Chrissie Group Pty Ltd atf All Angels Family Trust v Chief Commissioner of State Revenue

[2018] NSWCATAD 77

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:	Chrissie Group Pty Ltd atf All Angels Family Trust v Chief Commissioner of State Revenue [2018] NSWCATAD 77
Hearing dates:	21 February 2018
Date of orders:	09 April 2018
Decision date:	09 April 2018
Jurisdiction:	Administrative and Equal Opportunity Division
Before:	R.L. Hamilton SC, Senior Member
Decision:	1. The Chief Commissioner’s assessment decision is affirmed
Catchwords:	TAXES AND DUTIES - Stamp duty - Transfer not in conformity with agreement - avoidance of double duty - related parties STATUTORY INTERPRETATION - resolving conflicting provisions - literal interpretation - contextual considerations
Legislation Cited:	Duties Act 1997 (NSW) Taxation Administration Act 1996 (NSW)
Cases Cited:	Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297; [1981] HCA 26 Deputy Federal Commissioner of Taxation v Chant (1991) 24 NSWLR 352 Perizon Nominees Pty Ltd v CCSR [2016] NSWCATAD 84 Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355 Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat & Livestock Corp & Ors (1980) 29 ALR 333 at 347; [1980] FCA 45
Category:	Principal judgment
Parties:	Chrissie Group Pty Ltd atf All Angels Family Trust (Applicant) Chief Commissioner Of State Revenue (Respondent)
Representation:	Counsel: Mr Clark for Respondent     Solicitors: P. Morris for Applicant Crown Solicitors Office for Respondent
File Number(s):	2017/00255477
Publication restriction:	Nil

REASONS FOR DECISION

1. The issue in this case is whether nominal stamp duty should apply to a transfer of land which was not in conformity with the agreement to purchase.

2. The purchase agreement was entered into by an individual in her own name. This agreement was stamped ad valorem.

3. The transfer of the land was to a private company of which the individual was the only shareholder and director. The company was also acting as trustee of a family discretionary trust. The individual was the sole named object of the trust.

4. The case raises squarely the approach to statutory interpretation which should be applied in a revenue case containing conflicting relieving provisions. The general relieving provision applies literally because the applicant transferee is a private company and the person who entered into the agreement was the majority shareholder and director. The specific relieving provision does not, because the transferee company was the trustee of a discretionary trust.

The Facts

5. The Applicant company was incorporated on 25 July 2016. Mrs J Akkari was from that date the sole shareholder, director and secretary.

6. The All Angels Family Trust was settled (with $10.00) on 26 July 2016. The Applicant was the trustee. Mrs Akkari’s daughter, Christine, was originally the only named beneficiary/object, but the class of objects included other family members.

7. On 5 August 2016 the trustee resolved to remove Christine as the named beneficiary and substitute Mrs Akkari in her place. This was apparently required by the Bank.

8. On 24 August 2016 Mrs Akkari entered in to an agreement to purchase real property in Goulburn in her own name. She submitted that she was acting on behalf of the Applicant but there is no supporting evidence of this. On the agreement the name of another family company purchaser was crossed out and Mrs Akkari’s name was handwritten in. Ad valorem duty was paid on the agreement on about 14 October 2016.

9. Mrs Akkari’s conveyancers directed the vendors’ conveyancers that the transfer should be made to the Applicant company in its trustee capacity. The transfer has Mrs Akkari’s name as transferee crossed out and “Chrissie Group Pty Ltd ACN 613 855 378” handwritten in.

10. The transfer was originally stamped with nominal duty ($10.00). On review the transfer was assessed to another round of ad valorem duty.

11. The Applicant objected. The objection was disallowed. The Applicant now seeks review by the Tribunal of the decision to assess, pursuant to s 96 of the Taxation Administration Act 1996 (NSW).

The Statutory Provisions

12. Both the agreement for sale and the transfer are dutiable transactions (ss 8(1)(b)(i) and 8(1)(a) of the Duties Act 1997 (NSW) (DA)). Section 18 of the DA is designed to relieve double duty in certain situations. Section 18(2) of the DA provides for nominal duty ($10.00) on the transfer if it is in conformity with the agreement, and the agreement has been stamped.

13. Relevantly here s18(3) of the DA provides for relief in some situations where the transfer is not in conformity with the agreement. The sub-section provided at the relevant time:

(3) The duty chargeable in respect of a transfer of dutiable property that is not made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if:

(a) the duty chargeable in respect of the agreement has been paid, and

(b) the transfer would be in conformity with the agreement if the transferee was the purchaser under the agreement, and

(c) the transfer occurs at the same time as, or proximately with, the completion or settlement of the agreement, and

(d) at the time the agreement was entered into, and at the completion or settlement of the agreement:

(i) the purchaser under the agreement (other than a purchaser who purchased as a trustee) and the transferee under the transfer were related persons, or

(ii) if the purchaser purchased as a trustee (other than as a trustee of a self managed superannuation fund)--the transferee and the beneficiary were related persons.

14. The Chief Commissioner accepts that ss 18(3)(a)-(c) are satisfied. He does not rely on s 18(3)(d)(ii) because the purchaser (Mrs Akkari) did not purchase as trustee, but in her own name.

15. The Chief Commissioner’s position is that s 18(3)(d)(i) is not satisfied as Mrs Akkari and Chrissie Group Pty Ltd were not “related persons”. The Dictionary in the DA defined “related person” as follows:

"related person" means a person who is related to another person in accordance with any of the following provisions:

(a) natural persons are related persons if:

(i) one is the spouse or de facto partner of the other, or

(ii) one is the parent, brother or sister of the other, or

(iii) one is the spouse, or de facto partner, of a parent, child, brother or sister of the other,

(b) companies are related persons if they are related bodies corporate,

(c) a natural person and a private company are related persons if the natural person is a majority shareholder or director of the company or of another private company that is a related body corporate,

(d) a natural person and a trustee are related persons if the natural person is a beneficiary of the trust (not being a public unit trust scheme or discretionary trust) of which the trustee is a trustee,

(e) a private company and a trustee are related persons if the company, or a majority shareholder or director of the company, is a beneficiary of the trust (not being a public unit trust scheme or discretionary trust) of which the trustee is a trustee

The Submissions

16. The Applicant submitted that the ‘related persons’ definition states that if “any” of the provisions is satisfied the persons are related.

17. The Applicant further submitted that Mrs Akkari and Chrissie Group Pty Ltd are related persons by virtue of par (c) of the ‘related persons’ definition. Mrs Akkari was the majority shareholder and a director of Chrissie Group Pty Ltd; and she was in that position when the agreement was entered into, and at the completion or settlement of the agreement (as required by s 18(3)(d) DA).

18. The Chief Commissioner does not dispute that par (c) is satisfied on the literal words of the provision. His submission is that par (d) of the definition is the ruling provision as Chrissie Group Pty Ltd took the transfer in its capacity as trustee of The All Angels Trust, which was a “discretionary trust” (as defined in the Dictionary of the DA).The Applicant does not dispute this latter point.

19. The Chief Commissioner has identified various documents in the evidence which make it clear that Chrissie Group Pty Ltd as transferee acquired the land in its capacity as trustee of the Trust. I find that the Applicant did take the transfer as trustee of a discretionary trust.

20. The Applicant did not really make an argument to the contrary, but seemed to rest its argument on par (c) of the definition of “related person”.

21. The Chief Commissioner’s submissions were that the ‘related persons’ definition needs to be read in the light of the structure of s 18(3) of the DA which looks at the capacity in which persons are operating under the agreement and under the transfer. For example s 18(3)(d)(ii) of the DA is focussed on the purchaser under the agreement in the capacity of trustee.

22. Further it was submitted that pars (d) and (e) of the definition of “related person” are designed to deal pars (a)-(c). In particular paragraph (d) of the definition of ‘related person’ by specifically referring to trustees suggest that it was intended to deal with trustee situations specifically, to override situations where the more general provisions apply. Otherwise the provisions of pars (d) and (e) might be largely superfluous and open to abuse.

23. The Chief Commissioner referred to Perizon Nominees Pty Ltd v CCSR [2016] NSWCATAD 84. However, I did not find it to be of particular assistance to the question here, as the decision turned on the dates when the trustee was incorporated and when the trust came into existence. All that could be said is that the Tribunal considered without deciding the possible operation of pars (c) and (d) of the definition.

Consideration

24. The guiding principles of statutory interpretation have been laid out by the High Court of Australia in cases such as Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355 and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41 at [47] and reiterated numerous times and in numerous places since.

25. In Project Blue Sky their Honours McHugh, Gummow, Kirby and Hayne JJ. said at pars [69] – [71]:

“The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.

A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.

Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. In The Commonwealth v Baume Griffith CJ cited R v Berchet to support the proposition that it was "a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent.” (footnotes omitted).

26. Their Honours went on at par 78:

“However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning. In Statutory Interpretation, Mr Francis Bennion points out:

"The distinction between literal and legal meaning lies at the heart of the problem of statutory interpretation. An enactment consists of a verbal formula. Unless defectively worded, this has a grammatical meaning in itself. The unwary reader of this formula (particularly if not a lawyer) may mistakenly conclude that the grammatical meaning is all that is of concern. If that were right, there would be little need for books on statutory interpretation. Indeed, so far as concerns law embodied in statute, there would scarcely be a need for law books of any kind. Unhappily this state of being able to rely on grammatical meaning does not prevail in the realm of statute law; nor is it likely to. In some cases the grammatical meaning, when applied to the facts of the instant case, is ambiguous. Furthermore there needs to be brought to the grammatical meaning of an enactment due consideration of the relevant matters drawn from the context (using that term in its widest sense). Consideration of the enactment in its context may raise factors that pull in different ways. For example the desirability of applying the clear literal meaning may conflict with the fact that this does not remedy the mischief that Parliament intended to deal with." (footnotes omitted)”

27. I must consider the text of the statutory provision itself in the first instance; and seek its meaning by reference to the context in which it sits.

28. The introductory words of the definition of ‘related person’ say that if “any” of the following provisions apply the persons are related. The words of par (c) of definition of “related person” seem clear. The Applicant and Mrs Akkari satisfy par (c) of the definition and so by that provision of the definition they are “related”.

29. The issue is whether the context requires the clear, natural meaning of these words to yield to another provision which deals with the relationship between a natural person and a trustee.

30. The words of s 18(3)(d)(ii) DA provide specifically for a situation where the transfer is not in conformity with the agreement when a purchaser has purchased as trustee, but transferee and beneficiary of that trust are related persons. It would have been straight forward to provide similarly a specific exception from pars (a) - (c) in the definition of ‘related person’ for persons acting in the capacity of trustee.

31. At another time, it may have been appropriate to have regard to interpretational approaches to revenue laws which for example construed taxation provisions strictly; or which were reluctant to accept an approach which resulted in double taxation in the absence of clear words.

32. These approaches are now outmoded (and were of limited utility in the stamp duty arena anyway); taxing provisions are subject to the same interpretational principles as other statutes (see Alcan (NT) above at [57]). There is no longer anything “special” about the interpretation of words of a revenue statute (see e.g. Deputy Federal Commissioner of Taxation v Chant (1991) 24 NSWLR 352 at 356 per Kirby P.)

33. Nor does this seem to be a case which calls for the application of the approach adopted in cases such as Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation. (1981) 147 CLR 297; [1981] HCA 26. There does not appear to be such an obvious drafting error in the definition which should be resolved by reading apparently omitted words into the provision to cure an absurdity.

34. In the end result (and not without hesitation) I prefer the approach urged on me by the Chief Commissioner because it seems to me that there was a purpose in the definition of ‘related persons’ to address the ‘mischief’ that could result from allowing the use of discretionary trusts in cases where a purchaser e.g. wished to make a ‘subsale’. Although it could have been expressed more clearly, the definition does draw a distinction between the various capacities in which persons are acting in defining them as ‘related’. It contains a provision which particularly deals with trustees as related persons. It is unfortunate that in this case that the purchasers did not give closer attention to their exposure to stamp duty, as it does not seem that there was any ‘mischievous’ purpose involved. Despite a perception of harshness in the sense of a double duty liability it is my view that this is an appropriate case for application of the rule of interpretation that the special overrides the general.

35. The Tribunal was referred on this issue to the statement of Deane J in Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat & Livestock Corp & Ors (1980) 29 ALR 333 at 347; [1980] FCA 45 where His Honour discussed the situation of repugnancy between a general and a special provision and said:

“Repugnancy can be present in cases where there is no direct contradiction between the relevant legislative provisions. It is present where it appears, as a matter of construction, that special provisions were intended exhaustively to govern their particular subject matter and where general provisions, if held to be applicable to their particular subject matter, would constitute a departure from the intention by encroaching on that subject matter”.

36. It seems to me that it would be repugnant to the purpose of par (d) of the definition of ‘related person’ (which prevents trustees of discretionary trusts from being related to other persons) to carve out a wide group of entities (private companies acting as trustees) simply because the directors and shareholders met the literal words of par (c) of the definition.

Order

37. For the above reasons, the Chief Commissioner’s assessment decision is affirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Amendments

10 April 2018 - Coversheet amended - Catchwords and legislation cited previously absent

Decision last updated: 10 April 2018