Freedom Willetton Pty Ltd v Commissioner of State Revenue (WA)
[2021] WASCA 38
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: FREEDOM WILLETTON PTY LTD -v- COMMISSIONER OF STATE REVENUE [2021] WASCA 38
CORAM: BUSS P
MURPHY JA
VAUGHAN JA
HEARD: 5 NOVEMBER 2020
SUPPLEMENTARY
SUBMISSIONS : 30 NOVEMBER 2020 & 14 DECEMBER 2020
DELIVERED : 5 MARCH 2021
FILE NO/S: CACV 123 of 2019
BETWEEN: FREEDOM WILLETTON PTY LTD
First Appellant
GERALDTON PROJECT WELLS PTY LTD
Second Appellant
AND
COMMISSIONER OF STATE REVENUE
Respondent
ON APPEAL FROM:
Jurisdiction : STATE ADMINISTRATIVE TRIBUNAL
Coram: JUDGE T SHARP, DEPUTY PRESIDENT
Citation: FREEDOM WILLETTON PTY LTD AND ANOR and COMMISSIONER OF STATE REVENUE [2019] WASAT 69
File Number : CC 2286 of 2018
Catchwords:
Taxes and duties - Dutiable transaction - Agreement for the transfer of dutiable property - Transfer of dutiable property - Transfer to a trustee - Joint venture agreement for the amalgamation and subdivision of lots - Whether chargeable with nominal duty only - Turns on own facts
Legislation:
Duties Act 2000 (Vic)
Duties Act 2008 (WA), s 11(1), s 118(2)(a)
Revenue Laws Amendment Act 2008 (WA)
Revenue Laws Amendment Act 2019 (WA)
State Administrative Tribunal Act 2004 (WA)
Taxation Administration Act 2003 (WA)
Trustees Act 1962 (WA)
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
| First Appellant | : | R G Bain QC |
| Second Appellant | : | R G Bain QC |
| Respondent | : | AJ Sefton SC & R Panetta |
Solicitors:
| First Appellant | : | Chalmers Legal Studio Pty Ltd |
| Second Appellant | : | Chalmers Legal Studio Pty Ltd |
| Respondent | : | State Solicitor's Office |
Case(s) referred to in decision(s):
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
CA Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31
Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211; (2014) 48 WAR 300
Commissioner of State Revenue v OZ Minerals Ltd [2013] WASCA 239; (2013) 46 WAR 156
Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233
Commonwealth v Aurora Energy Pty Ltd [2006] FCAFC 148; (2006) 235 ALR 644
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
Freedom Willetton Pty Ltd and Anor v Commissioner of State Revenue [2019] WASAT 69
JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112
MD Commercial Pty Ltd & Anor v Commissioner of State Revenue [2019] VSCA 295
MD Commercial Pty Ltd v Commissioner of State Revenue [2018] VSC 560
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104
White Rock Properties Pty Ltd v Commissioner of State Revenue [2015] VSCA 77
JUDGMENT OF THE COURT:
Overview
The appellants, Freedom Willetton Pty Ltd (FW) and Geraldton Project Wells Pty Ltd (GPW), are parties to a joint venture agreement dated 17 August 2017 as rectified by a deed dated 18 April 2018.[1] It is convenient to refer to the joint venture agreement as rectified as the 'JVA'.
[1] BAB 1 ‑ 84.
At the time of entry into the JVA, FW and GPW owned contiguous lots in Willetton, Western Australia. FW was the registered proprietor of Lot 130 (a small portion of which was to be transferred to the Water Corporation). GPW was the registered proprietor of Lot 99. The stated intention of the parties under the JVA was to amalgamate the two lots to create a single lot. The amalgamated lot was to be developed and subdivided into numerous smaller lots which were to be sold to the public. Following entry into the JVA, to facilitate the amalgamation of the land, GPW (as transferor) transferred Lot 99 to FW (as transferee). The transfer was expressed to be pursuant to the terms of the JVA.
The JVA and the transfer of land were lodged with the respondent, the Commissioner of State Revenue, for assessment of duty under the Duties Act 2008 (WA). The appellants submitted that only nominal duty was chargeable pursuant to s 118(2)(a) of the Duties Act.
Section 118 has since been repealed and replaced.[2] At the relevant time s 118(2)(a) provided, in substance, that nominal duty was chargeable on a 'transfer of dutiable property' that was 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.
[2] Revenue Laws Amendment Act 2019 (WA) s 45. The amendments commenced in effect on 13 June 2019.
On 9 March 2018 the Commissioner issued a duty assessment notice, assessing duty on the JVA in an amount of $727,790, to which the appellants objected. The Commissioner disallowed the objection. The appellants sought review of the objection determination by the State Administrative Tribunal pursuant to s 40 of the Taxation Administration Act 2003 (WA). The Tribunal affirmed the Commissioner's objection determination and dismissed the application for review.[3]
[3] Freedom Willetton Pty Ltd and Anor v Commissioner of State Revenue [2019] WASAT 69 (primary reasons).
The present appeal is an appeal as of right from the Tribunal's decision pursuant to s 43A of the Taxation Administration Act. Broadly speaking, it raises the following issues:
1.Whether the JVA constituted an agreement for the transfer of dutiable property; and, if so, whether it was chargeable with nominal duty only on the basis that s 118(2)(a) of the Duties Act applied.
2.In the alternative, if the only dutiable transaction was the transfer of land in relation to Lot 99, whether s 118(2)(a) of the Duties Act applied such that only nominal duty was chargeable.
For the reasons that follow, the JVA constituted an agreement for the transfer of dutiable property (Lot 99) within the meaning and for the purposes of the Duties Act. Section 118(2)(a) of the Act did not apply to such an agreement for the transfer of dutiable property; the operation of s 118(2)(a), as in force on entry into the JVA, was confined to transfers of dutiable property and did not extend to an agreement for the transfer of dutiable property. The appeal should be dismissed.
Background facts
The facts were not in dispute. The hearing in the Tribunal proceeded on the facts stated in the Commissioner's statement of facts, issues and contentions, which were agreed by the appellants, together with some amplification by the appellants to which the Commissioner took no issue. The Tribunal made detailed factual findings in accordance with the parties' agreed position and the parties' respective bundles of documents.[4]
[4] Primary reasons [1] - [4], [11] - [81].
The matters stated at [1] - [5] above suffice to outline the nature of the transaction and the events that led to the appeal. It is also relevant to note the following:
1.The deed of rectification was executed after the issue of the duty assessment notice but before the issue of the Commissioner's statement of grounds. However, in the appeal the Commissioner accepted that she had proceeded to determine the objection on the premise that the JVA had been rectified and that the review in the Tribunal had effectively proceeded on the same basis.[5] Accordingly, the appeal proceeded on the basis of the terms of the JVA as rectified.[6]
2.In lodging the JVA and the transfer of land for assessment of duty, the appellants informed the Commissioner that they were special purpose vehicles established for the purpose of undertaking a group housing development on the amalgamated Lot 99 and Lot 130. The appellants stated that, while approvals had been granted for the amalgamation, Landgate required that there be only one registered proprietor in order to apply for a new certificate of title for the amalgamated lot.
3.The duty assessment notice dated 9 March 2018, as objected to, was issued having assessed the JVA as 'an agreement'. It was calculated on the basis of a valuation of $14.250 million for Lot 99. The valuation was not in dispute in the proceedings before the Tribunal.
4.The Commissioner considered that duty was not chargeable on the transfer of land in respect of Lot 99 because of the 'no double duty' provisions in s 42 of the Duties Act.
5.On 19 April 2018 the Western Australian Planning Commission gave final approval to a deposited plan which provided for the proposed amalgamation of Lot 99 and the balance of Lot 130. The resultant lots were to be known as:
(a)Lot 888 - the amalgamated lot that would eventually be registered to FW; and
(b)Lot 889 - the much smaller lot that would eventually be registered to the Water Corporation.
[5] Respondent's submissions par 1 WAB 25.
[6] Appeal ts 40.
Mention ought also be made of a number of the terms of the JVA as rectified. Given what is said at [9.1] above, we will not set out the original terms of the JVA or, for the most part, differentiate between terms as originally drafted or as rectified. We will observe, however, that recital C was deleted and substituted by the deed of rectification[7] and there were relevant alterations to cl 2.1[8] and cl 9.1.[9] Clause 1.1's definition of 'Respective Properties'[10] and cl 2.3 were also introduced by the deed of rectification.[11]
[7] GAB 3 (cl 2.1.1).
[8] Deleting the words 'procuring that the Nominee holds the Land as bare trustee for and on behalf of the Owners in their Respective Proportions and undertakes': GAB 4 (cl 2.1.9).
[9] GAB 6 (cl 2.1.16).
[10] GAB 4 (cl 2.1.8).
[11] GAB 4 - 5 (cl 2.1.10).
Recital C of the JVA provides:
[FW] and [GPW] 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 on terms recorded in this agreement and for which development approval has been sought from the Western Australian Planning Commission ('WAPC').[12]
[12] GAB 12.
Clause 2.1 recorded that FW and GPW had agreed to constitute and associate themselves with each other in a joint venture on the terms and conditions contained in the JVA for the purposes of the 'Project'. The term 'Project' was defined in cl 1.1 as meaning:
(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;
(d)for the purpose of participating in the Profit in the portions determined by clause 5.[13]
[13] GAB 17.
The term 'Respective Properties' was defined in cl 1.1 as:
'Respective Properties' means for [GPW] Lot 99 and for [FW] Lot 130 notwithstanding the creation of unity of title.[14]
[14] GAB 17.
Clause 2.3 provided:
Avoidance of Doubt
For the avoidance of doubt neither Owner shall by entering into this agreement acquire any proprietary interest in the other's land other than for [FW] 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 of the Respective Properties.[15]
The term 'Owners' was defined in cl 1.1 as FW and GPW and 'Owner' as either of them.
[15] GAB 19.
Clause 3 dealt with the relationship between the parties; they were said to be joint venturers rather than partners. Paramount objectives of the joint venture were agreed in cl 4. FW's and GPW's respective entitlements were provided for in cl 5. The entitlements of FW and GPW as owners in and to the joint venture were vested 50:50 subject to variation on the occurrence of any alienation (cl 5.1). Clause 6 provided for sale of the 'Joint Venture Assets' (which included the 'Land'). There was a specific mechanism to deal with the buy-out of a defaulting owner (cl 6.2). There were also processes for sale of the joint venture assets on termination of the joint venture (cl 6.3) and following commercial dispute between the owners (cl 6.4). Clause 7 addressed joint venture funding. The JVA also provided for certain specific obligations of the parties (cl 8), mutual covenants (cl 15), the administration of the joint venture (cl 10) and the distribution of gross sale proceeds on the settlement of the sale of each subdivided lot created and sold following the amalgamation of the Land (cl 11).
Much of the debate on appeal concerned the effect of cl 9 of the JVA. We will outline the terms of cl 9 in a moment. Before doing so we will record the effect of cl 8.3.4 and cl 21.1.4. The respondent relied on those parts of the JVA in submitting that the Tribunal was correct to construe the JVA as providing for an agreement between the appellants for the transfer of Lot 99 from GPW to FW.
Clause 8.3.4 is part of cl 8 dealing with various specific obligations of the parties. It provides that GPW will 'do all those things described in cl 9.2.1' of the JVA. As will be seen, cl 9.2.1 provides for certain acts by GPW including executing and delivering a transfer of Lot 99 to FW. So far as the relevant obligation is found in cl 9.2.1 in any event, cl 8.3.4 is of limited significance to the disposition of the appeal. That is also the case with cl 21.1.4. Clause 21.1.4 provides simply that the JVA, when executed, will constitute legal, valid and binding obligations in accordance with the terms of the JVA. The status of the terms of the JVA as enforceable obligations within a legally binding agreement has never been in dispute.
Clause 9 is entitled: 'Nominee to Act as Trustee'. The 'Nominee' as defined was FW (cl 1.1). Clause 9.1 provided:
Subject to the WAPC approving the composite development of Lots 99 and 130 the Nominee [ie FW] is appointed to:
9.1.1hold as agent and trustee Lot 99 for [GPW] for the purpose of achieving unity of title with Lot 130 as required by Landgate to implement the development as approved by the WAPC on the proviso it holds Lot 130 as altered by the Water Corporation Land Swap for the purpose of the Project;
9.1.2hold Lot 130 as altered by the Water Corporation Land Swap and enter into and perform its obligations and those of the Owners under any agreements as the Management Committee may determine and each of the Owners hereby agrees and acknowledges that it will in its Respective Proportion be severally liable for the performance of the obligations imposed by this clause.[16]
[16] GAB 27.
The 'Water Corporation Land Swap' was a defined term (cl 1.1). It referred to: (1) the exchange of an approximate 99 square metre portion of Lot 130 on which was situated certain infrastructure maintained by the Water Corporation; and (2) the grant of rights over certain land by the Water Corporation including the ability to construct a suspended noise wall and a right of carriageway easement.
For the purposes of cl 9.1, GPW agreed to execute and deliver to FW, as 'Nominee', a transfer of land in relation to Lot 99 free of all encumbrances (cl 9.2.1). FW was to:
1.cause to be lodged at Landgate a plan approved by the WAPC to create, among other things, unity of title for Lot 99 and Lot 130 (cl 9.2.3.1); and
2.prepare and cause to be lodged at Landgate an application for a new certificate of title for the land created as provided for in cl 9.2.3.1 (cl 9.2.3.2).
By cl 9.2.4:
For the avoidance of doubt [FW] declares that for the purpose of this agreement it shall hold the documents described in clauses 9.2.1 [ie the transfer of land as to Lot 99 and a discharge of mortgage in relation to Lot 99] and 9.2.2 [ie a discharge of mortgage in relation to Lot 130] and the Respective Properties [ie Lot 99 and Lot 130] that make up the land for the purpose of completing the Project.[17]
[17] GAB 27.
The Tribunal's reasons provide a detailed account of the interactions between the parties in the period before the proceedings in the Tribunal. These include pre-assessment representations and exchanges of views between the parties[18] as well as the Commissioner's statement of grounds for the duty assessment.[19] It is not necessary to recount those matters. They are either subsumed within or overtaken by the parties' positions on the appeal.
[18] Primary reasons [36] - [50].
[19] Primary reasons [54] - [59].
The appellants lodged an objection on 23 April 2018. An amended objection was lodged on 1 May 2018. Among other things, the appellants contended that the arrangement under the JVA, including the transfer of land in relation to Lot 99, met the requirements of s 118(2)(a) of the Duties Act meaning that the assessment should be of nominal duty only.
On 5 July 2018, in a preliminary response, the Commissioner informed the appellants that her position continued to be that:
1.The JVA constituted either an agreement for the transfer of dutiable property or a declaration of trust over dutiable property - either characterisation resulting in the same duty outcome.
2.By operation of s 42(1) of the Duties Act, the transfer did not attract duty because it was in conformity with the JVA and the JVA was duty endorsed.
3.Section 118(2)(a) of the Duties Act was not relevant to consideration of the dutiability of the JVA. In the Commissioner's view, the relief from duty contemplated by that provision was confined to transfers of dutiable property and did not extend to agreements for the transfer of dutiable property (such as the JVA).
The appellants availed themselves of a further opportunity to support their proposition that the JVA attracted either no or nominal duty. Among other things, the appellants expanded their argument to contend that the JVA did not constitute an agreement to transfer dutiable property; nor did it constitute a declaration of trust over dutiable property.[20] Even so, the Commissioner disallowed the objection on 14 August 2018.
[20] Primary reasons [69] - [70].
The Commissioner's objection determination is restated at length in the Tribunal's reasons.[21] In summary:
1.The Commissioner considered that the JVA was an agreement for the transfer of a legal interest in Lot 99 and that the JVA was therefore a dutiable transaction.
2.The transfer of land was also a dutiable transaction. However, it was in conformity with the JVA (the JVA being an agreement for the transfer of dutiable property). Thus no duty was chargeable on the transfer itself by reason of the operation of s 42(1) of the Duties Act.
3.The Commissioner considered that s 118(2)(a) of the Duties Act did not apply for two reasons:
(a)On its terms s 118(2)(a) applies only to a 'transfer of dutiable property' and does not apply to 'an agreement for the transfer of dutiable property'. The JVA was the latter rather than the former.
(b)Even if the JVA did not constitute an agreement for the transfer of dutiable property, and the only relevant transaction was the transfer of land, the property transferred (Lot 99) was not to be held by the transferee (FW) only as trustee and only for the transferor (GPW). The Commissioner considered that the intent of the appellants was to amalgamate the two lots and then subdivide and sell to third parties.
[21] Primary reasons [72] - [81].
Statutory framework
Duties Act
Chapter 2 of the Duties Act deals with 'transfer duty'. The only provision in pt 2 of ch 2 is s 10. It provides in simple terms that duty is imposed on 'dutiable transactions'.
Subject to various exceptions in s 11(2), s 11(1) of the Duties Act lists out a series of 'dutiable transactions'. The list of dutiable transactions includes:
1.A transfer of dutiable property (s 11(1)(a)). (The term 'transfer' includes an assignment and exchange (s 9)).
2.An agreement for the transfer of dutiable property, whether conditional or not (s 11(1)(b)).
3.A declaration of trust over dutiable property (s 11(1)(c)).
Division 2 in pt 3 of ch 2 is concerned with 'dutiable property'. Land in Western Australia is dutiable property (s 15(a)). The term 'land' includes any estate or interest in land other than certain carbon rights or carbon covenants (par (a) of the s 3 definition). There is no doubt that Lot 99 was land in Western Australia, and thus dutiable property, within the meaning and for the purpose of ch 2 of the Duties Act.
There is no relevant definition of 'agreement for the transfer' of property. However, in ch 2 the term 'transfer' includes assignment and exchange (s 9). Also, unless the contrary intention appears, s 9 of the Duties Act provides that the term 'declaration of trust' means:
any declaration (other than by a will) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration;
Section 42(1) of the Duties Act provides, in effect, that duty is not chargeable on a transfer of dutiable property in conformity with an agreement for the transfer of dutiable property if the agreement is duty endorsed. An agreement is 'duty endorsed' if, among other things, the agreement is endorsed by the Commissioner to indicate that the required duty has been paid (s 272, s 273).
At the relevant time, s 118 of the Duties Act provided:
118.Transfer to and from trustee
(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.
Note for this subsection:
For example, a change in the legal description of dutiable property in the issuing of a new certificate of title following a subdivision of land.
The words 'means a trustee of a trust, other than a unit trust scheme or a discretionary trust, and' in the s 118(1) definition were inserted by a 2008 amendment to the provision.[22]
[22] Revenue Laws Amendment Act 2008 (WA) s 25.
It should be noted that the operative provision in s 118(2) is expressed to provide for nominal duty only on a 'transfer of dutiable property' rather than an agreement for the transfer of dutiable property.
Taxation Administration Act
A person dissatisfied with the Commissioner's decision on an objection may apply to the State Administrative Tribunal for a review of the decision.[23] The review is a hearing de novo.[24] The Tribunal has functions and discretions corresponding to those exercisable by the Commissioner as the original decision-maker.[25] The onus of establishing that the assessment or decision is invalid or incorrect lies on the taxpayer.[26]
[23] Taxation Administration Act2003 (WA) s 40(1).
[24] State Administrative Tribunal Act 2004 (WA) s 17(1), s 27(1).
[25] State Administrative Tribunal Act s 29(1).
[26] Taxation Administration Act s 37(2).
An appeal from a decision of the Tribunal can be brought on a question of law, of fact or of mixed law and fact without having first obtained leave to appeal.[27] The appeal is by way of rehearing.[28] In the present case, the Tribunal’s conclusions depended on reasoning from agreed facts and documents. Accordingly, in conducting the appeal this court can determine the matter without relevant disadvantage.[29] It is open to the court to draw inferences from the agreed facts.[30]
[27] Taxation Administration Act s 43A(1).
[28] Commissioner of State Revenue v OZ Minerals Ltd [2013] WASCA 239; (2013) 46 WAR 156 [89].
[29] Commissioner of State Revenue v OZ Minerals Ltd [90].
[30] Commonwealth v Aurora Energy Pty Ltd [2006] FCAFC 148; (2006) 235 ALR 644 [8].
In this case the review decision of the Tribunal was constituted by a Deputy President of the Tribunal. Accordingly, the appeal lies to the Court of Appeal.[31]
[31] State Administrative Tribunal Act s 105(3)(a)(ii).
The Tribunal's decision
The appellants applied to the Tribunal to review the Commissioner's objection decision.[32] The appellant sought orders that:[33]
1.The objection be allowed.
2.The assessment be revoked.
3.The transaction be reassessed for nominal duty pursuant to s 118(2)(a) of the Duties Act.
[32] BAB 41 - 48.
[33] BAB 45.
In their grounds, the appellants contended that the JVA did not alter GPW's beneficial ownership of Lot 99 and did not confer on FW any interest in Lot 99 other than as trustee. It was said that the words 'to be held solely as trustee' in s 118(2)(a) of the Duties Act did not lessen the powers conferred on FW by pt IV of the Trustees Act 1962 (WA). The appellants contended that, in the circumstances, the transaction recorded in the JVA satisfied the requirements of s 118(2)(a) and was assessable for nominal duty under that section.[34]
[34] BAB 48.
Accordingly, on its face the application for review was confined to the exception provided by s 118(2)(a) of the Duties Act. After completion of the hearing in the Tribunal, however, it became apparent that the appellants continued to maintain the contention that the JVA was not dutiable as an agreement for the transfer of dutiable property.[35] The Commissioner did not oppose the apparent enlargement of the issues for determination by the Tribunal.
[35] Primary reasons [97].
The Tribunal proceeded to consider the review proceedings on the basis that the appellants contended that:[36]
1.The JVA did not constitute an agreement for the transfer of dutiable property or a declaration of trust over dutiable property.
2.If, however, there was a dutiable transaction (including as to the transfer of land), it should only attract nominal duty pursuant to s 118(2)(a) of the Duties Act. In this respect it was the appellants' position that both the JVA and the transfer should only attract nominal duty.
[36] Primary reasons [98] - [99].
The Tribunal identified the issues for determination as raising two distinct areas. First, whether or not the JVA was either an agreement for the transfer of dutiable property or a declaration of trust over dutiable property. Second, and depending on the answer to the first question, whether s 118(2)(a) applied. If the JVA was neither an agreement for the transfer of dutiable property nor a declaration of trust over dutiable property, the question was whether the transfer of land attracted nominal duty under s 118(2)(a). If, however, the JVA was an agreement for the transfer of dutiable property, the question was whether the JVA attracted nominal duty under s 118(2)(a).[37]
[37] Primary reasons [93], [142] - [145]. See also the headings above Primary reasons [147], [158].
In considering the first issue, the Tribunal referred to orthodox legal principles concerning the construction of an agreement,[38] the surrounding circumstances[39] and the terms of the JVA.[40] The Tribunal concluded that, construed as a whole in light of the surrounding circumstances, the JVA constituted an agreement for the transfer of dutiable property and was a dutiable transaction.[41] This finding is challenged by ground 1 (see [51] below).
[38] Primary reasons [140] - [141].
[39] Primary reasons [147].
[40] Primary reasons [148] - [153].
[41] Primary reasons [157].
The Tribunal then turned to the question of whether the JVA attracted nominal duty under s 118(2)(a) of the Duties Act or duty at the general rate. The Tribunal first considered the text of s 118(2)(a) of the Duties Act (noting it referred only to a 'transfer of dutiable property' not 'an agreement for the transfer of dutiable property')[42] and held that:
1.The word 'transfer' in its ordinary and natural meaning was to be understood by what had been held in Commissioner of State Revenue v Abbotts Exploration Pty Ltd.[43]
2.The word 'transferor' should be given its ordinary meaning of 'the party who passes land or an interest in [property] to another, whether for value or not'.[44]
3.The word 'trustee', while defined to exclude certain types of trustee, should be given its ordinary meaning as 'a person to whom property is conveyed for the benefit of another'.[45]
4.The word 'held' should be given its ordinary meaning as the past participle of 'hold' meaning to reserve, to retain, to set aside, to keep in a specified state, to have the ownership of and to keep as one's own.[46] This finding is challenged by ground 3.1 (see [54] below).
5.The word 'solely' should be given its ordinary meaning of exclusively or only.[47]
[42] Primary reasons [160]. See also Primary reasons [167] - [170].
[43] Primary reasons [161]. See Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211; (2014) 48 WAR 300 [107].
[44] Primary reasons [162].
[45] Primary reasons [164].
[46] Primary reasons [165].
[47] Primary reasons [166].
The Tribunal had regard to the legislative history of s 118 of the Duties Act[48] and the judicial consideration of analogous provisions in Victoria.[49] One of the cases relied on by the Tribunal, MD Commercial Pty Ltd & Anor v Commissioner of State Revenue, was subsequently the subject of a successful appeal in the Court of Appeal of Victoria.[50]
[48] Primary reasons [171] - [177].
[49] Primary reasons [178] - [191]. The Tribunal referred to: Comptroller of Stamps v Yellowco Five Pty Ltd [1993] 2 VR 529; Commissioner of State Revenue v Victoria Gardens Developments Pty Ltd [2000] VSCA 233; White Rock Properties Pty Ltd v Commissioner of State Revenue [2015] VSCA 77; and MD Commercial Pty Ltd v Commissioner of State Revenue [2018] VSC 560.
[50] MD Commercial Pty Ltd & Anor v Commissioner of State Revenue [2019] VSCA 295.
In coming to its determination on the second issue for consideration, the Tribunal commenced by concluding that, on its proper construction, s 118(2)(a) of the Duties Act did not extend to an agreement for the transfer of dutiable property.[51] Initially, there was no challenge to this finding by any ground of appeal. However, as will be seen at [58] - [61] below, it appears that the appellants do seek to challenge this finding.
[51] Primary reasons [191].
The Tribunal went on to consider the position on the alternate basis that it was wrong in holding that: (1) the JVA was a dutiable transaction, being an agreement for the transfer of dutiable property; and (2) s 118(2)(a) only applies to a transfer of dutiable property, ie it did not apply to an agreement for the transfer of dutiable property. In that event the Tribunal considered that s 118(2)(a) would still not apply to the JVA or the transfer of land for Lot 99,[52] giving the following reasons:
1.FW was not holding Lot 99 solely as trustee for GPW as transferor - FW was holding Lot 99 for the purposes of the joint venture, not exclusively for GPW, there being no circumstances in which GPW was entitled to a re-transfer of Lot 99 and in which GPW's interest in Lot 99 consisted of its rights under the JVA (FW equally having the same rights).[53]
2.Moreover, FW's obligations extended far beyond merely holding the land for GPW during the subsistence of the trust. FW, from the time of the transfer by GPW, had a duty under the JVA to develop the land and secure sales of the subdivided lots. In all the circumstances this was inconsistent with the requirement, for the purposes of the exemption, that there be no change in the beneficial ownership of Lot 99.[54]
[52] Primary reasons [193], [203].
[53] Primary reasons [194] - [195], [197].
[54] Primary reasons [196] - [197].
The alternate findings referred to in [47] above are challenged by grounds 2.1, 2.2 and 2.3. In further support of the finding referred to at [47.2] above, the Tribunal, noting an argument of the appellants that such an interpretation of s 118(2)(a) of the Duties Act ought not be accepted given the broad powers of sale and subdivision conferred on a trustee by the Trustees Act,[55] held that for s 118(2)(a) to apply those powers must be excluded.[56] That finding is challenged by grounds 2.4, 4.1 and 4.2.
[55] See Primary reasons [130(c)], [199].
[56] Primary reasons [199].
The Tribunal affirmed the Commissioner's objection decision and dismissed the application for review.
Grounds of appeal
Regrettably, the grounds of appeal fail to identify the paragraph of the Tribunal's reasons where the alleged error is said to have occurred.[57] Also, inexplicably the grounds are numbered as 1.1 - 1.4 rather than the more orthodox 1 - 4. In now restating the grounds we will instead identify them as grounds 1 - 4 (corresponding with 1.1 - 1.4 respectively).
[57] Contrary to the obligation in rule 32(4)(d) of the Supreme Court (Court of Appeal) Rules 2005 (WA).
Ground 1 is that:
The learned judicial member erred in law in construing as an agreement for the transfer of dutiable property, and not as a Trust Deed, a Deed executed by the Appellants and dated 21 August 2017 as rectified by a Deed executed by the Appellants on 18 April 2018 ('Deed').
This apparently refers to the finding noted at [43] above. The nub of the appellants' contention is that the JVA was a trust deed rather than an agreement for the transfer of dutiable property.
Ground 2 is that:
The learned judicial member erred in law in concluding:
2.1.the transfer of property required by clause 9.2 of the Deed resulted in the Appellant, Freedom Willetton Pty Ltd ('Freedom Willetton') [not] holding the property transfer solely as a trustee of Geraldton Project Wells Pty Ltd ('Geraldton Project');
2.2.the obligations imposed by Deed on Freedom Willetton went (well) beyond Freedom Willetton's [sic] merely holding the property for Geraldton Project;
2.3.obliging Freedom Willetton to subdivide and sell sub-divided portions or [sic] the property, prevented the property being held by Freedom Willetton without any change in beneficial ownership; and
2.4.for s 118(2)(a) of the Duties Act ('Act') to apply, the powers of sale and subdivision conferred by the Trustees Act had to be excluded.
Ground 3 is that:
The learned judicial member erred in law in failing properly to construe, in s l18(2)(a) of the Act:
3.1the word 'held' as having its established meaning of describing how a trustee as legal owner of property, held such property, including the proprietary rights, which are not restricted or lessened by being so held, but were to be used in accordance with the obligations imposed by the trust;
3.2the expression 'beneficial interest' [sic] as having its established meaning of being the rights conferred on the cestui que trust to compel the trustee to hold property, including proprietary rights, as mandated by the trust;
3.3the expression 'without any change' as having the meaning that no one other than the cestui que trust, for the duration of the trust, had the right to compel the trustee to hold property, including proprietary rights, as mandated by the trust.
The meaning the Tribunal attributed to the term 'held' is referred to at [44.4] above. The Tribunal did not make any express findings as to the proper construction of the terms 'without any change' or 'beneficial ownership' for the purposes of s 118(2)(a) of the Duties Act. In that respect, while ground 3.2 refers to 'beneficial interest', the appellants must mean 'beneficial ownership' - that being the relevant phrase in s 118(2)(a). The term 'beneficial interest' is found in s 118(2)(b), but that was never relied on before the Tribunal.
Ground 4 is that:
The learned judicial member erred in law:
4.1in concluding that s 118(2)(a) of the Act required that the instrument of trust pursuant to which the relevant property was transferred, materially, was required to exclude the powers conferred on trustees by the Trustees Act;
4.2in failing to conclude that s 118(2)(a) of the Act, properly construed, materially did not require the instrument of trust pursuant to which the relevant property was transferred to exclude the powers conferred on trustees by the Trustees Act.
It is difficult to see what ground 4 adds to ground 2.4.
The absence of any apparent challenge to the Tribunal's finding that, on its proper construction, s 118(2)(a) of the Duties Act did not extend to an agreement for the transfer of dutiable property, was raised with the appellants at the appeal hearing.[58] Senior counsel for the appellants sought and was granted leave to apply to amend to add a new ground which alleged that the Tribunal erred in deciding that s 118(2)(a) of the Duties Act does not apply to an agreement for the transfer of dutiable property.[59] Post-appeal hearing, on 9 November 2020, the appellants made an application which in part sought to add a new ground to that effect. However, the application was also expressed as being in terms that the appellants have leave to amend by adding such a new ground in accordance with an attached minute. The attached minute did not advance a ground in the terms foreshadowed but rather went to different matters altogether.
[58] Appeal ts 2 - 3.
[59] Appeal ts 3.
The minute advances a proposed ground 1.5 as follows:
The learned judicial member, having identified (at [158] of the Reasons …) the second issue for determination to be whether the Deed attracted nominal duty under section 118(2)(a) of the Act or duty at the general rate, and having concluded (at [192) of the Reasons) that the circumstances in which section 118(2)(a) of the Act may apply could be created by a separate trust deed, erred in law that [sic] concluding clause 9 of the Deed did not create such circumstances:
1.5.1.finding (at [194] of the Reasons), contrary to the intent expressed in clause 9.1 of the Deed, the First Appellant was not holding Lot 99 solely as trustee for the Second Appellant;
1.5.2.finding (at [195] of the Reasons), contrary to the intent expressed in clause 9.1 of the Deed, if the rights of the Second Appellant under the Deed were not converted to cash, then each of the Appellants held an interest in the whole of the land as amalgamated;
1.5.3.finding (at [197] of the Reasons), contrary to the intent expressed in clause 9.1 of the Deed, the First Appellant was not holding Lot 99 on trust for the Second Appellant within the compass of s 118(2)(a) of the Act:
(i)because of future amalgamation of the Appellants' respective properties; and
(ii)notwithstanding finding that:
'... 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'; and
1.5.4.finding (at [199] of the Reasons), contrary to the intent expressed in clause 9.1, for Lot 99 to be held solely for the First Appellant the powers conferred upon the First Appellant as trustee by the Trustees Act 1962 (WA) had to be excluded.
Proposed ground 1.5 repeats or overlaps with the challenges made to the Tribunal's findings as previously made in grounds 2.1 and 2.2 (proposed grounds 1.5.1 and 1.5.2), grounds 2.3 and 3 (proposed ground 1.5.3) and grounds 2.4 and 4 (proposed ground 1.5.4). Leave to amend in terms of the minute should be refused for two reasons. First, proposed ground 1.5 is duplicitous. Second, proposed ground 1.5 is outside that for which leave to apply was ordered at the appeal hearing - it does not raise the question of whether the Tribunal was in error in concluding, at [191] of the primary reasons, that on its proper construction s 118(2)(a) of the Duties Act does not extend to an agreement for the transfer of dutiable property.
However, ignoring the reference to the minute, the application itself did seek leave to amend:
to add a new ground which alleges that the Tribunal erred in deciding that s 118(2)(a) of the Duties Act does not apply to an agreement for the transfer of dutiable property.
We would grant leave to amend, substantially in those terms, and will refer to the new ground as 'ground 5'. Doing so is consistent with the basis on which the appeal hearing was conducted.
Disposition: Ground 1 - The Tribunal was not in error in concluding that the JVA as rectified constituted an agreement for the transfer of dutiable property
The parties' initial submissions
The appellants submitted that, properly construed, the JVA was a trust deed. The ordinary and natural meaning of the words in cl 9.1 were said to provide for a transaction whereby FW was appointed as trustee to hold Lot 99 for GPW which, to be complete, required the transfer of Lot 99 to FW as provided in cl 9.2. The transfer of Lot 99 was said to be an incident of the trust created by cl 9.1 - it being submitted, at the appeal hearing, that it was part of the one dealing.[60] Thus, according to the appellants, the JVA was not an agreement for the transfer of dutiable property.[61]
[60] Appeal ts 8.
[61] Appellants' submissions pars 26 - 27, 29 - 30 WAB 9, 10.
At the appeal hearing, senior counsel for the appellants emphasised that unity of title was an external requirement, mandated by Landgate, meaning that the transfer and trusteeship was no more than a 'ministerial necessity' or 'matter of machinery' for the purposes of the JVA.[62] The trusteeship was said to be for the 'very limited purpose' of having unity of title.[63]
[62] Appeal ts 7 - 10. See also Appeal ts 22.
[63] Appeal ts 13.
The appellants submitted, in the alternative, that to the extent cl 9.2 of the JVA expressed an agreement for GPW to transfer Lot 99 to FW, it was an agreement to transfer that met the requirements of s 118(2)(a) of the Duties Act. It was also said that as an agreement to make a transfer that met the requirements of s 118(2)(a) of the Act it was not an agreement to which s 11(1)(b) applied.[64]
[64] Appellants' submissions par 30 WAB 10.
There are conceptual difficulties with the alternate submission. First, it assumes - contrary to the finding challenged by the new ground 5 (see [61] - [62] above) - that an agreement for the transfer of dutiable property may be within s 118(2)(a) of the Duties Act. That assumption is misplaced (see [100] - [110] below). Second, it asserts that if the requirements of s 118(2)(a) are met the JVA cannot be an agreement to which s 11(1)(b) of the Act applies. That misconceives the operative effect of s 118(2). While, colloquially, it might be said that s 118(2) provides for an 'exemption', that is not an accurate description of the legal effect of s 118(2). Section 118(2) provides only that where there is a transfer of dutiable property within sub-section (2)(a) or (b) 'nominal duty is chargeable'. It does not affect the character of the underlying transaction as a dutiable transaction. To the contrary, s 118(2)(a) presupposes that such character is retained. Otherwise not even nominal duty would be chargeable.
The appellants' alternative submission inverts the order in which the relevant issues should be considered. Whether or not the JVA constituted an agreement for the transfer of dutiable property turns on the proper construction of the instrument, and the application of s 11(1)(b) of the Duties Act, rather than whether the requirements of s 118(2) of the Act were met. The alternative submission must be rejected at the outset.
The respondent, in substance, adopted the reasoning of the Tribunal. The respondent contended that the Tribunal correctly determined that the JVA constituted an agreement for the transfer of dutiable property,[65] pointing to:
1.The relevant surrounding circumstances known to the parties on entry into the JVA (ie the separate ownership of the adjacent lots, the agreement to associate in a joint venture and the understanding that to carry out the proposed composite development of the two properties Landgate required that there be unity of title).[66]
2.The commercial purpose or object of the JVA - which was said to include governing the amalgamation process to ensure that the two lots were in one registered proprietorship.[67]
3.The plain meaning of the express terms of the JVA - in particular cl 2.1, cl 2.3, cl 8.3.4, cl 9.1.1, cl 9.2 and cl 21.1.4. The respondent emphasised that cl 9.2.1 (and thus cl 8.3.4) amounted to an agreement by GPW to execute and deliver to FW, as 'Nominee', a transfer of land document of Lot 99 free of all encumbrances.[68] The transfer was said to be required before the trust contemplated by cl 9.1 could be effective.[69]
[65] Respondent's submissions par 28 WAB 29.
[66] Respondent's submissions par 29 WAB 29 - 30.
[67] Respondent's submissions par 30 WAB 30.
[68] Respondent's submissions pars 31 - 33 WAB 30; Appeal ts 28.
[69] Respondent's submissions par 34 WAB 31.
The respondent did not dispute the creation of a trust arrangement. It was said, however, that the circumstance that the obligations under cl 9.2 were specified as being for the purposes of cl 9.1 did not preclude or militate against the conclusion that there was a dutiable transaction in the nature of an agreement to transfer dutiable property.[70] Senior counsel for the respondent contended that the circumstance that the agreement was entered into to achieve unity of title, and ultimately a trust arrangement as contemplated by cl 9.1 of the JVA, did not in any way lead to a conclusion that there was not an agreement to transfer Lot 99.[71]
[70] Respondent's submissions par 35 WAB 30 - 31.
[71] Appeal ts 28.
The respondent did not, on appeal, raise any contention that the JVA was dutiable as a declaration of trust over dutiable property should it be found that it was not an agreement for the transfer of dutiable property.[72] Instead it was contended that, even if, properly construed, the JVA constituted a declaration of trust over any property, there was also a transaction by way of an agreement to transfer Lot 99 to FW.[73] There was an anterior agreement between the parties to transfer the title in Lot 99 to FW for the purposes of the joint venture.[74]
Supplementary submissions as to the proper construction of cl 9.1 of the JVA
[72] Appeal ts 40 - 41.
[73] Appeal ts 31.
[74] Appeal ts 34.
As the appellants accepted at the appeal hearing,[75] the character of the JVA for the purposes of the Duties Act is to be ascertained by determining the legal effect of the JVA at the time it was executed.
[75] Appeal ts 6.
There were, in this regard, a number of constructional issues in relation to cl 9.1 of the JVA that were not addressed in the parties' written submissions but which were raised at the appeal hearing. These included:
1.The meaning of the chapeau to cl 9.1, ie the words '[s]ubject to the WAPC approving the composite development of Lots 99 and 130'.
2.The significance, if any, of FW being referred to as 'the Nominee' within cl 9.1 (and cl 9 more generally).
3.The reference to FW, as 'Nominee', being appointed to 'hold as agent and trustee' Lot 99 for GPW for the purpose of achieving unity of title with Lot 130 as required by Landgate to implement the development as approved by the WAPC.
Questions arose as to when the office as agent and trustee commenced: was the reference to 'subject to' a condition precedent, a condition subsequent or something else? There were also questions as to what obligations, if any, arose as agent as distinct from those as trustee; and when any obligations as agent commenced and ended. Also, a discrete issue arose as to the meaning of the words 'for the purpose of'. As these issues were first ventilated at the appeal hearing, the parties were provided with an opportunity to file written supplementary submissions in relation to the proper construction of cl 9.1. It should be noted, however, that on the respondent's case none of these constructional issues mattered. None of them made any difference to the JVA's characterisation as an agreement for the transfer of property - a characterisation which relied in particular on cl 9.2.1 as read with the obligation in cl 8.3.4.[76]
[76] Appeal ts 30. See also Appeal ts 34. The respondent repeated this contention in her supplementary submissions: Respondent's supplementary submissions par 14.
The appellants' supplementary submissions were not confined to, and in many respects did not address, the constructional questions that arose as to cl 9.1 of the JVA. To the extent that the supplementary submissions exceeded the grant of leave to file supplementary submissions we have put them aside. The appellants otherwise submitted that: (1) the terms of the trust should be determined as at the time of its creation;[77] (2) the trust is limited and has the sole purpose of achieving unity of title;[78] (3) cl 9 of the JVA, dealing with the trust, must be distinguished from the administration of the joint venture in cl 10 - the trust does not deal with the development and sale of the land;[79] and (4) there was nothing in the trust which involved either party obtaining any interest in land beneficially owned by the other under a unitary legal title.[80]
[77] Appellants' supplementary submissions pars 10 - 11, 15.
[78] Appellants' supplementary submissions pars 11 - 12, 15.
[79] Appellants' supplementary submissions pars 13 - 14.
[80] Appellants' supplementary submissions par 16.
As mentioned, the appellants' supplementary submissions did not fully address the constructional questions as to cl 9.1. Accordingly, it is appropriate that we record what was advanced in this respect by senior counsel for the appellants at the appeal hearing.
The appellants rejected the proposition that the words 'subject to' in the chapeau to cl 9.1 created any condition precedent to the commencement of the agency or the creation of the trust.[81] The appellants submitted that the words 'subject to' should be read and construed as meaning 'for the purposes of' the WAPC approving.[82] Necessarily this rejected the possibility that the words 'subject to' took effect as a condition subsequent. It was accepted that the reference to 'Nominee' was nothing more than a label and of no significance in determining the character of the role given to FW.[83] As to the reference to FW holding Lot 99 'as agent', the appellants contended that there were various things under the JVA that FW could do for GPW in relation to Lot 99 as agent rather than as trustee and the phrase should not be construed as a composite expression.[84] The appellants embraced a suggestion that the word 'agent' referred to those things necessary to achieve unity of title with Lot 130 and nothing more.[85]
[81] Appeal ts 8 - 9.
[82] Appeal ts 22.
[83] Appeal ts 26.
[84] Appeal ts 15 - 16, 22 - 23.
[85] Appeal ts 25.
The respondent submitted in her supplementary submissions that on the proper construction of cl 9.1 and the JVA as a whole:[86]
1.The JVA comprises, in part, an agreement for the transfer of the whole of the property in the fee simple estate of Lot 99 to FW.
2.Upon the transfer of Lot 99 to FW a trust arose under which Lot 99 was impressed by equitable interests created by the JVA.
3.The equitable interests were in favour of both FW and GPW.
4.A trust of the same character arose in relation to Lot 130 (subject to the Water Corporation Land Swap) - the trust arising on the discharge of the mortgage in relation to Lot 130 or the discharge of the obligations under the Water Corporation Land Swap, ie on the doing of all that needed to be done for Lot 130 to be amalgamated with Lot 99.
5.The amalgamated lot, on its creation, was held on a trust of the same character for the purposes of the joint venture with entitlements as specified in the JVA and corresponding interests in equity impressed upon the estate in fee simple in favour of both FW and GPW.
[86] Respondent's supplementary submissions par 3.
At the appeal hearing, senior counsel for the respondent suggested that the reference to holding Lot 99 for GPW 'as agent' was redundant.[87] In the respondent's supplementary submissions senior counsel did not go as far. Senior counsel for the respondent stated that the purpose and effect of the inclusion of the word 'agent' was not immediately apparent. It was contended that the reference to agent had been included out of an abundance of caution to ensure that FW had authority to take all necessary steps to achieve amalgamation of Lot 99 and Lot 130.[88]
[87] Appeal ts 29.
[88] Respondent's supplementary submissions par 6.
The respondent submitted that the words 'subject to' at the commencement of cl 9.1 did not constitute a condition precedent to the trust arising. Instead, it was a condition precedent to the further performance of obligations under the JVA and the trust.[89]
Consideration
[89] Respondent's supplementary submissions par 13. Compare Appeal ts 29.
The distinction between a 'transfer' of dutiable property and an 'agreement for the transfer' of dutiable property is considered below in the context of determining ground 5 (see [101] - [108] below). The same understanding of the term 'agreement for the transfer' of dutiable property is to be applied in considering whether, properly construed, the JVA constituted an agreement for the transfer of dutiable property within s 11(1)(b) of the Duties Act.
The critical question, determinative of ground 1, is whether, on its proper construction, the JVA was an agreement for the transfer of dutiable property. There was no dispute that Lot 99 was dutiable property. Nor was it disputed that, at law, there is but one fee simple estate in land. An absolute owner does not hold two estates, one legal and one equitable; an absolute owner holds only the legal estate with all the rights and incidents that attach to that estate. Thus, where the holder of the fee simple estate in land transfers it to another to hold it on trust for the transferor, it is not correct to say that only a bare legal estate is transferred. Any equitable interests are not carved out of the legal estate, as transferred, but are engrafted onto the legal estate held by the transferee.[90]
[90] DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 [13], [15] - [16], [26] - [27].
Accordingly, ground 1 requires consideration of whether, properly construed, the JVA constituted an agreement for the transfer of Lot 99.
The parties referred to conventional authorities on the principles of contractual construction.[91] There is no need, in these reasons, to rehearse those principles. The general principles are well-established.[92] Reference need only be made to Electricity Generation Corporation v Woodside Energy Ltd,[93] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd[94] and Black Box Control Pty Ltd v Terravision Pty Ltd.[95]
[91] Appellants' submissions pars 3 - 4 WAB 6; Respondent's submissions pars 15 - 17 WAB 27.
[92] See eg the recent formulations in CA Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31 [51] ‑ [54] and JKC Australia LNG Pty Ltd v CH2M Hill Companies Ltd [No 2] [2020] WASCA 112 [67] ‑ [72].
[93] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35].
[94] Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37; (2015) 256 CLR 104 [46] ‑ [50].
[95] Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 [42].
In summary, an instrument must be construed as a whole. Meaning is to be determined objectively by reference to text, context and purpose. The meaning of the provisions of the JVA is to be determined by what a reasonable business person would have understood the terms to mean having regard to the text, context and purpose of the JVA. In that respect, the JVA is to be construed so as to avoid it making commercial nonsense or working commercial inconvenience. Moreover, the JVA should be construed practically, so as to better give effect to its purpose. As the JVA underpins a commercial arrangement, it is inappropriate to adopt a narrow or pedantic approach to its construction.
The background to the JVA is that:
1.FW was the registered proprietor of Lot 99; and GPW was the registered proprietor of the adjoining Lot 130.[96]
2.FW and GPW had agreed to associate themselves in a joint venture for the purpose of developing Lot 99 and Lot 130 as a composite development.[97]
3.Landgate required that there be 'unity of title' (ie a single certificate of title) in order to carry out the composite development of Lot 99 and Lot 130.[98]
[96] JVA, recitals A and B and sch 1 GAB 12.
[97] JVA, recital C GAB 12.
[98] JVA, cl 2.3, cl 9.1.1 GAB 19, 27.
By the JVA, the parties agreed to constitute themselves as a joint venture on the terms and conditions contained in the agreement for the purposes of the 'Project' (cl 2.1). This included entering into contracts of sale of the subdivided lots forming part of the land created from Lot 99 and Lot 130, as developed, and participating in profit in portions determined by cl 5 (see cl 1.1 definitions of 'Project', 'Lot' and 'Land'; see also cl 4.1.7). The parties agreed that, as at the date of the JVA, their respective entitlements in and to the 'Joint Venture Assets' (which included the 'Land', ie the parcel to be created from Lots 99 and 130 in accordance with cl 9.2) were vested 50:50 as between FW and GPW - that proportion being subject to possible variation on any alienation (cl 5.1).
The JVA provides that:
1.Neither party shall by entering into the agreement acquire any proprietary interest in the other's land (other than for FW to hold in trust Lot 99 for GPW to meet the requirement that there be unity of title to carry out the composite development of Lot 99 and Lot 130) (cl 2.3).
2.FW is appointed to hold, as agent and trustee, Lot 99 for the purpose of achieving unity of title with Lot 130 to implement the development (cl 9.1).
3.For the purposes of cl 9.1:
(a)GPW agreed to execute and deliver to FW a transfer of Lot 99 free of all encumbrances (cl 9.2.1);
(b)the parties agreed that FW's solicitors would ensure that the transfer of Lot 99 was lodged at Landgate (cl 9.2.5);
(c)FW agreed to lodge at Landgate an approved plan to create unity of title as to Lot 99 and Lot 130 (excluding the land the subject of the 'Water Corporation Land Swap') and an application for a new certificate of title for the 'Land' so created (cl 9.2.3);
(d)the parties agreed to sign all documents and do all things necessary and use all reasonable endeavours to complete the matters referred to in sub-par 2 above and this sub-par 3 (cl 9.2.6).
4.FW declares that it will hold, among other things, the transfer of Lot 99, and Lots 99 and 130, for the purpose of completing the Project (cl 9.2.4) - this, as already seen, contemplates the development and sale of the subdivided lots forming part of the composite unified Land created from Lot 99 and Lot 130.
The JVA contains no express right to any re-transfer of Lot 99 to GPW.[99] Rather, as provided in cl 9, FW was to hold Lot 99 for the purpose of achieving unity of title with Lot 130; and, thereafter, the land comprised of the two properties was to be held for the purpose of completing the Project. Provision was made for possible sale of the Joint Venture Assets (including the Land) in the normal course of business before completion of the Project (cl 6.1) and on a termination of the joint venture following a party's default (cl 6.3). In each case any profit on the sale was to be distributed in accordance with the parties' respective proportionate entitlements. Otherwise, on sale of the subdivided lots forming part of the composite unified Land created from Lot 99 and Lot 130, FW was to pay out the gross proceeds of sale in the order of priority prescribed in cl 11. The balance after meeting GST, debt repayment and repayment of unpaid costs was to be divided as profit and paid to the parties in accordance with their respective proportionate entitlements (cl 11.1.7).
[99] Senior counsel for the appellants accepted as much at the appeal hearing: Appeal ts 14.
The effect of the JVA, as a whole, is that on transfer of Lot 99 FW would continue as registered proprietor of both Lot 99 and Lot 130 - and then the composite unified Land as created from Lots 99 and 130 - until the latter had been subdivided and the subdivided lots had been sold or the Project was otherwise brought to an end.
Neither cl 9.1 nor cl 9.2.4 expressly refer to FW holding the composite unified Land as created from Lots 99 and 130 on trust. It is only Lot 99, once transferred, which is specified in FW's appointment, under cl 9.1, to hold as agent and trustee. However, regard must be had to the circumstance that there is no provision for any re-transfer of Lot 99 to GPW - the distinct fee simple estate comprised in Lot 99 ceasing to exist on issue of the new certificate of title for the composite unified Land in any event - and the circumstance that the JVA provides for the joint venture parties to obtain an entitlement to share in the proceeds of sale of the composite unified Land under one of cl 6.1 (by agreement before Project completion), cl 6.3 (on termination following default) or cl 11 (following subdivision and sale of a subdivided lot). In that respect, as senior counsel for the appellants accepted at the appeal hearing,[100] FW and GPW held an equitable interest in the Joint Venture Assets as a whole - those assets including the composite unified Land as created from Lots 99 and 130.
[100] Appeal ts 21 - 22. The appellants' supplementary submissions did not address how the submission recorded at [74](4) above was advanced in light of this concession made by senior counsel for the appellants.
FW's declaration in cl 9.2.4 - that it will hold 'the Respective Properties that make up the land for the purpose of completing the Project' - must be read and construed consonantly with these matters. The legal effect of the JVA is that, from at least the creation of the composite unified Land as derived from Lots 99 and 130, that Land is held by FW on trust for the benefit of both parties (ie FW and GPW) for the purpose of its development and subdivision in accordance with the JVA. Moreover, each party has an equitable interest in the Land in accordance with their entitlements under the JVA.
Nothing in cl 2.3 of the JVA affects this conclusion.
Two things ought to be observed in relation to cl 2.3. Both arise out of the proscription that, with one exception that we will come to, neither FW nor GPW acquire a proprietary interest in the other's land by entering into the JVA. First, the reference in cl 2.3 is to the 'other's land'; it is not to the 'Land' as defined in cl 1.1, ie what we have referred to as the composite unified Land as created from Lots 99 and 130. On an ordinary and natural reading cl 2.3 speaks to Lot 99 (of which, on entry into the JVA, GPW is the registered proprietor) and Lot 130 (of which FW is the registered proprietor). Clause 2.3 does not purport to have any operation, detracting from what is otherwise the legal effect of the JVA as a whole, on the distinct fee simple estate comprised in the composite unified Land created in accordance with cl 9.2. Second, cl 2.3 refers to what is intended to be effected 'by entering into this agreement'. It does not purport to have any operation, detracting from what is otherwise the legal effect of the JVA as a whole, on the performance of the JVA - in particular, on the creation of the composite unified Land in accordance with cl 9.2.
It is, in our view, unnecessary to determine the precise legal effect of the JVA as regards Lot 99 and Lot 130 prior to creation of the composite unified Land in accordance with cl 9.2. It is enough, for present purposes, that the transfer of Lot 99 as contemplated by cl 9.1 and cl 9.2 will result, in due course on performance of the JVA, in each party holding an equitable interest in the composite unified Land as derived from Lots 99 and 130 in accordance with their entitlements under the JVA. Nor, in our view, is it necessary to determine the content of cl 9.1's reference to FW holding Lot 99 'as agent' for GPW or to determine what is meant by the words '[s]ubject to the WAPC approving the composite development of Lots 99 and 130' in cl 9.1.
The respondent's contention that the JVA, properly construed, ought to be characterised as an agreement for the transfer of dutiable property focused on the express terms of the JVA (see [68.3] above).
It is plain, in our opinion, that by the JVA, on its proper construction, GPW agreed to transfer its fee simple estate in Lot 99 to FW. That was the effect of cl 9.2.1 and cl 8.3.4 - particularly when read with cl 9.2.5 (providing for the lodgement at Landgate of the transfer in relation to Lot 99) and cl 9.1 (providing for FW to hold Lot 99 as trustee for GPW). Such a transfer was required to bring about the unity of title in relation to Lot 99 and Lot 130, as was Landgate's requirement, in order to carry out the composite development of the two properties in accordance with the JVA. No other understanding of cl 9.2.1 is possible when regard is had to cl 2.3. There, as an exception to the proscription on either party acquiring a proprietary interest in the other's land by entering into the JVA, it is confirmed that FW is to hold Lot 99 on trust for GPW. Necessarily that requires a conveyance of the fee simple estate in Lot 99 from FW to GPW. Clause 2.3 thus confirms that, by the JVA, GPW agreed to transfer its fee simple estate in Lot 99 to FW.
FW agreed, by cl 9.1, to hold Lot 99 on trust for the purposes of the joint venture created by the JVA.
The appellants seek to rely on the trust arrangement to gainsay the JVA's characterisation as an agreement for the transfer of dutiable property. It is said that the JVA was a trust deed and that the transfer of Lot 99 was simply an incident of the trust created by cl 9.1. Those submissions overlook the circumstance that the obligations under cl 9.2 - including GPW's agreement to transfer the fee simple estate in Lot 99 - are anterior to the operation of cl 9.1. Clause 9.2.1 operates for the purposes of cl 9.1. The transfer of the fee simple estate in Lot 99 was required to occur before the trust contemplated by cl 9.1 could be effective. By cl 9.2.1 and cl 8.3.4, GPW agreed to transfer the fee simple estate in Lot 99 to FW. In any event, as senior counsel for the respondent submitted, the trust arrangement - and the underlying object that there be a transfer of Lot 99 to fulfil Landgate's requirement that the parties procure unity of title - does not answer the unassailable conclusion that by the JVA, on its proper construction, GPW agreed to transfer its fee simple estate in Lot 99 to FW.
The Tribunal was correct to conclude that, properly construed, the JVA constituted an agreement for the transfer of dutiable property and was a dutiable transaction. The JVA provided, in part, for GPW's agreement to transfer the fee simple estate in Lot 99 to FW. Ground 1 should be dismissed.
Disposition: Ground 5 - The Tribunal was not in error in concluding that s 118(2)(a) did not apply to an agreement for the transfer of property
The appellants' argument in support of ground 5's proposition that s 118(2)(a) of the Duties Act applied to an agreement for the transfer of dutiable property did not rise above assertion.
The assertion has no foothold in the text of s 118. Nor is it sustainable in the context in which s 118 appears. The language of s 118(2) is clear. It prescribes that nominal duty is chargeable on 'a transfer of dutiable property' in particular circumstances. There is no mention, in s 118, of an agreement for the transfer of dutiable property. There is, throughout the Duties Act, an obvious distinction between 'a transfer of dutiable property' and 'an agreement for the transfer of dutiable property'. This commences at s 11(1)(a) and (b) where the two types of transaction are defined, separately, as dutiable transactions. There is then, throughout the Act, a continual distinction drawn between transfers and agreements for transfer. See for example s 11(2)(b), s 11(2)(c), s 28(6), s 29(1), s 35, s 42(1), (2), (4), (5), (7), (8) and (15), s 81, s 97, s 108(2)(b), s 109, s 111, s 112(1), (2), (3) and (4), s 114(1), s 115, s116(1), s 117(1)(a)(ii), s 119(3) and (5), s 122(2), s 124(1), s 126(2), s 127(2), s 134(1) and s 139(2). It is readily apparent from those provisions that Parliament stated when it intended that a provision operate alike on a transfer of property and on an agreement for the transfer of property - it did so by expressly mentioning both types of transaction.
The distinction between a transfer of dutiable property and an agreement for the transfer of dutiable property is obvious from s 42(1) of the Duties Act:
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.
Accordingly, while, ordinarily, an agreement for the transfer of dutiable property and a transfer of dutiable property are independent dutiable transactions, s 42(1) operates to prevent the imposition of double duty where a transfer is in conformity with a duty endorsed agreement for the transfer of the dutiable property.
The drafting convention throughout the Act that those provisions applying alike to transfers and agreements for transfer expressly mention both forms of transaction is obvious from s 97 of the Duties Act dealing with some transactions between spouses or de facto partners:
Duty is not chargeable on a transfer of, or an agreement for the transfer of, dutiable property where … [various conditions are satisfied].
Sections 114, 115 and 116 are particularly useful context in this respect. They appear in the same subdivision as s 118 (sub-div 1 of div 2 in pt 6 of ch 2 of the Duties Act). Each, like s 118, is concerned with nominal duty being chargeable in relation to certain trust transactions. However, unlike s 118(2), they are expressed to apply to a transfer of, or an agreement for the transfer of, dutiable property. The absence of similar language in s 118 is telling. Section 118 is confined in its operative effect to a transfer of dutiable property; it does not apply to an agreement for the transfer of dutiable property.
The different terminology of 'transfer' and 'agreement for the transfer' reflects different concepts. Often the latter will precede the former. But that is not to elide the two concepts. They are separate and distinct. For example, s 31 of the Duties Act deals with changes to consideration after an agreement for the transfer of dutiable property is entered into and before the property is transferred.
For a 'transfer':
[T]he 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.[101]
[101] Commissioner of State Revenue v Abbotts Exploration Pty Ltd [107].
An 'agreement for the transfer' of dutiable property is an agreement to effect or bring about such a transfer.
The appellants did not suggest any statutory purpose implicit in s 118 which might mean that, despite the text of s 118 and the context in which it appears, the provision applies to an agreement for the transfer of dutiable property as well as a transfer of dutiable property. Nor are we able to discern such a statutory purpose. Having regard to the text and context of s 118 we are unable to conclude that Parliament intended that it have a broader operation than that which has been expressly provided for based on an ordinary and natural reading of the provision.
The Tribunal was correct to conclude that, properly construed, s 118(2)(a) of the Duties Act did not extend to an agreement for the transfer of dutiable property. Ground 5 should be dismissed.
Unnecessary to determine the remaining grounds of appeal
Our conclusions on grounds 1 and 5 are sufficient to dispose of the appeal. It is only if, contrary to our conclusions, the JVA did not constitute an agreement for the transfer of dutiable property, or alternatively, that s 118(2)(a) may apply to an agreement for the transfer of dutiable property, that it becomes necessary to determine the remaining grounds as to the proper construction and application of s 118(2)(a) of the Duties Act.
The remaining grounds were fully argued. We have considered whether we should determine the other grounds notwithstanding that any determination is unnecessary for the proper disposition of the appeal. In our view, as a matter of judicial economy, it is appropriate to decline to determine the remaining grounds of appeal. That is especially so where: (1) s 118 has subsequently been repealed and replaced; and (2) the arguments as presented relied substantially on a Victorian line of cases concerning s 35(1)(a) of the Duties Act 2000 (Vic) and its predecessor. In circumstances where s 118 has been repealed and replaced it is preferable, in our view, that the Victorian line of cases about a Victorian statutory provision not be the subject of close analysis and possible reappraisal in this court.
Conclusion and orders
The appeal should be dismissed. We would make orders that:
1.The appellants have leave to add a new ground, to be designated as 'ground 5', that the Tribunal erred in law in deciding that s 118(2)(a) of the Duties Act 2008 (WA) does not apply to an agreement for the transfer of dutiable property.
2.The new ground 5 is taken to be included within the appellants' grounds of appeal; and further amendment, and filing and service of amended grounds of appeal, is dispensed with.
3.The appeal is dismissed.
The parties should be heard on the question of costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
OE
Associate to the Honourable Justice Vaughan
5 MARCH 2021
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