Doherty v Commissioner for Act Revenue
[2014] ACAT 26
•2 May 2014
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
DOHERTY v COMMISSIONER FOR ACT REVENUE
(Administrative Review) [2014] ACAT 26
AT 13/71
Catchwords: ADMINISTRATIVE REVIEW – Home buyer concession – whether applicant had equitable interest in land other than subject property in relation to which the home buyer concession was applied for – earlier contract for purchase of a unit “off-the-plan” - contract for subject property was made when earlier contract was not completed – units plan relating to earlier contract was registered before contract for subject property was completed – in home buyer concession application, applicant answering “no” to question whether there was legal or equitable interest in land other than subject property – re-assessment of duty after investigation – whether notification of decision about amended assessment was notice of assessment – interpretation of “legal or an equitable interest in land” – meaning of “interest”, “land”, “interest in land” and “equitable interest in land” – whether earlier contract prohibiting the lodging of caveat meant that prospective purchaser had no interest in land but only had a personal right – right of prospective purchaser to enforce seller’s obligation under earlier contract: equitable rights available to prospective purchaser to enforce or protect purchaser’s interest in land under earlier contract, by specific performance or injunction - relevance of judicial decisions dealing with caveat – remission of penalty tax: tax default being beyond applicant’s control – whether Tribunal has Commissioner’s power to remit interest payable, as part of its review of Commissioner’s refusal to allow objection to re-assessment of duty
Legislation: ACT Civil and Administrative Tribunal Act 2008, s 68
Duties Act 1999, ss 16A and 31
Legislation Act 2001, ss 6, 29, 31, 37, 139, 140, 141, 142, 144, 148 and 168
Real Property Act 1900 (NSW), s 74F
Taxation Administration Act 1999,
ss 14, 82, 100, 107A, 108A
and 139, and schedule 1 and schedule 2
Unit Titles Act 2001, s 33
Subordinate
Legislation: Taxation Administration (Amounts Payable – Eligibility –
Home Buyer Concession Scheme) Determination 2009 –
DI2009-113 (repealed), s 5
Cases: ACT Nursing Services Pty Ltd and Commissioner for ACT
Revenue [2008] ACTAAT 29
Bahr v Nikolay No 2 (1988) 164 CLR 604
BDH Projects v ACT Planning and Land Authority
[2010] ACAT 37Black v Garnock [2007] HCA 3
Casey v Alcock [2009] ACTCA 1
Chan v Cresdon (1989) 168 CLR 242Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 45 NSWLR 639
Collector of Customs v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1Cooper Brookes v Commissioner of Taxation (Cth)
(1981) 147 CLR 297CSS Investments Pty Limited v Lopiron Pty Limited
(1987) 16 FCR 15Forder v Cemcorp Pty Ltd [2001] NSWSC 281
Hanley v COFACTR [2012] ACAT 64
Harrison v Lidoform Pty Ltd FCA 1998, unreported
Jessica Holdings Pty Ltd v Anglican Property Trust
(1992) 27 NSWLR 14Jokhan v COFACTR [2012] ACAT 15
KDLE Pty Ltd v COSD (Qld) (1984) 155 CLR 288
Kingsley’s Chicken Pty Limited v Queensland Investment Corporation and Canberra Centre Investments Pty Limited [2006] ACTCA 9
Kuper v Keywest Constructions Pty Ltd (1990) 3 WAR 419
Legione v Hateley (1983) 152 CLR 406
Lopiron Pty Ltd v CSS Investments Pty Ltd (1986) ACTSC 121
Petersson v ACT Heritage Council & Anor [2010] ACAT 28Steele v Commissioner for ACT Revenue [2010] ACAT 15
Stern v McArthur (1988) 165 CLR 489
Telstra v Aboushadi [2004] FCA 811Touma v Chief Commissioner of State Revenue
[2012] NSWADT 2Walkington v ACT Planning and Land Authority
[2010] ACAT 81
Texts/Papers: The Macquarie Dictionary, New Budget Edition (1985),
Tribunal: Ms E Symons - Presidential Member
Date of Orders: 2 May 2014
Date of Reasons for Decision: 2 May 2014
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 13/71
BETWEEN: JOSEPH DOHERTY
Applicant
AND:COMMISSIONER FOR ACT REVENUE
Respondent
TRIBUNAL: Ms E. Symons - Presidential Member
DATE:2 May 2014
ORDER
The Tribunal Orders that:
The Tribunal being satisfied that the applicant was not eligible for the Home Buyer Concession in relation to the property being unit 237 of block 20 section 44 Belconnen (the subject property), also known as 84 Chandler Street Belconnen because he had an equitable interest in land other than the subject property within two years prior to the subject property contract, which was not required to be relinquished under an order of a court, or under any other specified agreement in accordance with section 5(1)(d)(i) of the Taxation Administration (Amounts Payable – Eligibility – Home Buyer Concession Scheme) Determination 2009 – DI2009-113, confirms that part of the respondent’s decision under review.
The respondent’s decision to impose penalty tax of 25% is set aside and substituted by a decision that the Applicant is to pay no penalty tax and the Respondent is to remit the penalty tax paid by the Applicant within 28 days.
The respondent’s decision to impose interest of $3,130.86 is confirmed.
………………………………..
Ms E. Symons
Presidential Member
REASONS FOR DECISION
Background
On 5 June 2008, the applicant entered into a contract (the 1st contract) for the sale and purchase of unit 83 of blocks 16-19 section 109 Bruce (the Bruce unit), the applicant being the purchaser.
On 21 December 2009, the applicant entered into a contract (the 2nd contract) for the sale and purchase of unit 237 of block 20 section 44 Belconnen, also known as 84 Chandler Street Belconnen (the subject property), the applicant being the purchaser.
At the time the applicant entered the 2nd contract the 1st contract was uncompleted.
On or about 24 June 2010, the units plan relating to the Bruce unit was registered.
On or about 5 July 2010 the applicant’s purchase of the Bruce unit was completed.
On or about 6 September 2010, the applicant applied for a Home Buyer Concession (HBC application) from ad valorem duty under the Duties Act 1999 (the Duties Act) in respect of the 2nd contract, pursuant to the Taxation Administration (Amounts Payable - Eligibility - Home Buyer Concession Scheme) Determination 2009 (No 1) - D12009-113 (repealed) (the Determination).
The following questions appeared in “Section 3 Other interests in land” of the HBC Application:
At the date of the transaction (in Section 2), do any grantees/transferees or their domestic partners alone or jointly, hold a legal or equitable interest in land other than the subject property?
Have any of the grantees/transferees or their domestic partners, either alone or jointly with another person/s, held a legal or equitable interest in land other than the subject property during the two years preceding the date of the transaction (in Section 2) of the subject property?
The applicant declared “no” to both of these questions in Section 3.
The applicant’s HBC application was approved and he received a payment of $11,124.50 pursuant to the HBC concession on 14 September 2010.
In March 2013, the respondent’s office conducted an investigation into tax law compliance in relation to the applicant’s HBC application and subsequent concession, and on 26 March 2013 caused a notice under section 82 of the Taxation Administration Act (1999) (TAA) to be sent to the applicant.
The applicant responded to the notice by letter and statutory declaration of 10 April 2013.
After concluding the tax compliance investigation the respondent decided to reassess duty in respect of the 2nd contract. The respondent decided that the applicant should pay a total amount of $17,036.48 being duty of $11,124.50, interest of $3,130.86 and penalty tax at the rate of 25% of $2,781.12. The applicant was told of the decision by a letter dated 16 April 2013.
By letter dated 6 May 2013 the applicant objected to that reassessment.
On 14 August 2013 the respondent determined, on objection, that the applicant was not eligible for the Home Buyer Concession (HBC) in relation to the subject property because he had an equitable interest in land other than the subject property within two years prior to the subject property contract, which was not required to be relinquished under an order of a court, or under any other specified agreement in accordance with section 5(1)(d)(i) of the Determination.
On 9 September 2013, the applicant applied to the ACT Civil and Administrative Tribunal (the Tribunal) for review of that decision pursuant to section 108A of the TAA.
Pursuant to Directions made on 11 September 2013, the Respondent filed the “T” documents on 8 October 2013.
At a Directions Hearing on 23 October 2013 orders were made which set a timetable for the parties to file a statement of facts and contentions, the witness statements and any other material to be relied as well as a list of authorities and the matter was set down for hearing on 20 December 2013.
The application was heard on 20 December 2013. Mr M. Popplewell, Solicitor of O’Connor Harris, appeared for the applicant and Dr D. Jarvis of Counsel appeared for the respondent, instructed by the ACT Government Solicitor. At the conclusion of the hearing the Tribunal reserved its decision.
Preliminary Issue
Mr Popplewell raised, as a preliminary issue for determination, whether the letter dated 16 April 2013 (T140)[1] from the Commissioner to the applicant entitled ‘NOTIFICATION OF DECISION TO ISSUE AN AMENDED ASSESSMENT’ (the Notification) constitutes a ‘Notice of Assessment’.
[1] i.e. T-documents, page 140
The applicant submitted that the TAA[2] relies upon the existence of a relevant notice of assessment as a precondition of objection to the Commissioner and in turn, review by the Tribunal of the Commissioner’s determination of the objection. Subsection 14(3) of the TAA states:
14Notice of assessment, reassessment or withdrawal of assessment
(3) If the commissioner makes a reassessment, the commissioner must issue a notice of assessment, showing the amount of the reassessment and the amount by which the assessment has been increased or decreased.
[2] See section 100, TAA
The Notification identifies the sum demanded from the applicant, namely $17,036.48, and demands payment within 30 days. The applicant submitted[3] that it does not resemble a notice of assessment per se, and that no notice obviously resembling that description has been issued by the Commissioner since 14 September 2010.
[3] Applicant’s Statement of Facts and Contentions, at [50]
The applicant submitted that:
(a)a fair reading of the respondent’s letter dated 16 April 2013 might regard it as giving notice of a decision preliminary to the issuing of the notice of assessment, rather than a notice of assessment per se;
(b)it makes no reference to the Duties Act 1999 which is the only Act under which the amount specified could be primarily assessable;
(c)it misrepresents the effect of sub-paragraphs 5(1)(c) and 5(1)(d) of the Determination as imposing obligations on the applicant rather than defining certain of the requirements of eligibility;
(d)it suggests, because the applicant was ineligible, it is a condition that he pay ‘the concessional amount of duty’;
(e)it closes with a curious statement about ‘paying back the grant’;
(f)the letter does not evidence a proper understanding of the exercise which is being embarked upon; and
(g)it does not manifest that the Commissioner has made a concluded and coherent reassessment.
The applicant further submitted[4] that the above impression was heightened by the document starting at T137 which appears to attach some significance to the fact that the contract for the Bruce unit was completed at the time that the applicant signed his application for concessional duty in respect of the subject property contract, which is simply irrelevant under the Determination.
[4] Applicant’s statement of Facts and Contentions, at [54]
The respondent contends[5] that the re-assessment on 16 April 2013 complies with the requirements of the TAA because it shows the amount of the re-assessment and the amount by which the assessment was increased as required by subsection 14(3) of the TAA; it requires payment of the outstanding tax in 30 days; it is accompanied by an “Internal review notice” (T143) and a fair reading of it does not show that it was a preliminary action to the making of a final decision. The respondent also submits that it is immaterial that the Notification uses the words “amended assessment” rather than “re-assessment”.
[5] Respondent’s summary of submissions, at [4], [5] and [6]
The respondent further contends[6] that the Tribunal has jurisdiction to review a purported decision, even if technically invalid. The respondent referred the Tribunal to earlier tribunal decisions of Petersson v ACT Heritage Council & Anor [2010] ACAT 28, at [9-11], and BDH Projects v ACT Planning and Land Authority [2010] ACAT 37, at [12-13], and the Federal Court decision in Collector of Customs v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1 which establish that the tribunal has such jurisdiction.
[6] Respondent’s summary of submissions, at [4] and [8]
The Tribunal has considered the respective helpful submissions, the relevant documentation and the legislation. It was a proper matter to be raised as a preliminary issue.
The Tribunal is satisfied that questions of jurisdiction could be readily overcome by the respondent unambiguously using the words of the TAA and identifying the document setting out its decision as a ‘Notice of Assessment’ as well as, or instead of, using the description ‘Notification of Decision to issue an amended assessment’ at the beginning of its written response to an objection. As it stands the addressee of a ‘Notification’ is entitled to raise the very issue the applicant has raised.
Having said that, the Tribunal is satisfied that the TAA does not set out any formal requirements for a notice of assessment. The Notification shows the amount of the re-assessment including the amount by which the assessment has been increased as required by subsection 14(3) of the TAA. It requires payment of the outstanding tax within 30 days and is accompanied by a notice giving information about the internal review process. The Tribunal is satisfied that it is a notice of assessment for the purposes of the TAA.
If the Tribunal is wrong and the respondent’s decision is, therefore, a ‘purported decision’, the Tribunal notes that the cases referred to in paragraph 25 above establish that the Tribunal has jurisdiction to review a purported decision.
The Primary Issue
The applicant contends that, neither at the date of the subject property contract, 21 December 2009, nor at any time during the preceding two years, did he have an equitable interest in land within the meaning of the Determination. The applicant says that the Bruce unit contemplated by the Bruce contract had not been constructed, nor had a units plan been registered, as at 21 December 2009 or in the preceding two years.
The applicant contends that he was an eligible home buyer for the purposes of the second contract, as he did not have an equitable interest in land at the relevant time as claimed by the respondent.
The respondent contends that the applicant had an equitable interest in land during the 2 years preceding the date of the subject property contract, 21 December 2009. The equitable interest relied on by the respondent is identified as the ‘off-the-plan’ contract of sale the applicant entered into on 5 June 2008 for the Bruce unit.
The respondent contends, as a result of this equitable interest, the applicant is not an ‘eligible home buyer’ as defined in paragraphs 5(1)(c) and 5(1)(d) of the Determination.
The legislation
Section 139 of the TAA provides for the determination by the Minister of amounts payable under tax laws. A copy of section 139 is attached. Pursuant to subsection 139(2) of the TAA a determination is a disallowable instrument.
The Home Buyer Concession (HBC) Scheme’s parameters, as are relevant for this matter, are defined by the Determination which is applicable to agreements dated after 1 July 2009 and before 31 December 2009[7] and operates as a determination for the purposes of section 31 of the Duties Act, a copy of which is attached to this Decision.
[7] DI2009-244 revokes DI2009-113 with effect from 1 January 2010.
The Determination specifically provides for a certain ‘determined rate’ or ‘determined amount’ for the purposes of section 31 of the Duties Act displacing the determined rate or amount of duty that would otherwise be charged. In this matter, subject to the applicant satisfying all of the requirements of the Determination, duty of $20 would displace the duty of $11,124.50 otherwise imposed pursuant to section 31 of the Duties Act.
The Determination relevantly provides at paragraph 5:
Definition—eligible home buyer
(1)Eligible home buyer means a person who provides written evidence to the Commissioner that:
(a)during the 1 year prior to the date of the first of the following—
(i)the grant of the Crown lease; or
(ii) the transfer of the Crown lease; or
(iii)the agreement for the transfer of the Crown lease—
all persons named in the grant, or transfer, or agreement (and their domestic partners) had a total income that—
(iv) is less than or equal to the relevant income threshold; and
(v) reflects their usual income; and
(b)at least one of the persons named in the grant, or transfer, or agreement will:
(i)reside in the subject property as their principal place of residence for a continuous period of 6 months; and
(ii)start the residency period within 1 year of—
A.in relation to an eligible property—the date of the completion of the transfer of the subject property; or
B.in relation to an eligible vacant block—the date of the certificate of occupancy following completion of construction of the residence on the subject property; and
(c)the person and their domestic partner do not, either alone or jointly with another person or persons, have a legal or an equitable interest in land other than the subject property; and
(d)the person and their domestic partner have not had a legal or an equitable interest in land other than the subject property in the 2 years preceding the date of the grant, transfer, or agreement for the transfer (whichever is first), except if a person:
(i)is required to relinquish an interest in land by virtue of:
A.an order of a court; or
B.a financial agreement made under section 90B, 90C, 90D, 90UB, 90UC, or 90UD of the Family Law Act 1975 (Cwlth) that is binding on them, and their relationship has ended; or
C.a domestic relationship agreement or a termination agreement under the Domestic Relationships Act 1994 as a consequence of the termination of a relationship between domestic partners; or
(ii)acquired their interest in the land by virtue of being an Executor or a Trustee (but not a beneficiary) under a will; and
(e)under the grant or transfer all persons are acquiring both a legal and an equitable interest in the subject property; and
(f)on the first of the date of the grant, transfer, or agreement for the transfer, all persons acquiring an interest in the subject property were at least 18 years of age.
Issues
The issues for determination are:
(i)the correct interpretation of ‘legal or an equitable interest in land’ (the relevant phrase) occurring in both sub-paragraphs 5(1)(c) and 5(1)(d) of the Determination; and
(ii)whether the applicant had an equitable interest in land at the time of the subject property contract, 21 December 2009, or in the two preceding years.
Applicant’s submissions
The correct interpretation of ‘legal or an equitable interest in land’ (the relevant phrase) occurring in both sub-paragraphs 5(1)(c) and 5(1)(d) of the Determination
The applicant submits[8] that taken at its broadest the relevant phrase is a concatenation of terms with technical legal meanings encompassing an extraordinarily wide range of concepts and it is inconceivable that the correct interpretation of the Determination could be such as to preclude from the scheme anyone who has ever rented a house or taken a security in land for a loan.
[8] Applicant’s submissions, at [11] and [12]
Mr Popplewell submitted that the Tribunal can have regard to extrinsic material in working out the purpose of an instrument and, thereafter, can have regard to the purpose of the instrument to determine if more than one construction of it is open, even though on its face it is not ambiguous.[9] In support of this, Mr Popplewell referred the Tribunal to sections 141 and 142 of the Legislation Act 2001 and the ACT Court of Appeal’s decision in Kingsley’s Chicken Pty Limited v Queensland Investment Corporation and Canberra Centre Investments Pty Limited (Kingsley’s Chicken[10]). For working out the purpose of a statutory instrument, extrinsic material includes an explanatory statement.[11]
[9] Casey v Alcock [2009] ACTCA 1 per Besanko J at [103]; Applicant’s submissions at [16]
[10] [2006] ACTCA 9, at [43]
[11] Legislation Act 2001)ACT) table 142, Column 3, Item 4
He submitted that the Tribunal should consider the explanatory statement in working out the purpose and the meaning of the Determination, in particular the meaning of sub-paragraphs 5(1)(c) and 5(1)(d). The relevant paragraph of the explanatory statement is [22] which states:
This instrument provides for an exception to the 2 year prior ownership of property requirement in section 5(1)(d)… (emphasis added by applicant)
Based on this, the applicant submitted[12] that the relevant purpose of subparagraph 5(1)(d) is to do with prior ownership of land. Those who already own land or, have owned it during a period of 2 years preceding the relevant transaction, are not intended to benefit from the scheme.
[12] Applicant’s submissions, at [22] and [24]
The applicant also submitted that the relevant phrase in sub-paragraphs 5(1)(c) and 5(1)(d) cannot be accorded the full potential of its technical legal meaning which extends beyond land ownership to a wide range of interests in land. For example, an interest in land can include the interest in land of a mortgage or charge; an interest in land of a lessee under a lease; the interest in land arising from exchange of contracts of sale, including a contract later rescinded within the 5 working day cooling-off period contemplated by section 12 Civil Law (Sale of Residential Property) Act 2003 (ACT); an interest in land under a presumed trust arising from subsection 9(2) of the Married Persons Property Act 1986 (ACT) by virtue of co-contribution to purchase by civil partners; and the interest of (business) partners in partnership property recognized by equity irrespective of title.[13]
[13] Applicant’s Submissions, at [11]
Mr Popplewell submitted[14] that, given the interpretative difficulties, the various approaches open to the Tribunal range from reading words which are not there into the Determination (which the Applicant does not support), to the careful articulation of the ordinary meaning of the word “interest” in terms of the purpose of the instrument. This is the approach that the Applicant urges upon the Tribunal.
[14] Applicant’s Submissions, at [26]
Mr Popplewell referred the Tribunal to the interpretation of “interest” in The Macquarie Dictionary[15] - “…3. A share in the ownership of property, in a commercial or financial undertaking, or the like” and to the reference in the explanatory statement to subparagraph 5(1)(d) of the Determination as a “prior ownership of property requirement”. He also referred the Tribunal to the Commissioner’s Revenue Circulars issued in support of the Scheme before notification of the Determination and circular DAA004.8 (dated June 2012)[16], which referred to “current and previous property ownership” as support for this finding.
[15] The Macquarie Dictionary, New Budget Edition (1985), page 212
[16] Applicant’s Submissions, at [31] and attachment D
He also referred the Tribunal to Kingsley’s Chicken as authority for a Court interpreting words by reference to their ordinary meaning. In Kingsley’s Chicken the Court of Appeal, by unanimous judgment, gave the words ‘offer’ and ‘acceptance’ in the Leases (Commercial and Retail) Act 2001 an interpretation by reference to their ordinary meaning, having regard to the purposes of that Act, overturning an ACT Magistrates Court decision that those words should be given their technical legal meaning.
Mr Popplewell contended that the interpretation required by section 139 of the Legislation Act as that which would best achieve the Determination’s purpose is that the phrase ‘…legal or…equitable interest in land’ be read as ‘a share in the legal or equitable ownership of land’.[17]
Whether the applicant had an equitable interest in land at the time of the subject property contract, 21 December 2009, or in the two preceding years.
[17] Applicant’s submissions, at [32]
The applicant contends, applying the interpretation of the relevant phrase sought above, that he did not have a share in legal or equitable ownership of land by virtue of the Bruce contract dated 5 June 2008, as at 21 December 2009.
It is not disputed that, by 21 December 2009, no units plan had been registered; the units plan was not registered until June 2010 and without the units plan being registered, no title could be conveyed under the Bruce contract. The applicant submitted that, therefore, no property being land was in existence which he could be said to have owned in law or equity. To assert otherwise, he submitted[18], would be to assert an estate or interest in an indeterminate “cube of air” not yet in existence. He referred the Tribunal to the considerations articulated by Hely J in Harrison v Lidoform Pty Ltd[19]and endorsed in Forder v Cemcorp Pty Ltd[20] (Cemcorp) by Barrett J:
15….I agree that there are substantial problems with the notion that an equitable interest can subsist in an unsubdivided part of a larger parcel of land, whether the envisaged subdivision is a surface subdivision or a strata subdivision. Those problems are referred to in the judgment of
Hely J in Harrison v Lidoform Pty Ltd, FCA, unreported, 24 November 1998, particularly where his Honour points out that a personal equity to be offered a lot in a proposed subdivision only becomes a proprietary interest when it attaches to an identifiable lot.[18] Applicant’s submissions at [37]
[19] FCA 1998, unreported
[20] [2001] NSWSC 281
As an alternative to the submission in the previous paragraph, Mr Popplewell contended that the Tribunal should find that the Bruce contract itself does not give the applicant a legal or equitable interest in land within the meaning of the Determination. The Tribunal will return to this below.
He again referred the Tribunal to Cemcorp which was a caveat case dealing with the issue of whether the ‘statutory interlocutory injunction’ of a caveat should be allowed to continue, because there was a serious question to be tried about whether an option-holder had an equitable interest in the relevant land. Barrett J noted that a Court of Equity might assist the option-holder by restraining the developer from dealing with the unimproved land inconsistently with his rights under the option deed and by restraining the developer from registering a strata plan not according to the deed. Having regard to the potential availability of that relief, Barrett J was satisfied that there was a serious question as to whether the option-holder had a corresponding equitable estate or interest in the undeveloped land. He allowed the caveat to continue. He held that an ‘off-the-plan’ option-holder in respect of an un-built strata unit had a caveatable interest (of some kind) in the land to be developed.
Mr Popplewell submitted that the “caveat cases” should be distinguished from the present case as those cases were only looking at the first step; they were not finally determining whether the individual had an equitable interest in the property.
Mr Popplewell then submitted that there will not always be a corresponding equitable interest in land in circumstances where a Court of Equity will grant injunctive relief. In support of this submission he referred the Tribunal to Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd[21], where Meagher JA stated:
…. As Windeyer J pointed out in Brown v Heffer [1966] HCA 50; (1966) 116 CLR 340 at 351:
"While the question whether the Minister would consent was still pending, the testator or his executor was not at liberty to enter into any transaction inconsistent with an obligation to perform his contract with the purchaser. The purchaser's rights to have the testator and his executor do nothing to his prejudice were enforceable in equity by injunction. But they did not create an equitable interest in the land.”At stages during the course of argument, a derivative proposition was advanced, viz. that if one were, actually or potentially, entitled in equity to any form of remedy in relation to an asset, one had, by virtue of that fact, an equitable interest in that asset. This cannot be correct. In Commissioners of Stamp Duty v Livingston [1964] UKPC 2; [1965] AC 694, the Privy Council held that a residuary beneficiary had no proprietary interest in the residue of the estate, despite being entitled to limited equitable rights with regard to that residue. Similarly, a beneficiary in a discretionary trust has no interest in the trust assets, although possessing limited equitable rights against the trustee; Gartside v IAC [1967] UKHL 6; [1968] AC 553, even if he be the only beneficiary: Re Weir's Settlement Trusts [1971] Ch 145. In The Queen v Toohey & Anor; ex parte Meneling Station Pty Limited [1982] HCA 69; (1883) 158 CLR 327 at 342, Mason J said: "No one who has a merely personal right in relation to land can be said to have an "estate or interest" in that land.
[21] (1998) 45 NSWLR 639, at 655; Applicant’s submissions, at [43]
Mr Popplewell submitted[22] that the provisions in the Bruce contract weigh against the suggestion that the applicant gained an equitable interest in rem in the undeveloped land at Bruce between 5 June 2008 and 21 December 2009. Clause 31.3 of the Bruce contract stated that Mr Doherty “may not make any objection, requisition or claim or delay Completion or rescind or terminate this Contract in respect of any matter in this clause 31”, which related to the preparation and registration of a Units Plan by the seller. Clause 43 prohibited Mr Doherty from lodging a caveat on the unimproved land, evincing an intention in the parties not to confer on Mr Doherty any relevant interest or estate in that land under the Bruce contract and suggesting that, at all material times up to and including 21 December 2009, he had merely a personal right in relation to the land under the Bruce contract.
Respondent’s submissions
the correct interpretation of ‘legal or an equitable interest in land’ (the relevant phrase) occurring in both sub-paragraphs 5(1)(c) and 5(1)(d) of the Determination
[22] Applicant’s submissions, at [45] and [46]
Dr Jarvis submitted that the Tribunal’s task, pursuant to section 68 of the ACAT Act, was to review the Commissioner’s decision; not to give an opinion about the scope of the term “equitable interest in land”[23] He relied upon Walkington v ACT Planning and Land Authority[24] and Telstra v Aboushadi[25].
(a) The term “interest”
[23] Respondent’s Summary of Submissions, at [3]
[24] [2010] ACAT 81, at [10]
[25] [2004] FCA 811 at [28-35]
He submitted[26] that section 144 of the Legislation Act, previously section 49 of the Interpretation Act 1967, provides to the effect that the definitions in the Act apply also to statutory instruments. The Determination is a statutory instrument. The term “interest” was inserted into the Interpretation Act 1967 in 1999, and, in relation to land or other property, is defined in the Legislation Act as –
interest, in relation to land or other property, means—
(a)a legal or equitable estate in the land or other property; or
(b)a right, power or privilege over, or in relation to, the land or other property.
[26] Respondent’s Summary of Submissions at [10], [11] and [12]
He took issue with the applicant contending that resort should be had to the ordinary meaning of the term “interest” in The Macquarie Dictionary when there are a number of definitions in the Legislation Act which are applicable to this instrument. He drew the Tribunal’s attention to section 168 of the Legislation Act 2001, which expanded the term “interest” as follows:
168References to person with interest in land include personal representative etc
In an Act or statutory instrument, a reference to a person with an interest in land or other property includes a reference to the person’s personal representatives, successors and assigns.
Examples—references to people with interests in land
1 proprietor
2 transferor or transferee
3 mortgagor or mortgagee
4 lessor or lessee
5 sublessor or sublessee
6 trustee
NoteAn example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see s 126 and s 132).
He also drew the Tribunal’s attention to the following definitions of “estate”; “in relation to”; and “land” in the Legislation Act -
estate includes any charge, claim, demand, easement, encumbrance, lien, right and title, whether at law or in equity.
…
in relation to includes the following:
(a) in respect of;
(b) with respect to;
(c) in connection with;
(d) in regard to;
(e) with reference to;
(f) relating to;
…
land includes messuages, tenements and hereditaments, corporeal or incorporeal, of any tenure or description, whatever the interest in the landNote A number of the terms mentioned in the definition of land have a technical meaning at law. A messuage is a house together with its gardens, orchards and outbuildings. The term tenement signifies land capable of being held in freehold. Hereditament refers to real property that can be inherited. Hereditaments may be corporeal, that is, tangible things such as lands and buildings, or incorporeal, that is, intangible rights attaching to land such as rents, easements, tithes and profits a prendre. (Profits a prendre are the right to take some product of, or part of the soil from, the land of someone else.)
“Land” is also defined in the Duties Act 1999 as ‘land includes a stratum’. The term “stratum” is not defined. Dr Jarvis submitted[27] that as the Duties Act 1999 was based on model uniform legislation prepared in NSW, this reference may be explained as a reference to the terminology for unit titles used in the Strata Titles Act 1973 (NSW).
[27] Respondent’s Summary of Submissions, at [17]
Dr Jarvis urged the Tribunal to find that while the Determination was made under the TAA and, as such, is not directly affected by section 148 of the Legislation Act[28], a strong inference arises that words in the instrument have the same meaning as its cognate Act, that is, the Duties Act, and that section 6 of the TAA supports that proposition. A copy of that section is at the end of this Decision.
[28] Section 148, Legislation Act: “Terms used in instruments have the same meanings as in authorising laws. Terms used in a statutory instrument have the same meanings as they have, from time to time, in the Act or statutory instrument (the authorising law ), or the relevant provisions of the authorising law, under which the instrument is made or in force.”
He submitted[29] that if the phrase, ‘interest in land”, in the HBC instrument is read as ‘interest in stratum’ two questions arise – (i) whether the intention was to refer to the ACT term ‘unit’ (i.e. the term used in the ACT) and (ii) whether it extends to an estate to be created in the future, as in an off-the-plan contract.
[29] Respondent’s Summary of Submissions, at [32] and [33]
As to (i), he submitted the term must be given some meaning and effect as it appears to be a slip that the NSW term was used rather than the ACT term of ‘unit’ titles. He referred the Tribunal to the decision in Cooper Brookes v Commissioner of Taxation (Cth)[30]as authority in which a drafting slip was taken into account in construction of a provision. As to (ii), he submitted that, construed in the context of section 16A of the Duties Act, the phrase does extend to cover a future unit; the term ‘interest’ in section 16A(1)(b) must be taken to refer to an equitable interest in a future unit and the term ‘interest in land’ in the HBC instrument should be read accordingly.
(b)“Equitable interest in land”
[30] (1981) 147 CLR 297 at 304
Dr Jarvis submitted[31] that the meaning of the term “equitable interest” in relation to land or property was well settled prior to the enactment of the Duties Act. He referred the Tribunal to a number of authorities[32] in which the High Court has said that a purchaser under a contract of sale for land, or other property such as shares or a lease, has an equitable interest in that land or other property. A purchaser’s equitable interest in land under a contract of sale is not merely commensurate with his or her ability to obtain injunctive or other equitable relief. As authority for the proposition that it was uncontroversial that a purchaser in an uncompleted sale had an equitable interest in land, Dr Jarvis referred the Tribunal to the 2007 High Court decision in Black v Garnock[33] in which Crennan J said at [106]
...there was no dispute about certain uncontroversial principles, with which one commences a consideration of the submissions on the appeal. It was accepted that the Torrens system is a system of "title by registration" and that indefeasibility of title was "the foundation of the Torrens system of title". It was also not in dispute that the purchasers had a "caveatable interest" in Wanaka once they had exchanged contracts and paid the deposit of $100,000 thereby, before completion, acquiring an equitable interest in land commensurate with what a court of equity would order to enforce the contract by way of specific performance, injunction or otherwise.
[31] Respondent’s Summary of Submissions, at [19]
[32] Legione v Hateley (1983) 152 CLR 406; KDLE Pty Ltd v COSD (Qld) (1984) 155 CLR 288 at 297; Bahr v Nikolay No 2 (1988) 164 CLR 604, at 611-612, 638-639 and 645-647; Stern v McArthur (1988) 165 CLR 489 at 522; Chan v Cresdon (1989) 168 CLR 242 at 252-253.
[33] [2007] HCA 31, at [83] and [106]
Dr Jarvis referred the Tribunal to a number of other authorities, referred to below, supporting the proposition that a purchaser has an “equitable interest” in land or other property when the completion of the sale depends on some contingency. Kuper v Keywest Constructions Pty Ltd[34] (Kuper) and Cemcorp concerned purchases of ‘off-the-plan’ units. In Kuper, the contingency was the registration of a units title plan by the vendor in contractual circumstances and under legislation Dr Jarvis submitted[35] was not relevantly distinguishable from the ACT legislation. The Western Australian Full Court held[36] that the purchaser of an ‘off-the-unit’ plan had an equitable interest in the underlying land sufficient to support the lodgement of a caveat under section 137 of the Transfer of Land Act (WA). Malcolm CJ said:
In my opinion, in appropriate circumstances, a court would be prepared to protect a purchaser's interest under a contract such as that in the present case, at the so-called inchoate stage, both by granting specific performance in the sense of requiring the vendor to do all things necessary to be done to procure registration of the strata plan as well as restraining the vendor by injunction from dealing with the land inconsistently with the purchaser's right to specific performance of the contract, both in the special sense and, subject to fulfilment of a condition, in the ordinary sense: cf Pakenham Upper Fruit Co Ltd v Crosby (9124) [1924] HCA 55; 35 CLR 386 at 396-399, per Isaacs and Rich JJ.
In my opinion the estate or interest claimed by the purchasers under the contracts was sufficient to ground a caveatable equitable interest in the relevant land, notwithstanding the conditional nature of the contracts.
[34] (1990) 3 WAR 419
[35] Respondent’s Summary of Submissions at [21]
[36] Kuper, at [426]
In Cemcorp the caveatable interest was held to exist, over the underlying land, because the plaintiff held an option to purchase the unit under a draft form of contract.
In Jessica Holdings Pty Ltd v Anglican Property Trust Diocese of Sydney[37], which followed Kuper and Cemcorp, the purchaser had purchased a lot in a future subdivision. The NSW Supreme Court held that the purchaser’s interest was sufficient to give the purchaser a right to an injunction and therefore a caveat to restrain the vendor from registering a subdivision plan different from the draft annexed to the sale contract. The purchaser’s interest was in the underlying land, as the lots had not yet come into existence. Dr Jarvis pointed out[38] that the NSW statutory provision relating to the caveat[39] referred to a “legal or equitable interest in land”.
[37] (1992) 27 NSWLR 140, at 151-152
[38] Respondent’s Summary of Submissions at [22]
[39] Section 74F, Real Property Act 1900 (NSW)
Dr Jarvis also referred the Tribunal to the decision of the Full Federal Court, sitting as the ACT Court of Appeal, in CSS Investments Pty Limited v Lopiron Pty Limited [40] (“Lopiron”), which affirmed that, in circumstances where the agreed date for registration of a units plan had passed and the vendor had not done all that was reasonably necessary to have it registered, the purchaser had an equitable right to specific performance.
(c)Application of defined terms and case law to the present matter.
[40] (1987) 16 FCR 15
Dr Jarvis submitted[41] that by virtue of section 33(2) of the Unit Titles Act 2001 the property in the individual unit automatically comes into existence on registration of the units plan.
[41] Respondent’s Summary of Submissions, at [26]
It is the respondent’s contention that in applying the above authorities as at 21 December 2009, the applicant had an equitable right to obtain registration of the plan for the Bruce unit and this right would be sufficient to bring about a position where the unit would be brought into existence and there would be nothing legally to prevent the transfer of it under the contract. As at that date he, as the purchaser, had an equitable interest in the underlying land. He could compel the vendor, by an order of specific performance, to do all things reasonably necessary to register the plan and then to convey the unit or he could restrain the vendor by injunction from undertaking any inconsistent dealing with the underlying land.
Dr Jarvis further submitted[42] that the authorities relating to caveats are relevant in the present matter because in order to support a caveat, it was necessary to first find that there was an equitable interest in land capable of protection by specific performance or injunction.
[42] Respondent’s Summary of Submissions, at [27]
In relation to the two identified issues[43], Dr Jarvis submitted[44] that the drafter of the HBC instrument must be taken to be aware of the Legislation Actprovisions. Pursuant to sections 140 and 144 of that Act, the purpose of the instrument is to be ascertained from the meaning of its provisions as a whole.[45] Pursuant to section 6 of the Legislation Act, the tribunal is bound to apply the meaning of the provisions unless the meaning is displaced.
[43] In paragraph [ 38] above
[44] Respondent’s Summary of Submissions, at [29]
[45] Cooper Brookes v Commissioner of Taxation (Cth) (1981) 147 CLR 297, at 304
Dr Jarvis urged the Tribunal to reject the approach to interpretation put forward by the applicant, stating “it is not permitted to read the instrument as if the word ‘owner’ or ‘ownership’ was used instead of ‘interest’ in land.”[46]
(d)The Sale Contract
[46] Respondent’s Summary of Submissions, at [30]
Mr Popplewell submitted[47] that the provisions in the Bruce contract weigh against the suggestion that the applicant gained an equitable interest in rem in the undeveloped land at Bruce between 5 June 2008 and 21 December 2009. Clause 31.3 of the Bruce contract stated that Mr Doherty “may not make any objection, requisition or claim or delay Completion or rescind or terminate this Contract in respect of any matter in this clause 31”, which related to the preparation and registration of a Units Plan by the seller. Clause 43 prohibited Mr Doherty from lodging a caveat on the unimproved land, evincing an intention in the parties not to confer on Mr Doherty any relevant interest or estate in that land under the Bruce contract and suggesting that, at all material times up to and including 21 December 2009, he had merely a personal right in relation to the land under the Bruce contract.
[47] Applicant’s submissions, at [45] and [46]
Based on the foregoing, Dr Jarvis submitted that the applicant’s reference to and reliance on clause 31.3 of the contract for sale (see paragraph 54 above) is of no consequence as the obligation, in this case on the seller, to do all things reasonably necessary is implied by operation of law and may be specifically enforced.
Further, Dr Jarvis submitted[48] that a proper reading of the Bruce contract leads to the same result. Pursuant to clause 31.1 of the Bruce contract ‘The Seller agrees to prepare, and promptly on completion of the Building Works, lodge for approval and registration, a Units Plan dividing the Building into units, together with the Common Property.’ In the event of default, Clause 18 of the Bruce contract provides for the issuing of a Notice to Complete (in 18.1) or a Default Notice (in 18.5). Clause 31.3 provides that ‘The Buyer may not make any objection, requisition or claim or delay Completion or rescind or terminate this Contract in respect of any matter in this clause 31.’ It does not exclude action by the Buyer otherwise set out in the contract and, in the event of Seller default, clause 20 of the contract allows the Buyer to utilise ‘any other rights and remedies available to the Buyer’, such as specific performance of the obligation to prepare and register the units plan.
CONSIDERATION
[48] Respondent’s Summary of Submissions, at [35]
As at 21 December 2009 the property the subject of the Bruce contract appears to have consisted of a development site. The blocks of units had not been completed and the Units Plan had not been registered. The applicant had exchanged contracts with the vendor for the Bruce property on 5 June 2008.
It appears to the Tribunal that the applicant’s case is that notwithstanding settled law that a purchaser gains an equitable interest in the land at the point of exchange of executed contracts for the sale of land, an equitable interest could not subsist in land, in this case, prior to the registration of a units plan.
It falls to the Tribunal to determine whether an equitable interest in land could subsist prior to the registration of a units plan. Or, as Dr Jarvis put it: “What does a person who buys a unit off-the-plan have as a result of that agreement? Is it something that can be called an equitable interest in land?”[49]
[49] Transcript, 20.12.13, page 33 Lines 2-4
The Tribunal has been referred to numerous helpful authorities by the parties. The authorities mainly concerned caveats, however, the Tribunal accepts Dr Jarvis’ submission that this does not detract from their relevance in the present matter.
The applicant asserts that at 21 December 2009 he had a personal right in relation to the land only. He supports this assertion by referring to the contract and in particular to his lack of ability to caveat (clause 31.3); the fact that the contract is expressed to give the seller a ‘get out’ clause because of three month’s delay and other clauses which expressly state that the buyer cannot make any claim, requisition or objection in relation to either the construction or the registration of the units plan.
The applicant submitted that the authorities in the caveat cases should be distinguished because of the express prohibition on lodging a caveat in the Bruce contract and because of the lack of permanence or stability in the applicant’s interest in the land under the terms of that contract.
Further, the applicant submitted, even if there is an arguable proposition that he had some estate or interest in the undeveloped land, that interest did not approximate to any form of ownership which is the proper construction of the phrase “equitable or legal interest in the land” in the instrument.
The Tribunal is not persuaded by the submission that the terms of a contract override a purchaser’s position in equity. In Legione v Hateley[50] the High Court ordered the vendor to specifically perform a contract even though there was a legal right to rescission for the breach by the purchaser of an essential term. The High Court held that in all of the circumstances it would be unconscionable for the vendor to avail itself of its legal right to rescind.
[50] See footnote 32
The Tribunal has considered the parties’ detailed submissions in relation to the meaning of “interest”. While the applicant’s reference to the ordinary meaning of “interest” in The Macquarie Dictionary provided an interesting perspective, the Tribunal notes that the relevant terms, “interest”; “estate”; “land” and “in relation to” are clearly defined in the Legislation Act and the definitions in the Act apply to statutory instruments. The Tribunal is bound to apply the meaning of the provisions unless the meaning is displaced. The Tribunal is not persuaded by the submission that there is confusion over the correct interpretation of “interest” nor is it persuaded, as urged by the applicant, that the words “owned” or “ownership” should be used instead of “interest” when reading the instrument.
Similar situations to the present case, where the unit was not yet in existence and the registration of the units’ plan had not occurred by 21 December 2009, have been considered in Kuper, Jessica Holdings by analogy and Cemcorp. In Kuper the court summarised the case law in the High Court referring to Legione v Hateley, Stern v McArthur, Barr v Nicolai and Chan v Cresdon[51] and at page 432 said that “…in appropriate circumstances, a court would be prepared to protect the purchaser’s interest under a contract such as that in the present case.” This was described by Dr Jarvis as an inchoate off-the-plan purchase. The court continued
Both specific performance in the sense of requiring the vendor to do all things necessary to be done to procure registration of the strata plan, as well as by restraining the vendor by injunction from dealing with the land inconsistently with the purchaser’s right to specific performance of the contract, both in the special sense and subject to fulfilment of the condition in the ordinary sense.
[51] See footnote 32 for the citations of cases referred to by the High Court.
While in the present case the applicant had not exercised his right to seek an order for specific performance that does not mean that the right did not exist. The right is an equitable right to protect, by injunction, the purchaser’s interest in the underlying land.
In Jessica Holdings, where the purchase concerned a lot in a subdivision that had not yet been registered, the Court held that the purchaser of the particular lot, which did not then exist, had a right to restrain the vendor from dealing with the whole of the subdivision and the ‘underlying land’. The purchaser had an equitable interest in land and had a right to an injunction.
The Tribunal accepts that in a contract for sale, the vendor has an obligation to do all things that are reasonably necessary to bring about completion. In Lopiron Pty Ltd v CSS Investments Pty Ltd[52] the ACT Supreme Court ruled that even though a vendor of a unit had a right under contract to rescind because the units plan had not been registered, the Court would imply into the contract an obligation to do all things reasonably necessary to bring the contract to fruition and equity would intervene to compel, by an order for specific performance, the registration of that plan. On appeal, in CSS Investments Pty Ltd v Lopiron Pty. Ltd[53] the Full Federal Court upheld this ruling. While Lopiron is distinguishable on the facts, the Tribunal is satisfied that the above rulings are relevant in the present matter.
[52] (1986) ACTSC 121
[53] (1987) 16 FCR 15
Mr Popplewell submitted that the Bruce Contract was quite unlike the Lopiron contract because of the extensive special conditions which prevail to the extent of any inconsistency over the standard conditions and beyond that also preclude any implication which is inconsistent with the express words of the contract. The Tribunal is satisfied that the Bruce contract legally gave the vendor the right to rescind, however, the Tribunal is also satisfied, as per Lopiron, that the purchaser would have an equitable right to compel the vendor to register the plan. A court would imply into the Bruce contract an obligation on the vendor to do all things reasonably necessary and compel by an order for specific performance the registration of the plan and the conveyance of the particular unit to him.
In the present case, the Tribunal also notes that clause 20 of the Bruce contract relates to the seller’s default and the action available to the purchaser after issuing the vendor with a default notice. The available action is [the buyer may] enforce without further notice any rights and remedies available to the buyer. This does not preclude the purchaser from availing himself of an equitable injunction.
Having considered all of the matters before the Tribunal, the Tribunal is satisfied that the applicant had an equitable interest in other land, namely the Bruce property, on 21 December 2009 and was, therefore, not eligible for the Home Buyer Concession.
Penalty Tax and Interest
The Tribunal now turns to the parties’ submissions in relation to penalty tax and interest.
Penalty Tax
Mr Popplewell submits that the ACT law materially differs from the NSW law, which is discretionary. In the ACT, if the Commissioner is satisfied that the taxpayer took reasonable care to comply with the tax law or, that the tax default happened solely because of circumstances beyond the tax payer’s control; no penalty tax is payable.
Dr Jarvis submitted that the tax default occurred because the applicant did not pay the whole amount of duty he should have paid.[54] It is not in dispute that the duty was payable pursuant to section 16A of the Duties Act one year and 14 days after 21 December 2009 (the date of the second contract), namely, 5 January 2011. Pursuant to section 31(1) of the TAA, the penalty tax of 25% is imposed automatically. It is also not in dispute that a tax default did occur.
[54] T16
However, subsection 31(6) of the TAA, (which is extracted at the end of the Decision) provides that no penalty tax is payable if the taxpayer, or a person acting on behalf of the taxpayer, took reasonable care to comply with the tax laws or the tax default happened solely because of circumstances beyond the taxpayer’s control or, if a person acted on behalf of the taxpayer, because of circumstances beyond either the person's or the taxpayer's control.
Dr Jarvis contends that remission of the automatic 25% penalty tax is an exceptional event; otherwise the scheme of deterrence of tax default by automatic penalty would be undermined (see Jokhan v Commissioner for ACT Revenue).[55] He further submitted that it is insufficient for a taxpayer to merely rely on an agent to discharge a taxpayer’s obligation. He relied on the tribunal decision in Steele v Commissioner for ACT Revenue [56] to support this submission.
[55] Jokhan v COFACTR [2012] ACAT 15, at [28]: “Remission of penalty tax or interest must be an exceptional event since otherwise the scheme in the LTA and TAA for automatic penalties and interest as general deterrence of tax default would be undermined: Talisco Pty Ltd v Sarney (1987) 18 ATR 420, 87 ATC 4343, 4345; Riverland Retreat v Commissioner for State Revenue (Vic) [2004] VCAT 1366; (2004) 56 ATR 490,497-8.”
[56] [2010] ACAT 15, at [13]: “...Division 5.2 refers to the tax payer ‘or a person acting on behalf of the tax payer’. These words are meant to take away any doubt as to the tax payer trying to sheet home blame to another person. Even without those words I would not have any difficulties in finding that a Real Estate Agent was in terms of the general law acting at all times on behalf of the tax payer. There may of course be some exceptions to the general rules as to Agency but they are unlikely to be applicable in a straight forward Real Estate Agency situation. I find it difficult to see that the Applicants took reasonable steps to mitigate the effects of the circumstances which resulted in the penalty where that situation continued for about six (6) years and only came to light as a result of the Commissioner’s own enquiries.”
Mr Popplewell, in his Reply, referred the Tribunal to a later decision of the NSW’s Administrative Decisions Tribunal (ADT) in Touma v Chief Commissioner of State Revenue[57]. It appears the ADT was concerned with the same phrase[58] in subsection 27(3)(a) of the NSW Taxation Administration Act 1996. Judicial Member Frost stated:
50. It may seem surprising that the discretion in s 27(3)(a) may be enlivened if either the taxpayer or a person acting on the taxpayer's behalf took reasonable care, even if the other did not . While that is the effect of the provision, it seems to me that a decision-maker would in many circumstances be entirely justified in refusing to exercise the discretion if any one of the relevant persons failed to take reasonable care. I am of that view here.
[57] [2012] NSWADT 2, at [50]
[58] “the taxpayer (or a person acting on behalf of the taxpayer)”
While that decision is not binding on the Tribunal, it is persuasive authority on the interpretation of this phrase. Mr Popplewell contends that the applicant’s legal representatives and the applicant both took reasonable care.[59] The applicant sought legal advice. He instructed his legal representatives to send the respondent the letter dated 16 April 2010 (T75) and he paid the full stamp duty on the Bruce contract [T75-T78]. He submitted that the same reasonable care must also be imputed to the applicant’s legal representatives (his agents), who took instructions, gave advice, acted on the instructions and advice and wrote the letter to the respondent which gave the relevant notice to the Commissioner.
[59] At [8] Applicant’s Reply, at [8]
Mr Popplewell also contends that when he applied for the Home Buyer Concession on the Belconnen contract in September 2010, the applicant held an honest and reasonable belief that neither on 21 December 2009, nor in the previous two years, did he have an equitable or legal interest in land within the meaning of the Determination. In this regard Mr Popplewell submits[60] that the issue, relating to whether he had a legal or equitable interest in land, was complex and, apparently, one which the respondent was struggling with as evidenced by the respondent’s letter dated 16 April 2013 (T140) and the document at T137 both of which asserted that the applicant had a ‘legal interest’ in land at 21 December 2009 and from which assertion the Commissioner subsequently resiled.
[60] Applicant’s Statement of Facts and Contentions, at page 11 [62]
Mr Popplewell further contends that the applicant did take reasonable care in his dealings with the respondent in 2010 and was entitled to accept as correct the notice of assessment issued by the respondent on 14 September 2010.
It is clear from the matters before the Tribunal that the applicant has at all times been open and frank with the respondent. The Tribunal accepts the applicant’s submissions that he not only took reasonable care but was also diligent in seeking legal advice and complying with the tax law. In this regard, the Tribunal notes that when the applicant decided, between 21 December 2009 and 16 April 2010, not to live in the Bruce Unit for which he had been granted the HBC concession that he understood he could not comply with the residency requirements of the Scheme; informed the respondent accordingly and paid the full stamp duty on the Bruce contract.
It appears to the Tribunal that the respondent should have had access to this information from the applicant’s legal adviser’s letter dated 16 April 2010 (T75) when it issued a notice of assessment for $20 on 14 September 2010 for the Belconnen property. The applicant was entitled to accept that assessment as the correct position in the circumstances and to do so was, the Tribunal finds, entirely reasonable and careful. The Tribunal is satisfied that the tax default was beyond the applicant’s control and the penalty tax should be remitted pursuant to subsection 31(6) of the TAA.
If the Tribunal has erred in the finding in the previous paragraph, then the Tribunal is, considering all of the matters before it, comfortably satisfied, for the reasons set out above, that having regard to section 37(a)(i) and (b) of the TAA (a copy of which is at the end of this Decision) that the penalty tax should be remitted.
Interest
Dr Jarvis submitted that a decision refusing to remit interest is not reviewable because it is not identified in Schedule 1.2 of the TAA which sets out decisions reviewable by the Commissioner and ACAT. Rather, it is specifically identified in Schedule 2.2(a) as being reviewable by a Commissioner only. ACAT cannot review, under section 108A of the TAA, a decision under section 29 of the TAA because it is not a reviewable decision under section 107A of the TAA. Dr Jarvis referred the Tribunal to an earlier tribunal decision in Hanley v Commissioner for ACT Revenue[61] where that tribunal stated:
The Tribunal has considered the relevant provisions in the LTA and the TAA. It accepts Dr Jarvis’ submission that neither the imposition of interest nor its remission can be subjected to review by the Tribunal.
If the Tribunal is wrong to conclude that it lacks jurisdiction to review interest then the Tribunal adopts the analysis of the interest provisions set out in paragraphs 24 to 30 inclusive of Trust Company of Australia Limited v Chief Commissioner of State Revenue [2002] NSWADT 21. The NSW provisions are essentially the same as those in sections 25 to 29 of the TAA. The evidence in this matter does not disclose any exceptional circumstances that would justify the remission of the market rate component of the interest.
[61] [2012] ACAT 64 at[51] – [52]
Mr Popplewell submitted[62] that the Tribunal is undertaking an administrative review pursuant to section 68(2) of the ACT Civil and Administrative Tribunal Act 2008 (“ACAT Act”) and in undertaking that function the Tribunal may exercise the functions and powers of the entity whose decision is under review. In this matter the entity is the respondent and the decision under review is the respondent’s refusal to allow the applicant’s objection to the (re)assessment shown in the ‘notice of assessment’ at T140.
[62] Applicant’s Reply, at [16]
If the Tribunal determined that no penalty tax is payable, Mr Popplewell submitted that it was open to the Tribunal to remit interest under section 29 of the TAA as part of the substitution of its assessment for that of the Commissioner. In support of this contention, Mr Popplewell referred the Tribunal to the definition of ‘assessment’ in the Dictionary of the TAA which includes ‘(b) an assessment substituted by ACAT on review under part 10’. His reasoning was that the respondent would have that power in the circumstances and the Tribunal may exercise the Commissioner’s power in undertaking review.
Mr Popplewell submitted[63] that the Tribunal’s power to substitute its assessment for that of the Commissioner on review is not limited by the TAA. The ACT AAT in ACT Nursing Services Pty Ltd and Commissioner for ACT Revenue [64] previously accepted that this power extends to remission of interest.
[63] Applicant’s Reply at [19]
[64] [2008] ACTAAT 29
While noting Mr Popplewell’s detailed submissions, the Tribunal concurs with Dr Jarvis and is satisfied that the TAA makes it clear that remission of interest cannot be subject to review by the tribunal.
CONCLUSION
For the reasons set out above the Tribunal is satisfied that the applicant was not eligible for the HBC concession in relation to the subject property because he had an equitable interest in land other than the subject property within two years prior to the subject property contract, which was not required to be relinquished under an order of a court, or under any other specified agreement in accordance with section 5(1)(d)(i) of the Determination. In this regard that part of the respondent’s decision under review is confirmed.
However, the Tribunal is also satisfied, for the reasons set out above, that the penalty tax imposed by the respondent should be remitted and, therefore, this part of the respondent’s decision is set aside and the penalty tax is to be remitted.
The Tribunal is also satisfied that the respondent’s decision to impose interest is not reviewable by the Tribunal. That part of the decision under review is confirmed.
………………………………..
Ms E. Symons
Presidential Member
LEGISLATION
Taxation Administration Act 1999
6Purpose of Act and relationship with other tax laws
(1)The purpose of this Act is to make general provision in relation to the administration and enforcement of the other tax laws.
(2)The other tax laws include provisions in relation to—
(a)the imposition of tax and its payment; and
(b)exceptions to and exemptions from liability to the tax; and
(c)entitlements to refunds.
(3)This Act includes general provisions in relation to—
(a)the assessment and reassessment of tax liability; and
(b)payment of tax, if this is not provided for in the tax law concerned; and
(c)entitlements to and the obtaining of refunds of tax; and
(d)the imposition of interest and penalty tax; and
(e)approval of special tax return arrangements; and
(f)the collection of tax; and
(g)record keeping obligations of taxpayers and general offences; and
(h)tax officers and their investigative powers and secrecy obligations; and
(i)objections and appeals; and
(j)cooperation with other jurisdictions in conducting investigations and enforcing tax laws; and
(k)miscellaneous matters such as the service of documents, corporate criminal liability and evidence.
31Amount of penalty tax
(1)The amount of penalty tax payable in relation to a tax default is 25% of the amount of tax unpaid, subject to this division.
(2)The amount of penalty tax payable in relation to a tax default is 50% of the amount of tax unpaid if the commissioner is satisfied that the tax default was caused wholly or partly by a failure by the taxpayer (or a person acting on behalf of the taxpayer) to take reasonable care to fulfil the taxpayer’s obligations under a tax law.
(3)Subsection (2) does not apply if the tax payer satisfies the commissioner that the taxpayer (or a person acting on behalf of the taxpayer) had a reasonable excuse for the failure.
(4)Subsections (2) and (3) apply to a tax default that happened before their commencement in the same way as they apply to a tax default that happened after their commencement.
(5)The amount of penalty tax payable in relation to a tax default is 75% of the amount of tax unpaid if the commissioner is satisfied that the tax default was caused wholly or partly by the intentional disregard by the taxpayer (or a person acting on behalf of the taxpayer) of a tax law.
(6)No penalty tax is payable in relation to a tax default if the commissioner is satisfied that—
(a)the taxpayer (or a person acting on behalf of the taxpayer) took reasonable care to comply with the tax law; or
(b)the tax default happened solely because of circumstances beyond the taxpayer’s control (or if a person acted on behalf of the taxpayer, because of circumstances beyond either the person’s or the taxpayer’s control) but not amounting to financial incapacity.
NoteThe commissioner’s decision to impose penalty tax is an internally reviewable decision (see s 107, def internally reviewable decision), and the commissioner must give an internal review notice to the taxpayer (see s 107B).
37Remission of penalty tax
The commissioner may remit all or part of an amount of penalty tax payable by a person if satisfied that—
(a)either—
(i)the person has taken reasonable steps to mitigate, or to mitigate the effects of, the circumstances that resulted in the liability for penalty tax; or
(ii)the circumstances that resulted in the liability for penalty tax were exceptional; and
(b)it would be fair and reasonable to remit all or part of the penalty tax.
NoteThe commissioner’s decision to refuse to remit penalty tax payable by a person is an internally reviewable decision (see s 107, def internally reviewable decision), and the commissioner must give an internal review notice to the person (see s 107B).
139Determination of amounts payable under tax laws
(1)The Minister may determine the following:
(a)the amount of tax, duty or licence fee payable under a tax law;
(b)the rate or differential rates at which, or the method by which, an amount of tax, duty, a licence fee or interest, payable under a tax law is to be calculated;
(c)a scale of allowances for expenses of witnesses under section 82 (5).
(2)A determination under subsection (1) is a disallowable instrument.
NoteA disallowable instrument must be notified, and presented to the Legislative Assembly, under the Legislation Act.
Schedule 1Decisions reviewable by commissioner and ACAT
(see s 100, s 107 and s 107A)
1.1Objections and reviews
A person dissatisfied with a decision mentioned in section 1.2 may—
(a)lodge an objection under section 100; and
(b)if dissatisfied with the determination of the objection—apply to the ACAT under section 108A (Applications for review).
1.2Decisions subject to objection or review
Section 1.1 applies to a decision—
(a)under section 8 determining the existence and effect of a tax avoidance scheme; or
(b)under section 31 to impose penalty tax; or
(c)under section 34 to impose increased penalty tax; or
(d)under section 37 refusing to remit penalty tax; or
(e)under section 40 (5) revoking a variation previously granted in relation to requirements for a return; or
(f)under section 43 refusing an application for special arrangements for lodgment of returns or methods of payment; or
(g)under section 44 imposing conditions on an approval under section 43; or
(h)under section 45 varying or cancelling an approval under section 43; or
(i) under section 103 refusing permission to lodge a late objection.
Schedule 2Decisions reviewable by commissioner only
(see s 100 and s 107)
2.1Objections
A person dissatisfied with a decision listed in section 2.2 may lodge an objection under section 100.
2.2Kinds of decision subject to objection
Section 2.1 applies to a decision—
(a)under section 29 refusing to remit interest in accordance with the taxpayer’s application; or
(b)under section 40 (3), refusing to vary the time for lodging a return in accordance with the taxpayer’s application; or
(c)under section 40 (3), refusing to vary the period to which a return relates in accordance with the taxpayer’s application; or
(d)under section 52—
(i)refusing to extend the time for payment of tax; or
(ii)refusing to accept payment by instalments; or
(iii)imposing a condition on an extension of time or acceptance of payment by instalments; or
(e)under section 103 imposing conditions on a grant of permission to lodge a late objection.
Duties Act 1999
16APayment of duty—‘off the plan’ purchase agreements
(1)For section 16, liability for duty on an ‘off the plan’ purchase agreement is taken to arise if at least 1 of the following events happens:
(a)the agreement is completed;
(b)the whole, or any part, of the purchaser’s interest under the agreement is assigned;
(c)the following period, beginning on the date of the agreement, ends:
(i)for a purchase agreement for a declared affordable house and land package—2 years;
(ii)for any other ‘off the plan’ purchase agreement—1 year;
(d)a certificate of occupancy has been issued under the Building Act 2004 for the building to which the agreement relates.
(2)The duty payable on an ‘off the plan’ purchase agreement—
(a)is payable within 14 days after 1 of those events happens; and
(b)may be paid before any of those events happens.
(3)Despite section 16, a tax default happens for the Taxation Administration Act if the duty payable on an ‘off the plan’ purchase agreement is not paid within the 14 day period under subsection (2) (a).
(4)In this section:
declared affordable house and land package means a house and land package declared under section 16B.
‘off the plan’ purchase agreement means—
(a)an agreement for the sale or transfer of dutiable property that is, or includes, land where a residence is to be erected or developed before completion of the sale or transfer; or
(b)a purchase agreement for a declared affordable house and land package.
31General rate
Except as provided by this chapter, duty at the determined rate is chargeable on a dutiable transaction.
Legislation Act 2001
6Legislation Act provisions must be applied
(1)A provision of this Act must be applied to an Act or statutory instrument, in accordance with the terms of the provision, except so far as it is displaced.
(2)A determinative provision may be displaced expressly or by a manifest contrary intention.
(3)A non-determinative provision may be displaced expressly or by a contrary intention.
NoteFor the distinction between a ‘manifest contrary intention’ (see s (2)) and ‘contrary intention’ (see s (3)), see the examples in this section.
(4)The declaration of a provision as ‘determinative’ indicates that it is the intention of the Legislative Assembly that, if the provision is to be displaced at all in a particular case, a more deliberate displacement is required than if the provision were a non‑determinative provision.
(5)This section applies despite any presumption or rule of interpretation.
(6)A provision of this Act must not be taken to be displaced by a provision of an Act or statutory instrument so far as the provisions can operate concurrently.
(7)In particular and without limiting subsection (5), a provision of this Act is not displaced by a provision of an Act or statutory instrument because the provisions deal with the same or a similar subject matter.
(8)This section is a determinative provision.
Examples—different kinds of displacement
1 Determinative provision—express displacement
The Collections Regulation Act 1999 (hypothetical), s 83 contains the following provision:
(2)The Legislation Act, section 47 (3) does not apply to a regulation under this Act.
Section 83 (2) illustrates a provision expressly displacing this Act, s 47 (3), a determinative provision.
2 Determinative provision—manifest contrary intention
The Motor Repairers Act 2001 (hypothetical) does not contain a provision like the Collections Regulation Act 1999, s 83, but s 79 contains the following provision:
(3)A regulation may apply, adopt or incorporate an instrument or provision of an instrument as in force from time to time.
Section 79 (3) illustrates a provision displacing this Act, s 47 (3), a determinative provision, by a manifest contrary intention because s 79 (3) clearly contradicts s 47 (3).
3 Non-determinative provision—contrary intention
The master of a vessel is charged with contravening the Liquor Act 2001 (hypothetical), s 126 by selling liquor on or from ‘licensed premises’ otherwise than at a time authorised by the Act. It is claimed that the sale took place on the vessel. The Act defines ‘licensed premises’ to mean that part or those parts of a building or buildings and of the land adjoining it or them as defined by the licensing court. It is argued that the complaint is defective in that a vessel cannot be ‘licensed premises’. However, s 126 is expressed to apply to ‘a licensee, servant, agent or master who sells liquor on or from licensed premises’. In this case, the reference to ‘master’ indicates a contrary intention indicating that the section is intended to apply to liquor sold on or from vessels.
Example—concurrent operation (no displacement)
The Small Clubs Act 2002 (hypothetical) contains the following provision about how notice of the club’s annual general meeting may be served on members of a registered small club:
60 Serving notice of annual general meeting
The executive committee of a registered small club may serve notice of the annual general meeting of the club on members by pinning the notice to a noticeboard in the club house.
This Act, s 247, a non-determinative provision, allows a document to be served on an individual under an Act in a number of ways (by giving the document to the individual, by sending it by prepaid post etc), but does not mention pinning the document to a noticeboard as a method of giving the notice.
Section 247 is not displaced by the Small Clubs Act 2002, s 60, because—
· s 60 does not expressly displace section 247 nor does it indicate a contrary intention (see s 6 (1) and (3)) and, in particular, s 60 does not indicate an intention that the method of service it authorises is to be the only method of serving notice of annual general meetings on members of small clubs; and
· the application of s 247 is not displaced by any presumption or rule of interpretation (see s 6 (5)); and
· s 60 and s 247 can operate concurrently (see s 6 (6)) by allowing complementary methods of service; and
· the fact that s 60 and s 247 deal with the same (or a similar) subject matter does not of itself displace s 247 (see s 6 (7) and also s 6 (5)).
It follows, therefore, that the executive committee is free to serve notice of the annual general meeting under s 60 or s 247.
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140Legislative context
In working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole.
Examples
1 The long title of an Act provides that it is an Act to give certain benefits to the holders of pensioner cards. Section 4 provides ‘This Act applies to a holder of a pensioner card’. Section 22 provides that the commissioner may grant ‘a person’ an exemption from payment of rates. The Act does not contain a definition of ‘person’. Section 22 must be read in the context of the Act as a whole so that the commissioner may only grant exemptions to people who are holders of pensioner cards.
2 The Drug Testing Regulation 2001 (made under the Drug Testing Act 2000 (hypothetical)), s 6 contains the following heading:
6 Corresponding law—Act, s 100, def corresponding law
The heading indicates that the section has been made for the definition of corresponding law in the Drug Testing Act 2000, s 100.
3 Section 12 (1) of a subordinate law refers to ‘a non-conviction order under the Crimes (Sentencing) Act 2005’. No other kind of order is mentioned in the section and the word ‘order’ is not otherwise defined in the subordinate law. Subsections (2), (4), (7) and (9) of the same section, which only refer to ‘the order’, are to be understood as referring to the order mentioned in s (1).
Note 1See s 126 and s 127 for material that is, or is not, part of an Act or statutory instrument.
Note 2An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see s 126 and s 132).
144Meaning of commonly-used terms
A definition in the dictionary, part 1 applies to all Acts and statutory instruments.
NoteSee s 130 for the def definition and s 131 for provisions about signpost definitions.
148Terms used in instruments have same meanings as in authorising laws
Terms used in a statutory instrument have the same meanings as they have, from time to time, in the Act or statutory instrument (the authorising law), or the relevant provisions of the authorising law, under which the instrument is made or in force.
PUBLICATION DETAILS
FILE NUMBER: | AT 13/71 |
PARTIES, APPLICANT: | Joseph Doherty |
PARTIES, RESPONDENT: | Commissioner for ACT Revenue |
COUNSEL APPEARING, APPLICANT | |
COUNSEL APPEARING, RESPONDENT | Dr D Jarvis |
SOLICITORS FOR APPLICANT | O’Connor Harris & Co |
SOLICITORS FOR RESPONDENT | ACT Government Solicitor |
TRIBUNAL MEMBERS: | Ms E. Symons |
DATES OF HEARING: | 20 December 2013 |
PLACE OF HEARING: | Canberra |
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