Commissioner for Australian Capital Territory Revenue v 6 Doublebar Pty Ltd as trustee for the 6 Doublebar Trust; Commissioner for Australian Capital Territory Revenue v 4 Bloodfinch Pty Ltd as trustee for the 4...
[2025] ACAT 53
•5 August 2025
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
COMMISSIONER FOR AUSTRALIAN CAPITAL TERRITORY REVENUE v 6 DOUBLEBAR PTY LTD AS TRUSTEE FOR THE 6 DOUBLEBAR TRUST; COMMISSIONER FOR AUSTRALIAN CAPITAL TERRITORY REVENUE v 4 BLOODFINCH PTY LTD AS TRUSTEE FOR THE 4 BLOODFINCH TRUST (Administrative Review) [2025] ACAT 53
AA 1/2025 and AA 2/2025
Catchwords: ADMINISTRATIVE REVIEW – merit review proceedings – Taxation Administration Act 1999 – burden of proof – does burden of proof in s 101(3) of the Taxation Administration Act apply in merit review proceedings in the Tribunal – application of burden of proof - Duties Act 1999 – aggregation of transactions – statutory requirements – “associated person” – substantially one transaction
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 68 (3)
Duties Act 1999 ss 7, 24, 17(1), 82(2), 83
Duties Act 1997 (NSW) s 163 U
Taxation Administration Act 1999 ss 44, 54, 56B, 82, 100, 108A, 108B, 101(3) cl 101
Taxation Administration Act 1953 (Cth) s 14ZZK
Cases cited:Abebe v The Commonwealth (1999) 197 CLR 510
Canberra Cleaners Pty Ltd V Commissioner for ACT Revenue [2018] ACTSC 208
Comcare v Power [2015] FCA 1502
Cypjayne Pty Ltd v Rodskog [2009] NSWSC 301
Gartside v IRC [1968] AC 553
Lemongrove Services Pty Ltd v Rilroll Pty Ltd [2019] NSWCA 174
McDonald v Director-General of Social Security (1984) 1 FCR 354
Planet Red Pty Ltd v Commissioner of ACT Revenue [2017]
Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26
Sweeney v He [2023] NSWCA 68
Whisprun Pty Ltd v Dixon [2003] HCA 48
Tribunal:Acting Presidential Member G Curtin SC
Date of Orders: 5 August 2025
Date of Reasons for Decision: 5 August 2025
Date of Publication: 12 August 2025
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 1/2025BETWEEN:
COMMISSIONER FOR AUSTRALIAN CAPITAL TERRITORY REVENUE Applicant
AND:
6 DOUBLEBAR PTY LTD AS TRUSTEE FOR THE 6 DOUBLEBAR TRUST Respondent
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 2/2025BETWEEN:
COMMISSIONER FOR AUSTRALIAN CAPITAL TERRITORY REVENUE Applicant
AND:
4 BLOODFINCH PTY LTD AS TRUSTEE FOR THE 4 BLOODFINCH TRUST Respondent
TRIBUNAL:Acting Presidential Member G Curtin SC
DATE:5 August 2025
ORDER
The Tribunal orders that:
1.The appeals are dismissed.
……..…………………………………
Acting Presidential Member G Curtin SCREASONS FOR DECISION
Introduction
1.In mid-2018 two adjoining lots of land in Fyshwick, in the Australian Capital Territory, were sold, one to each of the respondents (the taxpayers). Transfers were lodged for registration in August 2018.
2.The appellant (the Commissioner) determined that the two transactions should be aggregated pursuant to 24 of the Duties Act 1999 because the taxpayers were “associated people” (as defined) and the transactions together formed, evidenced, gave effect to or arose from what was, substantially, one arrangement relating to all of the interests in, the dutiable property.
3.The Original Tribunal disagreed with the Commissioner. The Commissioner appealed.
Background
4.The two properties concerned were Nos. 4 and 6 Lyell St, Fyshwick.
5.No. 4 Lyell St was originally owned by 4 Lyell St Pty Ltd. That company was the trustee of a discretionary trust called the 4 Lyell St Trust.
6.No. 6 Lyell St was originally owned by 6 Lyell St Pty Ltd. That company was the trustee of a discretionary trust called the 6 Lyell St Trust.
7.I shall collectively refer to 4 Lyell St Pty Ltd and 6 Lyell St Pty Ltd as the Lyell St companies unless it is necessary to refer to them individually.
8.I shall collectively refer to the 4 Lyell St Trust and the 6 Lyell St Trust as the Trusts unless it is necessary to refer to them individually.
9.In late 2016, the Lyell St companies were grouped by the Commissioner with certain other companies for payroll tax purposes, with a total claimed payroll tax owed (by the group) of a little over $4.6m.
10.Litigation ensued between the Lyell St companies and the Commissioner commencing in 2017.
11.During the course of that litigation, and by about November 2017, three non-bank lenders – Marginata Securities Pty Ltd (Marginata), Reliance Financial Services Pty Ltd (Reliance) and Accolade Advisory Pty Ltd (Accolade) (collectively, the lenders) – had advanced funds to the Lyell St companies and entered into mortgages with the Lyell St companies over Nos. 4 and 6 Lyell St (as well as taking other securities).
12.It is relevant to what comes later to note that at the time of these events, and until 1 July 2019, the sole director and sole shareholder of Marginata was Stefan Adam Morvillo (Mr Morvillo).
13.In relation to the claimed payroll tax debt the Commissioner issued garnishee notices in August 2017, and compliance notices in October 2017, pursuant to sections 54 and 56B of the Taxation Administration Act 1999.
14.McWilliam AsJ stayed enforcement of six of the garnishee notices on 14 November2017, and stayed enforcement of the compliance notices on 14 December 2017, pending the outcome of proceedings before her Honour.
15.On 3 August 2018 McWilliam AsJ delivered judgment in those proceedings: Canberra Cleaners Pty Ltd V Commissioner for ACT Revenue [2018] ACTSC 208. The plaintiffs in those proceedings were partly successful. Some but not all of the garnishee notices were set aside. None of the compliance notices were set aside.
16.Also on 3 August 2018, the first registered mortgagee of Nos. 4 and 6 Lyell Sts discharged its mortgages, having been paid out by funds advanced by one or more of Marginata, Reliance and Accolade.
17.The net result was that Marginata, Reliance and Accolade became registered mortgagees over the two Lyell St properties.
18.Accordingly, Marginata, Reliance and Accolade were concerned that they would lose the benefit of their secured interests in Nos. 4 and 6 Lyell St.
19.By at least 6 August 2018, the Lyell St companies were in default under their loan agreements with the lenders.
20.To avoid that occurring, and on 6 August 2018, the following steps were taken:
(a)6 Doublebar Pty Ltd (Doublebar) and 4 Bloodfinch Pty Ltd (Bloodfinch) (being the taxpayers) were incorporated;
(b)the sole director and shareholder of Doublebar and Bloodfinch was Mr Morvillo;
(c)Doublebar was appointed as trustee of the the 6 Doublebar Trust (the Doublebar Trust);
(d)Bloodfinch was appointed as trustee of the 4 Bloodfinch Trust (the Bloodfinch Trust);
(e)No. 4 Lyell St was transferred to Doublebar (as trustee of the 6 Doublebar Trust) by way of a contract for sale, registered transfer and a Deed of Agreement for the sum of (as expressed in the transfer) $450,000;[1]
(f)No. 6 Lyell St was transferred to Bloodfinch (as trustee of the 4 Bloodfinch Trust) by way of a contract for sale, registered transfer and a Deed of Agreement for the sum of (as expressed in the transfer) $1,050,000;[2]
(g)the Lyell St companies were placed into liquidation and a liquidator appointed.
[1] Done by the lenders purportedly exercising their powers under the terms of their loan agreements and/or mortgages.
[2] Ibid.
21.Both Trusts were wholly discretionary trusts.
22.Of relevance to the submissions made by the Commissioner to the Original Tribunal was the identification of Maria Cassaniti as a beneficiary in the Bloodfinch Trust. She was the grandmother of Mr Morvillo.
23.In the Bloodfinch Trust, “General Beneficiaries” were defined to be the persons that fell within the category defined in Item 2 of the Trust Schedule. Item 2 said:
ITEM 2
General Beneficiaries
(a) Maria Cassaniti and the persons related to Maria Cassaniti as follows, namely:
(i)spouse, including defacto spouse;
(ii) children, including adopted and step;
(iii)children and more remote descendants of such children;
(iv)brothers, sisters and parents;
(v)children and more remote descendants of brothers and sisters; and
(vi) spouses of any of the foregoing;
(b) any corporation of which any one or more of the foregoing beneficiaries is a member;
(c) the Trustee of any trust (in his capacity as such) which trust is bound to be determined not later than the Vesting Day and under which any one or more of the foregoing beneficiaries has any interest whether vested contingent or merely expectant or prospective;
(d) such individual's corporation's trusts or other entities having separate legal identity as may from time to time are nominated to be beneficiaries in accordance with the powers contained in this Trust Deed.
24.In the Doublebar Trust, “General Beneficiaries” were also defined to be the persons that fell within the category defined in Item 2 of the Doublebar Trust Schedule. Item 2 in that Trust Schedule was identical to Item 2 in the Bloodfinch Trust Schedule other than for the first two lines where the words “Thanh Cong Hoang and the persons related to Thanh Cong Hoang …” appeared in lieu of “Maria Cassaniti and the persons related to Maria Cassaniti …”.
25.The sums expressed in the transfers as consideration was not paid in cash. Rather, according to the lenders, the taxpayers “took over” the liabilities of the vendor companies to the lenders.
26.The consideration for each lot expressed in the transfers of the Lyell St properties was below the minimum consideration which would trigger an obligation to pay duty on each sale.
27.The Commissioner issued notices of investigation to the taxpayers pursuant to section 82 of the Taxation Administration Act 1999 (the TAA (ACT)) in relation to each transaction, and the taxpayers were required to provide a declaration by a competent valuer as to the value of each property.
28.The taxpayers provided valuations of the properties (as at 6 August 2018) by Herron Todd White. In those valuations No. 6 Lyell St was valued at $520,000 and No. 4 Lyell St at $1,280,000.
29.On 29 October 2018, the Commissioner informed the taxpayers that the ACT Valuation Office (the AVO) had been requested to provide valuations of the properties.
30.The AVO subsequently valued the properties at $600,000 and $1,900,000 respectively (excl GST).
31.Those values exceeded the minimum sum which would trigger a liability for duty, and the Commissioner determined that the two sales should be aggregated under section 24 of the Duties Act.
32.Accordingly, on 18 July 2019 the Commissioner issued a Conveyance Duty Notice of Assessment to Doublebar for the sum of just under $140,000, and a similar Notice to Bloodfinch for the sum of just over $44,000. Both sums included duty, penalty tax and interest.
33.In the respective Notices, the dutiable value of No. 4 Lyell St was said to be $2,090,000 (with GST added), and the dutiable value of No. 6 Lyell St was said to be $660,000 (with GST added).
34.On or about 19 August 2019, Doublebar and Bloodfinch lodged objections to those Notices pursuant to section 100 of the TAA (ACT).
35.The Commissioner’s delegate considered those objections and dismissed the taxpayers’ objections other than to hold that GST should have been excluded from the calculation of duty. Thus, the delegate said, the values to be considered should have been $600,000 (rather than $660,000) for No. 6 Lyell St, and $1.9m (rather than $2.09m) for No. 4 Lyell St.
36.Each of those decisions was a reviewable decision.
37.On being dissatisfied with those decisions, and on 6 September 2021, the taxpayers commenced merit review proceedings in the Tribunal against the Commissioner’s reviewable decisions pursuant to section 108A of the TAA (ACT).
38.The Original Tribunal hearing was conducted over five days between 22 November 2022 and 31 August 2023, and a decision given on 13 December 2024.
39.The Original Tribunal upheld the taxpayers’ objections, set aside the reviewable decisions, re-assessed the unencumbered value of the Lyell St properties and remitted the assessments of duty to the Commissioner for re-assessment in accordance with the Original Tribunal’s decision.
40.The net result of the Original Tribunal’s decision was that Doublebar and Bloodfinch would not be liable for all or most of the duty, tax and interest referred to in the Commissioner’s original assessments.
41.There were two critical findings in the Original Tribunal’s decision which are at the heart of this appeal.
42.The first was that the transfers of the Lyell St properties should not be aggregated under section 24 of the Duties Act, and, second, that the unencumbered value of the two lots as found by the Original Tribunal was erroneous.
43.The Commissioner appeals from the Original Tribunal’s decision in each of the proceedings.
The issues before the Original Tribunal
44.The Original Tribunal said that the parties agreed that the issues for the Original Tribunal to decide were as follows:
Issue 1: Should the transactions be aggregated under section 24 of the Act? This involves three sub-issues:
(a) Issue 1(a): Are the transferees “associated” or “related” under section 24(1)(b) of the Act?
(b) Issue 1(b): Are the dutiable transactions “one arrangement” under section 24(1)(c) of the Act?
(c) Issue 1(c): Is it just and reasonable to aggregate the transactions?
Issue 2: What is the dutiable value of the properties? This involves three sub-issues:
(a) Issue 2(a): Is the duty nil, following issue of a document titled “Conveyance Duty Notice of Assessment” dated 10 June 2022?
(b) Issue 2(b): Is the dutiable value of the properties under section 20(1)(a) of the Act the “consideration” of the dutiable transactions?
(c) Issue 2(c): What are the unencumbered values of the Lyell St properties?
Issue 3: What penalty and interest are payable?
45.The Original Tribunal also addressed the question of who bore the burden of proof. The Original Tribunal said that the burden of showing that the applicants’ objections are made out rested with the taxpayers pursuant to section 101(3) of the TAA (ACT). This issue is dealt with in relation to the first ground of appeal considered below.
46.To understand many of the issues set out below it is convenient to here set out the central provisions of the Duties Act (in the form it was at the relevant time, namely 6 August 2018) so far as concern this appeal and why the Commissioner said that the transactions should be aggregated.[3]
[3] By describing the Commissioner’s case I should not be seen as implying that the Commissioner bore any burden or onus of proof. It is simply recognition that it was the Commissioner who had determined that the transaction should be aggregated, and so it is necessary to understand the reasoning for that determination in order to also understand the taxpayers’ submissions to the contrary.
47.Section 24 of the Duties Act said:
Section 24 Aggregation of dutiable transactions
(1) Dutiable transactions relating to separate items of dutiable property, or separate parts of, or interests in, dutiable property are to be aggregated and treated as a single dutiable transaction if—
(a) they occur within 12 months; and
(b) the transferee is the same or the transferees are associated people; and
(c) the dutiable transactions together form, evidence, give effect to or arise from what is, substantially, 1 arrangement relating to all of the items or parts of, or interests in, the dutiable property.
(2) Dutiable transactions are not to be aggregated under this section if the commissioner is satisfied—
…
(d) that it would not be just and reasonable for the transactions to be so aggregated.
(3) The dutiable value of aggregated dutiable property is the sum of the dutiable values of the items or parts of, or the interests in, the dutiable property as at the time when each dutiable transaction occurs.
…
(5) Duty may be apportioned to the instruments effecting or evidencing the dutiable transactions, or may be payable in accordance with section 17 (1), as determined by the commissioner.
48.The expressions “associated person” used in section 24 was defined in the Dictionary to the Duties Act.
49.The definition of “associated person” was:
associated person-
(a) for this Act generally—means a person who is associated with another person in accordance with any of the following provisions:
(i) people are associated people if they are related people;
(ii) individuals are associated people if they are partners in a partnership to which the Partnership Act 1963 applies;
(iii) private companies are associated people if common shareholders have a significant interest in each private company;
(iv) trustees are associated people if any person is a beneficiary common to the trusts (not including a public unit trust scheme) of which they are trustees;
(v) a private company and a trustee are associated people if a related body corporate of the company is a beneficiary of the trust (not including a public unit trust scheme) of which the trustee is a trustee; and
(b) for part 3.2 (Acquisition of interests in certain landholders)—see section 83A.
50.The expression “related person” (found in (a)(i) of the definition of “associated person” above) was defined as follows:
related person means a person who is related to another person in accordance with any of the following provisions:
(a) individuals are related people if—
(i) they are partners, or they have been partners and the partnership has ended (whether the partnership ended in Australia or elsewhere); or
(ii) the relationship between them is that of parent and child, brothers, sisters, or brother and sister;
(b) private companies are related people if they are related bodies corporate;
(c) an individual and a private company are related people if the individual is a majority shareholder or director of the company or of another private company that is a related body corporate of the company;
(d) an individual and a trustee are related people if the individual is a beneficiary of the trust (other than a public unit trust scheme) of which the trustee is a trustee;
(e) a private company and a trustee are related people if the company, or a majority shareholder or director of the company, is a beneficiary of the trust (other than a public unit trust scheme) of which the trustee is a trustee.
51.It appears from the Original Tribunal’s reasons that the Commissioner’s case was that the three subsections of section 24 of the Duties Act were satisfied. Namely, that the dutiable transactions occurred within 12 months of each other, the taxpayers were “associated people” and that the transactions together formed, evidenced, gave effect to or arose from what was substantially one arrangement relating to all of the interests in the dutiable property.
52.There was no contest between the parties that the two dutiable transactions occurred within 12 months of each other. There was no dispute that the transfers were dutiable transactions within the meaning of that term as defined in section 7 of the Duties Act.
53.I shall briefly summarise the Original Tribunal’s reasons in order to aid understanding of the grounds of appeal and the submissions made in support of those grounds.
The Original Tribunal’s decision
54.The Original Tribunal said that the burden of showing that the taxpayers’ objections were made out rested with the taxpayers and cited section 101(3) of the TAA (ACT).
55.The Original Tribunal held that the taxpayers were not “associated persons” or “related persons” within the definitions of those terms in the Duties Act. It held that none of the “relevant elements” of the respective definitions were met.
56.It appears the Commissioner put a case that four of the five sub-paragraphs of the definition of “associated person” applied, namely (a)(i), (iii), (iv) and (v). I shall summarise the Original Tribunal’s reasons in relation to each of those sub-paragraphs.
57.As to (a)(i), the Original Tribunal rejected the Commissioner’s submission that Mr Morvillo was a beneficiary of the Bloodfinch Trust (because he was a blood relative of Maria Cassaniti) applying the reasoning in Cypjayne Pty Ltd v Rodskog [2009] NSWSC 301 (Cypjayne).
58.In that case Brereton J examined a relevantly similar definition of “associated person” in the NSW duties legislation. In short, his Honour held that an object of a discretionary trust is not a beneficiary in the traditional sense. His Honour said at [41]:
Thus a discretionary trust does not have beneficiaries in the traditional sense, whose interests together aggregate the beneficial ownership of the trust property. Instead, there is a class of persons, usually described in wide terms, who are the objects of a trust power to appoint either income or corpus or both to selected members of the class. The members of the class are objects of a trust power, rather than beneficiaries in the strict sense. They do not have a proprietary legal or equitable interest in the trust fund, though they have a right to due administration of the trust [Re Smith [1928] Ch 915; Gartside v IRC [1968] AC 553; Jacob’s Law of Trusts in Australia, 5th ed, 649 [2315]]. They have no beneficial interest in the trust property; they are not persons for whose benefit the trust property is held by the trustee; at the highest they are members of a class of persons for the benefit of some one or more of whom the trustee may in due course hold property if it so determines. At best, they are potential beneficiaries, not beneficiaries.
59.In response, the Commissioner relied on section 82(2) of the Duties Act. Section 82 is headed “Constructive ownership of landholdings and other property – discretionary trusts”. The Commissioner submitted that section 82 had the effect of deeming the object of a discretionary trust as a beneficiary.
60.Section 82(1)-(3) was in the following terms:
82Constructive ownership of landholdings and other property—discretionary trusts
(1) For this section, a person is a beneficiary of a discretionary trust if the person is a person, or a member of a class of people, in whose favour, by the terms of the trust, capital the subject of the trust may be applied in the event—
(a) of the exercise of a power or discretion in favour of the person or class; or
(b) that a discretion conferred under the trust is not exercised.
NoteDiscretionary trust—see the dictionary.
(2) A beneficiary of a discretionary trust is taken to own or to be otherwise entitled to the property the subject of the trust.
(3) For this part, any property that is the subject of a discretionary trust (the primary trust) is taken to be the subject of any other discretionary trust—
(a) that is a beneficiary of the primary trust; or
(b) any trustee of which (in the capacity of trustee) is a beneficiary of the primary trust.
61.The Original Tribunal rejected that submission for two reasons. First, because it held that section 82 (which appears in Part 3.2) did not apply to section 24 (which appears in Part 2.2) but was confined to the matters set out in Part 3.2 (which is headed “Acquisition of interests in certain landholders). Second, because Brereton J had rejected a similar argument in Cypjayne in relation to the NSW equivalent of section 82, namely section 163U of the Duties Act 1997 (NSW) and the same reasoning should apply to section 82 of the Duties Act.
62.As to (a)(iii), the Commissioner submitted that if the discretionary beneficiaries were not beneficiaries for the purposes of the associated person test in the Duties Act, then the beneficial interest must rest with the taxpayers and, by reason of the common shareholding, in the taxpayers by Mr Morvillo, this meant that they were associated persons.
63.The Original Tribunal rejected this submission and said that:
In any case, common shareholding is not the test here, the test is whether Mr Morvillo had a “significant interest” in each of the applicants.
64.This a reference to section 83 of the Duties Act which addresses the question whether a person has an “interest” in a landholder, and whether they have a “significant interest”. Section 83(1) and (2) said:
83Interest and significant interest in landholders—pt 3.2
(1) For this part, a person has an interest in a landholder if the person has an entitlement (otherwise than as a creditor or other person to whom the landholder is liable) to a distribution of property from the landholder on a winding up of the landholder or otherwise.
(2) A person who, under subsection (1), has an interest in a landholder has a significant interest in the landholder if the person, in the event of a distribution of all the property of the landholder immediately after the interest was acquired, would be entitled to at least 50% of the property distributed.
65.The Original Tribunal said that the Commissioner contended that Mr Morvillo had a “significant interest” in the taxpayer companies because he was the only shareholder of those companies, the taxpayers were landholding companies, and Mr Morvillo would be entitled to 100% of any distribution under section 83.
66.The Original Tribunal rejected this submission. It said that:
… a corporate trustee such as each of the applicants is not a landholder, therefore a significant interest does not arise here, and an association on the basis of subsection (a)(iii) is not established.
67.As to (a)(iv), the Original Tribunal said that the Commissioner submitted that the two Trusts had common beneficiaries (for reasons that need not be explored) and rejected that submission. No ground of appeal was raised in relation to this issue.
68.As to (a)(v), the Original Tribunal said that it rejected the Commissioner’s submission that the taxpayers were associated persons because the private company was a beneficiary of the trust of which the taxpayer company was trustee. The Original Tribunal held that neither of the two Trusts in this case had any private companies as beneficiaries, and therefore (a)(v) did not apply.
The grounds of appeal
69.The Commissioner identified four grounds of appeal. They were that the Original Tribunal erred in:
(a) failing to properly apply section 101(3) of the TAA (ACT);
(b) failing to consider the Commissioner’s submissions on “associated persons”;
(c) erroneously applying section 24(1)(c) of the Duties Act;
(d) making an erroneous finding as to the unencumbered value of the Lyell St properties by erroneously accepting the evidence of the taxpayers’ valuer and erroneously rejecting the evidence of the Commissioner’s valuer.
Ground 1: a failure to apply s 101(3) of the TAA (ACT)
70.The appellant contended that section 101(3) of the TAA (ACT) applied to a merits review proceeding in the Tribunal, and that the Original Tribunal failed to properly apply it.
71.The taxpayers contended that the scheme under the TAA (ACT) contained no express provision creating a legal burden of proof in the Tribunal’s review of a reviewable decision. Put more simply, the taxpayers submitted that section 101(3) of the TAA (ACT) did not apply to a merits review proceeding in the Tribunal. Alternatively, if section 101(3) applied, the taxpayers submitted that the Original Tribunal applied it correctly.
72.The Commissioner’s submission was:
The inclusion of ss 101(3) creates a default position that the assessment issued by the Appellant stands and the taxpayer carries the burden of displacing the presumption. In practical terms, ss 101(3) does not require the Appellant to prove that its assessment is correct; rather it requires the taxpayer to provide evidence demonstrating that an assessment is (in this case) excessive before the Tribunal (as the decision maker) can consider what the correct or preferable decision is. It represents a gateway which must be cleared before the Tribunal can re-make the decision under review.
73.For the reasons that follow I do not accept this ground of appeal.
Section 101(3) of the TAA (ACT) applies to merits reviews in the Tribunal
74.I at first thought that section 101(3) of the TAA (ACT) did not apply to merits review proceedings in the Tribunal because of the text of the TAA (ACT) and notwithstanding decisions in the Tribunal to the contrary. However, on reflection and after further consideration of the parties’ submissions, I have come to the view that the section does apply although for different reasons than those expressed in earlier Tribunal decisions.
75.How it is to be applied, and precisely what it means in a Tribunal context, are different questions to which I will come.
76.The TAA (ACT) distinguishes between “objections” to the Commissioner (the subject of Division 10.1) and “reviews” to the Tribunal (the subject of Division 10.2).
77.Both Divisions are contained within Part 10 of the TAA (ACT) which is headed “Objections and reviews”. That is some indication that the provisions of both Divisions are linked and are to be interpretated to operate, as far as possible, in a harmonious fashion.
78.Division 10.1 is headed “Objections” and Division 10.2 is headed “Notification and review of decisions”.
79.Section 100 of the TAA (ACT) is within Division 10.1 and is concerned with objections lodged with the Commissioner. Section 100(1) says that objections may be lodged with the Commissioner if a taxpayer is dissatisfied with one or more of the assessments and decisions referred to. Sub-section (2) says that an objection must be accompanied by a fee. Subsection (3) says that any fee must be repaid in the circumstances mentioned.
80.The word “objection” is defined in the Dictionary to the TAA (ACT) as being an “objection made under section 100”. The “written objection” mentioned in section 100 must refer to a document which presumably identifies the assessment or decision with which the taxpayer is dissatisfied and notifies the Commissioner that the taxpayer disagrees with it.
81.Section 101 is headed “Grounds for objection”. It sets out three requirements for objections. First, the grounds must be in writing, be stated fully and in detail. Second, the grounds were to be limited to the extent of the reassessment. The third requirement, found in section 101(3), is that:
The burden of showing that an objection should be sustained lies with the taxpayer making the objection
82.One purpose of section 101(3) is to place a burden on the taxpayer to establish his/her/its case because the taxpayer would have the better knowledge of his/her/its affairs.
83.Perhaps another consideration is the fact that consideration by the Commissioner of an objection does not involve adversarial proceedings. In such circumstances the Commissioner would not have the benefit of a contravenor and so it seems logical to place some requirement on the objector to bring forth sufficient evidence of relevant facts to sustain an objection based on the applicable law.
84.Equally, the Commissioner, in such circumstances, is not a contradictor. The Commissioner is an inquisitor obliged to be fair.[4] The Commissioner is not an adversarial cross-examiner, has no client and has no case to put against a taxpayer.
[4] See Abebe v The Commonwealth (1999) 197 CLR 510 at 576 [187] per Gummow and Hayne JJ; Re Minister for Immigration and Multicultural Affairs; Ex parteEpeabaka (2001) 206 CLR 128 at 146 [52] per Kirby J; Re Ruddock; ex parte Applicant S154/2002 [2003] HCA 60 at [57] per Gummow and Heydon JJ.
85.So much seems to have been contemplated in the Explanatory Statement to the Taxation Administration Bill 1998. In relation to clause 101 of that Bill the Explanatory Statement said:
Clause 101 - Grounds for objection - sets the requirements for objections generally and limits the grounds for objection against a reassessment to the reassessment itself, not the original assessment Also provides that on objection or appeal the burden of establishing the taxpayer's case by evidence rests with the taxpayer. This is because the taxpayer has the best knowledge of his or her own affairs
[Emphasis added.]
86.Division 10.2 of the TAA (ACT) concerns reviews to the Tribunal.
87.Section 108B is headed “Grounds of review” and is a rough analogue of section 101. Section 108B contains two requirements for reviews. First, the applicant’s and respondent’s cases on a review are not limited to the grounds of the objection. Second, if the objection was to a reassessment, the grounds of the review are limited to the extent of the reassessment.
88.What is being reviewed is, of course, the Commissioner’s decision on an objection lodged by a taxpayer. The grounds for an objection may be enlarged on a review, and it would seem incongruous not to apply the same burden of proof to those enlarged grounds that applied to the grounds advanced before the Commissioner. Just as there is no contravenor when the Commissioner is determining an objection, so there is no contravenor (in the traditional sense) on a review notwithstanding the fact that the Commissioner is a party to the proceedings.
89.I shall return to that matter shortly.
90.Applying the same burden of proof in reviews would be consistent with the Explanatory Statement referred to above which said that the burden of proof applied on appeals (which were later called reviews when the Duties Act was amended).
91.Ordinarily, and absent a statutory provision to the contrary, there is no burden of proof in merit review tribunals: Comcare v Power [2015] FCA 1502 at [58].
92.One central authority in this area is McDonald v Director-General of Social Security (1984) 1 FCR 354 (McDonald). McDonald was an appeal from a decision of the Administrative Appeals Tribunal to the Federal Court. The Tribunal had affirmed a decision of a delegate of the Director-General of Social Security to cancel an invalid pension which had previously been awarded to the applicant. The appeal lay to the Federal Court pursuant to section 44 of the AAT Act and was limited to questions of law. One question determined was whether either party bore any onus of proof in the Tribunal. The relevant legislation did not contain any similar provision to section 101(3) of the TAA (ACT) and the Full Court considered the question of burden of proof before merit review tribunals.
93.At 357 Woodward J considered the position where legislation did contain a burden of proof section. His Honour said:
It is possible to imagine a case where the act which the administrator is applying places a requirement or onus on one or other of the parties to an issue to establish a particular state of facts on which the administrator's decision would be based. If that were so, the same requirement or onus would apply before the AAT.
[Emphasis added.]
94.Although matters might have been made more clear by the inclusion of a sub-section in section 108B to the same effect as that found in section 101(3), I think it is tolerably clear that the purpose of the relevant provisions was to have a consistent system where a taxpayer bore a burden of proof both before the Commissioner determining an objection or a Tribunal undertaking a merits review of that determination, especially when one considers that neither are adversarial proceedings: see McDonald at 366.
95.Other decisions in the Tribunal have come to the same conclusion but by a different route, namely by drawing an analogy between section 101(3) of the TAA (ACT) and section 14ZZK of the Taxation Administration Act 1953 (Cth) (the TAA (Cth).
96.However, I do not agree that the sections are analogous.
97.For example, in Planet Red Pty Ltd v Commissioner of ACT Revenue [2017] ACAT 18 the Tribunal appeared to hold at [13] – [26] that the onus of proof set out in section 101(3) of the TAA (ACT) applied to a review in the Tribunal. I cannot see in the reasons any textual or contextual analysis of the section, nor can I find any reference to any extrinsic materials.
98.Rather, the Tribunal in that case referred to section 14ZZK of the Taxation Administration Act 1953 (Cth) (the TAA (Cth)), it being described as “the material equivalent of section 101(3) of the” TAA (ACT), and a small number of cases on that Commonwealth section.
99.With great respect, I do not regard s 14ZZK of the TAA (Cth) as being materially equivalent to section 101 of the TAA (ACT). There is a very great difference in the wording of the two sections, not least being the fact that s 14ZZK expressly said that it applied to reviews in the relevant tribunal, something section 101(3) of the TAA (ACT) does not do.[5]
[5] Section 14ZZK, at the time of the cases referred to, appeared in Division 4 of the TAA (Cth) which was headed “AAT review of objection decisions and extension of time refusal decisions”.
100.At the time of the cases referred to in Planet Red section 14ZZK said:
14ZZK Grounds of objection and burden of proof
On an application for review of a reviewable objection decision:
(a) the applicant is, unless the Tribunal orders otherwise, limited to the grounds stated in the taxation objection to which the decision relates; and
(b) the applicant has the burden of proving that:
(i) if the taxation decision concerned is an assessment (other than a franking assessment)—the assessment is excessive; or
(ii) if the taxation decision concerned is a franking assessment—the assessment is incorrect; or
(iii) in any other case—the taxation decision concerned should not have been made or should have been made differently.
101.As is clear, section 14ZZK was expressly rereferring to a review in the Administrative Decisions Tribunal, now the Administrative Review Tribunal (the present section 14ZZK is not, in substance, materially different to the older section).
102.Nevertheless, for the reasons I have given earlier, I am of the view that section 101(3) of the TAA (ACT) does apply to merit review proceedings in the Tribunal.
No error in the application of s 101(3) of the TAA (ACT)
103.The Original Tribunal said that the burden of showing that the taxpayers’ objections should be sustained rested with the taxpayers, citing section 101(3) of the TAA (ACT).
104.The Original Tribunal said that when conducting a review, the ACAT stood in the shoes of the Commissioner and the ACAT’s role was to make its own decision based on the material before it. The Original Tribunal said that it was well recognised that “[t]here is no presumption that the administrator’s decision is correct”, citing Comcare v Power [2015] FCA 1502 at [58].
105.The Original Tribunal then referred to section 68(3) of the ACT Civil and Administrative Tribunal Act 2008 which provides that, after a merits review, the ACAT must confirm, vary or set aside the reviewable decision, and, if the reviewable decision was set aside, to make a substitute decision or remit the matter to the decision maker in accordance with any direction or recommendation of the ACAT.
106.The Commissioner submitted that section 101(3) operated as a “gateway”. That is, a tribunal would first determine whether a taxpayer had satisfied the burden of showing that its objection should be sustained. Then, and only if so satisfied, a tribunal would then turn to the question of what the correct or preferable decision should be.
107.Put another way, the Commissioner submitted:
… if the authorising law requires a particular set of circumstances to exist before a decision may be made, the Tribunal must be satisfied that those circumstances exist before it can make that decision. Subsection 101(3) is precisely such a burden in an authorising law.
108.In summary, the Commissioner submitted that the gateway issue had to be addressed and decided first and separately from any other issue, and that the Original Tribunal erred in that it did not address this “gateway” first before proceeding to determine what the correct and preferable decision should have been.
109.The Commissioner submitted that this erroneous approach infected the totality of the Original Tribunal’s decision. He submitted that:
Had the primary Tribunal properly applied this threshold, it would have held that the Respondents had not provided sufficient evidence to demonstrate that the transactions should not be aggregated, nor had they supplied sufficient evidence to demonstrate that the valuations adopted by the Appellant were excessive. It is an error which affects the entirety of the decision.
110.In support of this submission made to the Original Tribunal, and repeated on appeal, the Commissioner cited Planet Red at [18]. However, that passage does not support the submission. All that the Tribunal said at [18] in Planet Red was:
Section 101(3) of the TAA modifies that position in relation to an objection to a reviewable tax decision by requiring the applicant to sustain its objection, meaning in this case to establish that the valuations are too high.
111.The Commissioner also cited [24]-[26] of Planet Red wherein the Tribunal said:
24. To the extent that the Tribunal considers (and has considered in this case) what the valuations ought to be, it is done to establish as a reference point whether the applicant has discharged its onus. If and only if the onus is discharged may the Tribunal proceed – but need not do so – to decide the extent to which the valuations are too high and substitute different valuations.
25. In Rawson Finances Jagot J put it this way:
The two tasks (on the one hand, being satisfied on the facts as found that the applicant has proved that the assessment is excessive and, on the other hand, being satisfied on the facts as found as to the amount of the liability in the impugned decision) are conceptually different. The statute consigns the first task only to the Tribunal. It may be accepted that, in performing the first task, the Tribunal may consider and/or resolve the second task. No doubt in a case where the Tribunal can satisfy itself, in accordance with the second task, that the facts as found by the Tribunal give rise to the amount of the liability in the impugned decision the Tribunal can also discharge the first task with a high degree of confidence and conclude that the applicant has not proved that the assessment was excessive. Provided the Tribunal’s consideration of the second task does not distract it from the task which the statute requires to be performed there will be no question of law capable of vitiating the Tribunal’s decision. But the second task cannot be substituted for the first task.
26. For the applicant to sustain its objection (in this case that the valuations are too high) does not imply that it must prove on the balance of probabilities that its view about the UV of each subject block is ‘correct’ or require the Tribunal to accept the applicant’s viewpoint. The Tribunal therefore rejects Dr Jarvis’ submission in this respect. Discharge of the onus is not a ‘black or white’ exercise. The Valuation of Land Act 1916 (NSW), section 40(2), similarly places an onus on an appellant to prove its case on appeal to the Land and Environment Court, but proving its case permits the Court to conclude on the evidence what it considers to be the appropriate value of improvements and thus the consequential UV of the land.
112.The best exposition of the point the Commissioner was putting was in Planet Red at [25], namely the first sentence in the quote from Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26.
113.But as that quote reveals, Jagot J made the point that the two tasks may be undertaken concurrently. That passage is no support for the Commissioner’s gateway argument, and I see no error in the Original Tribunal’s reasoning process. It seems to me that the Original Tribunal satisfied itself in accordance with the second task (to adopt Jagot J’s language) that the facts as found also discharged the first task with a high degree of confidence and concluded that the taxpayers had proved that their objections should be sustained.
Ground 2: failing to consider the appellant’s submissions on “associated persons”
114.The Commissioner submitted that it had put forward two alternative arguments why the taxpayers were associate persons within the meaning of section 24 of the Duties Act.
115.The first argument was that the beneficiaries of the two trusts were the beneficial owners of the two Lyell St properties, relying upon section 82 of the Duties Act. In response, the taxpayers relied on Cypjayne and submitted, correctly, that the beneficiaries of the Doublebar and Bloodfinch Trusts were not beneficiaries caught by section 82.
116.The second argument, put as an alternative to the first, was that if the beneficiaries of the two Trusts were not the owners of the land, then the taxpayers were the legal and equitable owners of the two properties at the time of the transfers. If that were correct, the Commissioner submitted, the taxpayers were associated people because Mr Morvillo was the sole director and shareholder of both taxpayers.
117.The Commissioner contended that the Original Tribunal had failed to consider the second argument.
118.How the second argument fell within the terms of s 24 of the Duties Act was not clearly explained and I had difficulty understanding what the Commissioner’s precise case was. No part of section 24 raises for consideration whether trustee companies are “associated persons” because the companies are the beneficial owners of land (assuming that latter statement was accurate).
119.As put to the Original Tribunal in written submissions, the Commissioner submitted that, assuming the taxpayers were the beneficial owners of the land, the taxpayers were “associated persons” because, per (a)(iii) of the definition. The submission was:
By reason of the common shareholding and directorship of those companies at the time of the transfer, being Mr Morvillo in all instances, those companies were properly “associated persons” for the purposes of section 24.
120.That of course was the ultimate submission, but how the Commissioner said that those particular facts fell within section 24 was difficult for me to understand.
121.Be that as it may, the question whether the taxpayers held a beneficial interest in the two properties was a red herring.
122.As best I understood the Commissioner’s submissions, the question, per (a)(iii) of the definition of “associated person”, was simply whether Mr Morvillo (who was the common shareholder in each taxpayer) had a “significant interest” in each taxpayer.
123.The word “interest” is defined in the Duties Act as:
interest—
(a) for this Act generally—includes an estate, an interest under a lease or a sublease, a proprietary right and a beneficial interest; and
(b) in a landholder, for part 3.2 (Acquisition of interests in certain landholders)—see section 83.
124.The words “significant interest” are defined in the Duties Act as:
significant interest, in a landholder—see section 83.
125.When I asked the Commissioner during oral submissions what was the Commissioner’s case as put below in terms of how it was put that Mr Morvillo had a “significant interest” in the taxpayers, the Commissioner said he had relied upon both (a) and (b) of the definition of “interest”.
126.However, I cannot find any submissions regarding (a) of the definition in either the written or oral submissions of the Commissioner put to the Original Tribunal.
127.In his written submissions on the appeal (at [28]) the Commissioner said that the “legal and factual analysis to support” his two alternative arguments were “spelled out in detail in the (Commissioner’s) closing submissions at [15]-[38]”.
128.However, those submissions are silent on how it was said that Mr Morvillo had a significant interest in both shareholders per (a) of the definition other than simply asserting this was because he was the sole shareholder of both companies.
129.In oral submissions to the Original Tribunal the Commissioner’s only case on this point concerned (b) of the definition.
130.For example, at T 114 (AB 355) the Commissioner referred to (a)(iii) of the definition of “associated person”, then referred to the definition of “significant interest” (which concerns a landholder), then referred to a distribution on winding up (the subject of section 83 of the Duties Act) followed by references to the deeming provisions of section 82 of the Duties Act.
131.I have set out section 83 earlier in these reasons. In short, it means that for Mr Morvillo to have had a significant interest in the taxpayers, he would need to have been entitled to at least 50% of any distribution of property on the winding up of the taxpayers.
132.The Commissioner submitted that on a winding up of a trustee of a discretionary trust, the sole director and shareholder of the trustee company could distribute the trust assets to himself. Self-evidently, that proposition is incorrect and would be a breach of trust and a breach of the trustee’s fiduciary duties. It would be a breach of clause 4 of the Trust Deeds if this occurred on the vesting day. I could not find any power in the Trust Deeds to wind up the trusts before the Vesting Day and was not taken to any such clause by the Commissioner.
133.As I read the Commissioner’s written and oral submissions put to the original Tribunal, and the Original Tribunal’s reasons, the Tribunal did consider the argument the Commissioner says was not considered. It was dealt with at [65] of the Original Tribunal’s reasons where the Original Tribunal said:
The (Commissioner) contended that if the Tribunal accepted that discretionary beneficiaries are not beneficiaries for the purposes of the associated person test in the Act, then the beneficial interest must rest with the applicant companies and, by reason of the common shareholding, this means they are associated. The Tribunal does not agree with the simplistic binary logic of the respondent’s latter contention given it is inconsistent with significant bodies of case law, as the applicant submitted. In any case, common shareholding is not the test here, the test is whether Mr Morvillo had a “significant interest” in each of the applicants. On this issue, during the proceedings the respondent contended that Mr Morvillo had a “significant interest” in the applicant companies because he was the only shareholder of a landholding company and he would be entitled to 100% of any distribution under section 83 of the Act. The respondent contended that the latter was true even if the applicants were trustee companies, relying again on section 82(2) of the Act which the Tribunal finds does not apply.
134.In that paragraph the Original Tribunal expressly referred to the case put by the Commissioner and, like myself, came to the view that beneficial ownership of the land was irrelevant. What (a)(iii) of the definition of “associate person” directed attention to was whether Mr Morvillo had a significant interest (as defined) in the taxpayers.
135.The Original Tribunal then addressed that question on the submissions put to it, and rightly rejected it.
136.No case was put to the Original Tribunal that (a) of the definition of “interest” applied, and I would not allow it to be raised for the first time on appeal.
137.I should also note that the Original Tribunal found that the taxpayers were not “landholders” for the purposes of the Duties Act (at [66]), and consequently section 83 cannot apply. There was no appeal from that finding and thus this ground was bound to fail.
Ground 3: failing to find the transactions formed one arrangement
138.As the appeal fails because the Commissioner has failed to establish any error in the Original Tribunal’s finding that the taxpayers were not “associated persons” as required by section 24(1)(b) of the Duties Act, this ground need not be determined.
139.However, as the matter was argued, I shall set out some brief reasons why this ground would also fail.
140.The Commissioner submitted that the Original Tribunal erred in failing to properly apply section 24 of the Duties Act. That is, the Original Tribunal failed to find that the dutiable transactions together formed, evidenced, gave effect to or arose from what was, substantially, one arrangement relating to all of the interests in the dutiable property: see section 24(1)(c) of the Duties Act.
141.It is important to note that the Commissioner did not challenge any of the Original Tribunal’s findings of fact.
142.Rather, the Commissioner, on the appeal, directed attention to the facts set out at [39] of his written submissions put to the Original Tribunal (commencing at AB 1347) and then submitted:
Once those matters are considered, the Appellant submits that it is clear that the primary Tribunal erred in failing to hold that the transfers of the properties to the Respondents arose out of one arrangement.
143.With respect, it is not sufficient on appeal to simply direct attention to a number of facts and then submit that it is therefore clear that the Original Tribunal erred. On an appeal error must be identified.
144.I think that the Commissioner’s real appeal point was that the Tribunal had not referred to all of the evidence in its reasons i.e. an inadequacy of reasons ground.
145.But a Tribunal need not refer to all of the evidence in reasons. As was said by the majority in Whisprun Pty Ltd v Dixon [2003] HCA 48:
[62] A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.
[63] … To suggest that a trial judge has not properly considered a party’s case is a serious charge. Such a suggestion should be accepted only when the record of the trial or other evidence persuasively suggests that the judge failed to discharge that paramount judicial duty.
146.In Sweeney v He [2023] NSWCA 68 Ward P, with whom Brereton and Mitchelmore JJA agreed, said this:
[142] The litany of complaints by the appellant as to an inability to see that the primary judge had received and understood his submissions has the hallmarks of a formulaic complaint that there was appellable error in relation to each submission not separately recorded and addressed by the primary judge. His Honour made clear the basis on which he rejected the appellant’s claim and it was not necessary in my opinion for his Honour to give a line by line account of the submissions made by the appellant in order to do so (though to pre-empt a similar such complaint I have set those out in some detail in these reasons).
[143] I note that, in Baira v RHG Mortgage Corporation Ltd [2012] NSWCA 387; (2012) 297 ALR 416, at [173]-[175] this Court noted that it is insufficient to demonstrate (on appellate review of factual findings) that a primary judge has failed to deal with some evidence. The evidence in question must have the “quality which seriously calls into question the integrity of a finding of fact” (see also Lemongrove Services Pty Ltd v Rilroll Pty Ltd [2019] NSWCA 174 at [32] per Payne JA).
[Emphasis added]
147.The Commissioner identified some matters not expressly recorded in the reasons of the Original Tribunal, but made no attempt to explain how those matters had the quality which seriously called into question the integrity of the Original Tribunal’s finding that there was not one arrangement.
148.It seems to me that the Original Tribunal addressed its mind to the correct factual question and, in some detail, considered various facts. In evaluating all of those facts the Original Tribunal came to a view that there was not one arrangement, and it was not erroneous to fail to refer to every fact mentioned by the Commissioner.
149.I should also note that the Original Tribunal also found in favour of the taxpayers that the Commissioner should have been satisfied under section 24(2)(d) of the Duties Act that it would not be just and reasonable for the transactions to be aggregated.
150.There was no appeal from that conclusion and so the appeal from the finding that the transactions should not be aggregated would necessarily fail.
Ground 4: error in accepting the taxpayer’s valuer’s valuations
151.The Commissioner submitted that the Original Tribunal erred in accepting the taxpayers’ valuer’s expert opinion as to the market value of the two properties at the time of the transfers.
152.The Commissioner submitted that the “basis for this ground” was set out in his written submissions to the Original Tribunal. With respect, that submission was not helpful. Disturbing factual findings on an appeal is a different exercise to advocating for the preference of one witness over another at a hearing.
153.Be that as it may, no error was identified in the Commissioner’s submissions. The submissions simply restated what was put below and that is not sufficient on an appeal. Error must be demonstrated, and none was.
154.Further, the Commissioner did not grapple with the entirety of the Tribunal’s reasoning process. That is, the Original Tribunal set out in detail the reasons why it preferred Mr Wright’s evidence over that of Mr Pilat, but the Commissioner did not address all of the matters relied on by the Tribunal.
155.Rather, the Commissioner, in substance, simply restated his submissions made to the Original Tribunal.
156.I see no error in the Original Tribunal’s findings on the valuations.
Orders
The Tribunal orders that:
1.The appeals are dismissed.
………………………………..
Acting Presidential Member G Curtin SC
Date(s) of hearing: 22 and 23 May 2025 Counsel for the Appellants: Mr B Buckland Solicitors for the Appellants: ACT Government Solicitor Counsel for the Respondents:
Solicitor for the Respondents:Mr A Russoniello
McEvoy Legal
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