Gardiner v Chief Commissioner of State Revenue

[2004] NSWSC 107

Reported Decision: 59 NSWLR 549

Supreme Court

CITATION:	Gardiner v Chief Commissioner of State Revenue [2004] NSWSC 107
HEARING DATE(S):	26/02/04
JUDGMENT DATE:	3 March 2004
JUDGMENT OF:	Gzell J
DECISION:	No equitable interest arose in the plaintiff. Registration having been acquired by transmission, the instrument of transfer failed in its intended operation and became useless and the plaintiff was entitled to reassessment.
CATCHWORDS:	TAXES AND DUTIES - Stamp duties - Instrument of transfer of land under the Real Property Act 1900 in registrable form given to plaintiff by father to protect her prior to devise of land to her by will - Stamped ad valorem as a transfer - No intention to make a gift - Caveat claiming equitable interest - Whether equitable interest arose - Plaintiff obtained registration as proprietor of the land by transmission under the will - Reassessment under the Duties Act 1997, s 293(2) limited to instruments that fail in their intended operation and become useless - Whether the instrument of transfer as a means of protection had not failed in its operation
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Duties Act 1997 Real Property Act 1900 Taxation Administration Act 1996 Conveyancing Act 1919 State Revenue Legislation Amendment Act 2002
CASES CITED:	Anning v Anning (1907) 4 CLR 1049 at 1057 Corin v Patton (1990) 169 CLR at 540 Brunker v Perpetual Trustee Co (Ltd) (1937) 57 CLR 555 Costin v Costin (1997) 7 BPR 15,167 Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 Rose v Hvric (1963) 108 CLR 353 Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351
PARTIES :	Cheryl Gardiner - Plaintiff/Appellant Chief Commissioner of State Revenue - Defendant/Respondent
FILE NUMBER(S):	SC 5669/03
COUNSEL:	Mr S Y Reuben - For Plaintiff/Appellant Mr I Mescher - For Defendant/Respondent
SOLICITORS:	Cordato Partners, Solicitors The Crown Solicitor's Office

LOWER COURTJURISDICTION:	Administrative Decisions Tribunal
LOWER COURT FILE NUMBER(S):	039032
LOWER COURT JUDICIAL OFFICER :	Appeal Panel

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

WEDNESDAY 3 MARCH 2004

5669/03 CHERYL GARDINER v CHIEF COMMISSIONER OF STATE REVENUE

JUDGMENT

1 The plaintiff appealed to the Court under the Administrative Decisions Tribunal Act 1997, s 119(1) from a decision of an Appeal Panel of the Administrative Decisions Tribunal restoring a decision of the defendant that disallowed an objection against his refusal to reassess duty on an instrument of transfer of land at nil under the Duties Act 1997, s 293(2).

2 The Duties Act 1997, s 293(1) provided that an instrument that failed in its intended operation and became useless was not chargeable with duty. Section 293(2) provided that the Chief Commissioner might make a reassessment of duty in respect of such an instrument if an application was made within a stipulated period of time. The plaintiff claimed that the instrument of transfer should have been regarded by the defendant as falling within these provisions.

3 The land was owned and occupied as the residence of the plaintiff’s father. He was separated from his second wife, Margaret. He said to the plaintiff:

“Margaret is acting unstable and I am scared she may attack me again. I want to make a new will leaving Margaret out, but I want to make sure that you will get my property at St Ives when I die. I will sign a transfer of the St Ives property over to you, which you can keep to protect you until my will comes into effect.”

4 The Real Property Act 1900, s 46 provided that where land under the provisions of that Act were intended to be transferred, the proprietor should execute a transfer in the approved form. Following the conversation with the plaintiff, her father executed such an instrument of transfer acknowledging receipt of the consideration of $1 and transferring to the plaintiff an estate in fee simple in the land.

5 The land was thereafter valued and the plaintiff paid ad valorem stamp duty of $56,990 based on that value. On the same day, the plaintiff lodged a caveat under the Real Property Act 1900, s 74F prohibiting the recording of any dealing affecting her estate or interest in the land that she claimed to be an equitable estate or interest as transferee.

6 Thereafter the plaintiff’s father executed his last will by which he devised the land to the plaintiff.

7 The Real Property Act 1900, s 41 provided that no dealing, until registered in the manner provided by that Act, should be effectual to pass any estate or interest in any land under the provisions of the Act. The plaintiff did not register the transfer. She said:

“It has always been my understanding that I would take the property under the will of my father and that the transfer signed by him was to protect the disposition under his will against any claim made by his estranged second wife, whom he had not divorced prior to his death.”

8 The plaintiff’s father continued to reside on the land until shortly before his death. Probate of his last will was granted to his executor.

9 The Real Property Act 1900, s 93(1) provided that upon the death of a registered proprietor, the person claiming consequent upon the will of the proprietor to be entitled to be registered as proprietor might apply in the approved form to the Registrar-General to be registered. Section 93(3) provided that upon being satisfied with the application, the Registrar-General was to record the applicant in the Register as proprietor of the estate or interest of the deceased.

10 After the grant of probate of her father’s will, the plaintiff lodged such a form claiming entitlement as beneficiary of the will to be registered as proprietor of the estate or interest of her father in the land. The consent of the executor of his estate was endorsed on the instrument.

11 The Duties Act 1997, s 63(b) provided that duty of $10 only was chargeable in respect of a consent by a legal personal representative of a deceased person to a transmission application by a beneficiary. The transmission application was, accordingly, stamped at $10. The plaintiff was subsequently registered as proprietor. Once that happened, the instrument of transfer could no longer be registered. On that basis, the plaintiff claimed that it had failed in its intended operation and become useless and she was entitled to a reassessment under s 293(2).

12 The defendant refused to reassess the instrument of transfer and rejected the plaintiff’s notice of objection against that decision. The plaintiff chose to seek a review before the Administrative Decisions Tribunal pursuant to the Taxation Administration Act 1996, s 96(1).

13 The Administrative Decisions Tribunal concluded that, on its face, the instrument of transfer was intended to effect a transfer of the fee simple in the land: that dutiable transaction became ineffective and the plaintiff was entitled to a refund of the duty.

14 From this decision the defendant appealed to the Administrative Decisions Tribunal constituted by an Appeal Panel under the Administrative Decisions Tribunal Act 1997, s 113(1).

15 The Appeal Panel concluded that the instrument of transfer did not effect a transfer of dutiable property and there was no obligation to stamp it in the first place. The Appeal Panel also concluded that the Real Property Act 1900, s 41(1) prevented a transfer in fee simple, the parties did not intend to effect a gift and no equitable interest arose in the plaintiff. Since, according to the Appeal Panel, the intended operation of the instrument of transfer was to protect the plaintiff until her father’s will came into effect, it followed that, notwithstanding that the plaintiff did not use the instrument of transfer in any way, it did not fail in its intended operation.

16 Neither party sought to support the Appeal Panel’s conclusion that the instrument of transfer was not, initially, subject to duty.

17 Duty was charged on a transfer of dutiable property under the Duties Act 1997, s 8(1)(a). The term “transfer” was not defined other than, relevantly, to include an assignment and an exchange. “Dutiable property” was defined to include land in New South Wales under s 11(1)(a) and an interest in land under s 11(1)(l). Unlike earlier stamp duty legislation, it was the transaction and not the instrument that gave rise to the charge to duty. Section 10 provided that it was immaterial whether or not a dutiable transaction was effected by a written instrument.

18 The charge to duty arose when the transfer of dutiable property occurred under the Duties Act 1997, s 12(1). However, the legislation contained an advance collection mechanism. Section 12(2) provided that if a transfer of dutiable property was effected by a written instrument, liability for duty arose when the instrument was first executed. The duty was payable within three months of the liability for duty arising under s 16(1).

19 The advance collection mechanism was not limited to instruments of transfer. The Duties Act 1997, s 8(1)(b) charged duty on other transactions such as an agreement for sale or transfer of dutiable property. A transfer and each such other transaction was defined as a “dutiable transaction” under s 8(2). Section 9(1) provided that duty with respect to such other dutiable transactions was to be charged as if each was a transfer of dutiable property. In consequence, if a written instrument was brought into existence, the liability to duty arose on first execution under s 12(2).

20 An advance payment mechanism requires some form of relief in the event that the transfer or other transaction does not eventuate. The Duties Act 1997, s 295(3) foreshadowed such relief. First execution having been defined in the earlier parts of the section, it provided that if an instrument was ineffective by reason of the failure of execution by necessary parties, a refund of duty might be provided.

21 The Duties Act 1997, s 50 performed that function with respect to agreements for sale or transfer of dutiable property. Subject to specified conditions, s 50(1) provided that such an agreement that was rescinded or annulled was not liable to duty and s 50(2) provided that if duty had been paid, the Chief Commissioner was obliged to reassess and refund the duty. Section 293 performed a like function with respect to instruments generally.

22 By the State Revenue Legislation Amendment Act 2002, with effect from 29 November 2002, s 50A was inserted into the legislation relieving from duty, under specified conditions, a transfer that was subsequently cancelled. Section 293(4) was inserted excluding from the operation of s 293 an instrument that effected a transfer of dutiable property. Those amendments did not apply to the instant circumstances as the transactions in question occurred before the amendments took effect.

23 The question was not, therefore, whether the instrument of transfer was charged with duty upon first execution, but rather whether it was subject to reassessment under the Duties Act 1997, s 293(2) following the registration of the plaintiff as proprietor of the land under the transmission application.

24 The defendant submitted that the intended operation of the instrument of transfer was to be ascertained by determining the subjective intentions of the parties to it; the caveat revealed that intention was to create an equitable interest; the gift was complete in equity and the equitable interest came into existence when the plaintiff was armed with all she needed to effect registration of the instrument of transfer.

25 The plaintiff responded that there was no intention to make a gift; it was not perfected and no equitable interest arose; the intended operation of the instrument of transfer was to be ascertained from the face of the document; on that basis the intended operation was a transfer of the land in fee simple; that could not occur and hence the intended operation failed and the instrument of transfer became useless.

26 The instrument of transfer evidenced a prospective transfer of land by way of gift. That transfer was not perfected by registration. The question was whether an equitable interest in the land arose in the plaintiff.

27 In Anning v Anning (1907) 4 CLR 1049 at 1057, Griffith CJ took the view that a gift of land under the Torrens system was complete when the donor had done all that was necessary by executing and delivering an instrument of transfer. As Mason CJ and McHugh J said in Corin v Patton (1990) 169 CLR at 540 at 559 this proposition implicitly recognised that the donee acquired an equitable estate or interest once the transaction was complete so far as the donor was concerned.

28 On the other hand, Isaacs J in Anning at 1069 took the view that if legal title was assignable at law, a gift would be regarded as imperfect in equity unless the legal assignment was complete. The fact that the donor had done everything required was irrelevant.

29 In Brunker v Perpetual Trustee Co (Ltd) (1937) 57 CLR 555 at 599-600 Dixon J expressed the view that an intended donee cannot obtain equitable remedies against the donor compelling the donor to give legal effect to the intention to give. This view is similar to that of Isaacs J in Anning. His Honour went on to say, however, that if under the Torrens system a volunteer had an indefeasible right to registration of a transfer of land, then while before registration the donee had neither a legal title nor an equitable estate in the land, the donee was entitled to a right of a new description arising under the statute and by its exercise the donee could obtain the legal estate in the land. At 602 that right was said to arise when the acts of the donor placed the intended donee in such a position that, under the statute, the donee had the right to have the transfer registered, a right that the donor or an executor could not defeat or impair.

30 In Corin at 556, Mason CJ and McHugh J concluded that Sir Owen Dixon’s concept of a new statutory right was no longer good law. At 559 their Honours preferred the approach of Griffith CJ to that of Isaacs J in Anning and stated:

“Accordingly, we conclude it is desirable to state that the principle is that, if an intending donor of property has done everything which it is necessary for him to have done to effect a transfer of legal title, then equity will recognize the gift. So long as the donee has been equipped to achieve the transfer of legal ownership, the gift is complete in equity.”

At 560, in speaking of an instrument of transfer under the Real Property Act 1900, their Honours went on to say:

“Where a donor, with the intention of making a gift, delivers to the donee an instrument of transfer in registrable form with the certificate of title so as to enable him to obtain registration, an equity arises, not from the transfer itself, but from the execution and delivery of the transfer and the delivery of the certificate of title in such circumstances as will enable the donee to procure the vesting of the legal title in himself. Accordingly, s. 41 does not prevent the passing of an equitable estate to the donee under a completed transaction.”

31 Deane J took a similar view in Corin at 582:

“In my view, Dixon J’s judgment in Brunker should be accepted not as establishing a new kind of statutory right but as identifying the test for determining whether the stage has been reached when a gift of Real Property Act land under an unregistered memorandum of transfer is complete and effective in equity. That test is a twofold one. It is whether the donor has done all that is necessary to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor. Once that stage is reached and the gift is complete and effective in equity, the equitable interest in the land vests in the donee and, that being so, the donor is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title.”

32 These observations were followed by the Court of Appeal in this State in Costin v Costin (1997) 7 BPR 15,167. In my view, they correctly state the law.

33 In this case, there was no direct evidence that the plaintiff’s father had given her the certificate of title. However, the Administrative Decisions Tribunal at first instance concluded that if the certificate of title was not furnished to her, it was likely, on the balance of probabilities and having regard to the close relationship between the plaintiff and her father, that it was available to her.

34 It was submitted by the defendant that this was a finding of fact that could not be challenged on an appeal limited to a question of law.

35 On the other hand, I was invited by the plaintiff to set the finding aside on the basis that the Administrative Decisions Tribunal had not drawn an inference of fact but rather had stated an implication drawn from the facts.

36 While I would not have found the certificate of title was given to the plaintiff or made available to her, I am of the view that the Administrative Decisions Tribunal drew an inference of fact to that effect and did not state an implication. An implication is included in and is part of that which is expressed: an inference is something additional to what is stated (Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 at 118, Rose v Hvric (1963) 108 CLR 353 at 358). The Administrative Decisions Tribunal’s conclusion was additional to the facts stated in the evidence and was not contained in those facts. I am not prepared to set the conclusion aside. However, for the reasons expressed below, I am of the view that it does not matter whether or not the plaintiff had the certificate of title in her possession or had it available to her.

37 That fact together with the claim to a caveatable interest tend to establish that the parties to the instrument of transfer intended to confer on the plaintiff an equitable interest. But those facts must be weighed against the rest of the evidence and in that process they are, in my view, outweighed.

38 As the Appeal Panel said, the plaintiff’s father wanted her to get the property when he died and not then and there. He gave the instrument of transfer to her, not to effect any change in ownership, but in order to protect her until the will came into effect. He continued to use the land as his own until his death and the plaintiff did not regard herself as entitled to exercise any dominion over it until after probate of will had been granted. The fact that the plaintiff’s father made a new will shortly after the transaction in question in which he devised the land to the plaintiff is, in addition, powerful evidence against the proposition that the parties intended to create an equitable interest by way of gift in the plaintiff upon execution of the instrument of transfer.

39 Whether or not the plaintiff had the certificate of title in her possession or available to her, the Appeal Panel was correct in concluding that there was no intention to effect a gift and the Administrative Decisions Tribunal at first instance wrongly applied the law to the facts in concluding that the plaintiff had not discharged the onus of establishing that a gift was not perfected.

40 The intended operation of the instrument of transfer was not to create an equitable interest in the land in the plaintiff and no such equitable interest arose. The plaintiff was mistaken in claiming in the caveat that she held such an interest.

41 The defendant submitted, in the alternative, that the Appeal Panel was correct in concluding that the intended operation of the instrument of transfer was to protect the plaintiff until the will came into existence, that it did so and, in consequence, it did not fail in its intended operation.

42 The transfer was not stamped as a security. It was stamped as an instrument that would, if registered, effect a transfer of the land in fee simple.

43 In my view, the legislative purpose of the Duties Act 1997, s 293(2) was to provide relief when an instrument, stamped in advance of a transfer or other dutiable transaction it was proposed to effect, was subsequently found not to effect that transfer or other dutiable transaction.

44 Here the instrument of transfer was intended to effect a transfer of the legal title to the land if registered. It was delivered to the plaintiff on the basis that it should be registered to achieve that end, if necessary. When the extrinsic evidence is taken into account to determine the real nature of the transaction to which the instrument of transfer relates (Commissioner of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351), it is plain that what was intended by the parties was that the instrument of transfer should effect a transfer of the land by registration if a problem arose with the devise under the will. The instrument was stamped on that basis and, in my view, that was its intended operation for the purpose of the Duties Act 1997, s 293(1) and s 293(2).

45 The weight of authority supports the view that the plaintiff was entitled to register the instrument of transfer after the death of her father (Brunker at 585, Corin at 566). The plaintiff chose not to do so and to take, instead, by transmission under the will. That course having been adopted, the instrument of transfer could not operate to effect the transfer of the land.

46 There is nothing in the Duties Act 1997, s 293(1) or s 293(2) or elsewhere that limits relief to circumstances beyond the control of a party to the instrument in question. If the failure of intended operation was brought about by a party, there is no reason to deny the relief afforded by those provisions.

47 Upon registration of the plaintiff as proprietor of the land pursuant to the transmission application, the intended operation of the instrument of transfer failed and, in consequence, it became useless. The Duties Act 1997, s 293(2) was then enlivened. In my view the Appeal Panel erred in law in concluding to the contrary.

48 In my view the decision of the Appeal Panel should be set aside and the decision of the Administrative Decisions Tribunal at first instance should be restored. I will hear the parties on costs. I direct parties to bring in short minutes of orders reflecting these reasons.

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Last Modified: 03/05/2004