CRUGNALE and COMMISSIONER OF STATE REVENUE - [2019] WASAT 8

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: TAXATION ADMINISTRATION ACT 2003 (WA)
DUTIES ACT 2008 (WA)

CITATION:   CRUGNALE and COMMISSIONER OF STATE REVENUE [2019] WASAT 8
MEMBER:   JUDGE T SHARP, PRESIDENT (ACTING)
HEARD:   23 OCTOBER 2018
WRITTEN SUBMISSIONS FILED
29 OCTOBER 2018
1 NOVEMBER 2018
2 NOVEMBER 2018

DELIVERED          :   28 FEBRUARY 2019
FILE NO/S:   CC 796 of 2018
BETWEEN:   JARRAD MICHAEL CRUGNALE
JEAN GRACE ROSE
Applicants
AND
COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

Strata scheme - Surveystrata scheme - Dutiable land - Dutiable transaction - Duty - Partition - Congeries of rights - New dutiable land

Legislation:

Duties Act 2008 (WA), s 10, s 11, s 11(1), s 11(2), s 15(a), s 17(1)(a), s 37, s 39
State Administrative Tribunal Act 2004 (WA), s 27(1)
Strata Titles Act 1966 (WA), s 3, s 4(1), s 4(4), s 5(1), s 5(5), s 9, s 18
Strata Titles Act 1985 (WA), s 19, s 20, s 30, s 30(1), s 30(2), s 132(1), Sch 3, cl 2(6), cl 3(1), cl 3(2), cl 3(3), cl 5
Taxation Administration Act 2003 (WA), s 16(5), s 37(2), s 40, s 40(1)

Result:

Respondent's decision affirmed

Category: B

Representation:

Counsel:

Applicants	:	Mr D Barker
Respondent	:	Ms R Panetta

Solicitors:

Applicants	:	Chalmers Legal Studio Pty Ltd
Respondent	:	State Solicitor's Office

Case(s) referred to in decision(s):

Commissioner of State Revenue v Abbotts Exploration Pty Ltd (2014) 48 WAR 300
Placer Dome Inc v Commissioner of State Revenue [2017] WASCA 165
Tipene v The Owners of Strata Plan 9485 [2015] WASC 30

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

This matter comes before the Tribunal by way of an application from the first applicant (Crugnale) and the second applicant (Rose) (together Applicants) under s 40 of the Tax Administration Act 2003 (WA) (TA Act) dated and lodged with the Tribunal on 17 April 2018.
The background to the application is that, as a result of, amongst other things, the termination of a strata scheme, the subdivision of the resultant parcel of land by the registration of a survey-strata plan and the subsequent disposition of the survey-strata lots, the respondent (Commissioner) issued a duties assessment notice to each of Crugnale and Rose.
The Applicants on 22 December 2017 objected to the assessment of duty and the Commissioner on 19 February 2018 allowed that objection in part. The Applicants' application to the Tribunal is for a review of the Commissioner's decision on the objection.

Proceedings in the Tribunal

At a directions hearing on 14 May 2018, the matter was referred to a mediation conference which took place on 24 July 2018. The mediation was terminated and the matter was programmed for a final hearing which took place on 23 October 2018.
A Statement of Agreed Facts and Issues was filed with the Tribunal on 23 August 2018. The Commissioner filed her Statement of Contentions on 3 September 2018 and the Applicants filed a Responsive Statement on 14 September 2018. The Commissioner filed her Reply on 1 October 2018.
Following the hearing, on 29 October 2018 the Commissioner filed an 'Explanatory Note' containing further details of the assessment under review. The Applicants sought and were given leave to file Responsive Submissions which they did on 1 November 2018. In the interests of procedural fairness, the Tribunal allowed the Commissioner to file a further Response which she did also on 1 November 2018.
On that date, 1 November 2018, the Tribunal reserved its decision.

Facts

The following facts have been drawn from the Statement of Agreed Facts. They are uncontroversial and the Tribunal makes these findings of fact.

Strata Plan 6837

On 12 April 1979, Lot 209 on Plan 4436(3) (Lot 209) and then being the whole of the land comprised in Certificate of Title Volume 1515 Folio 521 was subdivided by Strata Plan 6837 which plan shows Lot 209 being subdivided into two lots and common property.
Also on 12 April 1979, Certificate of Title Volume 1515 Folio 521 was marked 'Cancelled to Strata Plan 6837'.
On the same date, Certificate of Title Volume 1530 Folio 640 was created for Lot 1 on Strata Plan 6837 and Certificate of Title Volume 1530 Folio 641 was created for Lot 2 on Strata Plan 6837.
On 18 March 2003, Rose was registered as the proprietor of Lot 2 on Strata Plan 6837 together with a share in the common property as set out on the Strata Plan.
On 5 October 2011, Crugnale was registered as the proprietor of Lot 1 on Strata Plan 6837 together with a share in the common property as set out on the Strata Plan.

Survey-Strata Plan 73499

On 19 October 2017, the Applicants as the 'Owners of 82 Fraser Street, Bicton, Strata Plan 6837' by a unanimous resolution resolved that the strata scheme the subject of Strata Plan 6837, be terminated and executed a Form 15 (Notification of Termination of the Strata Scheme).
On 14 November 2017, the Applicants as the 'Owners of 82 Fraser Street Bicton' then executed an Application Form A5 for the termination of the strata scheme and, as tenants in common pursuant to s 30 of the Strata Titles Act 1985 (WA) (1985 Act), executed an Application Form 8 for the registration of Survey-Strata Plan 73499.
On 8 December 2017, the Applicants as the registered proprietors of Lot 209 the subject of Survey-Strata Plan 73499, executed a 'Form 22: Disposition on Subdivision' for Crugnale to be the registered proprietor of Lot 1 on Survey-Strata Plan 73499, for the Applicants to both be the registered proprietors of Lot 2 on Survey-Strata Plan 73499 and for Rose to be the registered proprietor of Lot 3 on Strata Plan 73499.
On 22 February 2018, the Applicants caused to be lodged at Landgate:
a)the Form 15 followed by;
b)the Form A5 followed by;
c)the Form A8 followed by;
d)the Form 22.
On 26 February 2018, a Memorial 'Strata scheme terminated included in Volume 2944 Folio 557' was entered on Strata Plan 6837.
On 26 February 2018, Certificates of Title Volume 1530 Folio 640 and Volume 1530 Folio 641 were both endorsed 'Folio cancelled. Strata scheme terminated to Volume 2944 Folio 557'.
On the same date, Certificate of Title Volume 2944 Folio 557 was created for Lot 209 with the Applicants the registered proprietors as tenants in common in equal shares. Lot 209 was subdivided by SurveyStrata Plan 73499 and Certificate of Title Volume 2944 Folio 557 was cancelled.
Also on that date:
(a)Certificate of Title Volume 2944 Folio 563 was created for Lot 1 on Survey-Strata Plan 73499 together with a share in any common property as set out in the SurveyStrata Plan of which the registered proprietor was Crugnale;
(b)Certificate of Title Volume 2944 Folio 564 was created for Lot 2 on Survey-Strata Plan 73499 together with a share in any common property as set out in the SurveyStrata Plan of which the registered proprietors were the Applicants as tenants in common in equal shares; and
(c)Certificate of Title Volume 2944 Folio 565 was created for Lot 3 on Survey-Strata Plan 73499 together with a share in any common property as set out in the SurveyStrata Plan of which the registered proprietor was Rose.

Lot 2 on Survey-Strata Plan 73499

On 23 December 2017, the Applicants accepted an offer from Roberto Roderio Marusco (Mr Marusco) to purchase proposed Lot 2 on SurveyStrata Plan 73499 for $475,000.
On 12 April 2018, Mr Marusco was registered as the proprietor of Lot 2 on Survey-Strata Plan 73499 together with a share in any common property as set out in the Survey-Strata Plan.

Duty assessment issued

On 19 October 2017, Rose signed Duties Valuation Forms for transactions in respect of proposed Lots 1, 2 and 3 on Survey-Strata Plan 73499 which described those proposed lots as previously been part of lots in Strata Plan 6837.
On or about 1 November 2017, the Commissioner sought valuations from Landgate for proposed Lots 1, 2 and 3 on Survey-Strata Plan 73499.
On 15 November 2017, Landgate provided the Commissioner with valuations of $570,000 for each of proposed Lots 1, 2 and 3 on SurveyStrata Plan 73499.
On 13 December 2017, the Commissioner issued a Duties Assessment Notice for the amount of $3,705 for Rose and $3,705 for Crugnale.
On 22 December 2017, the Applicants objected to the assessment of duties.
On 19 February 2018, the Commissioner determined the objection and allowed it in part. The Commissioner reduced her valuation of Lots 1, 2 and 3 on Survey-Strata Plan 73499 in light of the amount agreed to be paid by Mr Marusco for Lot 2. The amount of duty as reassessed is $2,804.40 for Rose and $2,804.40 for Crugnale.
On 17 April 2018, the Applicants applied to the Tribunal for a review of the Commissioner's decision on the objection.

Further fact demolition of buildings

An assertion by the Applicants which was not included in the Statement of Agreed Facts but is made in the Applicants' Statement of Contentions is that the residential dwellings that comprised the Strata Scheme for Strata Plan 6837 were demolished before the termination of the Strata Scheme for Strata Plan 6837. The Commissioner does not dispute this. However, it is unclear as to when the demolition occurred. It is apparent from the Applicants' Responsive Statement that the demolition occurred sometime prior to 22 February 2018, the date of lodgement at Landgate of the document effecting the termination of the Strata Scheme.

Legislative scheme

Tax Administration Act 2003

Section 40(1) of the Tax Administration Act 2003 (WA) (TA Act) provides:
Right of review by State Administrative Tribunal
(1)A person dissatisfied with the Commissioner’s decision on an objection or on an application for an extension of time for lodging an objection may apply to the State Administrative Tribunal for a review of the decision.
Section 37(2) of the TA Act provides that the onus of establishing that an assessment or decision to which an objection relates is invalid or incorrect lies on the taxpayer.
Section 16(5) of the TA Act relevantly provides that if an assessment of duty is based on a particular practice of the Commissioner that was generally applied to assessments of that kind when the assessment was made, the Commissioner cannot make a reassessment based on the ground that the interpretation or practice is or was erroneous.

Duties Act 2008

Section 10 of the Duties Act 2008 (WA) (Duties Act) provides:
10.Transfer duty imposed
Duty is imposed on dutiable transactions.
Section 11 of the Duties Act provides:
11.Dutiable transaction
(1)Subject to subsection (2), any of the following is a dutiable transaction
(a)a transfer of dutiable property;
(b)an agreement for the transfer of dutiable property, whether conditional or not;
(c)a declaration of trust over dutiable property;
(d)a vesting of dutiable property
(i)by, or expressly authorised by, statute law of this or another jurisdiction, whether inside or outside Australia; or
(ii)by, or as a consequence of, a court order of this or another jurisdiction, whether inside or outside Australia;
(e)a foreclosure of a mortgage over dutiable property;
(f)an acquisition of new dutiable property, on its creation, grant or issue;
(g)a surrender of special dutiable property;
(h)a trust acquisition or trust surrender;
(i)a partnership acquisition;
(j)a farm-in agreement.
(2)The following transactions are not dutiable transactions
(a)a transaction the subject of which is a right if no consideration is paid, or agreed to be paid, for the transaction;
(b)a transfer of, or an agreement for the transfer of, a lease if no consideration is paid, or agreed to be paid, for the transfer or agreement;
(c)a transfer of, or an agreement for the transfer of, a security interest, if the consideration for the transfer, or agreement, is equal to or greater than the market value of the security interest;
(d)a transaction the subject of which is a unit in a unit trust scheme;
(e)a transaction prescribed as an excluded transaction for the purposes of this section.
Section 15(a) of the Duties Act provides:
15.Dutiable property
Any of the following is dutiable property
(a)land in Western Australia[.]
'Land' is defined in the Duties Act to include any estate or interest in land; s 3.
Section 17(1)(a) of the Duties Act provides:
17.New dutiable property
(1)Any of the following is new dutiable property
(a)land in Western Australia[.]
Section 37 of the Duties Act provides:
37.Aggregation of dutiable transactions
(1)Dutiable transactions relating to separate items of dutiable property that together form, evidence, give effect to or arise from what is, substantially one arrangement are to be aggregated and treated as a single dutiable transaction.
(2)Without limiting subsection (1), unless the Commissioner is satisfied to the contrary, dutiable transactions relating to separate items of dutiable property together form, evidence, give effect to or arise from what is, substantially one arrangement if
(a)the transactions have taken place within 12 months; and
(b)in respect of each of the transactions, the person liable to pay duty is the same person (whether that person is the only person liable to pay duty or is liable to pay duty with the same or different persons).
(3)Dutiable transactions relating to separate items of dutiable property are not to be aggregated under this section unless the transactions to be aggregated
(a)are all chargeable at the same rate of duty; or
(b)are all chargeable with nominal duty; or
(c)are all exempt transactions.
(4)If dutiable transactions are aggregated, then they are to be treated as a single dutiable transaction that took place at the time that the last of the aggregated transactions took place.
(5)This section does not apply to a dutiable transaction to the extent that it relates to the grant of an option to acquire dutiable property, other than as required under section 34.
(6)Duty chargeable on the dutiable transaction aggregated under this section is to be
(a)assessed on the total of the dutiable values for each of the transactions (calculated as if each transaction was a dutiable transaction) at the time when liability for duty on each transaction arose; and
(b)apportioned between the transactions as decided by the Commissioner.
(7)The amount of duty payable in accordance with this section is to be reduced by the amount of any duty paid on a previous dutiable transaction that is, or previous dutiable transactions that are, aggregated under this section.
(8)Transactions aggregated and treated as a single dutiable transaction under this section may include a transaction that would not otherwise be a dutiable transaction, and where such a transaction is included, that transaction is taken to be a dutiable transaction and is liable to duty accordingly.
Section 39 of the Duties Act provides:
39.Partitions of property, dutiable values in case of
(1)For the purposes of this section, a partition occurs when property (some or all of which is dutiable property) that is held by persons jointly (as joint tenants or tenants in common) and beneficially is transferred or agreed to be transferred to one or more of those persons.
(2)The dutiable value of a partition is to be determined in accordance with the following formula
where
DV is the dutiable value;
A is the greater of the following amounts
(i)the sum of the amounts by which the unencumbered value of the property transferred or agreed to be transferred to a person exceeds the unencumbered value of the interest held by the person in all of the property immediately before the partition; or
(ii)the sum of any consideration for the partition paid by any of the parties;
X is the unencumbered value of all dutiable property the subject of the partition;
Y is the unencumbered value of all property the subject of the partition.
(3)The minimum amount of duty payable on a transaction that effects a partition is the amount of nominal duty.
Note for this section:
For example, A and B own lot 1 which has an unencumbered value of $400 000 and a boat that has an unencumbered value of $300 000.
The total value of the property being partitioned is $700 000 and A and B are each entitled to $350 000.
A is taking lot 1 by way of partition and the value of that lot exceeds A's entitlement by $50 000.
A's duty assessment:
$50 000 (excess entitlement) x $400 000 (value of dutiable property)
$700 000 (value of all property)
The dutiable value for the transfer of land to A is $28 571.

Strata Titles Act 1966

Section 4(1) of the now repealed Strata Titles Act 1966 (WA) (1966 Act) provides:
4(1) Land may be subdivided into lots by registering a strata plan in the manner provided this Act.
Section 4(3) of the 1966 Act provides:
A strata plan shall, for the purposes of the Transfer of Land Act, 1893, be deemed upon registration under this Act to be embodied in the register book kept under the first mentioned Act; and notwithstanding the provisions of the first mentioned Act, a proprietor shall hold his lot and share in the common property subject to
(a)any interests for the time being notified on the registered strata plan; and
(b)any amendments to lots or common property shown on that plan.
Section 4(4) of the 1966 Act provides:
Where a strata plan is duly registered under this Act a memorial thereof shall be entered on the Certificate of Title relating to the parcel and thereupon the Registrar of Titles may issue a separate Certificate of Title for each lot together with the share of the common property appurtenant thereto.
A 'parcel' is the land comprised in the strata plan; s 3 of the 1966 Act
Section 5(1) of the 1966 Act provides:
A strata plan shall
(a)delineate the external surface boundaries of the parcel and the location of the building in relation thereto;
…
(d)define the boundaries of each lot in the building by reference to floors, walls and ceilings, without necessarily showing any bearings or dimensions of the lot;
(e)show the approximate floor area of each lot;
(f)define any portions of the parcel not within the building, that are or are intended to be separate tenements, and used in conjunction with the building or portion of the building[.]
Section 5(5) of the 1966 Act provides:
Unless otherwise provided in the strata plan, the common boundary of a lot with another lot or with common property shall be the centre of the floor, wall or ceiling, as the case may be.
Section 18 of the 1966 Act provides:
(1)Every plan lodged for registration as a strata plan shall have an endorsement thereon specifying in whole numbers the unit entitlement of each lot and a number equal to the aggregate unit entitlements of all the lots.
(2)The unit entitlement so endorsed determines
(a)the voting rights of a proprietor;
(b)the quantum of the undivided share of each proprietor in the common property; and
(c)the proportion payable by each proprietor of contributions levied pursuant to subsection (6) of section thirteen of this Act.
Section 9 of the 1966 Act provides:
(1)The common property shall be held by the proprietors as tenants in common in shares proportional to the unit entitlement of their lots.
(2)The Registrar of Titles shall, in the certificate of title to a lot, certify the share of the proprietor in the common property.

Strata Titles Act 1985

Section 132(1) of the 1985 Act provides:
132.Transitional and savings
(1)Schedule 3 has effect.
Schedule 3, cl 2(6) of the 1985 Act provides:
Subject to this clause, a reference in this Act to a strata plan includes a reference to a plan registered under subclause (1) as a strata plan.

Schedule 3, cl 3(1) of the 1985 Act provides:
Former lots and former common property to be derived lots and derived common property
(1)Where immediately before the appointed day
(a)a former lot had any boundary that under section 5(5) of the former Act was the centre of a floor, wall or ceiling, that former lot, on the appointed day, becomes for the purposes of this Schedule a derived lot corresponding to that former lot and having, subject to subclause (2), as its boundaries
(i)instead of any boundary that was the centre of a floor, wall or ceiling, the upper surface of that floor, the inner surface of that wall or the under surface of that ceiling, as the case may be; and
(ii)except as provided by subparagraph (i), the same boundaries as that former lot;
and
(b)a former lot had no boundary that under section 5(5) of the former Act was the centre of a floor, wall or ceiling, that former lot, on the appointed day, becomes for the purposes of this Schedule a derived lot corresponding to that former lot and having as its boundaries the same boundaries as that former lot.
Schedule 3, cl 3(2) of the 1985 Act provides:
A derived lot does not include any structural cubic space unless that structural cubic space was stipulated, in the relevant strata plan, as forming part of the former lot to which that derived lot corresponds.
Schedule 3, cl 5 of the 1985 Act provides:
Continuation of estates or interests in former lots and former common property and rights in former common property
A person who, immediately before the appointed day
(a)had an estate or interest in a former lot, has on that day the same estate or interest in the derived lot which corresponds to that former lot; or
(b)had an estate or interest (not being a right or special privilege referred to in clause 13) in former common property, has on that day the same estate or interest in the derived common property which corresponds to that former common property.
Schedule 3, cl 3(3) of the 1985 Act provides:
On the appointed day, former common property becomes, for the purposes of this Schedule, derived common property corresponding to that former common property but has as its boundaries —
(a)where any derived lot has any of its boundaries ascertained in accordance with subclause (1)(a)(i) or (b), boundaries adjusted reciprocally; and
(b)except as provided by paragraph (a), the same boundaries as that former common property.
Section 4(1), (1a) and (1b) of the 1985 Act provides:
(1)Land may be subdivided into lots, or lots and common property, by the registration of a strata plan or a survey-strata plan.
(1a)A strata plan is a plan that —
(a)is described as such in its title or heading; and
(b)shows the whole or any part of the land comprised in the plan as being divided into 2 or more lots; and
(c)complies with section 5,
and includes any amendment duly made to that plan.
(1b)A survey-strata plan is a plan that —
(a)is described as such in its title or heading; and
(b)shows the whole or any part of the land comprised in the plan as being divided into 2 or more lots; and
(c)complies with section 5A,
and includes any amendment duly made to that plan.
The term 'survey-strata scheme is defined in s 3(1) of the 1985 Act as follows:
Survey-strata scheme means —
(a)the manner of division, from time to time, of a parcel into lots or into lots and common property under a survey-strata plan and the manner of the allocation, from time to time, of unit entitlements among the lots; and
(b)the rights and obligations, between themselves, of proprietors, other persons having proprietary interests in or occupying the lots and the strata company, as conferred or imposed by this Act or by anything done under the authority of this Act[.]
Schedule 3, cl 6 of the 1985 Act provides:
6.Application of Act to former strata schemes, former parcels, derived lots and common property
Subject to this Schedule, the provisions of this Act shall, on and from the appointed day, apply to and in respect of
(a)a former strata scheme as if it were a strata scheme; and
(b)a former parcel as if it were a parcel; and
(c)a derived lot as if it were a lot; and
(d)derived common property as if it were common property.
Section 30 of the 1985 Act provides:
Termination of strata scheme by unanimous resolution
(1)The proprietors of lots in a strata scheme may resolve by unanimous resolution that the strata scheme be terminated in accordance with this section and upon the passing of such a resolution the strata company shall immediately lodge notice of the resolution with the Registrar of Titles in the prescribed form.
(2)Upon receipt of the notice referred to in subsection (1), the Registrar of Titles shall make an entry on the relevant registered strata plan in the manner prescribed and thereupon the proprietors of lots in that plan are entitled to the parcel as tenants in common in shares proportional to the unit entitlements of their respective lots.
(3)Where all the proprietors of lots in a strata scheme desire to transfer the parcel or any part or parts of the parcel, they may by unanimous resolution direct the strata company to transfer the parcel or part or parts thereof, and thereupon —
(a)the strata company shall execute the appropriate transfer; and
(b)the proprietors of the parcel or part of the parcel transferred are entitled to the proceeds of the sale in shares proportional to the unit entitlements of their respective lots; and
(c)subsections (5) to (8) of section 19 apply as if the parcel were the common property.

Events leading up to the assessment of duty

In 1979, pursuant to the terms of s 4 of the 1966 Act, Lot 209 was subdivided into two lots and common property by the registration of Strata Plan 6837. Crugnale and Rose in due course became the owners of, respectively, Lot 1 and Lot 2. The common property shown on the Strata Plan was owned by both of them as tenants in common in equal shares.
The 1966 Act was repealed by the 1985 Act and, by virtue of the transitional provisions of the 1985 Act, Lots 1 and 2 on Strata Plan 6837 became 'derived lots' under the 1985 Act. The common property became 'derived common property' under the 1985 Act.
The 1985 Act applied to derived lots and derived common property as if they were lots and common property under the 1985 Act; Sch 3, cl 6 of the 1985 Act.
Under the 1985 Act, a strata scheme can be terminated by a unanimous resolution of the proprietors of the lots; s 30(1) of the 1985 Act. If that occurs, the proprietors of the lots become entitled to the 'parcel', that is, the land comprised in the strata or the surveystrata scheme, as tenants in common in shares proportional to their unit entitlements; s 30(2) of the 1985 Act.
In this case, on 19 October 2017, a unanimous resolution to terminate the scheme the subject of Strata Plan 6837 was made. On 22 February 2018, the notification of the resolution was lodged with the Registrar of Titles and on 26 February 2018 an entry was made on the registered Strata Plan reflecting its termination.
As a consequence, on 26 February 2018, the scheme the subject of Strata Plan 6837 was terminated and the Certificates of Title issued for Lots 1 and 2 were cancelled. A digital Certificate of Title for the parcel, that is, Lot 209, was created to reflect that Crugnale and Rose were then entitled to an estate in fee simple in the parcel as tenants in common in equal shares pursuant to s 30(2) of the 1985 Act.
Also on 26 February 2018, Lot 209 was subdivided into three surveystrata lots upon the registration of surveystrata plan 73499. Each of those three lots would have been registered in the names of Crugnale and Rose as tenants in common in equal shares upon registration of the survey-strata plan, except that the Applicants also lodged for registration a Form 22: Disposition on Subdivision. The effect of the registration of surveystrata plan 73499 and the Form 22 was that Lot 1 was vested in Crugnale, Lot 3 in Rose and Lot 2 in Rose and Crugnale as tenants in common in equal shares.
Lot 2 was then sold by Rose and Crugnale to Mr Marusco. The price paid for Lot 2 in that transaction set the value of each of the three lots at $475,000. The Commissioner had previously valued each lot at $570,000. It was this revaluation which resulted in the Commissioner allowing the objection in part.

First Dutiable Transaction

The Commissioner considers that on or around 26 February 2018, when the Registrar of Titles made the relevant entry on Strata Plan 6837 the strata scheme the subject of Strata Plan 6837 was terminated, which resulted in the acquisition of new dutiable property by each of Rose and Crugnale (First Dutiable Transaction).
The Commissioner's reason for arriving at that view is that because, prior to the termination of the strata scheme, Rose held a 100% legal interest in Lot 2 on Strata Plan 6837, together with a 50% share in any common property as set out on the strata plan. Crugnale similarly held a 100% legal interest in Lot 1 and also a 50% share in the common property set out on the strata plan. When the strata scheme was terminated, Crugnale and Rose between them acquired the whole of Lot 209, which the Commissioner says constitutes 'new dutiable property' in the form of 'land in Western Australia'. The Commissioner says that the interest of Crugnale and Rose in Lot 209 is new dutiable property because this interest differs to the respective interest of Crugnale and Rose in Lots 1 and 2 on Strata Plan 6837 and their share in the common property, which was what was owned by Crugnale and Rose prior to the termination of the strata scheme.
Therefore, in the Commissioner's submission, the interest of Crugnale and Rose in Lot 209 was newly acquired and was created upon the termination of the strata scheme the subject of Strata Plan 6837.
The Commissioner says that Lot 209 is different land to that represented by the aggregation of:
a)the common property the subject of Strata Plan 6837;
b)Lot 1 on Strata Plan 6837; and
c)Lot 2 on Strata Plan 6837.

Second Dutiable Transaction

The Commissioner then says that the subdivision of Lot 209 in accordance with the Form 22: Disposition on Subdivision gave rise to three further 'acquisitions of new dutiable property'. The Commissioner under s 37 of the Duties Act aggregated these three transactions (Commissioner's Explanatory Note filed on 29 October 2018 at page 2) and so I will refer to them in these reasons collectively as the Second Dutiable Transaction. The three acquisitions arose in the following manner.
Upon termination of the strata scheme the subject of Strata Plan 6837 on 26 February 2018, Rose and Crugnale each acquired a 50% interest in Lot 209 as tenants in common in equal shares.
Following registration of SurveyStrata Plan 73499 in respect of Lot 209 and in accordance with the disposition confirmed and consented to by the Applicants in the Form 22: Disposition on Subdivision:
a)Rose became the holder of a 100% interest in Lot 3 on SurveyStrata Plan 73499;
b)Crugnale became the holder of a 100% interest in Lot 1 on SurveyStrata Plan 73499; and
c)Rose and Crugnale each became the holder of a 50% interest in Lot 2 on SurveyStrata Plan 73499 as tenants in common in equal shares.
The Commissioner contends that Rose's 100% interest in Lot 3 constitutes 'new dutiable property' in the form of 'land in Western Australia' which, the Commissioner says, differs to Rose's 50% interest in Lot 209. Accordingly, Rose's interest in Lot 3 was newly acquired and was created upon the subdivision of Lot 209 by the surveystrata plan.
For the same reason, Crugnale's sole 100% interest in Lot 1 and Rose and Crugnale's individual 50% interest in Lot 2 both constitute 'new dutiable property' for the same reasons. Those interests were newly acquired by, in the case of Lot 1, Crugnale and in the case of Lot 2, Crugnale and Rose.
The Commissioner says that Lot 209 is different land to that represented by the aggregation of:
a)Lot 1 on SurveyStrata Plan 73499;
b)Lot 2 on SurveyStrata Plan 73499; and
c)Lot 3 on SurveyStrata Plan 73499.
The Commissioner says that there is no exemption provision available under the Duties Act in relation to the acquisitions by, respectively, Crugnale, Rose and Crugnale and Rose of these lots.

Applicants' position

As to the Commissioner's identification of the First Dutiable Transaction, namely Rose and Crugnale's acquisition of an estate in fee simple in the whole of Lot 209 as tenants in common in equal shares following the termination of Strata Plan 6837, the Applicants say that when the Registrar of Titles made the termination entry on Strata Plan 6837, the strata scheme the subject of that strata plan had already been terminated as a result of the prior demolition of the buildings that constituted the lots.
The applicants' authority for this proposition is Tipene v The Owners of Strata Plan 9485 [2015] WASC 30 (Tipene) where at [87] Corboy J said:
In my view:
(a)The demolition of a Boundary Building will obliterate the cubic space that constitutes a lot. The lot will be destroyed with the building so that there is nothing in respect of which title can subsist. The proprietary interest constituted by a combination of the title to the lot and the power to deal with the lot conferred by s 4(2) [of the 1985 Act] is effectively extinguished by the demolition of the building and cubic space that comprised the lot. The proprietor will hold some interest in the land but that interest will not be in the cubic space that formed a 'lot' according to the statutory definition.
The Applicants say that Rose and Crugnale became owners of Lot 209 as tenants in common in equal shares because of the demolition of the buildings, and the demolition was not a dutiable transaction under s 11(1) of the Duties Act either because:
a)that action is not included in the list of dutiable transactions set out in s 11(1) of the Duties Act; or
b)the demolition was not a dutiable transaction because of s 11(2) of the Duties Act, because no consideration was paid or agreed to be paid.
The Applicants say that the subsequent termination of the strata scheme the subject of Strata Plan 6837 did not result in a change of ownership of Lot 209 because Rose and Crugnale by that stage already owned Lot 209 as tenants in common in equal shares by virtue of the demolition and resultant destruction of the lots.
As to the Second Duitable Transaction, namely the dutiable transactions which the Commissioner says were constituted by the lodgement of the Form 22: Disposition on Subdivision, the Applicants say that these are also not dutiable transactions but, instead, were a partition of land between joint owners within the meaning of the Duties Act and no duty is payable because of the operation of s 39 of the Duties Act.

Commissioner's response to the Applicants' position

The Commissioner does not accept the Applicants' argument that, because the strata scheme had already been terminated by the demolition of the buildings, the registration of a notice of termination of the strata scheme the subject of Strata Plan 6837 by unanimous resolution was not a dutiable transaction. While the Commissioner takes the view that, on the authority of Tipene, the effect of the demolition of the buildings was that the parcel became common property as defined in the 1985 Act, the Commissioner does not accept that the result of that demolition was that Lot 209 was then owned by Rose and Crugnale in an estate in fee simple as tenants in common in equal shares. The Commissioner says that the proportions of common property held by the relevant proprietors is dictated by those proprietors' unit entitlements which in turn depend on the existence of lots.
However, the Commissioner says that even if it were assumed that the Applicants owned the common property following the demolition of the buildings as tenants in common in equal shares, that common property cannot be regarded as the same land as the freehold (green title) land which resulted from the termination of the strata scheme by resolution; Commissioner's Reply at para 7.
Specifically, the Commissioner says that the common property created by the destruction of the lots is common property under the 1985 Act and the congeries of rights held by the owners of that common property were different to the congeries of rights held by the owners of Lot 209 following the termination of the strata scheme.
Accordingly, the Commissioner still considers that the First Dutiable Transaction arose upon the registration of the Application Form A5 for the termination of the strata scheme.
As to the Applicants' argument that the effect of the lodgement of the Form 22 Disposition on Subdivision was not to bring about a dutiable transaction but was in fact a partition of land within the meaning of the Duties Act, the Commissioner says that s 39 of the Duties Act does not apply in this case. The Commissioner maintains her view that Lots 1, 2 and 3 on Survey-Strata Plan 73499 are all new dutiable property acquired by Crugnale and Rose and are different land from Lot 209. The Commissioner says that s 39 of the Duties Act does not apply to dutiable transactions 'of the "acquisition of new dutiable property" type' and so cannot apply in this case; Commissioner's Statement of Contentions at para 82. The Commissioner says that under s 39, a partition occurs when a property that is held by persons as tenants in common is transferred or agreed to be transferred to one or more of those persons. The Commissioner points out that the word 'transfer' means that the transferor must deal with the property in question so as to divest the transferor of the relevant property and vest it in the transferees; Commissioner of State Revenue v Abbotts Exploration Pty Ltd (2014) 48 WAR 300 at 327. Consequently, the Commissioner says, it can be seen that the word 'transfer' is premised on there being a match between the property divested from the transferor and the property vested in the transferee. The Commissioner says that it necessarily follows that the dutiable property prior and post the transfer cannot be different dutiable property which the Commissioner says is the case here.
The Commissioner explains that s 39 of the Duties Act would have been applicable had Lot 209 been subdivided first into three lots with Rose and Crugnale being joint owners of each of the three lots. Then, the Commissioner says, a partition could have occurred when Lots 1 and 3 were transferred to one each of the joint owners only; Commissioner's Statement of Contentions at para 104.

The decision under review

The Commissioner says that the First Dutiable Transaction is a dutiable transaction. This is the acquisition by Rose and Crugnale as tenants in common in equal shares of Lot 209 upon the termination of the strata scheme the subject of Strata Plan 6837.
The Commissioner originally valued the entirety of Lot 209 at $1,710,000. However, in the light of the sale of Lot 2 on Strata Plan 73499 to Mr Marusco at a price of $475,000, the Commissioner reduced her valuation of Lot 209 to $1,425,000, that is, 3 x $475,000.
On a dutiable value of $1,425,000, the duty payable is $67,302.50. Crugnale and Rose, being the persons acquiring the property would be jointly liable for that duty and, as I have previously mentioned, the Commissioner does not consider that there is any exemption provision under the Duties Act which applies to that transaction.
The Commissioner then says that the transactions comprising the Second Dutiable Transaction, namely the acquisition by Crugnale of Lot 1 on Strata Plan 73499, the acquisition by Crugnale and Rose of Lot 2 and the acquisition by Rose of Lot 3, were also dutiable transactions. The Commissioner considers that the three transactions comprising the Second Dutiable Transaction were substantially one arrangement and that they should be aggregated under s 37 of the Duties Act. The aggregate dutiable value is $1,425,000 and the duty payable is $67,302.50. The Commissioner considers that the duty should be apportioned at $22,434.20 for Lot 1, $22,434.15 for Lot 2 and $22,434.15 for Lot 3.

Crugnale would be liable for the duty on Lot 1, Rose and Crugnale would be jointly liable for the duty on Lot 2 and Rose would be liable for the duty on Lot 3.
Notably, however, these assessments in respect of the First Dutiable Transaction and the Second Dutiable Transaction are the assessments which the Commissioner says that she should have made.
The Commissioner accepts that the assessment which was actually made, and which is the decision under review, was based on an unwritten practice that has been generally applied to assessments of transactions involving the Form 22: Disposition on Subdivision.
The unwritten practice is set out in the Commissioner's Explanatory Note filed on 29 October 2018 at page 2 as follows:
Nominal duty of $20 is charged on the Form 22 Disposition of (sic) Subdivision instrument provided the parties receive the property strictly in accordance with their original entitlements. The property is to be the physical land i.e., the location of the surface geographical area.
However, if the parties receive property more than what they were originally entitled to, then duty will be assessed on the value of that property disposed/received.
The Commissioner now considers that this practice is wrong. She says that 'this practice did not take into account the two separate events (i.e. transactions) that took place, namely, the termination of the strata scheme and the conversion of the tenancy in common parcel to a survey strata scheme'. The Commissioner concludes that this unpublished practice is 'erroneous in that it is not aligned with the current laws, namely the Duties Act (a transaction based tax) and the [1985 Act] (with respect to conversion to Survey-Strata schemes)'.
Accordingly, the Commissioner's assessment was made on the basis that Crugnale and Rose were originally entitled to two lots of land individually, with each lot comprising half of the area of the then former Lot 209 but ultimately received three lots of land, two as individuals and the third as tenants in common. The lot which Crugnale and Rose were to hold as tenants in common, Lot 2, was not in the Commissioner's view in accordance with their original entitlement and accordingly the parties were receiving more than they were originally entitled to.
The Commissioner concedes that this understanding was itself erroneous because Lots 1 and 2 on Strata Plan 6837, that is the cubic spaces, did not occupy the full area of the former Lot 209. The two lots were defined by the two buildings then present on the land, with the remaining land area of the former Lot 209 being common property.
The Commissioner says that in order for each party to obtain a common interest in Lot 2, each party acquires a half share each of the value of the other party's area of land.
Accordingly, the Commissioner only assessed duty on the acquisitions by each of Crugnale and Rose of Lot 2, in the following way:
Dutiable value (one half of $475,000) $237,500
Half of that value is the share acquired $118,750
The dutiable payable by Crugnale was therefore $2,804.40 and the same amount is payable by Rose.

Disposition

I consider that the decision of the Commissioner on the Applicants' objection to the assessment of duty should be affirmed.
However, I arrive at the same decision of the Commissioner for different reasons to those of the Commissioner.
I agree that the Commissioner's unwritten practice which deals with the assessment of duty on the Form 22: Disposition on Subdivision is erroneous, but not for the reason given by the Commissioner in her Explanatory Note. The Commissioner says that the reasons why she considers that the practice is erroneous is because it does not take into account the two separate transactions that took place, namely the termination of the strata scheme and the conversion of the tenancy in common parcel to a survey-strata scheme. However, the practice relates to the treatment for duty purposes of the Form 22 and although in this case there was a prior and separate transaction, namely the termination of the previous strata scheme, that would not necessarily always be the case and there is no reason why the Commissioner should not assess that separate transaction as such.
Further, I consider that the practice can only apply when, as in this case, the Form 22 relates to a surveystrata scheme and there is no common property. If that is the case, then I consider that the practice can be applied because the congeries of rights attached to the property held previously in fee simple, in this case Lot 209, by Crugnale and Rose as tenants in common in equal shares, are not so different to the congeries of rights attached to the lots which were created upon the subdivision by Strata Plan 73499, the new surveystrata scheme, that the lots acquired should be regarded as new dutiable property.
The effect of the registration of the Form 22 in this case is that Crugnale will receive one third of Lot 209 (Lot 1) and one sixth of Lot 209 (a half share of Lot 2, which itself is one third of Lot 209). That is in total a half of Lot 209. In my view, the effect of the registration of the Form 22, in terms of the essential identity of Lot 209, is a disposition of half of Lot 209, to which Crugnale was already the holder in fee simple.
The same applies to Rose in respect of Lot 3 and the remaining half of Lot 2.
Of course, the Commissioner's practice is not limited to cases involving surveystrata schemes where there is no common property. It may be that I would not take the same view if the strata scheme was a 'built' strata scheme (a term not used in either the 1966 Act or the 1985 Act but which commonly differentiates a strata scheme effected by the registration of a strata plan from a surveystrata scheme) and included common property.
Accordingly, on the basis that the practice relating to the treatment of the registration of a Form 22 is intended to apply to strata schemes generally, I consider that the practice is erroneous.
This matter is, of course, a review of a reviewable decision under s 27(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) and the Tribunal has the functions and discretions corresponding to those exercisable by the Commissioner in making the reviewable decision. In particular, the Commissioner is bound by s 16(5) of the TA Act and cannot make a reassessment based on the ground that a particular interpretation of the applicable law or a particular practice of the Commissioner was erroneous. When reading s 16(5) of the TA Act with s 29(1) of the SAT Act, the Tribunal is bound by 16(5): Placer Dome Inc v Commissioner of State Revenue [2017] WASCA 165 at [202][204].
In my view, the termination of the original strata scheme and the resultant 'acquisition' of Lot 209 in fee simple is a dutiable transaction. I agree with the Commissioner that, prior to the termination of the strata scheme, Crugnale held a 100% legal interest in Lot 1 on Strata Plan 6837, Rose held a 100% legal interest in Lot 2 on Strata Plan 6837 and they both held a 50% each in the common property set out on the strata plan. Upon termination of the strata scheme, Crugnale and Rose acquired the whole of Lot 209 as tenants in common in equal shares. I consider that the congeries of rights that constitute the grant of a fee simple over the whole of Lot 209 are different to the congeries of rights that were possessed by Crugnale and Rose in Lots 1 and 2 on Strata Plan 6837 and the common property. In particular, the common property can only be dealt with in accordance with the provisions of the 1985 Act, for example under s 19 which prohibits the disposal of any share in the common property except as a pertinent to the lot of the relevant proprietor.
I disagree with the Applicants that the demolition of the buildings comprising Lots 1 and 2 on Strata Plan 6837 of itself effected the termination of the strata scheme. As I understand the decision in Tipene, the effect of the destruction of a lot is simply to create additional common property under the strata scheme. The strata scheme itself continues until the termination of the strata scheme by the process set out in s 30 of the 1985 Act.
However, notwithstanding these conclusions, it seems to me that the Commissioner issued a single assessment in respect of the First Dutiable Transaction and the Second Dutiable Transaction and I consider that I am prohibited by s 16(5) of the TA Act from ordering separate assessments. The Commissioner issued a single assessment in respect of both transactions of $5,608.80, comprising two assessments each of $2,804.40. I do not consider that it is open to the Tribunal to make a reassessment in this case.
Although it is not necessary to deal with the other issue raised by the Applicants, namely whether or not the transactions which together constitute the Second Dutiable Transaction are a partition under s 39 of the Duties Act, I will do so for the sake of completeness.
I agree with the Commissioner that s 39 of the Duties Act does not apply because of my finding that the Applicants' acquisition of Lot 209 following the termination of the original strata scheme is an acquisition of new dutiable property. Section 39 only applies when property that is held by persons jointly, in this case as tenants in common, is transferred or agreed to be transferred to one or more of those persons. For s 39 to apply, the property being transferred from the transferor to a transferee must be the same property which in my view is not the case here.
As to the transactions which constitute the Second Dutiable Transaction, I have already concluded in this case that Lots 1, 2 and 3 on SurveyStrata Plan 73499 are together, in terms of the essential identity of Lot 209, the same land as the entirety of Lot 209. It is for that reason that I concluded that in this particular case the Commissioner's practice could have been applied and that either no duty or nominal duty should have been assessed on the Second Dutiable Transaction.

Orders

The Tribunal's orders are as follows:
1.The decision of the respondent upon the objection of the first applicant and the second applicant dated 22 December 2017 is affirmed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
JUDGE T SHARP, PRESIDENT (ACTING)
28 FEBRUARY 2019