Macquarie Street Apartment as from 13 September 2013 was Mr Stubbs, he being the only person in whom the beneficial interest in the Benidorm Shares and the beneficial interest in the Macquarie Street Apartment is, and has at all material times, been vested as the legal personal representative of the estate of the late Mr Robinson. It is said that any dealing by another person in relation to real and personal property of the late Mr Robinson, including the beneficial interest in the Benidorm Shares and the beneficial interest in the Macquarie Street Apartment is, therefore, invalid and of no effect.

56. Benidorm points out that Mr Stubbs, as the legal personal representative of Mr Robinson, was required to deal with the late Mr Robinson’s interest in the Benidorm Shares and the beneficial interest in the Macquarie Street Apartment in accordance with the terms of the Will. It is noted that Mr Stubbs is also the sole beneficiary named in the Will. Therefore, it is said that Mr Stubbs, as the executor of the Will, is required to transfer Mr Robinson’s beneficial interest in the Benidorm Shares and in the Macquarie Street Apartment to himself (Mr Stubbs) as the sole beneficiary of the Will (by a transmission application made under the Real Property Act 1900 (NSW) and a share transfer form made under the Corporations Act 2001 (Cth) and the constitution of Benidorm).

57. It is also noted that Mr Stubbs is the only person who has the legal capacity to transfer the late Mr Robinson’s interest in the Benidorm Shares and the Macquarie Street Apartment to himself as the sole beneficiary of the Will (whether as a bare trustee of the Benidorm Shares or as the sole director of the corporate trustee, Benidorm, of the Apartment Resulting Trust and the Apartment Express Trust). Benidorm points out that Mr Dawson had no legal capacity to transfer the late Mr Robinson’s beneficial interest in the Benidorm Shares or in the Macquarie Street Apartment to Mr Stubbs.

The “declaration of trust issue” under s 8(3) of the Duties Act

58. Section 8(3) of the Duties Act has been set out above. Benidorm argues that the critical document in this case is the Second Declaration of Trust; a standard form declaration of trust in substantially the same terms as the First Declaration of Trust, which created the express trust over the Macquarie Street Apartment following the creation of the Apartment Resulting Trust at the time of acquisition of the Macquarie Street Apartment by Benidorm in 2007.

59. Benidorm maintains that there can be no issue that the Second Declaration of Trust is a declaration, nor that property in the Macquarie Street Apartment was “vested” in the declarant, Benidorm. It is noted that Mr Stubbs joined in or assented to the declaration made in the Second Declaration of Trust, he being a party to the Second Declaration of Trust and having executed it.

60. Benidorm says that a critical element in the definition of a “declaration of trust” in s 8(3) of the Duties Act (which it maintains is not satisfied in the present case) is the requirement that the declaration operates to vest the beneficial estate in the property in such a way as to create a trust, that is, a new trust, over the property for the benefit of the beneficial owner by the declarant as the trustee of the trust property. It is said that this is because, in the present case, Benidorm already held the Macquarie Street Apartment upon trust for the benefit of Mr Stubbs in consequence of the creation of the trust in favour of Mr Robinson by the First Declaration of Trust in May 2007 and, upon his death, by the operation of s 44 of the Probate Act to vest a beneficial interest in the Macquarie Street Apartment in Mr Stubbs as sole executor, and subsequently, as sole beneficiary, of the Will.

61. In this regard, Benidorm identifies the following difficulties with the approach adopted by the Chief Commissioner on this question in the Objection Decision.

62. First, Benidorm says that although the Second Declaration of Trust refers to the Macquarie Street Apartment as the trust property in Recital A, it refers to the beneficial interest in the Trust as a further category of trust property in Recital D. Further, it is noted that the subject matter of the Second Declaration of Trust is the beneficial interest of the original beneficiary referred to in Recital D rather than the legal and beneficial estate in the Macquarie Street Apartment, which is referred to in Recital A. Benidorm says that this conclusion follows because the legal and beneficial estate in the Macquarie Street Apartment ceased to exist as one concept of property on 31 May 2007 when the original express trust was declared in the deed (the First Declaration of Trust) declaring the Apartment Express Trust, which confirmed the antecedent separation of the legal and beneficial interests in the Macquarie Street Apartment that had arisen on its purchase under the Apartment Resulting Trust.

63. Second, Benidorm says that the Second Declaration of Trust expressly acknowledges that the vesting of the beneficial interest in the Macquarie Street Apartment in the new beneficiary had already occurred by operation of law under s 44 of the Probate Act upon the death of the original beneficiary (13 September 2013) more than one year before the Second Declaration of Trust was made (in consequence of, first, the death of the original beneficiary, second, the grant of probate of the Will of the original beneficiary, and third, its terms). Reference is made to recitals B and C (and D) of the Second Declaration of Trust, as being relevant for the purposes of interpreting the Second Declaration of Trust (albeit not operative for the purposes of creating trust obligations on the trustee, Benidorm).

64. Benidorm argues that the Second Declaration of Trust is a mere acknowledgement of the continued operation of a trust created eight years earlier, notwithstanding the change in the identity of the beneficiary of the Trust in consequence of the death of the Original Beneficiary and the succeeding of the new beneficiary to the estate of the original beneficiary under the Will of the original beneficiary, including a beneficial interest of the original beneficiary in the Macquarie Street Apartment under the original trust deed. Benidorm says that this is not the re-declaration of the (same) trust over the Macquarie Street Apartment after the death of the original beneficiary (notwithstanding what it says is the “superfluous addition” of the words “AND DECLARED” after “HEREBY ACKNOWLEDGED” in the heading to the operative provisions of the Second Declaration of Trust). Benidorm maintains that the Second Declaration of Trust merely acknowledges what s 8(1)(b)(vii) of the Duties Act recognises (and that any liability to duty imposed by s 8(1)(b)(vii) is negated by the exemption from duty created by s 65(12) of the Duties Act).

65. Insofar as the Chief Commissioner relies on the decision in Platinum (see below), Benidorm says that this decision is distinguishable on its facts (being a “future vesting” case accommodated by the second limb of s 8(3) of the Duties Act) and, in any event, Benidorm says that it does not stand for the proposition contended for by the Chief Commissioner. Benidorm says that the second limb of s 8(3) requires a vesting of trust property at general law in the future when the identified trust property as described in the relevant instrument comes into existence (referring to Platinum at [11]-[14], per Campbell JA; and at [104]-[110], per Handley AJA) but that in the present case, no beneficial interest in the Macquarie Street Apartment was, nor could ever be, vested in Mr Stubbs by Benidorm because Benidorm never held a beneficial interest in it (since, from the date of its acquisition in 2007, in consequence of the Apartment Resulting Trust, the beneficial interest resided at all times in the real purchaser, Mr Robinson). It is said that nothing, in the sense of a proprietary interest in the Macquarie Street Apartment, vested in Mr Stubbs at the date of the Second Declaration of Trust and, equally, nothing of a proprietary nature ever vested, nor could have ever vested at some future time, under that instrument.

66. Insofar as the Chief Commissioner relies on the decision in this Court of Toohey’s Ltd v Commissioner of Stamp Duties (1960) 60 SR (NSW) 539 (Tooheys (SC)), Benidorm says it too is distinguishable on its facts. It is noted that in Tooheys (SC) it was held that the words “declaration of trust” in the former definition extended to cases where property was not yet vested in the trustee and also to cases where no presently operative trust is declared (that is, where a future trust is being declared) (see at 545-546 per Walsh, Owen and Clancy JJ). Benidorm says that, accordingly, the statements of principle in Tooheys (SC) can be of no present relevance and the decision says nothing about the existence of, or rationale for, a liability to duty for an instrument which creates no new trust, such as the present case.

67. Insofar as the Chief Commissioner relies on Pendal Nominees, Benidorm says it too is distinguishable from the present case. It says that is so for three reasons. First, on the basis that the present case is not one where property is “to be vested”; rather, the Macquarie Street Apartment was vested beneficially in Mr Robinson from its acquisition by Benidorm in 2007 and, as from Mr Robinson’s date of death, in Mr Stubbs under the Will.

68. Second, that the present case is not one where a question about the intention to create a trust in the future is involved; rather, at the time when the relevant instruments were signed (namely, 29 January 2015), there was already dutiable property vested in a trustee which was held on trust for a beneficiary, so the new instruments had no work to do (apart from confirming, or acknowledging, the continuing existence of the trust in each case). Thus it is said that Pendal Nominees can have no possible relevance to the present case.

69. Third, Benidorm argues that Pendal Nominees is not authority for the proposition that an instrument which creates no new trust may nonetheless be charged with duty under s 8(1)(b)(ii) of the Duties Act “if it meets the statutory description of the instrument”. In this regard, Benidorm notes that in Pendal Nominees, the relevant legislation was the Stamp Duties Act 1920 (NSW) (the 1920 Act), which imposed duty on instruments and not upon transactions, whereas the Duties Act imposes duty only on transactions and not on instruments. Benidorm argues that in the present case, there is no dutiable transaction that can give rise to duty. As noted above, it says that on the date of the Second Nominee Declaration and the Second Declaration of Trust (namely, 29 January 2015), Mr Dawson and Benidorm respectively held the property in those documents on trust for Mr Robinson and then, on his death, on trust for Mr Stubbs and had done so since 13 September 2013. It is said that it was therefore not possible for those instruments to effect “a dutiable transaction”, as is required by s 8 of the Duties Act, when read in the light of s 9 of the Duties Act.

70. Benidorm points to authority for the proposition that a legally ineffective instrument cannot be subject to a liability for stamp duty, namely, Commissioner of Stamp Duties (Queensland) v Hopkins (1945) 71 CLR 351; [1945] HCA 14 (Hopkins), where Latham CJ said (at 360) that:

It is true that, as has often been said, the Stamp Duty Acts impose duties upon instruments and not upon transactions. It is obvious that you can stick a stamp or impress a stamp upon an instrument, but not upon a transaction. But, in order to determine whether an instrument is dutiable, it is nevertheless necessary to ascertain the legal operation of the instrument, i.e., to determine the nature of the transaction which it accomplishes. Thus for example, if a person purported to make a conveyance or settlement of land in which he had no interest whatever, the instrument would not be dutiable as a conveyance or settlement because it would not produce any legal effect whatever in relation to the property with which it purported to deal: see Rich ACJ in Wedge v Acting Comptroller of Stamps (Vict.) (1941) 64 CLR 75, p. 79; Kent v Commissioner of Stamps (1927) QSR 398, p. 408; Alpe, Law of Stamp Duties, 19th ed. (1929), p. 249: “A settlement must effect a disposition of property”; Massereene v Commissioners of Inland Revenue (1900) 2 LR. 138.

[Emphasis as per Benidorm’s submissions]

71. Benidorm also places weight on the statement of principle by Rich ACJ in Wedge v Acting Comptroller of Stamps (Victoria) (1941) 64 CLR 75; [1941] HCA 1 (Wedge) at 79 (which was cited in Hopkins as extracted above) as support for the proposition by Benidorm that the relevant instruments in this case (the Second Nominee Declaration and the Second Declaration of Trust) are both legally ineffective instruments, that is, that they could not possibly attract any liability to duty because they achieve no result in trust law either at the date of the relevant instrument or at any future date. Rich ACJ stated:

The subject instrument contains no disposition or agreement to dispose of property belonging to the appellant but is merely an acknowledgement or recognition that he is not the absolute owner of the property comprised in the instrument and preserves other trusts or rights affecting it. No new beneficial interest is created in favour of the appellant or anybody else, and the property remains subject to the same trusts as it did before the instrument was executed.

72. It is noted that, on that basis, the High Court in Wedge set aside the decision of the Full Court of the Supreme Court of Victoria confirming the assessment of ad valorem duty on the instrument in question, which did no more than declare trusts which had already been validly created in the Will of the appellant’s late father.

73. Benidorm argues that the outcome of the facts in Wedge is squarely on all fours with the facts in the present case. It says that Mr Dawson has done no more than confirm that he holds his shares in Benidorm for the benefit of Mr Stubbs and that Benidorm holds the title to the Macquarie Street Apartment on trust for Mr Stubbs consistently with the original first declarations earlier made by them; and that the second tranche of documents purport to achieve what ss 44 and 47 of the Probate Act by their own force had already achieved at the instant of Mr Robinson’s death two years earlier on 13 September 2013 (although, as the evidence stands, Mr Dawson was relevantly unaware of that result of the automatic operation of the Probate Act).

74. It is submitted that, in the present case, the documents which the defendant has assessed to duty do not effect any valid “transactions” whatsoever (since, on the date of these latter two instruments, Mr Dawson and Benidorm respectively already held the property referred to in those instruments upon trust for Mr Stubbs absolutely).

75. As adverted to in the introduction to these reasons, in its submissions on the hearing before me Benidorm relied on the decision of the Western Australian Court of Appeal decision in Rojoda (WA). There, the Court of Appeal did not deal with the construction of s 11(1)(c) of the Duties Act 2008 (WA) (the Duties Act (WA)) (relevantly, the equivalent to s 8(3) of the Duties Act), the Commissioner having conceded in the Tribunal below that, if it was found that no new trust at general law was created by the deed in question (the 2013 Deed), then there was no “declaration of trust” within the meaning of s 11(1)(c) of the Duties Act (WA). Benidorm relied upon what was said by Buss P and Beech JA in Rojoda (WA) (at [31]) to the effect that the clause there in question, on its proper construction, merely acknowledged or recorded an existing obligation that had arisen under the general law and did not create new trusts in relation to the partnership properties conferring on the partners or their representatives a proprietary equitable interest in the properties that had not previously been held by the partners or their representatives.

76. Benidorm’s contention was that no declaration of trust can arise at general law or under the statute (be it under the Western Australian or the New South Wales definitions of “declaration of trust”) unless the instrument creates new beneficial interests in the property over which the putative trust has been declared. It is submitted that there could be no “transaction” embodied in the instrument if there is no creation of a new trust at general law at the time of the vesting of the trust property (the Macquarie Street Apartment) in the trustee (Benidorm), as the case law on the predecessor to s 8(3) of the 1920 Act requires, at the very least, for the characterisation of the instrument in question as a statutory “declaration of trust”.

77. In written submissions for the present hearing, reference was made by Benidorm to an argument raised by the Chief Commissioner in his review of the assessment the subject of the earlier Stubbs Proceeding, as an aspect of his re­assessment of the Second Declaration of Trust to Benidorm, which analyses the Second Declaration of Trust as a resettlement of the Trust over the Macquarie Street Apartment; so raising the proposition that the promise of a personal indemnity given by Mr Stubbs (as the new beneficiary of the trust) in favour of Benidorm (as the trustee of the trust) for the trust’s liabilities, in addition to that which exists at general law, effected in cl 2 of the Second Declaration of Trust, constitutes a new trust because (quoting Griffiths CJ in Davidson (Collector of Imposts) v Chirnside (1908) 7 CLR 324 (Davidson v Chirnside) at 340-341; [1908] HCA 65):

... any instrument, which on its face purports to be the charter of future rights and obligations with respect to the property comprised in it, and which contain such limitations as are ordinarily contained in settlements, is a settlement or agreement to settle within the meaning of the Schedule [to the Stamps Act 1982 (Vic)], whether those rights could have been established aliunde or not. If a statement of already existing rights is added as a mere incident to the main operation of the instrument, as in the case of the appointment of a new trustee of an existing trust, this condition is not fulfilled, for in such a case the charter would still be the original settlement.

[Emphasis as per Benidorm’s submissions]

78. Benidorm contends that this “trust resettlement point” is flawed for four reasons. First, that the Chief Commissioner has not assessed the Second Declaration of Trust as a settlement. It is said that the Second Declaration of Trust could not be liable to duty as a settlement because there is no charge to duty in the Duties Act on a “settlement”. It is said that, in order for a “settlement” to become liable to duty, it must be a “transfer of dutiable property” within the meaning of s 8(1)(a) of the Duties Act, but that there is no suggestion that the Second Declaration of Trust involves a transfer of dutiable property by Benidorm to Mr Stubbs (and that any such proposition would be untenable). Benidorm says that the Chief Commissioner is here seeking to rely upon a statement of principle relating to one category of trust transaction (a settlement) to support an assessment of duty for a different category of trust transaction (a declaration of trust); and points out that both categories of transaction are different in the Duties Act.

79. Second, that the passage italicised in the above quoted passage of Griffiths CJ’s judgment is on all fours with the addition of a personal indemnity by Mr Stubbs to that which exists under equitable principles (assuming that cl 2 of the Second Declaration of Trust adds an additional indemnity by Mr Stubbs to that which Mr Robinson gave in cl 2 of the Custodian Agreement), as to which Benidorm relies on Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226; [1998] HCA 4 at [43]-[51], per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ. Benidorm says that, assuming for present purposes there to have been an addition in 2015 of the personal indemnity by the beneficiary to the existing personal indemnity for nominal outgoings on the (unencumbered) Macquarie Street Apartment (rates and taxes) relative to the value of the Macquarie Street Apartment as trust property, this is a clear case of “a mere incident to the main operation of the instrument” (quoting Griffiths CJ in Davidson v Chirnside at 341).

80. Third, Benidorm refers to the decision of the Full Court of the Federal Court in 2011 in Federal Commissioner of Taxation v Clark (2011) 190 FCR 206; [2011] FCAFC 5 (Clark), where the majority (Edmonds J and Gordon J, her Honour then sitting in the Full Court of the Federal Court of Australia), rejecting a similar argument based on a waiver by the trustee of its general law right of indemnity (as distinct from, in the present case, the suggested addition of a right of indemnity), said (at [82]):

[the trustee]’s waiver of its rights to be indemnified out of the CU Trust in respect of liabilities incurred by it in properly discharging its powers and duties as trustee, no more created a new trust estate than it terminated an existing one. At the very most, it may have extinguished a “beneficial interest” in the trust assets which [the trustee] had by virtue of that right: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 367 per Stephen, Mason, Aickin and Wilson JJ, but even that is not clear … there was no alteration to the terms of the trusts embodied in the Deed of Trust and no exclusion of the right of indemnity under that document by way of amendment. Even if [the trustee]’s beneficial interest in the trust assets was extinguished by the waiver, it did no more than extinguish an interest which ranked in priority to those of the beneficiaries; the beneficiaries’ interests are not “encumbered” by the trustee’s right’: Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 247, and in some way altered by the extinguishment.

81. Fourth, Benidorm submits that the new indemnity point is factually unsound. Benidorm notes that the Apartment Resulting Trust and the Apartment Express Trust (created by the First Declaration of Trust) included a personal indemnity from the beneficiary from inception in each case; noting that the Custodian Agreement, which was made contemporaneously with the First Nominee Declaration and the First Declaration of Trust in 2007 on the same date as the Contract for the purchase of the Macquarie Street Apartment was entered into, includes what in substance is an identical personal indemnity from the beneficiary of the trust as that for which cl 2 of the Second Declaration of Trust provides. As adverted to above, Benidorm says that there is no evidence that the Custodian Agreement was ever cancelled or varied (on 29 January 2015 when the Second Declaration of Trust was entered into, or on any other date), and says that the Custodian Agreement, including the personal indemnity from the beneficiary provided to the trustee in cl 9, continued to operate when the parties entered into the Second Declaration of Trust some eight years later on 29 January 2015.

82. Thus, Benidorm maintains that there is no merit in the Chief Commissioner’s trust resettlement point founded on the addition of the supposedly new personal indemnity given by Mr Stubbs as the beneficiary in cl 2 of the Second Declaration of Trust.

The “transaction issue” under s 8(1)(b)(ii) of the Duties Act

83. Assuming that the Second Declaration of Trust is found to be a “declaration of trust” within the meaning of s 8(3) of the Duties Act (contrary to Benidorm’s submissions on that issue), Benidorm argues that the Second Declaration of Trust must nonetheless qualify as a “transaction” within the meaning of the chapeau to s 8(1)(b) of the Duties Act in order to charge duty on the Second Declaration of Trust as a “declaration of trust over dutiable property” under s 8(1)(b)(ii) of the Duties Act.

84. Benidorm starts here with the ordinary meaning of the word “transaction” (a term not defined in the Duties Act), noting relevantly that only a “transaction” which has the character of a “declaration of trust” is charged with duty under s 8(1)(b)(ii) of the Duties Act.

85. Benidorm says that “transaction” as ordinarily understood is “a comprehensive word which includes any dealings with property” (citing Barron (Inspector of Taxes) v Littman [1953] AC 96 (Barron v Littman) at 113 per Lord Nonnand); the operative requirements being: a “dealing” in “property”. Benidorm says that the Macquarie Street Apartment is “property”, noting that there is no issue that it is “dutiable property” within the meaning of s 11(1)(a) of the Duties Act but says that there is no “dealing” in the Macquarie Street Apartment, by operation of the Second Declaration of Trust, as the word “dealing” is ordinarily understood.

86. In that regard (though accepting in oral submissions the force of the caution sounded by Leeming JA, among others, as to the use to be made of dictionary definitions (T 7)) reference is made to the definition of “dealing” as “relations; trading: business dealings; conduct in relation to others; treatment: honest dealing” (see The Macquarie Dictionary, 3rd ed, 1997, Macquarie Library). Benidorm says that, in the context employed by Lord Normand in Barron v Littman at 113, “dealing” means “business dealings” in the sense of “trading” (i.e., that there is a requirement for some business dealing, in the sense of trading, in the Macquarie Street Apartment for the Second Declaration of Trust to constitute a “transaction” “over” the Macquarie Street Apartment or in respect of the Macquarie Street Apartment, to employ the language of s 8(1)(b)(ii) of the Duties Act).

87. Benidorm argues that this interpretation of “transaction” in s 8(1)(b) of the Duties Act is reinforced by the statutory purpose of the Duties Act as articulated by Emmett AJA in Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773 (Winston-Smith), a decision which involved a review of an application for relief from land rich duty charged by Ch 4 of the Duties Act which had been refused under s 163H of the Duties Act by the Chief Commissioner. In particular, it is noted that Emmett AJA said that (at [49]):

The purpose of s 163H is to enable a Commissioner to relieve a taxpayer from duty consequences attaching to a relevant acquisition in circumstances where Ch 4 brings within its operation and acquisition that Ch 4 was not intended to capture. The primary purpose of the Duties Act is to tax transactions that result in a change, indirectly, in the underlying practical or economic interest in dutiable property, as distinct from the mere legal or equitable proprietary interest, by providing for duty to be charged on transactions that result in a change of such underlying practical or economic interest, as well as on direct transfers of dutiable property [sic]. The fundamental basis of taxation under the Duties Act, including Ch 4, is a change of the underlying practical or economic interest as well as direct beneficial ownership, whether legal or equitable.

[Emphasis per Benidorm’s submissions]

88. Benidorm submits that it is clear from the above passage that this is a statement of statutory purpose of the entire statute, not merely a statement of the statutory purpose of Ch 4 of the Duties Act, because no distinction is drawn between the statutory purpose of Ch 4, on the one hand, and the purpose of the Duties Act as a whole (which involves the imposition of taxation only upon transactions which effect a change of the underlying practical or economic interest in dutiable property), on the other. Benidorm places emphasis on the “the statute-wide status” of the characterisation by Emmett AJA of the Duties Act as a tax on transactions having economic substance and no longer a tax on instruments which lack any real economic substance; and, second, that that statute-wide statement includes Ch 4 (i.e., the land rich duty regime).

89. Benidorm says that the requirement for a “transaction” which results in a change of “the underlying practical or economic interest” in dutiable property and the requirement for “a change of the ... direct beneficial ownership, whether legal or equitable”, in dutiable property means that the Second Declaration of Trust necessarily must effect a positive change in Mr Stubbs’ practical or economic interest in the Macquarie Street Apartment in order to qualify the Second Declaration of Trust (assuming that it indeed is a “declaration of trust” within the meaning of s 8(3) of the Duties Act) as a “transaction” over dutiable property which is charged to duty by s 8(1)(b)(ii) of the Duties Act.

90. Benidorm emphasises that, at the date of the entry into the Deed constituting the Second Declaration of Trust by Benidorm, as trustee, and Mr Stubbs, as beneficiary, of the trust over the Macquarie Street Apartment, Benidorm already held the Macquarie Street Apartment upon a bare trust for the benefit of Mr Stubbs because of the combined operation of the original resulting trust, its confirmation by the First Declaration of Trust as an express trust, the death of Mr Robinson, the terms of Mr Robinson’s Will, the grant of probate of the Will and the operation of ss 44 and/or 47 of the Probate Act for the reasons outlined earlier.

91. Benidorm says that the only practical result in trust law achieved by the Second Declaration of Trust was: first, to confirm Benidorm’s liability as the trustee for all the debts and expenses of operating the trust; second, to confirm Benidorm’s general law right of indemnity out of the Macquarie Street Apartment as trust property held as trustee; and third, to confirm the existence of a personal indemnity from Mr Stubbs for that liability owed by Benidorm as trustee, which he assumed from Mr Robinson as a term of his succession to Mr Robinson’s beneficial interest in the Macquarie Street Apartment (as that was an express term of the Apartment Express Trust from its inception under cl 9 of the Custodian Agreement, all of which Mr Stubbs provided to Benidorm by cl 2 of the Deed).

92. It is said that, on the interpretation of the word “transaction” (as proffered above), the mere confirmation (or, even if that characterisation of cl 2 is not accepted, the mere addition) of a personal right of indemnity, without more, is not sufficient in trust law to constitute the Second Declaration of Trust a “transaction” in the relevant sense that is required in order to attract a charge to duty in s 8(1)(b) of the Duties Act.

93. Accordingly, Benidorm submits that even if (contrary to Benidorm’s principal case) the Second Declaration of Trust is found to qualify as a “declaration of trust” within the meaning of s 8(3) of the Duties Act, it is not a “transaction” in respect of dutiable property because it is not a transaction constituted by “a declaration of trust over dutiable property” which is charged to duty under s 8(1)(b)(ii) of the Duties Act.

The “same trust issue” under either s 18(6) or 18(6A) of the Duties Act

94. Benidorm next relies upon s 18 of the Duties Act (that being a relieving provision to prevent double duty being charged on the same transaction). Benidorm contends that this is a double duty case (if the Principal Assessment which is under review is otherwise upheld) because the First Declaration of Trust was charged with duty, in respect of the trust over the Macquarie Street Apartment for the benefit of Mr Robinson, and the Second Declaration of Trust (according to the Chief Commissioner) has been charged with duty, in respect of the trust over the Macquarie Street Apartment for the benefit of Mr Stubbs, despite Mr Stubbs succeeding to Mr Robinson’s beneficial interest in the Macquarie Street Apartment under the Will with the benefit of an exemption from duty under s 63(1)(a) of the Duties Act as a transfer of that beneficial interest made under s 8(1)(a) of the Duties Act “in conformity with the trusts contained in the will of the deceased [Mr Robinson]”.

95. Benidorm notes that s 18 relieves a dutiable transaction from the charge to ad valorem duty by charging a specified nominal duty in various factual situations specified in the provision; and that it is only enlivened if the Second Declaration of Trust is otherwise charged with duty.

96. The first factual situation relied on by Benidorm is that contained in s 18(6) of the Duties Act. If s 18(6) is engaged then the duty charged on the Second Declaration of Trust is $10.00. The requirement in s 18(6) is that the Second Declaration of Trust “declares the same trusts as those upon and subject to which [the Macquarie Street Apartment] was transferred to the person declaring the trust [Benidorm]”. The Macquarie Street Apartment was first transferred to Benidorm by the original vendor under the Apartment Resulting Trust. This transfer occurred before the first trust was confirmed by the First Declaration of Trust.

97. Insofar as the Chief Commissioner’s position is that the trusts created by each of the Apartment Resulting Trust (“Trust (No 1)”), the First Declaration of Trust (“Trust (No 2)”) and the Second Declaration of Trust (“Trust (No 3)”) are not “the same” trusts, within the meaning of s 18(6) of the Duties Act (on the basis that the Chief Commissioner contends that the third trust over the Macquarie Street Apartment (that is, Trust (No 3)) is different to Trust (No 1) and Trust (No 2) because Trust (No 3) contains a personal indemnity from Mr Stubbs in favour of Benidorm); Benidorm says that there is no factual basis for the assertion that Trust (No 3) contains an additional personal indemnity to that which constitutes the terms of the trusts in Trust (No 1) and Trust (No 2). Benidorm maintains that Trust (No 1) and Trust (No 2) contain both the general law right of indemnity of Benidorm out of the trust property which is the Macquarie Street Apartment and also the same personal indemnity from the beneficiary that Trust (No 3) contains. Benidorm says that the only factual difference is that the identity of the beneficiary providing the personal indemnity is different.

98. Benidorm argues that cl 2 of the Second Declaration of Trust does no more than confirm Mr Stubbs’ succession under the Will to that term of the Apartment Resulting Trust and Apartment Express Trust over the Macquarie Street Apartment created by the First Declaration of Trust that flows from his succession to the beneficial interest of the deceased in trust property of an express trust which includes cl 9 of the Custodian Agreement as one of its terms. Benidorm says that the personal indemnity given in cl 9 of the Custodian Agreement gives it a general right of indemnity, which every trustee of an express trust has (subject to the contrary terms of the trust instrument), as well as the beneficiary’s personal indemnity from, and Benidorm has those parallel rights of indemnity under, all three trusts.

99. Benidorm maintains that the giving by Mr Stubbs of his personal indemnity to Benidorm in addition to that given by Mr Robinson, which remained alive and in force under cl 9 of the Custodian Agreement and which he assumed from Mr Robinson under the Will, “no more involves the creation of a new trust over the [Macquarie Street] Apartment than the waiver of the general law right of indemnity did in Clark”.

100. It is noted that an express trust is complete when a trust obligation attaches to trust property requiring the trustee in whom the trust property is vested to hold the trust property on trust for a named beneficiary or a charitable purpose. Benidorm says that a new express trust is not created merely because an incidental aspect of a trust obligation is deleted (as occurred in Clark) or is confirmed (as occurred in this case with the confirmation of the original beneficiary’s personal indemnity, or alternatively, if that characterisation is not upheld, then added to the existing personal indemnity in cl 9 of the Custodian Agreement by cl 2 of the Second Declaration of Trust).

101. Accordingly, assuming (contrary to Benidorm’s cases under s 8(3) and under s 8(1)(b)(ii)) that the Second Declaration of Trust is found to be a “declaration of trust” over the Macquarie Street Apartment which qualifies as a “transaction” in respect of the Macquarie Street Apartment, Benidorm contends that it is only charged with duty of $10.00 under s 18(6) of the Duties Act.

102. Alternatively, Benidorm relies on s 18(6A) of the Duties Act, which charges duty of $50.00 where the Court is satisfied that the Second Declaration of Trust: first, supersedes the First Declaration of Trust; second, declares the same trusts as the First Declaration of Trust declared; third, involves the same beneficiary as the First Declaration of Trust involved; and, fourth, involves the same dutiable property as the First Declaration of Trust involved.

103. Benidorm understands there to be no issue as to the first and fourth of the above requirements (the superseding of the first trust and the same trust property being involved in each of the First Declaration of Trust and the Second Declaration of Trust, namely, the Macquarie Street Apartment). As to the second requirement (the same trust being created by each instrument), Benidorm says that it is answered in this case for the reasons outlined above in relation to the application of s 18(6) of the Duties Act. As to the third requirement (i.e., for the same beneficiary), Benidorm understands the Chief Commissioner’s position to be that Mr Stubbs is not the “same” as Mr Robinson. In that regard, while accepting that (factually and literally) that proposition is correct, Benidorm argues that the requirement in s 18(6A) of “sameness” is not the same person but the same beneficiary (and says that the distinction is critical on the facts of this case).

104. Benidorm contends that s 18(6A) is to be interpreted purposively, involving a statutory purpose of avoiding double duty arising from a declaration of trust made to give effect to a gift in a will of a beneficial interest held in the trust property by the deceased. It is contended that if this statutory purpose is applied in this case then Mr Stubbs is the same beneficiary as Mr Robinson because Mr Stubbs has succeeded to the whole of Mr Robinson’s estate in New South Wales.

105. On a purposive approach to statutory interpretation, and assuming “the same trust” argument that is maintained above for the purposes of s 18(6) of the Duties Act is upheld, Benidorm contends that the four elements for the nominal charge to duty of $50.00 on the Second Declaration of Trust specified in s 18(6A) of the Duties Act are here present.

The “transfer under the will issue” under s 63(1)(a)(i) of the Duties Act

106. Finally, Benidorm relies on s 63(1)(a)(i) of the Duties Act (but only in the event that its cases under ss 8(3), 8(1)(b)(ii), 18(6) and 18(6A) are not upheld). As excerpted above, s 63(1)(a)(i) charges duty of $50.00 upon:

a transfer of dutiable property by the legal personal representative of the deceased person to a beneficiary being: (i) a transfer made under and in conformity with the trusts contained in the will of the deceased person.

107. Benidorm contends that the Second Declaration of Trust effected the transfer of Mr Robinson’s beneficial interest in the Macquarie Street Apartment under the Trust over it (the Apartment Resulting Trust and the Apartment Express Trust which was created by the First Declaration of Trust).

108. Benidorm says that, because that beneficial interest is dutiable property (it is an interest in land in New South Wales within the meaning of s 11(1)(a) of the Duties Act), the Second Declaration of Trust satisfies the test of a “transfer of dutiable property” in the first limb of the chapeau to s 63(1)(a)(i) of the Duties Act. Benidorm contends that the transfer in question that is made under the Second Declaration of Trust is made by Mr Stubbs, in his capacity as executor of the Will, to himself, in his capacity as a sole beneficiary of the Will. It is said that so much follows because Mr Stubbs is a party to the Second Declaration of Trust and, by its terms, he has bound the trustee, Benidorm, which is also a party to the Deed embodying the Second Declaration of Trust, to hold the Macquarie Street Apartment henceforth upon trust for his benefit rather than upon trust for the benefit of Mr Robinson. Accordingly, Benidorm submits that the second limb of the chapeau to s 63(1)(a)(i) of the Duties Act is satisfied in this case.

109. Insofar as the Chief Commissioner takes issue with the second of those propositions, and contends that Benidorm (rather than Mr Stubbs) is the “transferor” of the beneficial interest in the Macquarie Street Apartment from Mr Robinson to Mr Stubbs which was effected by the Second Declaration of Trust, Benidorm argues that this approach is fundamentally flawed when one has regard to the fact that Benidorm never held a beneficial interest in the Macquarie Street Apartment from the moment of its acquisition by Benidorm, at the behest of and on behalf of Mr Robinson, and that Benidorm certainly could not have held the Macquarie Street Apartment beneficially at the date of the Second Declaration of Trust. It is said that Benidorm could never have held the Macquarie Street Apartment beneficially at any date because Benidorm acquired the Macquarie Street Apartment as apparent purchaser for Mr Robinson as its real purchaser (and points out, though without suggesting any estoppel would here arise, that the original purchase documents were stamped by the Chief Commissioner on that express basis).

110. Benidorm also notes that the First Declaration of Trust was stamped with nominal duty because it declared an express trust over the Macquarie Street Apartment which, from its original acquisition, was already held upon a resulting trust for the benefit of Mr Robinson by Benidorm. It says that there could not possibly have been a transfer of the beneficial interest in the Macquarie Street Apartment by Benidorm to Mr Stubbs effected by the Second Declaration of Trust because, in its capacity as an apparent purchaser, Benidorm never held (and nor could it have possibly held under principles of resulting trusts), the beneficial interest in the Macquarie Street Apartment from the start.

287. Further, I accept that Mr Dawson’s ignorance of the operation of the relevant provisions of the Probate Act is of no moment. That is to say, this does not change the fact that the Second Declaration of Trust, in effect, had no work to do and had no legal consequence.

288. Having said these things, it is necessary also to consider the Chief Commissioner’s submissions on this aspect of the dispute.

289. As to the Chief Commissioner’s submission that the First Declaration of Trust was dutiable (with a concession applied per ss 8(3) and 55) notwithstanding that it was preceded by the Apartment Resulting Trust and that Benidorm did not need to do anything in order to convey or settle the beneficial interest in Mr Robinson, I do not see where this submissions takes the matter. This is for no less than two reasons.

290. First, the impugned transaction here relates to the Second Declaration of Trust and the treatment of the First Declaration of Trust, which is of a materially different character (concerning the purported declaration of an express trust over that, and on terms, circumscribed by an earlier resulting trust), is of limited, if any, assistance (at least as regards disposition under the “declaration of trust” issue). This is not least because disposition under a relieving provision, or exemption from duty, is a different matter (which I come to in due course).

291. Second and relatedly, as I have previously indicated, the declaration of an express trust in the circumstances in which the First Declaration of Trust was made does more than simply acknowledge the resulting trust (that is, ‘confirming’ the Apartment Resulting Trust).

292. As to the Chief Commissioner’s submission that s 47 of the Probate Act does not confer the beneficial interest in the Macquarie Street Apartment in Mr Stubbs as beneficiary and instead provides that the executor takes the property “according to the trusts and dispositions of such will” (with the Will providing that the “remainder of the estate” goes to Mr Stubbs absolutely), I do not see how this changes the disposition of this issue. I say this for the following reasons.

293. Before his death, Mr Robinson held the beneficial interest in the Macquarie Street Apartment pursuant to, or as confirmed by (again, it matters not), the First Declaration of Trust; then, upon the grant of probate following Mr Robinson’s death and by operation of the provisions of the Probate Act, the beneficial interest vested in Mr Stubbs.

294. This might be dispositive if, as the Chief Commissioner also submits, Benidorm did, in consequence of its execution of the Second Declaration of Trust, vest Mr Robinson’s beneficial interest in the Macquarie Street Apartment in Mr Stubbs as beneficiary of the Will. However, I do not accept that proposition, which it seems to me proceeds on an incorrect identification of the, so to speak, relevant legal relationship.

295. To explain why this is so it is important to identify the two planes of legal relationship here at play. The first is the relationship of beneficiary and trustee of the interest in the Macquarie Street Apartment under the trust. That is a relationship between Mr Robinson (and, later, Mr Stubbs) and Benidorm, respectively. The second is the relationship between executor and the creditors of, along with those with other interests in, Mr Robinson’s estate. The issue here concerns the first of those relationships. However, at least some of the submissions for the Chief Commissioner focus on the second.

296. That this is so is revealed by some of the authorities on which the Chief Commissioner relies; for example, the reliance placed by the Chief Commissioner on the decision of Santow J in Fryer. While it is certainly true that Mr Stubbs is the sole beneficiary of Mr Robinson’s estate, the issue here concerns Mr Stubbs’ rights against Benidorm as trustee, and his rights to the beneficial interest in the Macquarie Street Apartment, under the trust over the Macquarie Street Apartment; it does not concern an estate beneficiary’s rights, as a beneficiary, against Mr Stubbs, as executor (putting aside the fact that this is, in practical terms, a right against himself). The former relationship is a plane removed from the latter. The same can be said of the Chief Commissioner’s reference to the reasoning of Buss P in Sarich (at [211]).

297. The dispositive point is that, as is the core distinction between executors and trustees, the property that comes to the executor by reason of that office comes in full ownership. That is, it comes without distinction between legal and equitable interests (whereas, a trust is premised on a duality of legal and equitable ownership). As was said by Swinfen Eady LJ in Re Blow [1914] 1 Ch 233 (at 246), “[a]n executor is not an express trustee for the residuary legatees or next of kin”.

298. This difference was explained by the High Court in Schultz as follows (at 312):

[P]rior to administration of the deceased estate, there is no specific property capable of constituting the subject property of any trust in favour of the beneficiary. It could not be said at that stage what part or parts of the testator’s property would need to be realized for the purposes of administration. So It was held that the beneficiary does not have a proprietary interest in each of the assets which are the subject of the devise or bequest such that he or she can say ”this is mine” or “this belongs to me”.

302. In this regard, I see force to Benidorm’s submission that the distinction drawn by the Chief Commissioner between Mr Stubbs’ status as executor (in which capacity the Chief Commissioner seemingly concedes a beneficial vesting) and his status as the beneficiary of the Will is contradictory and, for the reasons here explained, fails to identify the relevant plane of legal relationship. This is further exposed if one considers an apparent implication, or effect, if the Chief Commissioner’s submission (that Benidorm in consequence of its execution of the Second Declaration of Trust vested the beneficial interest in the Macquarie Street Apartment in Mr Stubbs as beneficiary of the Will whereas the Probate Act had only vested that interest in Mr Stubbs as executor) were to be accepted. This apparent implication is as follows: the Second Declaration of Trust could have had the consequence of circumventing the due administration of the estate (including, Mr Stubbs’ obligations as executor to satisfy payment of estate debts, funeral and testamentary expenses before he could take the interest unconditionally for his benefit) by effectively vesting in Mr Stubbs the beneficial interest in the Macquarie Street Apartment absolutely at a time when, if and where the estate were not yet fully administered, Mr Stubbs held the beneficial interest subject to the due administration of other estate interests.

303. The Second Declaration of Trust did not (and could not) do that. Again, the Second Declaration of Trust operated on the distinct and separate plane of legal relationship, being Mr Stubbs’ relationship as beneficiary (under the trust) to Benidorm as trustee of that trust. In this regard, I consider that the distinction advanced by the Chief Commissioner in his submissions does some violence to what is said in, amongst other authorities, Livingston and Schultz.

304. I cannot accept the Chief Commissioner’s submission (said to be dispositive irrespective of my determination of preceding submissions) that the most that could pass to Mr Stubbs under the Probate Act is the beneficial interest held by Mr Robinson prior to his death; whereas what Benidorm has declared is a trust over the whole of the legal estate. In this regard, it is instructive to consider the passage, to which the Chief Commissioner refers, of the judgment of Gibbs CJ in DKLR (relevantly at 442). His Honour there, relevantly, said:

It was next submitted on behalf of the appellant that even if the case fell within par. 2 no duty was payable, because the property comprised in the declaration was no more than the bare legal estate, or, alternatively, that the consideration for the declaration should be regarded as the transfer of the land and that there was therefore full consideration for the declaration. Neither of these arguments is correct. The property comprised in the declaration of trust was the entire property in the land in question. Before the transfer was executed 29 Macquarie was the legal owner of the land; it had the whole right of property in the land, but had no separate equitable estate in it, for its equitable estate was absorbed in the legal estate. Assuming, as we must, for the purposes of the case, that there was an effective transfer of the fee simple to D.K.L.R., the latter company then became obliged to hold the land for the benefit of 29 Macquarie. However, the property as to which the trust was declared - the property comprised in the declaration - was the whole right of property in the land, and not the bare legal estate, for it was not until the declaration of trust became operative that any separate equitable estate was created. 29 Macquarie did not transfer to D.K.L.R. the bare legal estate; indeed it could not declare itself a trustee for itself, and then transfer the bare legal estate to another.

[Emphasis added.]

305. In DKLR, 29 Macquarie was the registered proprietor of certain land. The directors of 29 Macquarie later resolved to request that DKLR act as trustee for it of the land. The directors then approved the declaration, adding that DKLR would hold only the legal estate and that 29 Macquarie would be retaining the beneficial ownership. The directors of DKLR then resolved that that company execute the declaration of trust. The directors of 29 Macquarie then resolved that the company “affix its seal to a transfer of the bare legal estate”. The declaration of trust was then executed on behalf DKLR. A memorandum of transfer from 29 Macquarie to DKLR was then executed.

306. As can be seen, the facts of DKLR are very different to the present proceeding: DKLR concerned the transfer of real property previously not subject of any trust and a subsequent declaration of a trust; meanwhile, and at risk of belabouring the point, the present proceeding concerns the vesting in the executor of the interests of a deceased estate consequent upon the grant of probate of an already persisting beneficial interest under an already persisting express trust. In this way, it can be seen that the dichotomy sought to be drawn in the present case between the beneficial interest held by Mr Robinson prior to his death, on the one hand, and the interest under a trust over the whole of the legal estate which Benidorm has declared, on the other, is a false dichotomy: they are, relevantly, the same thing.

307. Once this is appreciated, the disposition of this issue is, at least in some respects, answered by the Chief Commissioner’s own acceptance, in submissions, that on the death of Mr Robinson, and by operation of s 44 of the Probate Act, the beneficial interest in the Macquarie Street Apartment came to be vested in Mr Stubbs as executor (the Chief Commissioner in this regard accepting, by reference to s 65(12) of the Duties Act, that that statutory vesting is not subject to duty).

308. Similarly, as to the legal consequence (or otherwise) of the Second Declaration of Trust, the Chief Commissioner’s own submissions go some way in disposing of the issue. Relevantly, the Chief Commissioner submitted that the transaction as identified by Mr Stubbs is to keep the property in Benidorm’s name and that the Second Declaration of Trust is a record to avoid any uncertainty of ownership and potential future litigation (noting, in this regard, that the Second Declaration of Trust, once stamped, is “at the very least” of evidentiary value and is an admissible record of its content).

309. That is to say, on this submission (which, I readily accept, was only one of many submissions many of which were put in the alternative), the Second Declaration of Trust had no legal consequence other than confirming, and constituting evidence of, that which had already come to exist by operation of the Probate Act. In that particular regard, the dutiable treatment of express declarations confirming resulting trusts (as to which, see above) should here be recalled. For the avoidance of doubt, the distinction between these two circumstances is as follows: the former does no more than evidence (in the sense of acknowledging) that which had already come to exist by operation of the Probate Act; whereas the latter has legal effects beyond merely evidencing (in the sense of acknowledging) the resulting trust (in that it confirms that which would otherwise only, as a matter of law, be presumed).

310. I do not accept the submission that the Second Declaration of Trust does more than merely acknowledge the general law because I consider that this proceeds from the wrong point of reference. That this is so is illuminated when one considers the comparisons, between the rights and obligations under the Second Declaration of Trust and those under the general law, which the Chief Commissioner attempts to draw out in order to make good this submission.

311. The salient comparisons postulated in furtherance of this submission were as follows: first, the Second Declaration of Trust employs mandatory, directory and anticipatory language; second, the Second Declaration of Trust contains an undertaking by the trustee to hold the property on the same trusts as the First Declaration of Trust (it is said, thereby, going beyond the general law in expressly agreeing to act as directed by Mr Stubbs and in agreeing to execute all instruments); third, the Second Declaration of Trust contained an agreement by Mr Stubbs himself to indemnify the trustee and to pay for all outgoings (it is said, going beyond a trustee’s lien or right to be recouped or exonerated); fourth and similarly, the Second Declaration of Trust contains express indemnities (noting that Mr Stubbs expressly undertook obligations that go beyond the general law so far as indemnities are concerned and, in the case of a transfer, agreed to a prior or simultaneous discharge of monies owed or owing); and fifth and finally, the Second Declaration of Trust articulated an express mechanism for transfer.

312. As can be seen, and taking for example the Chief Commissioner’s reference to Octavo v Knight which is cited in support of the third of those comparisons, the Chief Commissioner here compares the putative rights and obligations under the Second Declaration of Trust to those rights and obligations that arise according to the general principles of trust law. I consider, however, that the correct point of reference is the question whether the rights and obligations under the Second Declaration of Trust precisely correlate with those which Mr Stubbs held following the operation of the Probate Act. That requires comparison between the First Declaration of Trust and the Second Declaration of Trust. Relevantly, those rights and obligations precisely correlate; and, again, they are rights and obligations which had already vested, by operation of the Probate Act, in Mr Stubbs. It is not necessary in this context to consider other cases where the “capacity” issue has been raised (see, for example, Rinehart v Rinehart [2020] NSWSC 68 at [197]ff).

Conclusion

313. For the above reasons, I have concluded that the Second Declaration of Trust did not constitute a “declaration of trust” within the meaning of the definition of that term in s 8(3) of the Duties Act.

314. As adverted to in the “Background” section of these reasons, the remaining three issues identified by Benidorm arise only if I had found that the Second Declaration of Trust did constitute a “declaration of trust”. Nevertheless, and in the event that I am wrong in the disposition of that issue, I turn now to consider those three issues.

315. The first is whether the Second Declaration of Trust is a “transaction” within the meaning of s 8(1)(b)(ii) of the Duties Act (again, referred to by Benidorm as the ”transaction issue”).

The “transaction issue” under section 8(1)(b)(ii)

316. As noted, this issue is whether, if the Second Declaration of Trust is a declaration of trust under s 8(3), it is a “transaction” within the meaning of s 8(1)(b)(ii). This issue can be readily disposed of, in my opinion. However, before doing so, I note that Benidorm’s description of this issue is perhaps an imprecise description of the dispositive point.

317. To my mind, it is tolerably clear from the statutory provision that the word “transaction” in s 8(1)(b) does not itself have any operative effect. Instead, the word “transaction” is employed as a simple classificatory device capturing those specific legal events, as enumerated in the list that follows the chapeau, which are chargeable with duty under the Chapter. Put differently, and to adopt the language of the Chief Commissioner’s submission which I here accept, the word “transaction” in s 8(1)(b) is defined by what follows it. It is therefore unnecessary to consider the ordinary or other meaning of the word “transaction”. It is also unnecessary to consider the statutory purposes of the Duties Act, as identified in Winston-Smith and elsewhere, or to reach for the contention that Emmett AJA’s observations regarding s 163H underlie the entire statute and thereby the word “transaction” in s 8(1)(b) has independent operative effect. This, I consider, is the answer to Benidorm’s position on this issue and it is fatal thereto.

318. I now turn to consider whether the Second Declaration of Trust is liable to nominal duty under either of s 18(6) or s 18(6A) (again, referred to by Benidorm as the “superseded trust issue” and “the same trust issue”).

The “superseded trust issue” under either s 18(6) or s 18(6A)

319. As noted, this issue is whether, if the preceding two issues were answered affirmatively, the Second Declaration of Trust is liable to nominal duty: (i) of $10.00 under s 18(6) because it declares the same trust as the resulting trust under which Mr Robinson acquired the Macquarie Street Apartment on 16 May 2007; (ii) of $10.00 under s 18(6) because it declares the same trust as declared in the First Declaration of Trust; or (iii) of $50.00 under s 18(6A) because it supersedes the First Declaration of Trust, declares the same trust(s) as the First Declaration of Trust declared, the beneficiary in each trust is the same and the trust property in each trust is the same.

320. I reject each of those propositions for the following reasons.

321. As I have noted in my summary of the factual background to this dispute, on 27 June 2007 the sale of the Macquarie Street Apartment was completed. Ad valorem duty of $783,994.00 paid on the Contract. This is particularly relevant to the disposition of the issue here being considered because of the requirement in sub-s (6) that ad valorem duty have been paid on the relevant transfer.

322. Similarly, and as also noted in my summary of the factual background to this dispute, the First Declaration of Trust was determined to be liable for nominal duty of $50.00 pursuant to s 55(1)(a) of the Duties Act. This is of particular relevance to the disposition of the issue here being considered because of the requirement in sub-s (6A) that duty have been paid on the relevant (superseded) declaration of trust. Pausing here, I note that the requirement under sub-s (6A) is not a requirement that the relevant duty have been assessed on an ad valorem basis.

Section 18(6)

323. As can be readily discerned, sub-s (6) is only engaged if ad valorem duty has been paid on the relevant “transfer”. In this regard, and as I have just noted, in the present case ad valorem duty was not paid on the transfer – it was paid on the Contract. Therefore, as the Chief Commissioner here submits, sub-s (6) may not be engaged for this reason (and I note, in this respect, s 9 of the Duties Act).

324. In any event, for the reasons to which I now turn, I am not persuaded that the First Declaration of Trust and the Second Declaration of Trust declare the same trust(s). For this reason, s 18(6) is not here engaged.

Section 18(6A)

325. The application, or non-application, of sub-s (6A) is more difficult. This is because the sub-section is engaged where the relevant ‘earlier duty’ was charged on the earlier trust, not an earlier transfer; and, as I have noted, here a nominal duty was paid on the the First Declaration of Trust.

326. At the outset, I understand that it is common ground between the parties that that the Second Declaration of Trust supersedes the First Declaration of Trust; and that the Second Declaration of Trust involves the same dutiable property as the First Declaration of Trust. Rather, as can be appreciated, there are two critical issues here contested as regards the engagement or non-engagement of s 18(6A). These issues are as follows.

327. First, whether the trust declared by the declaration of trust (here, the Second Declaration of Trust) is the same trust(s) as were declared by superseded declaration of trust (here, the First Declaration of Trust).

328. Second and relatedly, whether the beneficiary under the declaration of trust (here, Mr Stubbs) is the same as under the superseded declaration of trust (here, Mr Robinson).

329. I do not accept (for the reasons which I have indicated in my disposition of the “declaration of trust” issue) the Chief Commissioner’s submission that the dispositive point is some purported distinction between Mr Stubbs taking the beneficial interest in the Macquarie Street Apartment as executor while taking the same beneficial interest later as beneficiary under the Will. As I have indicated, to my mind, such a submission focuses on an erroneous point of reference: no declaration of trust by Benidorm could affect Mr Stubbs’ duties as executor of the Will and his rights as beneficiary under the Will and, thereby, alter the ‘capacity’ in which the beneficial interest under the trust vested in Mr Stubbs.

330. Meanwhile, I see some force, generally for the reasons which I have given in my determination of the “declaration of trust” issue (and I note that that reasoning can apply here even in the event that I am wrong in my determination of the “declaration of trust” issue), in Benidorm’s submission that cl 2 of the Second Declaration of Trust does no more than confirm, or acknowledge, the succession under the Will of Mr Stubbs to that term of the (existing) trust over the Macquarie Street Apartment created by the First Declaration of Trust.

331. However, I have considerable difficulty accepting that the trust declared by the First Declaration of Trust has the same beneficiary as that declared by the Second Declaration of Trust. The beneficiary of the former was Mr Robinson. The beneficiary of the latter is Mr Stubbs.

332. In this regard, I also have some difficulty accepting that the trust declared by the First Declaration of Trust is the same trust as that declared by the Second Declaration of Trust. This is not least because the object (that is, the beneficiary) of the trust(s) is a different person.

333. In one sense, it can be conceived that Mr Robinson and Mr Stubbs are the ‘same’ beneficiary. One might reason to that conclusion (and, indeed, as I understand the thrust of Benidorm’s submissions to be) as follows: Mr Robinson (as beneficiary) held a bundle of rights as against Benidorm (as trustee) vis-à-vis the subject property of the trust; and Mr Stubbs has come to occupy Mr Robinson’s position as beneficiary and, thereby, now holds exactly those same bundle of rights vis-à-vis the subject property of the trust.

334. Having said this, I think that arguments of this kind necessitate artificiality and straining of theoretical concepts which does no little violence to the words used, as properly construed, in the statute.

335. This difficulty is not met by reaching for a purposive construction whereby it is said that s 18(6A) must be construed in order to avoid the imposition of ‘double duty’ arising from a declaration of trust made to give effect to the disposition under Mr Robinson’s Will. I think this not least because the legislature has made specific provision in relation to deceased estates under s 63 and elsewhere; further still, a purposive approach is not a licence to ignore the plain meaning of the words used. Again, I do not see how such a rule of statutory interpretation, if applied here, can be legitimately deployed to make Mr Stubbs the same beneficiary as Mr Robinson.

336. For these reasons, I have concluded that neither para (6A)(a) nor para (6A)(b) is here satisfied, with the consequence that s 18(6A) does not here apply. There was a change of beneficiary upon the death of Mr Robinson; that change in beneficiary was effected by the relevant provisions of the Probate Act.

The “transfer under the Will issue” under s 63(1)(a)(i)

337. The final issue concerns whether, if the Second Declaration of Trust is a declaration of trust under s 8(3) that it is a dutiable transaction within the meaning of s 8(1)(b)(ii) and is otherwise liable to duty, the Second Declaration of Trust is liable to nominal duty of $50.00 pursuant to s 63(1)(a)(i) as a transfer made under and in conformity with the trusts of the will of the late Mr Robinson. I have extracted the terms of s 63 earlier in these reasons.

338. I can readily accept, as Benidorm submits, that the Second Declaration of Trust was made (or, at least, seems to have been thought necessary) to give legal effect to Mr Robinson’s testamentary wishes.

339. However, to my mind, Benidorm’s submissions on this issue must be rejected for at least the following two reasons. First, contrary to Benidorm’s submissions, the Second Declaration of Trust was (purportedly) a declaration of trust (albeit one that, for the above reasons, does not fall within the statutory definition under s 8(3)). It was not a transfer.

340. Pausing here, I ought to note that Benidorm indicated in submissions that it did not understand that the Chief Commissioner cavilled with Benidorm’s position that this was a transfer. However, as adverted to above, the Chief Commissioner has put a submission that the Second Declaration of Trust was not a transfer. For the avoidance of doubt, I accept the Chief Commissioner’s submission.

341. Second, in any event, the Second Declaration of Trust (whether one characterises it, as a matter of law, as a declaration of trust or a transfer) was not made by the legal personal representative (here, Mr Stubbs) of the deceased (here, Mr Robinson). Rather, it was made by Mr Dawson. In this regard, I accept the Chief Commissioner’s submission that, contrary to Benidorm’s position that the “transfer” is made by Mr Stubbs in different capacities, the mere fact that Mr Stubbs is recorded as a party to the Second Declaration of Trust does not mean that Mr Stubbs made the declaration of trust.

342. Otherwise, to the extent that Benidorm says that because the beneficial interest is dutiable property then ipso facto the Second Declaration of Trust satisfies the test of a “transfer of dutiable property”, I do not accept this submission. The nature of the interest the subject of the transaction does not determine the legal characteristic of that transaction.

343. It is, in these circumstances, unnecessary to consider whether the Second Declaration of Trust vested the interest in Mr Stubbs in his capacity as executor, his capacity as beneficiary, both capacities, or if anything turns on any such distinction (though, as to this, see my brief observation at [312] above).

Conclusion

344. Ultimately, notwithstanding the level of complexity to which some of the submissions here descended, the difficulties in this matter are perhaps more chimerical than real. Mr Robinson was the beneficiary under the trust which existed over the Macquarie Street Apartment. Upon his death, the relevant provisions of the Probate Act were engaged. Those provisions operated to vest, in accordance with his Will, the beneficial interest in the Macquarie Street Apartment under that trust in Mr Stubbs. That had the consequence of effecting a change in the beneficiary and, in effect, created a new and different trust. The Second Declaration of Trust did no more than acknowledge that fact.

345. For the above reasons, Benidorm’s claim should be allowed. I see no reason not to make the ordinary order as to costs.

Orders

346. Accordingly, I make the following orders:

1. The defendant’s assessment dated 6 March 2019 (“the Principal Assessment”), which assessed a deed made on 29 January 2015 between the plaintiff (as trustee) and Derek Stubbs (as beneficiary) described as “Declaration of Trust by Nominee” with ad valorem duty, be revoked pursuant to s 101(1)(a) of the Taxation Administration Act 1997 (NSW).

2. The defendant repay any duty paid under the Principal Assessment with interest pursuant to s 101(1)(e) of the Taxation Administration Act 1997 (NSW).

3. The defendant pay the costs of this proceeding pursuant to s 101(1)(e) of the Taxation Administration Act 1997 (NSW) and s 98 of the Civil Procedure Act 2005 (NSW).

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Decision last updated: 30 April 2020