Gleeson v Commissioner of State Revenue
[2009] VSC 464
•23 October 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
VICTORIAN TAXATION APPEALS LIST
No. 8668 of 2008
| REGINALD EDWARD GLEESON | Appellant |
| v | |
| COMMISSIONER OF STATE REVENUE | Respondent |
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JUDGE: | Justice Mandie | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 April 2009 | |
DATE OF JUDGMENT: | 23 October 2009 | |
CASE MAY BE CITED AS: | Gleeson v Commissioner of State Revenue | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 464 | |
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TAXATION – whether transfer of property exempt from duty under s.34 or s.36 of the Duties Act 2000 (Vic) – whether company held property on trust for the “real purchasers” and whether the transfer was made to the “real purchasers” within the meaning of s.34 – whether property was subject to a “fixed trust” and whether the transfer was made to a beneficiary (in that capacity) within the meaning of s.36.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Dr N Orow | Quinn & Quinn |
| For the Respondent | Mr N Kotros | Solicitor for the Commissioner of State Revenue |
HIS HONOUR:
This is an appeal pursuant to s.106 of the Taxation Administration Act 1997 (Vic) instituted as a result of an objection by the appellant dated 12 March 2008 to a notice of assessment from the respondent dated 13 February 2008. The Commissioner assessed duty under the Duties Act 2000 (Vic) (“the Act”) of $105,765 on a transfer, dated 5 December 2007, of a residential property situated at 57 Black Street, Brighton (“the Property”)[1] from Regsher Pty Ltd (“Regsher”) to the appellant. The duty was assessed on a valuation of the Property in the sum of $1,923,000.
[1]Certificate of Title vol 4072 fol 338.
Facts
Regsher was incorporated on 23 July 1980 and engaged in various commercial and trading activities. Its share capital comprised two ordinary shares held by the appellant and his then wife Sheridan Myrtle Gleeson (“Sheridan”). The appellant was at all relevant times a director of Regsher and Sheridan was also a director of Regsher at all relevant times until about 1986.
In the first half of 1983, a contract of sale for the purchase of the Property for the sum of $160,000 was entered into. The funds for the deposit were provided by the appellant and Sheridan by cheque drawn on their joint bank account. The contract is not in evidence but there is no reason to suppose that the ultimate registered proprietor, Regsher, was not the purchaser named in the contract. The appellant could not remember who was named as purchaser in the contract. Settlement of the contract occurred on 27 July 1983. The sum of $113,600 was procured by a loan from Westpac Savings Bank Ltd to Regsher, secured by a mortgage over the Property from Regsher to the bank. The balance required at settlement was provided by the appellant and Sheridan. The acquisition costs (legal expenses and stamp duty) were paid by the appellant and Sheridan.
The appellant deposed that at the time of the initial purchase of the Property, “it was my understanding that Regsher…was to hold the property for myself and…Sheridan” and that “[i]t was never intended that the purchase monies and acquisition costs…were to be a gift or a loan to [Regsher].”
The Property was transferred to Regsher by the then registered proprietors, in consideration of the sum of $152,000, by instrument of transfer dated 27 July 1983. Regsher was registered as proprietor on 19 August 1983.
In or about December 1983, the appellant and Sheridan sold a jointly owned property in Carnegie for the sum of $114,000 and used the net proceeds to repay the said loan from Westpac.
The balance sheet of Regsher for the years ended 30 June 1983, 1984 and 1985 made no reference to the Property. The financial accounts of Regsher made no reference to the Property, to borrowings from Westpac or to the moneys used to fund the acquisition of the Property.
All costs associated with the holding of the Property were paid by the appellant and Sheridan (including mortgage repayments until the loan was repaid as mentioned above).
In or about late 1984, following the breakdown of their marriage, the appellant and Sheridan entered into a section 87 agreement under the Family Law Act. In evidence is an undated and unexecuted copy of that agreement which relevantly recited that Regsher was the registered proprietor of the Property which the parties agreed was valued at $190,000. The agreement relevantly provided that the appellant should pay to Sheridan the sum of $90,000, by instalments, and that, after payment of $60,000, Sheridan should sign all documents and do all things necessary to resign as director of Regsher and to transfer to the appellant any shares or other interests she might have in Regsher. A decree nisi was granted on 1 November 1985.
In fact, in or about November 1986, Sheridan transferred her share in Regsher to their son, Troy Gleeson (born on 31 October 1978), in trust for the appellant (according to the share certificate). The share held by Troy Gleeson was transferred to the appellant on 20 October 2004.
The Property had been used as the principal residence of the appellant and Sheridan and after the marriage broke down it continued to be the principal residence of the appellant and his children. The appellant paid all the costs associated with the maintenance and holding of the Property including municipal and water rates, land tax, insurance and repairs.
On or about 3 December 2003, the appellant instructed accountants to carry out a members’ voluntary winding up of Regsher and, on 15 December 2003, a resolution was passed that Regsher be wound up voluntarily. However the appellant did not proceed with the winding up because of uncertainty as to income tax consequences.
At an extraordinary general meeting of “member” (sic) of Regsher held on 17 September 2007 and attended by the appellant, it was resolved that the company be wound up voluntarily, that a liquidator be appointed and that the liquidator be authorised to distribute to the member in cash or in specie the whole or part of any assets of the company.
By instrument of transfer dated 5 December 2007 executed by the liquidator of Regsher, the Property was transferred to the appellant for a consideration stated as “a distribution in specie.”
By notice of assessment made 13 February 2008, the Commissioner assessed the transfer for duty and the appellant paid that duty.
By notice dated 12 March 2008, the appellant objected to the assessment, relevantly, for present purposes, relying upon s.34 and/or s.36 of the Act.
It was common ground on this appeal that the said assessment was correct unless the appellant could bring the transaction within the provisions of either s.34 or s.36 of the Act.
Section 34 of the Act
Section 34 of the Act relevantly provides:
(1) No duty is chargeable under this Chapter in respect of—
…
(b) a transfer of dutiable property…from an apparent purchaser to the real purchaser in a case where dutiable property…[is] vested in an apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property...
…
(2A) In this section, a reference to a real purchaser who provided the money for the purchase of the dutiable property includes a person on whose behalf the money for the purchase of the dutiable property was provided.
The appellant said that, under s.34, no duty was chargeable in respect of a transfer of dutiable property from an apparent purchaser to the real purchaser in a case where dutiable property was vested in an apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property. The appellant submitted that, on the facts, Regsher was the “apparent purchaser” and had transferred the Property to the appellant as the “real purchaser.”
The appellant submitted that the evidence showed that the Property was vested in Regsher on trust for the appellant who provided the full consideration for the purchase of the Property. The appellant submitted the Property at all times was treated as that of the appellant and Sheridan, the debt obligations were treated as their debt obligations and Regsher was nothing more than a nominal entity that existed on title. The financial statements of Regsher did not recognise the Property as an asset or the Westpac mortgage as a liability.
The appellant submitted that at the time of the purchase of the Property there was a resulting trust in favour of the appellant and Sheridan because they jointly paid or advanced the purchase price.[2] The appellant further submitted that, to the extent that Regsher had to be regarded as providing the money obtained by borrowing from the bank, that money should be regarded as having been provided on behalf of the appellant and Sheridan within the meaning of s.34(2A) of the Act, subsequently evidenced by the fact that they repaid that loan from their own funds.
[2]Citing Calverley v Green (1984) 155 CLR 242.
Alternatively, the appellant submitted that a constructive trust was imposed upon Regsher in favour of the appellant and Sheridan because it would have been unconscionable for Regsher to assert a beneficial title to the Property.[3]
[3]Citing Stephenson Nominees Pty Ltd v Official Receiver (1987) 16 FCR 536, 552, 557 per Gummow J.
Even if either of the foregoing submissions were correct, the appellant had to deal with the problem that the “real purchasers” within the meaning of s.34 of the Act were the appellant and Sheridan whereas the transfer was from the “apparent purchaser” (Regsher) to the appellant only. The appellant endeavoured to overcome this problem by referring to the effect of the section 87 agreement and saying that a “substance-based” approach should be taken, but I was unable to understand this submission, particularly given that the section 87 agreement was made some time later and that it dealt with the shares in Regsher and not with any interest in the Property.
On the other hand, the Commissioner submitted that s.34 did not apply because the appellant was not the “real purchaser” as he had not provided all of the purchase money for the acquisition of the Property by Regsher. Rather, Regsher provided the bulk of the purchase money using funds lent to it by a bank and Sheridan also appeared to have provided a portion of the purchase money. Even if there was a trust (which was denied), s.34 of the Act did not provide for apportionment in relation to the interest of the appellant as beneficial owner (if he was one).
In Calverley v Green,[4] a man and woman, living together as husband and wife, purchased a house in their joint names. They raised money on a mortgage under which they were jointly and severally liable to make repayments. It was agreed between them that the man would make the repayments and he did so. He also paid the deposit out of his own funds. They were registered as joint tenants. The relevant principles in relation to the existence of a trust in such circumstances were stated by Gibbs CJ as follows:[5]
“Where a person purchases property in the name of another, or in the name of himself and another jointly, the question whether the other person, who provided none of the purchase money, acquires a beneficial interest in the property depends on the intention of the purchaser. However, in such a case, unless there is such a relationship between the purchaser and the other person as gives rise to a presumption of advancement, i.e., a presumption that the purchaser intended to give the other a beneficial interest, it is presumed that the purchaser did not intend the other person to take beneficially. In the absence of evidence to rebut that presumption, there arises a resulting trust in favour of the purchaser. Similarly, if the purchase money is provided by two or more persons jointly, and the property is put into the name of one only, there is, in the absence of any such relationship, presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such -- not, e.g., as a loan. Consistently with these principles it has been held that if two persons have contributed the purchase money in unequal shares, and the property is purchased in their joint names, there is, again in the absence of a relationship that gives rise to a presumption of advancement, a presumption that the property is held by the purchasers in trust for themselves as tenants in common in the proportions in which they contributed the purchase money: Robinson v. Preston; Ingram v. Ingram and Crisp v. Mullings (a decision of the English Court of Appeal).
…
However, both the presumption of advancement, and the presumption of a resulting trust, may be rebutted by evidence of the actual intention of the purchaser at the time of the purchase: see Charles Marshall Pty. Ltd. v. Grimsley, at pp. 364-365. Where one person alone has provided the purchase money it is her or his intention alone that has to be ascertained. In the present case however both purchasers contributed the purchase money. The amount of $18,000 borrowed under the mortgage was provided equally by the parties, for it was lent to them jointly, on terms which made them jointly and severally liable for its repayment, and, having thus been borrowed, was applied by them in part payment of the purchase price. Where there are two purchasers, who have contributed unequal proportions, but have taken the purchase in their joint names, the intentions of both are material. Even if the parties had no common intention, the intentions of each may be proved, for the purpose of proving or negating that one intended to make a gift to the other.
…
The extent of the beneficial interests of the respective parties must be determined at the time when the property was purchased and the trust created. The fact that the mortgage debt was repaid by the appellant is therefore not relevant in determining the extent of the interests of the parties in the land, although it may be relevant on an equitable accounting between the parties.”
[4](1984) 155 CLR 242.
[5](1984) 155 CLR 242, 246-7, 251-2.
In the same case, Mason and Brennan JJ said:[6]
[6](1984) 155 CLR 242, 257-8, 262.
“The first question is whether the plaintiff was a contributor to the purchase price of the property, as the Court of Appeal found, or whether she was not, as Rath J. found…It is understandable but erroneous to regard the payment of mortgage instalments as payment of the purchase price of a home. The purchase price is what is paid in order to acquire the property; the mortgage instalments are paid to the lender from whom the money to pay some or all of the purchase price is borrowed…The payment of instalments under the mortgage was not a payment of the purchase price but a payment towards securing the release of the charge which the parties created over the property purchased. We would agree with the view expressed by the English Court of Appeal in Crisp v. Mullings, at p. 733, a case in which the material facts are not distinguishable from the present:
"The situation, in our view, is that the defendant does not establish that he alone provided the purchase-price, any more than he would have, had the whole price been provided by a joint mortgage; and the resulting trust of the whole is therefore not established."
As both parties contributed to the purchase price, there could not be a resulting trust in favour of the defendant alone. It follows that the Court of Appeal was right to allow the appeal from Rath J…When two or more purchasers contribute to the purchase of property and the property is conveyed to them as joint tenants the equitable presumption is that they hold the legal estate in trust for themselves as tenants in common in shares proportionate to their contributions unless their contributions are equal.
…
The Court of Appeal correctly took the time of the acquisition of the Baulkham Hills property as the material time for determining the beneficial interests of the parties. The evidentiary material from which the court might have drawn an inference as to the intention of the parties included their acts and declarations before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction. Evidence of those acts and declarations were admissible either for or against the party who did the act or made the declaration, but any subsequent declarations would have been admissible only as admissions against interest: Shephard v. Cartwright; Charles Marshall Pty. Ltd. v. Grimsley. In some cases it is possible to treat the concurrence of one “party with the other's payment of the mortgage instalments as an admission of the former's exclusive interest, but the circumstance attending the payment of mortgage instalments is no more than one of the relevant facts. Another relevant fact is the relationship between the parties at the time.”
In the present case, on an application of those principles, it seems that there would be a presumption that the couple did not intend Regsher to take beneficially, at least to the proportionate extent represented by their contribution to their payment of the deposit and their contribution at settlement to the balance of the purchase price. There would therefore be a resulting trust in their favour but only for an interest proportionate to their contribution to the purchase price. Further, as Regsher “provided” the sum of $113,600 by borrowing from the bank, it would seem that it would not be presumed that the couple did not intend Regsher to take beneficially, at least to that extent.
However, as the above statements of principle make clear, presumptions based upon contributions to the purchase money can be rebutted by evidence of the intention of the purchaser. In the present case, there is uncontradicted evidence from the appellant (who was a director of Regsher) that it was intended that Regsher was to hold the Property for himself and Sheridan and that it was never intended that the purchase moneys and acquisition costs were to be a gift or loan to Regsher. There was no evidence from Sheridan (the other director of Regsher) but there is no indication that her evidence would have been any different. Furthermore, even if subsequent events generally cannot be relied upon to establish the intention of the purchaser at the time of acquisition, subsequent events of some immediacy in the present case tend to corroborate or are at least consistent with the appellant’s evidence as to that intention at the time of acquisition. These events include the facts that the appellant and Sheridan paid the mortgage instalments from the time of acquisition until the loan was repaid, the loan was repaid only some six months or so after acquisition by the appellant and Sheridan selling their property in Carnegie and using the net proceeds to do so and, importantly, that the financial statements[7] of Regsher never showed the Property as an asset of the company and never showed the payments by the appellant and Sheridan as a liability of Regsher to them.
[7]Including the first set of financial statements after acquisition of the Property.
In my opinion there is sufficient evidence of the intention of Regsher, indeed of all concerned, to show, and I am satisfied, that it was intended that the appellant and Sheridan retain the beneficial ownership of the Property and that Regsher should hold the same on trust for them.
The difficulty still faced by the appellant is the submission by the Commissioner that, even if Regsher held the Property on trust for the appellant and Sheridan, s.34 of the Act does not provide for apportionment in relation to the one-half beneficial interest of the appellant if the “real purchasers” comprised both him and Sheridan.
Commissioner of State Revenue v Pattison,[8] was a case concerned with Exemption (17) of Heading VI of the Third Schedule to the Stamps Act 1958 (Vic). That exemption applied to “any instrument for the conveyance of real property from a nominee or trustee to the person beneficially entitled thereto where such person has contributed the purchase money therefore…” The taxpayer entered into a contract to purchase land and nominated a company as substitute purchaser. The taxpayer paid the purchase price and the land was transferred to the company. The company registered a two lot plan of subdivision and sold one lot to a third party and transferred the other lot to a taxpayer for a consideration expressed as “the transferee being entitled in equity.” Hansen J held that the exemption was inapplicable because the lots resulting from the subdivision did not constitute the same real property as the property from which they were subdivided and from which the purchase price was paid. He referred with approval to a case[9] in which the exemption had been held to be inapplicable because the taxpayer had not previously been beneficially entitled to the whole of the property concerned and the exemption did not permit an apportionment of the amounts paid in relation to the beneficial interest that he had in fact held and to a New South Wales case[10] to a similar effect. His Honour said:[11]
“these decisions support the view that there should be identity between the property which the nominee or trustee first purchases and then transfers, and that the beneficial owner must have paid the whole of the purchase moneys. There is no provision for apportionment based on either the proportion of the property which the transferee beneficially held or the proportion of the purchase price which the transferee paid.”
[8](2001) 3 VR 520.
[9]Extra Nominees Pty Ltd v Comptroller of Stamps (Vic) (1990) 90 ATC 2021.
[10]Triantafilis v Commisioner of Stamp Duties (NSW) (1995) 95 ATC 4655 and on appeal (1998) 98 ATC 4484.
[11](2001) 3 VR 520, 523.
The language in s.34 of the Act is of course different but I do not think that the result is different. To satisfy the requirements of s.34(1)(b) the “real purchaser” who is the transferee must be identical with the “real purchaser” for whom the property is held on trust and who initially provided the money for the purchase thereof. In the present case, that requirement is not satisfied. There is no provision for apportionment. Accordingly, the claim to an exemption under s.34 of the Act fails.
It is irrelevant, as far as s.34 is concerned, to determine what became of Sheridan’s one-half equitable interest in the Property but it is apparent that the express provisions of the section 87 agreement failed to deal with her interest in the Property. No doubt the appellant and Sheridan both assumed, although there is no evidence of a relevant communication, that, once Sheridan had transferred her share in Regsher to the appellant pursuant to the section 87 agreement, she would have relinquished any control over or interest in the Property. It may well be the case that Sheridan, as against the appellant, was thereafter estopped from contending that she had any interest in the Property; but otherwise it would seem that Regsher probably continued to be bound by the trust as originally constituted in 1983.
Section 36 of the Act
Section 36 of the Act provides:
(1) No duty is chargeable under this Chapter in respect of a transfer of dutiable property that is subject to a fixed trust (the principal trust) to a beneficiary of the trust if—
(a) the duty (if any) charged by this Act in respect of the dutiable transaction that resulted in the dutiable property becoming subject to the principal trust has been paid or the Commissioner is satisfied that the duty will be paid; and
(b) the beneficiary was a beneficiary at the relevant time; and
(c) the transfer is—
(i) to the beneficiary absolutely; or
…
(d) the dutiable value of the property transferred does not exceed the value of the beneficiary's interest in the principal trust; and
(e) the Commissioner is satisfied that the transfer is not part of a sale or other arrangement under which there exists any consideration for the transfer.
(2) If a beneficiary would be entitled to an exemption from duty under subsection (1) but for subsection (1)(d), the beneficiary is entitled to a concession from duty in respect of so much of the dutiable value of the dutiable property that does not exceed the value of the beneficiary's interest in the principal trust.
(3) Nothing in this section limits the application of the exemption in section 34.
…
(5) In this section—
fixed trust means a trust other than—
(a) a discretionary trust (within the meaning of section 36A); or
(b) a trust to which a unit trust scheme relates; or
(c) a superannuation fund (within the meaning of section 41A);
relevant time in relation to dutiable property that is subject to the principal trust, means the time at which the property first became subject to the principal trust.
The appellant submitted that:
· the Property was subject to a “fixed trust” within the meaning of s.36(1) of the Act;
· that the appellant was a beneficiary of the fixed trust when the Property became subject to the same (“the relevant time”);
· any relevant duty in respect of the dutiable transaction that resulted in the Property becoming subject to the fixed trust had been paid;
· the transfer by Regsher to him was a transfer “to a beneficiary of the trust” (the fixed trust) and was a transfer to him as “the beneficiary absolutely”;
· the dutiable value of the Property did not exceed the value of his interest as beneficiary in the fixed trust, alternatively he was entitled to a concession from duty in respect of half of the dutiable value of the Property representing his interest in the fixed trust.
On the other hand, the Commissioner submitted that there was no trust but that, if there was, it was not a “fixed trust.” The Commissioner submitted that to be a fixed trust, upon a proper construction of s.36, it had to be a trust created in writing. Further, the Commissioner submitted that the transfer from Regsher to the appellant was a transfer to the appellant qua shareholder and not qua beneficiary. Finally, and in the alternative, the Commissioner submitted that the appellant was at best entitled to a concession from duty in respect of one half of the value of the Property.
The first question is whether the trust that I have found[12] to have been created when the Property was purchased by Regsher in 1983 is a “fixed trust.” Section 36(5) defines a fixed trust to mean a trust other than a discretionary trust (within the meaning of s.36A), a trust under a unit trust scheme or a superannuation fund (within the meaning of s.41A). It might be said, on the plain words, that s.36(5) simply defines fixed trust to mean all trusts of any kind other than the three types of trust expressly excepted from the definition. Arguably, that approach gives no appropriate weight to the use of the word “fixed” or takes appropriate account of the circumstance that all of the excepted trusts would necessarily be trusts created by a written instrument.
[12]See paras [28]-[29] above.
Putting aside statutory definitions, the word “fixed” when used in relation to a trust is not a term of art. It is a word used sometimes to provide a contrast with a trust described as a “discretionary trust” and sometimes to provide a contrast with a trust described as a “flexible trust.” For example, the Macquarie Dictionary (3rd ed) defines “fixed trust” as either “a trust, the beneficiaries of which are specified in the trust instrument (as opposed to a discretionary trust)” or “a unit trust whose trust deed provides for a fixed portfolio of investments during the lifetime of the trust (opposed to flexible trust).”
In Ford & Lee: Principles of the Law of Trusts (2nd ed), the authors, in dealing with “express trusts” and under the heading “Discretionary trusts and fixed trusts,” distinguish between discretionary trusts where the acquisition by an object of an interest in property pursuant to the trust is dependent on the trustee’s discretion and trusts where objects have fixed interests.[13] In Dal Pont & Chalmers, Equity and Trusts in Australia (4th ed),[14] the authors dealing with the classification of trusts and under the heading “Express trusts,” distinguish a “fixed” trust where the beneficiaries or class of beneficiaries are ascertained and a “discretionary” trust where the trustees have a discretion to apply the income and/or capital of the trust property to the beneficiaries who have a mere expectancy.
[13]At [114].
[14]At [16.15].
The trust which I have found to be created in the present case is a “fixed” trust in the sense that the beneficial entitlements of the appellant and Sheridan were fixed and ascertained at the time of the creation of the trust. Insofar as the use of the word “fixed” in s.36(5) carries with it that connotation, it does not provide a problem for the appellant unless the definition also carries with it the implicit requirement that the trust be created or exist under a written instrument. Although that is arguable, I see no reason to import into the statutory definition a restriction that is not expressed in it. Accordingly I conclude that the trust created in 1983 in favour of the appellant and Sheridan, of which Regsher was the trustee, was a fixed trust within the meaning of s. 36(5) and that the transfer of the Property was the transfer of dutiable property that was subject to that fixed trust within the meaning of s.36(1).
The next question is whether, for the transfer to be exempt under s.36, it must be to the beneficiary qua beneficiary.
The corresponding exemption under the Stamps Act 1958 (Vic) was Exemption (10) in Heading VI of Schedule 3 to that Act which exempted from stamp duty “any instrument for the conveyance of real property that is subject to a trust to a beneficiary of the trust, if the beneficiary was a beneficiary when the real property was vested in a trustee of the trust…and the conveyance is…to the beneficiary absolutely…”
In Re Ralara Pty Ltd and Comptroller of Stamps (Vic),[15] the Administrative Appeals Tribunal of Victoria – Taxation Division (constituted by Mr G Nettle, as he then was) had to consider Exemption (10). The Tribunal considered that Exemption (10) should be construed so as to require that a conveyance, to be exempt, had to be from the trustee to the beneficiary qua beneficiary.
[15](1992) 24 ATR 1133.
In SDAEA v Commissioner Of State Revenue,[16] a trustee of a trust transferred a property to the taxpayer who was a beneficiary of that trust but the taxpayer paid $5.5M for the property. This case was concerned with s.36 of the Act, the successor provision to Exemption (10) in the previous legislation. Hollingworth J referred to the above decision of the Tribunal in Re Ralara Pty Ltd and Comptroller of Stamps (Vic) that the transfer had to be to a beneficiary in that capacity. After a consideration of the legislative history of s.36 of the Act in its then form, and despite the deletion at that time of the words “for no consideration” that had been contained in the provision as first enacted, Hollingworth J concluded that Parliament had intended to retain the requirement that the transfer be to the beneficiary qua beneficiary.
[16][2005] VSC 484.
In this case, the appellant expressly did not contest the correctness of the proposition that, under s.36, the transfer had to be to the beneficiary in that capacity. Rather, the appellant submitted that, because Regsher was a trustee of the Property, its sole duty and power was to convey the Property upon demand to the beneficiary of the trust. Although the liquidator was authorised to distribute the “property of the company,” the transfer of this Property was not within the ambit of that authority. The appellant therefore submitted that the description of the consideration in the transfer as “a distribution in specie” was a misdescription and the transfer, properly characterised, was a transfer to the appellant in his capacity as a beneficiary.
I am unable to accept the appellant’s submission. The liquidator expressly distributed the Property in specie, as part of the process of winding up the company, to the sole member of Regsher. He did not purport to transfer the Property to the appellant as a beneficiary of a trust. Indeed, even on the hypothesis that I have accepted, there were still probably two beneficiaries from the trustee’s point of view.
If I were wrong in the foregoing conclusion, because the dutiable value of the Property transferred exceeded the value of the appellant’s probable one-half interest in the principal trust (that is, under s 36(1), the fixed trust created in 1983 and continuing thereafter), s.36(2) would have been applicable to restrict the appellant’s entitlement to a concession from duty to the amount of duty applicable to that one-half interest. The fact that, on the basis of estoppel, the appellant subsequently became entitled to resist any claim by Sheridan could not have altered that consequence.
Conclusion
For the foregoing reasons, the appeal is dismissed with costs.
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CERTIFICATE
I certify that this and the 15 preceding pages are a true copy of the reasons for Judgment of Justice Mandie of the Supreme Court of Victoria delivered on 23 October 2009.
DATED this twenty third day of October 2009.
Associate
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