Freedom Willetton Pty Ltd & Anor and Commissioner Of State Revenue - [2019] WASAT 69

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

CITATION:   FREEDOM WILLETTON PTY LTD AND ANOR and COMMISSIONER OF STATE REVENUE [2019] WASAT 69
MEMBER:   JUDGE T SHARP, DEPUTY PRESIDENT
HEARD:   30 MAY 2019
WRITTEN SUBMISSIONS FILED ON 10 & 12 JUNE 2019 AND 13 & 14 AUGUST 2019

DELIVERED          :   10 SEPTEMBER 2019
FILE NO/S:   CC 2286 of 2018
BETWEEN:   FREEDOM WILLETTON PTY LTD
First Applicant
GERALDTON PROJECT WELLS PTY LTD
Second Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

Duty - Dutiable transaction - Transfer of dutiable property - Transfer to a trustee - Exemption - Bare trust - Agreement for the transfer of dutiable property

Legislation:

Duties Act 2000 (VIC), s 35(1), s 35(1)(a)
Duties Act 2008 (WA), s 3, s 10, s 11(1), s 11(1)(a), s 11(1)(b), s 11(1)(c), s15(a), s 27(1), s 29(1), s 30 s 42, s 42(1), s 118, s 118(2)(a), s 119(3), s 119(5), s122(2), s 124(1), s 126(1), s 126(2), s 127(2), s 272
Duties Bill 2007 (WA), cl 118
Interpretation Act 1984 (WA), s 19
Revenue Law Amendment Act 2008 (WA), s 25
Revenue Law Amendment Act 2019 (WA)
Revenue Laws Amendment Bill 2008 (WA)
Stamps Act 1958 (VIC)
State Administrative Tribunal Act 2004 (WA), s 17(1)
Taxation Administration Act 2003 (WA), s 37(2), s 40, s 40(1)
Trustees Act 1962 (WA), s 5

Result:

Respondent's decision affirmed

Category: B

Representation:

Counsel:

First Applicant	:	Mr DK Barker & Mr P MacMillan
Second Applicant	:	Mr DK Barker & Mr P MacMillan
Respondent	:	Ms R Panetta

Solicitors:

First Applicant	:	Chalmers Legal Studio Pty Ltd
Second Applicant	:	Chalmers Legal Studio Pty Ltd
Respondent	:	State Solicitor's Office

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

Australian Broadcasting Commission v Australasian Performing Rights Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378
CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337
Commissioner of State Revenue v Abbotts Exploration Pty Ltd (2014) 48 WAR 300
Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233
Comptroller of Stamps v Yellowco Five Pty Ltd [1993] 2 VR 529
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (1980) 1 NSWLR 510
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503
Fremantle Lawyers Pty Ltd & Ors v Ivan Josip Sarich as executor of the estate of Ivan Branimir Saric [2019] WASCA 48
MD Commercial Pty Ltd & Anor v Commissioner of State Revenue [2018] VSC 560
Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9; (2005) 222 CLR 194
SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362
White Rock Properties Pty Ltd v Commissioner of State Revenue [2015] VSCA 77

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

On 17 August 2017, the first applicant (Freedom Willetton) and the second applicant (GPW) (together applicants) entered into a joint venture agreement (JVA), the terms of which I will elaborate on later in these reasons. In essence, however, the stated intention of the parties under the JVA was to amalgamate a portion of land owned by Freedom Willetton with a contiguous portion of land owned by GPW, to create a single lot. The amalgamated lot was then to be developed, subdivided into a number of smaller lots and the newly created lots sold.
To facilitate the amalgamation of the land, on the same date GPW transferred its portion to Freedom Willetton, the relevant transfer being expressed to be 'pursuant to the terms of a Joint Venture Agreement made on or about the same date as this document'.
The applicants then lodged the JVA and the transfer in favour of Freedom Willetton with the respondent (Commissioner) for assessment of duty under the Duties Act 2008 (WA) (Duties Act).
Following an exchange of information and correspondence, the Commissioner in due course issued a duties assessment notice, to which the applicants objected. The Commissioner disallowed the objection and on 11 October 2018 the applicants lodged with the Tribunal an application under s 40 of the Taxation Administration Act 2003 (WA) (TA Act) for a review of that decision.

Proceedings in the Tribunal

At a directions hearing on 29 October 2018, the matter was referred to mediation on 21 November 2018. The mediation was terminated without a resolution being achieved and the matter was programmed for a final hearing.
The Commissioner filed her statement of facts, issues and contentions on 19 February 2019 (Commissioner's SFIC). The Commissioner also filed her bundle of documents on the same date (Commissioner's bundle).
The applicants then filed their statement of facts, issues and contentions on 20 March 2019 (applicants' SFIC) and their bundle of documents on the same date (applicants' bundle).
The Commissioner on 7 May 2019 filed responsive submissions (Commissioner's response).
The matter was heard on 30 May 2019. Following the hearing, the parties filed further submissions (respectively, applicants' further submissions and Commissioner's further submissions).
In August 2019, the parties then filed submissions on the issue of whether or not the Tribunal should have regard to the amendments made after the hearing to the Duties Act by the Revenue Laws Amendment Act 2019 (WA).

Facts

The following facts are taken from the Commissioner's SFIC and agreed by the applicants, subject to some 'amplification' by the applicants with which the Commissioner took no issue.
The applicants in the applicants' SFIC also provided some additional facts, about which the Commissioner said that she had no knowledge but, again, took no issue with them.
The facts as thus agreed are set out below and the Tribunal makes these findings of fact.

Acquisition of the relevant land

On 15 April 2014, GPW became the registered proprietor of what was then Lot 99 on Plan 2903 (Lot 99), being the whole of the land comprised in Certificate of Title Volume 1970 Folio 820.
On 1 October 2014, Freedom Willetton became the registered proprietor of what was then Lot 130 on Deposited Plan 34511 (Lot 130) being the whole of the land comprised in Certificate of Title Volume 2526 Folio 49.
Parts of Lot 130 are located on either side of Lot 64 on Plan 7749 owned by the Water Corporation, but Lot 99 and Lot 130 are contiguous.

Land arrangements between Freedom Willetton and the Water Corporation

On a date prior to 17 August 2017, in respect of Lot 130, Freedom Willetton and the Water Corporation agreed to an exchange of easements and Freedom Willetton transferred a small area of its land to the Water Corporation.

Joint venture agreement and transfer of Lot 99 to Freedom Willetton

On 17 August 2017, Freedom Willetton and GPW executed the JVA for the purpose of developing Lot 99 and the balance of Lot 130 following the transfer to the Water Corporation; Commissioner's bundle pages 5 - 47.
A transfer of land form in respect of Lot 99 was executed, also on 17 August 2017, by GPW as transferor and Freedom Willetton as transferee; Commissioner's bundle pages 49 - 52.
Consideration for the transfer of Lot 99 is stated in the transfer of land form as follows:
Pursuant to the terms of a Joint Venture Agreement made on or about the same date as this document between the Transferor and the Transferee pursuant to which the Transferor declares that it holds the land above described on trust.

Creation and subdivision of Lot 888

On 19 April 2018, the Western Australian Planning Commission (WAPC) gave final approval to Deposited Plan 411460, which was the plan of the proposed amalgamation of Lot 99 and the balance of Lot 130. The resultant lots were to be known respectively as Lot 888 on Deposited Plan 411460 (Lot 888) (being the lot that would eventually be registered to Freedom Willetton) and Lot 889 on Deposited Plan 411460 (Lot 889) (being the lot that would eventually be registered to the Water Corporation).
On 21 June 2018:
(a)Freedom Willetton became the registered proprietor of Lot 99 free of Mortgage M609576; Commissioner's bundle page 61;
(b)Freedom Willetton and the Water Corporation lodged their application for new titles, providing the following reason for the application:
Issue of titles subject to Deposited Plan 411460
Whereby Lot 888 issues to Freedom Willetton Pty Ltd
And Lot 889 issues to Water Corporation;
Commissioner's bundle pages 55 - 59;
(c)the certificates of title for Lot 99 and Lot 130 were cancelled, a memorial being entered on both certificates of title stating that new folios had been created for the lots on Deposited Plan 411460; and
(d)Freedom Willetton became the registered proprietor of Lot 888, being the whole of the land being comprised in Certificate of Title Volume 2949 Folio 956.
On 11 July 2018, WAPC approved survey strata plan 76709 relating to the survey strata subdivision of Lot 888.
On 12 July 2018:
•Freedom Willetton lodged an application for new titles for the lots on Survey Strata Plan 76709;
•the certificate of title in respect of Lot 888 was cancelled, a memorial being entered on that certificate of title stating that new folios had been created for the lots on Survey Strata Plan 76709; and
•new titles were issued for Survey Strata Lots 1 to 64 inclusive.

Details of the JVA

The following details of the relevant provisions of the JVA have been taken from the applicants' amended objection to the Commissioner’s assessment of duty (Commissioner's bundle pages 248 258) to which I refer later in these reasons. However, these details are also apparent from the words and language of the JVA; Commissioner's bundle pages 5 48.
The JVA was the subject of a subsequent document (the Deed of Rectification) and I will also refer to that document later in these reasons.
Recital C of the JVA provides that Freedom Willetton and GPW have agreed to associate themselves with each other in a joint venture for the purpose of amalgamating Lot 99 and Lot 130 and developing the resulting land on the terms and conditions set out in the JVA.
Clause 9 of the JVA provides that GPW will transfer Lot 99 to Freedom Willetton, free of encumbrances and Freedom Willetton will hold Lot 99 for GPW as trustee.
Also in clause 9, Freedom Willetton declares that it shall hold Lot 99 on trust for GPW for the purpose of the completing the 'Project'. The 'Project' is defined in clause 1.1 of the JVA as follows:
'Project' means:
(a)the carrying out of future capital works to construct a survey strata residential development to be known as Nicheliving Willetton upon the Respective Properties;
(b)entering into of contracts of sale of all of the Lots so developed;
(c)on terms and conditions approved by the Management Committee from time to time[.]
The applicants say, but it is not apparent from the JVA, that the JVA provides that Freedom Willetton will subdivide the amalgamated lot into:
•residential survey strata lots;
•common property lots; and
•vacant survey lots, for re-subdivision in later stages of the development.
The applicants also say that, at the same time as the registration of the transfer of Lot 99 to Freedom Willetton, an application is to be made to the Registrar of Titles for the registration of a caveat in respect of both Lot 99 and Lot 130, declaring that Freedom Willetton holds Lot 99 on trust for GPW for the purpose of the development project.
The applicants say that Freedom Willetton will enter into contracts of sale for each of the residential survey strata lots to third party purchasers.
On settlement of the sale of each of those lots, the intention is that the proceeds will be held by Freedom Willetton who will pay any outstanding costs and taxes and distribute the balance to itself and GPW on an equal basis.
Although not specifically mentioned in the amended notice of objection, the JVA at clause 6 provides for the sale of the joint venture assets prior to the completion of the Project if the parties decide to do so. Clause 6 of the JVA also provides that in the event of a default by either party, the 'Non-defaulting Owner' is entitled to purchase the 'Defaulting Owners' share in the JVA assets.
If the Non-defaulting Owner does not wish to acquire the JVA assets, the assets are to be sold by tender or auction. The profit or loss on the sale will be distributed in accordance with the parties' entitlements.

Commissioner's assessment of duty

Documents lodged

The JVA and the transfer of land form in respect of Lot 99 was submitted to the Commissioner for assessment of duty on 21 August 2017, along with a covering letter from the applicants' representatives; Commissioner's bundle pages 83 - 84.
In that covering letter, the applicants' representatives explained that Freedom Willetton and GPW are 'special purpose vehicles established for the purpose of undertaking a group housing development on the amalgamated Lot 130 and Lot 99 …'. The applicants' representatives informed the Commissioner that WAPC had granted approval for the amalgamation of Lot 99 and Lot 130 but that 'Landgate requires that in order to apply for a new Certificate of Title for [the amalgamated lot] there must only be one registered proprietor'.
The applicants' representatives went on to say that to allow the amalgamation of the two lots to proceed, the parties agreed that GPW will transfer Lot 99 to Freedom Willetton 'as evidenced in a Joint Venture Agreement dated 17th August 2017'.
The applicants' representatives drew the Commissioner's attention to clause 9 of the JVA 'pursuant to which Lot 99 is transferred to [Freedom Willetton] to be held on trust by it together with Lot 103 (sic) to permit amalgamation and the completion of the Project as trustee'. The transfer of Lot 99 is 'pursuant to the [JVA]'.
The applicants' representatives submitted that 'only nominal duty is chargeable pursuant to section 118(2)(a) of the [Duties Act]'.
Section 118(2)(a) of the Duties Act, which is set out in full later in these reasons, provides that nominal duty is chargeable on a transfer of dutiable property that is made by a transferor to a trustee to be held solely as trustee for the transferor without any change in the beneficial ownership of the dutiable property.

Commissioner's requisition and preliminary view

On 27 September 2017, the Commissioner issued a duties requisition to the applicants' representatives, which included an outline of her 'preliminary view' as to duty assessment; Commissioner's bundle pages 85 90. The Commissioner's preliminary view was focussed around the applicability or otherwise of s 118(2)(a) of the Duties Act.
The Commissioner said that in her view, s 118(2)(a) of the Duties Act did not apply in this case. She considered that under the JVA the applicants both receive a beneficial interest in Lot 99 and Lot 130 'rather than retaining their respective interests as immediately before the [JVA]'; Commissioner's bundle page 86.
The Commissioner also observed that all of the subdivided lots from the subsequently created Lot 888 were to be sold 'and the profits to be distributed equally between the [applicants]'. The Commissioner said that '[a]malgamating, subdividing, developing and selling of the land in pursuit of furthering the interests of a joint venture goes well beyond the requirement to merely hold the property for the transferor'; Commissioner's bundle page 86.
The Commissioner said that, as a consequence of this, 'section 118(2)(a) cannot apply as the [JVA] clearly alters the beneficial ownership of both Lot 99 and Lot 130'. Also, the Commissioner said, the JVA 'does not evidence creation of a trust whereby the property is to be held solely for the transferor' but instead is a trust where all the assets of the joint venture 'are held for both [applicants] equally, for the purpose of developing and realising the property'; Commissioner's bundle page 86.
The Commissioner said that there is an absence of judicial consideration of s 118 of the Duties Act in Western Australia, but she found support for her conclusions in a number of decisions from Victoria, specifically Comptroller of Stamps v Yellowco Five Pty Ltd [1993] 2 VR 529 (Yellowco), Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233 (Victoria Gardens) and White Rock Properties Pty Ltd v Commissioner of State Revenue [2015] VSCA 77 (White Rock).
The Commissioner said that these cases were relevant because of the similarity between s 118(2)(a) of the Duties Act and the equivalent provision in the Duties Act 2000 (VIC) (Duties Act Vic), specifically s 35(1)(a), and its immediate predecessor, exemption (18) in Schedule 3, Heading VI of the Stamps Act 1958 (VIC) (Stamps Act Vic).
The Commissioner invited the applicants, if they did not agree with the Commissioner's view, to make 'comprehensive submissions' stating why they considered that s 118(2)(a) should apply.

Applicants' response

On 6 October 2017, the applicants' representatives provided written submissions in response to the Commissioner's preliminary view as to the assessment of duty; Commissioner's bundle pages 91 97.
The applicants' representatives submitted that '[t]he transaction being assessed is an agreement expressed in clause 9.2 of [the JVA] … for the transfer of Lot 99 … which land Freedom Willetton is to hold on trust for [GPW] for the purpose of the amalgamation of [Lot 99 and Lot 130] …'; Commissioner's bundle page 92. The applicants' representatives' considered that the exemption in s 118(2)(a) of the Duties Act applies because 'at no time throughout the duration of the JVA will anyone other than [GPW] have a beneficial interest … in what is currently Lot 99'; Commissioner's bundle page 97.

Duties assessment notice issued

On 9 March 2018, the Commissioner issued a duties assessment notice for the amount of $727,790 to the applicants; Commissioner's bundle page 101. Duty was assessed on the JVA as an 'agreement' and was calculated on the basis of a valuation of $14,250,000 for Lot 99. The Tribunal understands that this valuation is not in dispute for the purpose of this proceeding.
The Commissioner considered that duty was not chargeable on the transfer of land because of the 'no double duty' provisions in s 42 of the Duties Act.
The Commissioner on 27 April 2018, almost two months later, issued a statement of grounds for the duties assessment (Statement of Grounds); Commissioner's bundle pages 102 108.

Grounds for the duties assessment

In the Statement of Grounds, the Commissioner says that the 'primary issue at the core of this assessment is the statutory interpretation and scope' of s 118(2)(a) of the Duties Act; Statement of Grounds page 3 (Commissioner's bundle page 103).
The Commissioner says that s 118(2)(a) of the Duties Act provides that nominal duty will be chargeable in relation to a transfer of dutiable property in circumstances where:
(a)the transfer is made by a person who passes the dutiable property to a trustee of a trust (but not a discretionary trust or a unit trust scheme); and
(b)the dutiable property transferred is to be held thereafter (that is, the trust is a trust to hold (Commissioner's emphasis) the property and not, for example, a trust to develop or sell the dutiable property); and
(c)immediately upon the transfer, the trustee is to hold (Commissioner's emphasis) the property for the future without any change in beneficial ownership;
Statement of Grounds pages 3 and 4 (Commissioner's bundle pages 103 and 105).
The Commissioner says that in this case:
1)The Commissioner accepts that the transfer is made by a person who passes the dutiable property to a trustee of a trust which is neither discretionary nor a unit trust scheme.

However:
2)The Commissioner does not consider that the dutiable property is to be held thereafter by the transferee only as trustee and nor will the property transferred be held only for the person passing the property.
In particular, the Commissioner says that the property is not being 'held', but rather is to be developed and sold.
Also, the Commissioner does not consider that the property is to be held only for GPW. She says that under clause 9.1.1 of the JVA, Freedom Willetton is appointed to hold the property and the rights of the joint venture as bare trustee of Freedom Willetton and GPW. She says that '[o]n a holistic reading of the [JVA], the property of the [applicants], whether described as Lot 99 and Lot 130, the amalgamated [Lot 888] or the resultant further subdivided residential lots are all held equally for both [applicants]'.
Further:
3)The Commissioner disagrees that, immediately upon the transfer, there will be no change in beneficial ownership. The Commissioner says that the JVA and the transfer of Lot 99 represent a change of beneficial ownership of Lot 99 from being wholly with GPW to both of the applicants;
Statement of Grounds pages 4 and 5 (Commissioner's bundle pages 105 and 106).
The Commissioner says that for these reasons, s 118(2)(a) of the Duties Act does not apply and therefore an assessment of duty was raised on the JVA as an agreement for the transfer of dutiable property at the general rate in accordance with the duties assessment notice dated 9 March 2018; Statement of Grounds pages 5 and 6 (Commissioner's bundle pages 106 and 107).

Objection to the duties assessment

Deed of Rectification in respect of the JVA

On 18 April 2018, after the issue of the duties assessment notice on 9 March 2018 but before the issue of the statement of grounds on 27 April 2018, the applicants executed a document entitled 'Deed of Rectification Joint Venture Agreement' relating to the JVA (Deed of Rectification); Commissioner's bundle pages 121 204.
The recitals to that document are as follows:
A.[The applicants] have entered into the [JVA] for the purpose of developing Lot 99 and Lot 130.
B.By mutual mistake there are inconsistencies in how the parties' relationship is recorded in the [JVA].
C.The parties have agreed to rectify the mistake on the terms set out in this document.

Objection (and amended objection)

On 23 April 2018, again a few days prior to the issue by the Commissioner of the Statement of Grounds on 27 April 2018, the applicants' representatives lodged with the Commissioner an objection to the assessment of duties; Commissioner's bundle pages 111 120. They also provided the Commissioner with a copy of the Deed of Rectification.
In a letter dated 27 April 2018, the Commissioner accepted the objection; Commissioner's bundle pages 245 246.
Then on 1 May 2018, the applicants' representatives wrote again to the Commissioner, stating that the applicants' objection had been prepared before they received and had an opportunity to consider the Statement of Grounds and that they wished to amend their objection; Commissioner's bundle page 247. The applicants' representatives included with that letter an amended objection to the assessment of duties; Commissioner's bundle pages 248 258.
The amended objection repeats the applicants' assertion that the arrangement entered into under the JVA following the execution of the Deed of Rectification 'and, in particular, the transfer of Lot 99 from [GPW] to Freedom Willetton, to hold as trustee for [GPW], meets the requirements of s 118(2)(a) of the [Duties Act] and it should, therefore, be assessed for nominal duty (not transfer duty)'; Commissioner's bundle page 257 at para 5.1

Commissioner's preliminary response to the objection and request for further submissions

On 5 July 2018, the Commissioner replied to the applicants' representatives. She acknowledged receipt of the amended objection and provided a further explanation as to how the duties assessment was arrived at; Commissioner's bundle pages 259 261. While not conceding that the effect of the Deed of Rectification was to rectify, as opposed to amend, the terms of the JVA, the Commissioner's position continued to be that the JVA (read with the Deed of Rectification) constituted either an agreement for the transfer of dutiable property or a declaration of trust over dutiable property. The Commissioner said that either selection would result in the same duty outcome. The Commissioner therefore decided to impose duty on the JVA.
The Commissioner said that the transfer itself, by operation of s 42(1) does not attract duty because it is in conformity with the JVA and the JVA is duty endorsed.
The Commissioner then turned to s 118 of the Duties Act and said that the relief from duty contemplated by that section is confined to transfers of dutiable property and does not extend to agreements for the transfer of dutiable property. Accordingly, the Commissioner considered that s 118 of the Duties Act is not relevant to a consideration of the dutiability of the JVA.
The Commissioner concluded by giving the applicants the opportunity of identifying any other legislative basis to support the applicants' proposition that the JVA attracts either no duty or nominal duty.

Applicants' further submissions to the Commissioner

The applicants provided further submissions in a letter to the Commissioner dated 18 July 2018; Commissioner's bundle pages 263 266. Specifically, the applicants now stated that they considered that clauses 9.1 and 9.1.1 of the JVA do not 'constitute an agreement to transfer dutiable property' nor do they constitute a declaration of trust and that the JVA should not attract any duty; Commissioner's bundle page 264.
The applicants then submitted that the Commissioner must 'consider [s 118 of the Duties Act] when determining the rate of duty to be charged on the Trust Agreement [arising from the terms of the JVA], and to apply that rate to facilitate no duty being charged on the transfer pursuant to s 42(1) [of the Duties Act]'; Commissioner's bundle page 266.

Commissioner's decision on the objection

On 14 August 2018, the Commissioner disallowed the objection as amended. It is that decision which is the decision under review; Commissioner's bundle pages 267-271.

Details of the Commissioner's decision

The Commissioner in her disallowance of the applicants' objection first deals with the applicants' argument, raised in their representative's letter to the Commissioner dated 18 July 2018, (Commissioner's bundle pages 263 266 at page 264) that the JVA does not constitute an agreement for the transfer of dutiable property within the meaning of s 11(1)(b) of the Duties Act or a declaration of trust within the meaning of s 11(1)(c) of the Duties Act.
The Commissioner points out in this regard that the applicants' representatives wrote to the Commissioner on 21 August 2017 (Commissioner's bundle pages 83 84 at page 84) advising as follows:
In order for the amalgamation to proceed the parties have agreed that [GPW] will transfer Lot 99 to [Freedom Willetton] for the purpose of developing [the amalgamated lot] as evidenced in [the JVA] …
The Commissioner says that, even putting aside this acknowledgment of the existence of an agreement for the transfer of dutiable property, the same result is evident from the JVA itself. She considers that it is clear from clauses 8.3, 9.1 and 9.2 of the JVA, when read with the Deed of Rectification and 'viewed in combination', that one of the objects of the JVA is to govern the land amalgamation process, which includes ensuring that the two lots are in one registered proprietorship. The Commissioner says that the language used in those clauses evidences an agreement to transfer the legal interest in Lot 99 from GPW to Freedom Willetton.
The Commissioner thus concludes that the JVA is an agreement for the transfer of a legal interest in Lot 99 and that the JVA is therefore a dutiable transaction.
The Commissioner says that a transfer of land or an interest in land in Western Australia is also a dutiable transaction for which duty can be imposed.
However, the Commissioner says, where a transfer is in conformity with an agreement for the transfer of dutiable property and that agreement is duty endorsed (as is the case here), no duty is chargeable on the transfer of dutiable property; s 42(1) of the Duties Act. The Commissioner accepts that the criteria for this provision is satisfied and for this reason she did not charge any duty on the transfer itself.
The Commissioner then turns to the provisions of s 118 of the Duties Act. The Commissioner considers that this section does not apply in the present case, for two reasons.
First, the Commissioner considers that s 118 on its own terms applies only to a 'transfer of dutiable property' and does not apply to 'an agreement for the transfer of dutiable property'.
Second, even if the JVA does not constitute an agreement for the transfer of dutiable property and the only relevant transaction to be considered is the transfer of Lot 99 from GPW to Freedom Willetton, it is the Commissioner's view that s 118 of the Duties Act does not apply in the circumstances of this matter. The property transferred was not to be held (Commissioner's emphasis) by the transferee only as trustee and only for the person passing the interest in the property. The Commissioner says that the clear intent of GPW and Freedom Willetton was to amalgamate Lot 99 and Lot 130 'and then survey strata the amalgamated lot and sell the subdivided lots to third parties'; Commissioner's bundle page 270.

Statutory scheme

State Administrative Tribunal Act

Under s 17(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), these proceedings fall within the Tribunal's review jurisdiction.
Section 27(1) of the SAT Act provides that the review of a reviewable decision is to be by way of a hearing de novo.
Section 29(1) provides that the Tribunal, when exercising its review jurisdiction, has the functions and discretions corresponding to those exercisable by the original decision-maker.

Taxation Administration Act

Section 40(1) of the 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, when the Commissioner is considering and determining an objection, the onus of establishing that the assessment or decision to which that objection relates is invalid or incorrect lies on the taxpayer. Accordingly, a function of the Tribunal upon review is to determine whether the taxpayer has discharged that onus. However, this is to be on the basis of the material before the Tribunal, rather than on the basis of the material originally before the Commissioner; Placer Dome Inc v Commissioner of State Revenue [2017] WASCA 165 at [203].

Duties Act

Under s 10 of the Duties Act, duty is imposed on dutiable transactions.
Section 11(1) of the Duties Act provides that dutiable transactions for the purpose of the Duties Act include:
(a)a transfer of dutiable property (Duties Act s 11(1)(a));
(b)an agreement for the transfer of dutiable property, whether conditional or not (Duties Act s 11(1)(b); and
(c)a declaration of trust over dutiable property (Duties Act s 11(1)(c)).
Dutiable property for the purposes of the Duties Act includes 'land in Western Australia'; Duties Act s 15(a).
'Land' is relevantly defined to include any estate or interest in land; Duties Act s 3.
Section 42(1) of the Duties Act provides that duty is not chargeable on the transfer of dutiable property to a transferee in conformity with an agreement for the transfer of dutiable property if that agreement is duty endorsed. An agreement is 'duty endorsed' if, relevantly, the agreement is endorsed by the Commissioner to indicate that the required duty has been paid in full; s 3 and s 272 of the Duties Act.
Section 118 of the Duties Act, as enacted at the relevant time, provides as follows:
(1)In this section —
trustee means a trustee of a trust, other than a unit trust scheme or a discretionary trust, and includes a trustee appointed in substitution for a trustee or a trustee appointed in addition to a trustee or trustees.
(2)Nominal duty is chargeable on a transfer of dutiable property that is —
(a)made by a transferor to a trustee to be held solely as trustee for the transferor without any change in the beneficial ownership of the dutiable property; or
(b)made by way of re transfer to the transferor, if no other person has had a beneficial interest in the property between the transfer to the trustee and the re-transfer.
(3)This section applies whether or not there has been a change in the legal description of the dutiable property.

Issues as identified by the parties

The parties agree that the issues to be determined by the Tribunal are as follows:
(1)What dutiable transactions arose from, or occurred pursuant to, the arrangement struck between the lot owners?
(2)Were those dutiable transactions chargeable with general duty or nominal duty under the Duties Act?
The applicants add a further issue, namely, where a transfer was effected pursuant to such arrangement, is the Commissioner able to avoid the operation of s 118(2)(a) of the Duties Act by not charging duty on the transfer and charging duty on the arrangement or agreement?
I consider this third 'issue' to be more in the nature of a submission.

The applicants' arguments

At the close of the hearing on 30 May 2019, it was my understanding that the applicants' position, in broad terms, was that both the JVA and the transfer of Lot 99 to Freedom Willetton were dutiable transactions but that both should attract nominal duty pursuant to s 118(2)(a) of the Duties Act. While I was aware that the applicants' representatives had submitted to the Commissioner on 18 July 2018 (Commissioner's bundle pages 263 266 at page 264) that the JVA did not constitute an agreement for the transfer of dutiable property or a declaration of trust, it appeared to me that that argument had been abandoned in subsequent correspondence with the Commissioner. It was not raised before the Tribunal, either in the applicants' SFIC, or in submissions made at the hearing of the matter.
It only became apparent that the applicants were maintaining the position that the JVA was not an agreement for the transfer of dutiable property when the applicants filed the applicants' further submissions, which the Tribunal had ordered for the purpose of dealing with another issue which arose during the hearing of the matter. In the applicants' further submissions, the applicants made the contention that 'the JVA is not an agreement for the transfer of land, as beneficial ownership of [GPW's] land does not pass to Freedom Willetton but a document that retains in [GPW] "beneficial ownership" of its land being the right to compel Freedom Willetton to upon becoming the registered proprietor hold and use the land only in accordance with the terms of the JVA'; applicants' further submissions at para 10.
I am therefore proceeding on the basis that the applicants still contend that:
•the JVA does not constitute an agreement for the transfer of dutiable property or a declaration of trust, for the reasons provided by the applicants to the Commissioner on 18 July 2018 (Commissioner’s bundle pages 263 266) and as set out above and is therefore not a dutiable transaction; and
•the transfer to Freedom Willetton is a dutiable transaction but should only attract nominal duty pursuant to s 118(2)(a) of the Duties Act.
However, I will accept it to be the applicants' position that, if the Tribunal finds that the JVA is a dutiable transaction, then both the JVA and the transfer to Freedom Willetton should only attract nominal duty pursuant to s 118(2)(a) of the Duties Act.
On the issue of whether the JVA is an agreement for the transfer of dutiable property, I have already referred at [70] to what the applicants submitted to the Commissioner in the applicants' representatives' letter to the Commissioner of 18 July 2018 and, at [96], to what the applicants say in the applicants' further submissions at para 10.
The applicants, apparently in further support of their argument that the JVA is not an agreement for the transfer of dutiable property, also contend that no consideration for the purposes of s 30 of the Duties Act passes between Freedom Willetton and GPW for Freedom Willetton to hold Lot 99 on the terms of the JVA; applicants' further submissions para 13.
The applicants conclude that the JVA is not an agreement for the transfer of dutiable property, and that the transfer of land 'meets the criteria of Section 118 of the Duties Act and is assessable for nominal duty'; applicants' further submissions para 14.
The applicants say however that if the Tribunal disagrees and finds that the JVA is a dutiable transaction, then the applicants consider that s 118(2)(a) of the Duties Act applies to an agreement for the transfer of dutiable property as well as to a transfer of dutiable property.
The applicants accept that under s 11(1) of the Duties Act, transactions which are dutiable include an agreement for the transfer of dutiable property, whether conditional or not, and a declaration of trust over dutiable property; applicants' SFIC para 49.
The applicants also accept that s 118(2)(a) of the Duties Act is in terms of a transfer and does not specify an agreement to transfer or a declaration of trust over dutiable property; applicants' SFIC para 50.
The applicants then pose this question (applicants' SFIC para 51):
If s 118(2)(a) of the Duties Act is limited to a transfer of dutiable property, and excludes an agreement for the transfer of dutiable property or a declaration of trust over dutiable property, the section has no operation.
Further, the applicants say that all trusts, other than resulting and constructive trusts and trusts arising out of legislation, are express (applicants' SFIC para 51) and that if s 118(2)(a) of the Duties Act 'does not apply to express trusts created by agreement or declaration', and the Commissioner can therefore charge duty on the agreement even though not on the transfer, then s 118(2)(a) of the Duties Act 'has no application'; applicants' SFIC para 52.
The applicants say that it is contrary to legislative intent that the Commissioner be permitted to charge no duty on the transfer and to charge duty on the antecedent arrangement or agreement, thereby evading the application of s 118(2)(a) of the Duties Act; applicants' SFIC para 72.
The applicants say that if s 118(2)(a) of the Duties Act does not apply to trusts created by agreement or declaration then it has, effectively, no application. The applicants say that this does not reflect Parliamentary intention and is not an appropriate construction of the legislation; applicants' SFIC para 73.
The applicants say that this view is supported by the amendment which was made to s 118(2)(a) of the Duties Act by s 25 of the Revenue Laws Amendment Act 2008 (WA), the effect of which was to exclude unit trust schemes and discretionary trusts from the application of that section. The applicants say that these are both varieties of express trusts which arise pursuant to an agreement or declaration of trust. The applicants say that if s 118(2)(a) of the Duties Act applies only to a transfer of dutiable property and not to an agreement for the transfer of dutiable property or a declaration of trust over dutiable property, the amendment would not have been necessary.

The applicants then turn to an analysis of the words of s 118(2)(a) of the Duties Act and the application of the section to both the JVA and the transfer of Lot 99.
The applicants accept that there are a number of decisions construing the equivalent statutory provision in Victoria, including Victoria Gardens, Yellowco, White Rock and MD Commercial Pty Ltd v Commissioner of State Revenue [2018] VCAT 333 (MD Commercial VCAT). However, the applicants consider that the equivalent legislation in Victoria, while in similar terms to the Western Australian legislation, is not in identical terms.
In any event, the applicants say, while the applicants themselves rely on these decisions to some extent (ts 28, 30 May 2019), they can all be distinguished on their facts. In Victoria Gardens, the joint venture agreement concerned provided that each parcel of land was held on trust for all three transferors. In this case, the applicants say, the JVA provides for the interest of each joint venturer in the land originally owned by that joint venturer.
White Rock and Yellowco both involved a unit trust. MD Commercial VCAT involved the establishment of two trusts as opposed to a single trust as in this case.
The applicants next turn to the phrase 'to be held' in s 118(2)(a) of the Duties Act and say that the section does not prescribe how long or how short the period of subsistence of the trust is to be. There is no requirement that the trust should end in a particular way. What is done with the property when the trust ends, the applicants say, is irrelevant to the exemption; applicants' SFIC para 54.
The applicants say that there is no requirement that on termination of the relevant trust the property is to be retransferred to the transferor; applicants' SFIC para 55.
The applicants say that the only qualification or prescription flowing from the words 'to be held', read with the phrase 'without any change in beneficial ownership' is that over the period of the duration of the trust in question, whatever that may be, the trust property is to be held:
(a)for the transferor;
(b)without any change in the pool of beneficiaries.
The applicants next consider the word 'solely'.
The applicants say that the word 'solely' is qualifying the word 'trustee'. The word 'solely' is not used to describe the duties of a trustee; applicants' SFIC para 58.
The applicants finally turn to the expression 'beneficial ownership'. The applicants, citing Hope JA (with whom Glass JA concurred) in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (1980) 1 NSWLR 510 at [16] and [18] say that although the beneficiary has an interest in trust property, the content of that interest is essentially a right to compel the trustee to hold and use its legal rights in accordance with the terms of the trust.
In s 118, the phrase 'without change in beneficial ownership' refers to the period of the subsistence of the trust. It does not refer to what is to happen on termination of the trust; White Rock at [98] and [107]; applicants' SFIC para 63.
The applicants then go on to apply this analysis to the terms of the JVA.
The applicants say that recital C of the JVA records that the development of Lot 99 and Lot 130 as a composite lot was pursuant to WAPC approval.
The applicants say that the plain, natural or common meaning of clauses 5, 9 and 11 of the JVA when read in the context of the JVA as a whole is that for the purpose of Lot 99 being developed with Lot 130 (as modified by the arrangement with the Water Corporation) as a composite lot:
(a)GPW would transfer Lot 99 to Freedom Willetton to be held on trust for GPW;
(b)GPW was entitled to share in the Profit (as defined in the JVA).
The applicants say that Freedom Willetton's sharing in profit from the sale of lots developed from Lot 99 did not confer beneficial interest in Lot 99 on Freedom Willetton.
The applicants point to clause 9.1 of the JVA which provides that the trustee is to hold Lot 99 for GPW 'for the purpose of achieving unit (sic) of title with Lot 130 as required by Landgate to implement the development as approved by WAPC on the proviso it holds Lot 130 as altered by the [transfer of land to the Water Corporation] for the purpose of the Project'; applicants' SFIC para 70.
The applicants say that the subsistence of the trust was until the sale of the property or termination of the JVA.
The applicants then turn to whether or not the exemption in s 118(2)(a) of the Duties Act is only to apply to a bare trust, as contended for by the Commissioner.
The applicants accept that there is a statement in the Explanatory Memorandum for the Revenue Laws Amendment Bill 2008 (WA) that 'this section was always intended to apply only to bare trusts, and this amendment confirms the original policy intent'. However, the applicants say that this must give way to the legislative language which does not convey any such restriction. They point out that there is nothing in s 118(2)(a) of the Duties Act which restricts the application of that subsection to a bare trust; applicants' SFIC para 78.
The applicants conclude (applicants' SFIC para 86) that:
s 118(2)(a) of the Duties Act extends, for exemption purposes, beyond a bare trust and as to that:
(a)a trustee referred to in s 118(2)(a) of the Duties Act is to hold the beneficial interest in the trust property for the transferor alone. That is, beneficial ownership is as to the transferor alone;
(b)for the purposes of s 118(2)(a) of the Duties Act there can be no change during the subsistence of the trust in the transferor's beneficial ownership. That is, the beneficial ownership pool cannot change;
(c)a trustee referred to in s 118(2)(a) of the Duties Act, however, by operation of the [Trustees Act 1962 (WA)] has the power of sale and subdivision of the trust property;
(d)all of which is met by the transfer of Lot 99 by [GPW] to Freedom Willetton;
(e)hence the transaction falls within the exemption.

Disposition

Principles of statutory construction

The applicants say that the general principles of statutory construction to be applied by the Tribunal are those set out or referred to by Buss P in Fremantle Lawyers Pty Ltd & Ors v Ivan Josip Sarich as executor of the estate of Ivan Branimir Saric [2019]WASCA48 (Fremantle Lawyers Pty Ltd), at [137] [144]. The Tribunal respectfully agrees.
The focus of statutory construction is on the text, context and purpose of the provision; Fremantle Lawyers Pty Ltd at [138].
As French CJ, Hayne, Crennan, Bell and Gageler JJ observed in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503 at [39]:
'This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text' (Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46 [47]). So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.
In SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 at [14], Kiefel CJ, Nettle and Gordon JJ said:
The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose (Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 - 382 [69] [71]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46 47 [47]). Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense (CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408). This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.
At common law (that is, independently of s 19 of the Interpretation Act 1984 (WA)), it is permissible, in construing a statutory provision, to have regard to the words used by Parliament in their legal and historical context and, if appropriate, to give them a meaning that will give effect to any purpose of the legislation that can be deduced from that context. The context includes reference to the legislative history of the provision; Fremantle Lawyers Pty Ltd at [140] (citations omitted).
However, legislative history and extrinsic materials cannot displace the meaning of statutory text. Further, the examination of legislative history and extrinsic materials is not an end to itself; Fremantle Lawyers Pty Ltd at [142] (citations omitted).
In Taylor v The Owners Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531 at [65], Gageler and Keane JJ made the following observation:
The constructional task remains throughout to expound the meaning of the statutory text, not to divine unexpressed legislative intention or to remedy perceived legislative inattention. Construction is not speculation, and it is not repair.
The context includes the existing state of the law, the history of the legislative scheme and the mischief to which the statute is directed; CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 at [408].
The purpose of legislation must be derived from the statutory text and not from any assumption about the desired or desirable reach or operation of the relevant provisions; Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 at [26]. The intended reach of a legislative provision is to be discerned from the words of the provision and not by making an a priori assumption about its purpose; Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9; (2005) 222 CLR 194 at [21].

Principles of construction of an agreement

When construing an agreement, the agreement should be construed as a whole; Australian Broadcasting Commission v Australasian Performing Rights Association Ltd [1973] HCA 36; (1973) 129 CLR 99 at 109. One may consider the language used, the surrounding circumstances known to the parties and the commercial purpose or objects to be secured by the agreement; Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at [35].
Where words in a contract are unambiguous, they are to be given their plain, natural or common meaning; Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 347.

The issues to be addressed by the Tribunal

The first issue identified by the parties is, what dutiable transactions arose from, or occurred pursuant to, the arrangement struck between the lot owners? I agree that this is the first issue to be addressed by the Tribunal.
The two documents which fall to be considered are the transfer of Lot 99 and the JVA. In that regard, I understand the parties to be in agreement, and in any event it is undoubtedly the case, that the transfer of Lot 99 to Freedom Willetton is a dutiable transaction. Accordingly, the first issue can be confined to whether or not the JVA is either an agreement for the transfer of dutiable property or a declaration of trust over dutiable property and is therefore a dutiable transaction.
If the JVA is not an agreement for the transfer of dutiable property or a declaration of trust over dutiable property, then the second issue becomes whether the transfer of Lot 99 to Freedom Willetton, being in those circumstances the only dutiable transaction, attracts nominal duty under s 118(2)(a) of the Duties Act or duty at the general rate.
If the Tribunal finds, however, that the JVA is in fact an agreement for the transfer of dutiable property, then the second issue becomes whether the JVA attracts nominal duty under s 118(2)(a) of the Duties Act or duty at the general rate.
In that case, once the agreement is duty endorsed, then there will be no duty chargeable on the transfer because the transfer is in conformity with a duty endorsed agreement for the transfer of dutiable property; s 42(1) of the Duties Act.

The first issue - is the JVA an agreement for the transfer of, or declaration of trust over, dutiable property?

The surrounding circumstances of the JVA are that:
(a)GPW was the registered proprietor of Lot 99;
(b)Freedom Willetton was the registered proprietor of the adjacent Lot 130;
(c)GPW and Freedom Willetton together in a joint venture agreed to develop Lot 99 and Lot 130 as a single lot; and
(d)GPW and Freedom Willetton had been given to understand that, to amalgamate the two lots into a single lot, the titles to those two lots had to be registered in the same name or names.
Recital C of the JVA, following the execution of the Deed of Rectification, provides that GPW and Freedom have agreed to associate themselves with each other in a joint venture for the purpose of developing Lot 99 and Lot 130 'as a composite development'.
Clause 2.3 provides that, 'for the avoidance of doubt', neither Freedom nor GPW shall, by entering into the JVA, 'acquire any proprietary interest in the other's land other than for Freedom Willetton to hold in trust Lot 99 for [GPW] to meet the Landgate requirements for there being unity of title in order to carry out the composite development …'.
Clause 8.3.4 provides that GPW will do all the things described in clause 9.2.1.
Clause 9.1.1 provides that Freedom 'is appointed to hold as agent Lot 99' for GPW 'for the purpose of achieving unity of title with Lot 130 … on the proviso it holds Lot 130 … for the purpose of the Project'.
Clause 9.2.1 provides that GPW will execute and deliver to Freedom Willetton a transfer of Lot 99.
From these surrounding circumstances, and from the language of the rectified or modified JVA as a whole, but in particular clauses 8.3.4, 9.1.1 and 9.2.1, when read with Recital C and clause 2.3, it is clearly open to me to find that the JVA constitutes an agreement between GPW and Freedom Willetton for the transfer by GPW of an estate in fee simple in Lot 99 to Freedom Willetton.
Further, this conclusion would be consistent with the applicants' representatives' advice to the Commissioner on 21 August 2017, namely that the parties had agreed that Lot 99 would be transferred to Freedom Willetton 'as evidenced in [the JVA]'; Commissioner's bundle page 84.
It would also be consistent with what the applicants' representatives told the Commissioner in their letter of 6 October 2017, namely that the agreement in clause 9.2 of the JVA is 'for the transfer of Lot 99'; Commissioner's bundle page 92.
Additionally, it would be consistent with what the applicants submitted to the Tribunal; applicants' SFIC paras 68 and 72.

Conclusion on the first issue

I find that the JVA, when construed as a whole and when the surrounding circumstances are considered, constitutes an agreement for the transfer of dutiable property and is a dutiable transaction.

The second issue - does s 118(2) of the Duties Act apply in this case?

Accordingly, the second issue is whether the JVA attracts nominal duty under s 118(2)(a) of the Duties Act or duty at the general rate.
That issue is resolved through a proper interpretation of s 118 of the Duties Act and involves a consideration of the statutory construction of that section. That means that there needs to be a consideration of the text of the section, in its context if that context assists in fixing the meaning of the text.

The text of s 118 of the Duties Act

The language of the section as it was enacted at the relevant time refers only to 'a transfer of dutiable property'. It does not expressly refer to 'an agreement for the transfer of dutiable property'.
'Transfer' in its ordinary and natural meaning requires that 'the transferor should so deal with the property in question, or an estate or interest in it, so as to divest the transferor of the relevant property, estate or interest and vest it in the transferee. The means by which this passing of property is accomplished, whether direct or indirect, may properly be described as a transfer'; Commissioner of State Revenue v Abbotts Exploration Pty Ltd (2014) 48 WAR 300 at 327.
'Transferor' is not defined and should be given its ordinary meaning. I will accept the Commissioner's conclusion as to the ordinary meaning of 'transferor', which is 'the party who passes land or an interest in land to another, whether for value or not'; Commissioner's SFIC para 75.
'Dutiable property' includes land and an interest in land in Western Australia.
'Trustee' is defined to mean a trustee of a trust, excluding a trustee of a unit trust or a discretionary trust. I will accept the Commissioner's conclusion as to the ordinary meaning of 'trustee', which is 'a person to whom property is conveyed for the benefit of another'; Commissioner's SFIC para 76.
The term 'held' is not defined and should be given its ordinary meaning. I will accept the Commissioner's conclusion as to the ordinary meaning of held. 'Held' is the past tense and past participle of 'hold' which in turn means to reserve; to retain; to set aside; to keep in a specified state; to have the ownership or use of; to keep as one's own; Commissioner's SFIC para 77.
The term 'solely' is not defined and should be given its ordinary meaning. I will accept the Commissioner's conclusion as to the ordinary meaning of 'solely', which is 'exclusively or only'; Commissioner's SFIC para 78.

The Duties Act as a whole

Dutiable transactions, as defined in s 11(1) of the Duties Act, include both a transfer of dutiable property and, as a separate and distinct dutiable transaction, an agreement for the transfer of dutiable property.
This reference to both a transfer of dutiable property and, separately, an agreement for the transfer of dutiable property indicates in my view a clear intention of the legislation that they are to be treated as separate and distinct dutiable transactions. An express reference to one, or other, or both, in the Duties Act is intentional.
Section 118 is in Chapter 2 Pt 6 of the Duties Act. Chapter 2 Pt 6 is entitled Exemptions, nominal duty and concessions and sets out, amongst other things, circumstances when nominal duty rather than general duty is chargeable on dutiable transactions.
Elsewhere in that Part, specifically s 119(3), s 119(5), s 122(2), s 124(1), s 126(1), s 126(2) and s 127(2), it is expressly provided that nominal duty is chargeable on 'a transfer of, or an agreement for the transfer of, dutiable property…'. Section 118, in contrast, specifies that nominal duty is chargeable on 'a transfer of dutiable property'.

Legislative history

The Commissioner has helpfully summarised the legislative history of s 118 of the Duties Act in the Commissioner's SFIC paras 82 to 86 and I do not understand the applicants to be disputing the accuracy of any of that history. I agree with the Commissioner's summary and will therefore simply repeat it here.
Section 118 was first enacted in 2008. It provided as follows:
(1)In this section –
'trustee' includes a trustee appointed in substitution for a trustee or a trustee appointed in addition to a trustee or trustees.
(2)Nominal duty is chargeable on a transfer of dutiable property that is –
(a)made by a transferor to a trustee to be held solely as trustee for the transferor without any change in the beneficial ownership of the dutiable property; or
(b)made by way of retransfer to the transferor, if no other person has had a beneficial interest in the property between the transfer to the trustee and the re-transfer.
(3)This section applies whether or not there has been a change in the legal description of the dutiable property.

The explanatory memorandum for the Duties Bill 2007 (WA) (at page 79) explained that cl 118 operates as follows:
This clause provides for the nominal duty to be charged on certain transfers of dutiable property to or from a trustee.
Subclause (1) provides a definition of 'trustee' for the purposes of this clause. This definition is self-explanatory.
Subclause (2) provides that nominal duty is chargeable on a transfer of dutiable property to a trustee from a transferor, where the trustee will hold the property on trust for the transferor and no other person will obtain a beneficial interest in the property.
A trustee's right of indemnity from the property does not, for the purposes of this subclause, constitute another person obtaining a beneficial interest in the property.
This subclause also allows for nominal duty to be charged on the retransfer of the dutiable property from the trustee back to the transferor of the property.
Subclause (3) provides that the clause applies irrespective of a change in the legal description of the property.
Section 118 of the Duties Act was then amended shortly thereafter by s 25 of the Revenue Laws Amendment Act 2008 (WA). The amendment was to include in the definition of 'trustee' in that section the words 'means a trustee of a trust, other than a unit trust scheme or a discretionary trust'.
The explanatory memorandum for the Revenue Laws Amendment Bill 2008 (WA) explained:
This Part of the Bill also includes two minor amendments to the Duties Act …
The second clarifies that the trustee of a unit trust scheme or discretionary trust cannot use the exemption that applies to a transfer to or from a trustee under section 118 of the Duties Act. The section was always intended to apply only to bare trusts, and this amendment confirms the original policy intent.
The explanatory memorandum goes on to say:
This clause amends section 118(1) to clarify the definition of trustee that is used for the purposes of this section.
Section 118 of the Duties Act specifies that nominal duty applies where there is a transfer to or from a trustee who is holding property solely for the transferor if certain criteria are satisfied.
It has been suggested that this provision could also extend to apply nominal duty to a transfer of dutiable property to a trustee of a unit trust that has a single unit holder.
Were this to be the case, it would present a significant opportunity for avoidance of duty, as property could be transferred into a unit trust structure for the payment of only nominal duty. Dispositions of units within the trust could then occur without the payment of duty if the landholder duty thresholds (land holding of $2 million or greater and interest acquired of 50% or greater) were not exceeded.
The provision has therefore been amended to make it clear that the provision cannot be used where the trustee is a trustee of a unit trust scheme or a discretionary trust.
Section 118 has been recently repealed and a new s 118 has been inserted; Revenue Laws Amendment Act 2019 (WA). As I said at [10], the parties filed submissions as to the relevance of this for the purpose of this proceeding. However, I am not assisted by those amendments in the interpretation of s 118 as it was enacted at the relevant time.

Judicial consideration of analogous provisions in other jurisdictions

I agree with the parties that there is no judicial commentary in Western Australia on s 118 of the Duties Act. I note though that s 35(1)(a) of the Duties Act Vic has been judicially considered. That section relevantly provides as follows:
(1)No duty is chargeable … in respect of –
(a)a transfer of dutiable property that is made by the transferor to a trustee or nominee to be held solely as trustee or nominee of the transferor, without any change in the beneficial ownership of the property; or
…
(2)A reference in subsection (1) to a change in beneficial ownership of dutiable property does not include a reference to the creation of a trustee's right of indemnity from the property.
(3)This section applies whether or not there has been a change in the legal description of the dutiable property.
The predecessor to s 35(1) was exemption (18) in Schedule 3, Heading VI of the Stamps Act Vic and it has also been judicially considered. The exemption was framed as follows:
(18)Any instrument for the conveyance of real property which is made by the transferor to a trustee or nominee to be held solely as trustee or nominee of the transferor without any change in beneficial ownership or made by way of re-transfer to such transferor.
I do not consider that the provisions of s 118 of the Duties Act are materially different to the provisions of s 35(1) of the Duties Act Vic. Section 35(1) of the Duties Act Vic has in turn been held to be not materially different to the equivalent exemption in the Stamps Act Vic; White Rock at [92]; MD Commercial Pty Ltd & Anor v Commissioner of State Revenue [2018] VSC 560 (MD Commercial VSC) at [19].
The cases where those exemptions have been considered include White Rock, MD Commercial VSC, MD Commercial VCAT, Victoria Gardens and Yellowco Five. In my view, despite the factual differences in these cases pointed out by the applicants, they should not be ignored and it is open to me to take some guidance from them in the question of construction of s 118 of the Duties Act. In particular, I consider that the following observations and conclusions drawn from these cases about the exemptions in respectively the Stamps Act Vic and the Duties Act Vic apply equally to the application of the nominal duty provisions of s 118 of the Duties Act.
For the exemption in either the Stamps Act Vic or the Duties Act Vic to apply, there are three requirements, namely that there is a transfer of property to a trustee, the property is to be held solely as trustee for the transferor and the property is to be held without any change in beneficial ownership; Yellowco Five at [541]; White Rock at [94] [102]. The same approach was taken in MD Commercial VSC.
The dutiable property transferred is 'to be held solely as trustee or nominee of the transferor'; Yellowco Five at 531. The word 'solely' imports some requirement of exclusivity; Yellowco Five at 539. The word emphasises that the transferee must take only as trustee and not otherwise and also that the property is to be held by the transferee as trustee solely for the transferor; White Rock at [94].
The words 'to be held' in the exemption 'introduce an element of futurity necessitating an enquiry whether, immediately upon the conveyance, the trustee-transferee is seen to hold the land for the future in the capacity only of trustee for the transferor'; Yellowco Five at 531.
When considering whether the exemption applies, regard is to be had not only to the transfer document but also to the deed relating to the trust, to establish the terms upon which the dutiable property is 'to be held'. As J.D. Phillips J said in Yellowco Five at 543, if those terms disclose that 'the property is to be held by the transferee as trustee for the transferor, then that is an end to the matter. It is the obligation of the trustee which requires examination and that can be determined only according to the terms of the trust document'. His Honour also said that '[a]lthough the circumstances which are relevant to the liability or not of the transfer to duty are those in existence at the time of the transfer, the terms of the exemption itself direct attention to what is to happen thereafter'; Yellowco Five at 538.
The exemption requires that the trust must be one where the dutiable property is to be held on trust for the transferor and not a trust to sell or develop the dutiable property; White Rock at [79], [103]; MD CommercialVSC at [42].
These decisions all expressly acknowledge that the exemption has a very narrow application. For example, the exemption under the Stamps Act Vic has 'very little scope' for its operation 'but that is simply a consequence of the words used by the legislature'; Yellowco Five at 532. It has 'a very narrow field of operation'; Yellowco Five at 535. The exemption under the Stamps Act Vic is 'very limited'; Victoria Gardens at [38]. The exemption under the Duties Act Vic has 'a very limited scope'; White Rock at [108]. The scope of the exemption under the Duties Act Vic is 'narrow, quite narrow'; MD Commercial VSC at [33].
In Victoria Gardens, the facts were relevantly similar to the facts in this proceeding. The transferors transferred their respective portions of land to Victoria Gardens Developments Pty Ltd (Company) to be held in trust for the transferors, subject to the terms of a joint venture agreement which provided that some of the transferors would develop the land which would then be sold or leased by the Company. The Court held that the exemption in the Stamps Act Vic did not apply. The effect of the joint venture agreement was not that the Company was holding each portion of land as trustee for the relevant transferor. The Court found that all three transferors had an interest in the whole parcel of land which was being held by the Company in trust.
Batt JA in Victoria Gardens at [38] said 'these transfers for massive development and realisation purposes are simply not the type which the exemption is designed to encompass'.
That is not to say that the exemption could never apply. However, as Fullagar J said in Yellowco Five at 532, 'the exemption requires those who would seek its protection to establish that, forthwith upon the conveyance, it does not appear that the land is to be held by the trustee upon any trusts other than a trust established solely for the transferor' (original emphasis).

Conclusion

I consider that when all the words of s 118 of the Duties Act are considered, in the context of the Duties Act as a whole, the provision for nominal duty extends to a transfer of dutiable property in the circumstances contemplated by the section, but not to an agreement for the transfer of dutiable property. The text of the section is clear and does not lend itself to being interpreted more broadly.
That is not to say that I consider that the existence of a trust deed will always deprive a transferee of the benefit of s 118 of the Duties Act. In my view, the trust can be created by the fact of the conveyance itself or by a separate instrument. However, if the trust is created by a separate trust deed, then that deed must be examined to ensure that it does not constitute an agreement for the transfer of dutiable property or another dutiable transaction.
If, however:
(a)I am wrong in my earlier finding at [157] that the JVA is a dutiable transaction; or
(b)I am wrong in finding that s 118 only applies to a transfer of dutiable property and not to an agreement for the transfer of dutiable property,
then I consider that s 118 does not apply to either the transfer of Lot 99 to Freedom Willetton or to the JVA or both, for these reasons.
For the section to apply, the transfer of dutiable property must be made by a transferor to a trustee to be held solely as trustee for the transferor without any change in the beneficial ownership of the dutiable property. In this case, I do not consider that Freedom Willetton is holding Lot 99 solely as trustee for the transferor, GPW. GPW's interest in Lot 99, following the transfer to Freedom Willetton, consists of its rights under the JVA to a portion of the sale proceeds of the subdivided lots, or a share of the sale proceeds of the entirety of the joint venture assets if the joint venture is prematurely terminated or a right to purchase Freedom Willetton's share in the joint venture in the event of a default by Freedom Willetton. There are no circumstances under which GPW is entitled to Lot 99 being retransferred to it.
Further, if GPW's rights under the JVA are not converted to cash, then GPA has an interest in the whole of the land the subject of the joint venture, not merely the land which comprises the former Lot 99. Freedom Willetton equally has the same rights and accordingly in my view it cannot be said that Freedom Willetton is holding Lot 99 solely as trustee for GPW.
In my view, Freedom Willetton's obligations under the JVA go further than holding the property for GPW. Freedom Willetton's obligations extend far beyond merely holding the land during the subsistence of the trust.
Freedom Willetton is holding Lot 99 for the purposes of the joint venture, not for GPW. Further, Freedom Willetton is amalgamating its own property with property which it is holding in trust for GPW. The land, and by that I mean the amalgamated lot, not just Lot 99, is then to be subdivided and the individual lots sold to third parties. It is difficult to find that this is consistent with the requirement, for the purposes of the exemption, that there be no change in the beneficial ownership of Lot 99. I agree with the applicants that s 118(2)(a) of the Duties Act does not prescribe how long or how short the period of subsistence of the trust is to be. There is also no requirement that the trust should end in a particular way. However, it is necessary to look at the immediate basis of the transfer at the time of the transfer and what it is at that time anticipated that could happen at some future time. In this case, Freedom Willetton, from the time of the transfer by GPW, had a duty under clause 4 of the JVA, along with GPW, to develop and secure sales of the subdivided lots and therefore the property is only held by Freedom Willetton as trustee without any change in beneficial ownership until sales of subdivided lots occur pursuant to the objectives of the joint venture.
I accept the applicants' argument that there is no requirement that the trust is a 'bare' trust. I agree that the term 'bare trust' does not appear in s 118.
I also note the applicants' argument that this interpretation of s 118 cannot apply because of the provisions of the Trustees Act1962 (WA) (Trustees Act). I accept that under the Trustees Act a trustee has the power to sell property vested in it and, where the property includes land, a power to subdivide the land. However, those powers are subject to the terms of the instrument creating the trust (s 5 of the Trustees Act) and, for the provisions of s 118 of the Duties Act to apply, these powers must be excluded.
I accept that this interpretation of s 118 could be seen to be very narrow, but nonetheless I do not accept the applicants' submission that this interpretation gives no utility to s 118 at all. In MD Commercial VSC at 30, the same question was raised. I respectfully agree with the response of Croft J at 34:
There is one core case that is clearly within the scope of the exemption: where a transferor transfers land to a trustee or nominee to be held on trust solely for the transferor, in circumstances where the terms of the trust make plain that the persons for whom the trustee holds the land cannot be altered or expanded and do not authorise any change in beneficial ownership whilst the trustee holds the property, and where the terms of the trust do not impose on the trustee any active duties or powers to develop or to sell the land. The cases have not recognised any other category of case where the exemption applies.
The Commissioner's decision upon objection in this case is that the JVA, being an agreement for the transfer of dutiable property, is chargeable with duty at the general rate. The Commissioner concluded that there is no relevant exemption provision that is applicable in this case.
The Commissioner also considered that the transfer of Lot 99 is not chargeable with duty pursuant to s 42(1) of the Duties Act because it is in conformity with an agreement for the transfer of dutiable property that is duty endorsed.
If, on the other hand, there is only one dutiable transaction, namely the transfer of Lot 99, then that transfer is chargeable with general duty as there is no relevant exemption or nominal duty provision that is applicable in this case.
I consider that the Commissioner's decision upon objection is the correct and preferable decision and that it should be affirmed.

Orders

1.The decision of the Commissioner of State Revenue upon objection is affirmed.
2.The application is dismissed.

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