Landfall Pty Ltd v Chief Commissioner of State Revenue
[2012] NSWADT 270
•18 December 2012
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Landfall Pty Ltd v Chief Commissioner of State Revenue [2012] NSWADT 270 Hearing dates: 7 December 2012 Decision date: 18 December 2012 Jurisdiction: Revenue Division Before: J Block, Judicial member Decision: The decision under review is affirmed
Catchwords: Interpretation of section 55 of Duties Act - meaning of "purchase" - meaning of "money" Legislation Cited: Duties Act 1997 Cases Cited: Kidston Goldmines Limited v Commissioner of Taxation (1991) 30 FCR 77
Parrett v Secretary, Department of Family & Community Services [2002] FCA 716
Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366
Platinum Investment Management Limited v Chief Commissioner of State Revenue (No 2) (2010) 78 ATR 143, [2010] NSWSC 1
CSR Limited v Eddy (2005) 226 CLR 1, [2005] HCA 64
Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240, [2011] NSWCA 48
Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256
John v FCT (1989) 166 CLR 417;
Messenger Press Proprietary Limited v Commissioner of Taxation [2012] FCA 756
ANM Trading Pty Ltd v Commissioner of Business Franchises [1996] 2 VR 312 at 323
V.G.M Holdings Limited [1942]1 Ch. 235; ; Commissioner of Taxes (Qld) v Camphin (1937) 57 CLR 127
Commissioner of State Revenue v TEC Desert Pty Ltd [2009] WASCA 128
Trust Company Limited v Chief Commissioner of State Revenue [2007] NSWCA 255Texts Cited: Pearce and Geddes - Statutory Interpretation in Australia (4th edition) Category: Principal judgment Parties: Landfall Pty Ltd (Applicant)
Chief Commissioner of State Revenue (Respondent)Representation: Counsel
IS Young (Respondent)
Munro Lawyers (Applicant)
Crown Solicitor (Respondent)
File Number(s): 126075
REasons for decision
Part A Introduction and preliminary
The decision in respect of which the Applicant seeks review is an assessment of duty pursuant to the Duties Act 1997 ("the Act") in respect of the Custodian Trust Deed as defined in clause 14 of the Statement of Agreed Facts set out in full (except for its annexures), hereafter in these reasons.
The Tribunal had before it the documents and supplementary documents lodged pursuant to section 58 of the Administrative Decisions Act 1997; it was furnished with written submissions (referred to as "AS" and "RS" respectively) by the parties and on which it has drawn to some extent for the purposes of these reasons. The Tribunal notes that it has drawn on RS to a greater extent having regard to the manner in which the Respondent dealt with relevant and important decided cases.
The matter was argued entirely in accordance with a lengthy Statement of Agreed Facts ("SAF") received by the Tribunal on 6 December 2012. SAF includes a number of annexures; the Respondent (who is usually referred to in these reasons as "the Chief Commissioner") noted that he has reservations in respect of annexures C and I to SAF; in this context:
(a) Annexure C consists of three letters all dated 29 October 2012; the first is a letter of that date by Annabel Gunns addressed to Stephen Gunns and Annabel Gunns ATF the Gunns Superannuation Fund reading;
I acknowledge that on 30 June 2010 I made a concessional contribution of $25000 to the Gunns Superannuation Fund.'
The other two letters bear the same date and the same content except that the writer is Stephen Gunns and the amounts referred to are different. The date of the three letters is such that the contention by the Chief Commissioner that they were prepared for the purposes of this hearing is probably correct.
(b) Annexure I consists of undated unsigned and unaudited financial statements for the Superannuation Fund in respect of the period 8 June 2010 to 30 June 2010. Those financial statements were criticised by the Chief Commissioner firstly because they are undated unsigned and unaudited, secondly because they too were prepared belatedly and thirdly because they make no mention whatever of the fact that on 30 June 2010 the Superannuation Fund possessed the Promissory Note referred to hereafter in an amount of $520000, The Promissory Note was unquestionably an asset of the Superannuation Fund on 30 June 2010 and should have been reflected. The Applicant contended in reply that the financial statements are not affected, at least as to net amount, having regard to the fact that if the Promissory Note was an asset it was also a liability. The Tribunal considers that the financial statements should properly have made mention of the Promissory Note. As to why the period to which the financial statements relate was selected is not clear.
(c) In the result SAF inclusive of its annexures was accepted subject in the case of annexures C and I to weight. The Tribunal doubts whether anything very much turns on such annexures.
SAF (excluding its annexures) reads in full as follows:
1. Landfall Pty Limited ACN120566387 ("Landfall") is a corporation registered under the Corporations Act 2001 on 5 July 2006. Annabel Jane Gunns ("Annabel") is the sole shareholder and director of Landfall.
2. The Gunns Family Trust No 2 ("Gunns Trust") is a discretionary trust for the benefit of Annabel and her children with Stephen Gunns ("Stephen") established under a Discretionary Trust Deed executed on 20 July 2006 by John David Maitland as settler and Landfall as trustee. A copy of the trust deed for the Gunns Trust is annexed as Annexure "A".
3. On 5 September 2007 the Gunns Trust acquired property situated at 871 Pacific Highway Chatswood 2067, being Folio Identifier 1, 2 and 7/SP17870 ("Property")
4. The Gunns Superannuation Fund ("Superannuation Fund" is a trust established for the purpose of providing superannuation benefits for Annabel and Stephen. The Superannuation Fund was established on 8 June 2010 with Annabel and Stephen (together" Superannuation Trustees") as trustees. A copy of the trust deed and rules for the Superannuation Fund is annexed as Annexure "B".
5. The Superannuation Fund is a complying superannuation fund within the meaning of section 45 of the Superannuation Industry Supervision Act 1991 ("SIS Act")
6. On 30 June 2010 the Superannuation Trustees resolved that the Superannuation Fund would acquire an interest in the Property. That interest in the Property was resolved to be in the form of a life interest in the Property that was to be measured by the joint lives of the two children of Annabel and Stephen , namely William Gunns and Oliver Gunns ("Life Interest")
7. The consideration for the acquisition of the Life Interest was agreed to be $575000 ("Purchase Price"). The Purchase Price to be paid by the Superannuation Fund was to be funded by contributions by Annabel and Stephen as members of the Superannuation Fund in the amount of $520000 and a vendor provided limited recourse loan of $55000. Copies of letters from Annabel and Stephen to the Superannuation Fund acknowledging their making contributions to the Superannuation Fund are annexed as Annexure "C".
8. The Purchase Price to be paid by the Superannuation Fund was determined by applying a life interest factor as published by the Office of State Revenue in South Australia for a male child of 3 years (being a factor of 0.95913) to the market value of the Property being $600000. A copy of the table of life interest factors published by the Office of State Revenue of South Australia is annexed as Annexure "D".
9. On 30 June 2010 the Superannuation Trustees resolved as follows:
(a) The Superannuation Fund would acquire the Life Interest for the Purchase Price,
(b) The funds for the acquisition were to be:
(i) $450000 by way of a non-concessional contribution to the Superannuation Fund by Stephen,
(ii) $45000 by way of a concessional contribution to the Superannuation Fund by Stephen,
(iii) $25000 by way of a concessional contribution to the Superannuation Fund by Annabel,
(iv) $55000 to be borrowed from the Gunns Trust on a limited recourse basis in accordance with section 67A of the SIS Act.,
10. A copy of the resolution of the Superannuation Trustees dated 30 June 2012 is annexed as Annexure "E".
11. On 30 June 2010 Landfall resolved to acquire the Life Interest and hold it as bare trustee for the benefit of the Superannuation Fund with funds to be supplied by the Superannuation Fund in a manner which complies with section 67A of the SIS act. A copy of the resolution of the director of Landfall dated 30 June 2010 is annexures as Annexure "F".
12. On 30 June 2010 Landfall in its capacity as trustee for the Gunns Trust, the Superannuation Trustees and Landfall in its capacity as custodian of the Superannuation Fund executed a Deed of Grant of Life Interest whereby the Gunns Trust granted the Life Interest measured by the lives of William Gunns and Oliver Gunns jointly. The Deed of Grant of Life Interest contained terms that provided that:
(a) the Gunns Trust grants the Life Interest to Landfall.
(b) the Purchase Price is $575000; and
(c) The Purchase Price to be paid by the Superannuation Fund to the Gunns Trust on execution of the Deed.
13. A copy of the Deed of Grant of Life Interest is annexed as Annexure "G".
14. On 30 June 2010 Landfall in its capacity as custodian for the Superannuation Fund and the Superannuation Trustees executed a Deed ("Custodian Trust Deed") whereby Landfall was to acquire the Life Interest and hold the Life Interest as custodian of a bare trust for the absolute benefit of the Superannuation Fund.
15. Under the terms of the Custodian Trust Deed:
(a) Landfall was to hold the Life Interest as bare trustee so that the Superannuation Fund acquires the equitable interest in the Life Interest,
(b) the Superannuation fund received a loan from the Gunns Trust on terms and conditions to be set out in a separate loan agreement, and were to apply the loan to the cost in acquiring the Life Interest; and
(c) the Superannuation Fund had a right to acquire the legal ownership of the Life Interest by making one or more payments after acquiring the equitable interest in the Life Interest.
16. The Custodian Trust Deed is included in the Documents Filed Pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 by the Respondent on 13 July 2012 ("Section 58 Documents") at page 9.
17. On 30 June 2010 the Superannuation Trustees and Landfall in its capacity as custodian for the Superannuation Trustees and in its capacity as trustee for the Gunns Trust executed a loan agreement whereby the Gunns Trust lent $55000 to the Superannuation Fund ("Loan Agreement").
18. The Loan Agreement is included in the Section 58 Documents at page 21
19. The purchase of the Life Interest was represented by the Superannuation Trustees drawing a promissory note made payable to the Gunns Trust for an amount of $520000 ("Promissory Note") and the entry into the Loan Agreement.
20. The Promissory Note was executed on 30 June 2010 by the Superannuation Trustees and provides that the Superannuation Fund promises to pay on demand the sum of $520000 to the Gunns Trust.
21. A copy of the Promissory Note is included in the Section 58 Documents at page 33.
22. Landfall as trustee for the Gunns Trust handed the Promissory Note to Annabel and Stephen as a loan from the Gunns Trust.
23. Annabel and Stephen handed the Promissory Note to the Superannuation Trustees in satisfaction of the contributions made by Annabel and Stephen to the Superannuation Fund.
24. Landfall acquiring the Life Interest as custodian and the entry into the Custodian Deed were in accordance with the requirements set out in section 67A of the SIS Act where a complying superannuation fund undertakes a limited recourse borrowing to assist in the purchase of an asset.
25. On 30 June 2010 Landfall issued a Limited Recourse Borrowing Certificate that certified that the Superannuation Fund is the beneficial owner of the Life Interest subject to the terms and conditions set out in the Custodian Trust Deed. A copy of the Limited Recourse Borrowing Certificate is annexed as Annexure "H".
26. On 30 June 2010 Landfall as trustee for the Gunns Trust and Landfall in its own right executed an LPI Transfer From in relation to the Life Interest with Landfall as trustee for the Gunns Trust as transferor and Landfall in its own right as transferee. ("Transfer Form") A copy of the Transfer Form is included in the Section 58 Documents at page 17.
27. A copy of the unaudited financial statements and reports for the Superannuation Fund for the period 8 June 2010 to 30 June 2010 are annexed as Annexure "I".
28. On 26 August 2011 Munro Lawyers wrote to the Chief Commissioner requesting that the Transfer Form be marked as not subject to stamp duty and that the Custodian Trust Deed be stamped for nominal duty of $50 pursuant so section 55 of the Duties Act. A copy of the letter dated 26 August 2011 is included in the Section 58 Documents at page 16.
29. The Transfer Form was marked "No Duty Payable" by the Office of State Revenue on 30 August 2011. A copy of the stamped Transfer Form is included in the Section 58 Documents at page 17.
30. On 28 September 2011 the Chief Commissioner wrote to Munro Lawyers requesting that in relation to stamping of the Custodian Trust Deed provision of 'documentary evidence to show that the real purchase actually provided the deposit as well as the balance of the purchase money". A copy of the letter dated 28 September 2011 is included in the Section 58 Documents at page 18.
31. On 13 October 2011 Munro Lawyers wrote to the Chief Commissioner providing a copy of the Loan Agreement and the Promissory Note and requesting the return of the stamped Custodian Trust Deed. A copy of the letter dated 13 October 2011 is included in the Section 58 Documents at page 20.
32. On 15 November 2011 the Chief Commissioner wrote to Munro Lawyers advising that the Chief Commissioner assessed duty payable on the Custodian Trust Deed to be $21365 and interest to date on default of that duty of $3105.14 on the basis that the transaction evidenced by the Custodian Trust Deed was not a "purchase" and duty on the declaration of trust was assessable on an ad valorem basis. A copy of the letter dated 15 November 2011 is included in the Section 58 Documents at page 34.
33. On 15 December 2011 Munro Lawyers wrote to the Chief Commissioner objecting to the Chief Commissioner's assessment of 15 November 2011. A copy of the letter dated 15 December 2011 is included in the Section 58 Documents at page 42.
34. On 1 May 2012 the Chief Commissioner wrote to Munro Lawyers advising that the objection of 15 December was disallowed ("Objection Decision")> A copy of the letter dated 1 May 2012 is included in the Section 58 Documents at page 47.
35. On 18 May 2012 Munro Lawyers wrote to the Chief Commissioner seeking particulars of the Objection Decision. A copy of the letter dated 18 May 2012 is included in the Section 58 Documents at page 50.
36. On 21 May 2012 the Chief Commissioner wrote to Munro Lawyers declining the requests for further particulars and to reconsider the Objection Decision and stating that in the Chief Commissioner's opinion there was no utility in the parties meeting to discuss the matter. A copy of the letter dated 21 May 2012 is included in the Section 58 Documents at page 54.
37. On 4 June 2012 the Applicant lodged an application for review of the Objection Decision in the Administrative Decisions Tribunal.
38. On 13 July 2012 the Respondent filed documents pursuant to section 59 of the Administrative Decisions Tribunal and served them on the Applicant.
39. On 16 July 2012 Munro Lawyers wrote to the Respondent stating their view that the documents filed by the Respondent on 13 July 2012 did not comply with section 58.
40. At a Directions Hearing in the matter on 18 July 2012, the Tribunal made the following orders;
(a) The Respondent to provide a response to the Applicant's request for particulars of 18 May 2012 and to the Applicant's letter to the Respondent of 16 July 2012 on or before 27 July 2012.
(b) The matter to be listed for a Preliminary Conference on 12 September 2012.
41. On 27 July 2012 the Respondent wrote to the Applicant;
(a) stating that the documents filed by the Respondent on 13 July 2012 were in compliance with section 58 and that there are no statement of reasons of the Respondent in this matter of statement for reasons for a decision in an internal review in this matter, and
(b) stating that the Chief Commissioner is not required to provide a reply to a request for particulars.
42. On 3 September 2012 Munro Lawyers wrote to the Respondent stating the Applicant's view that the Respondent had not provided adequate written reasons for the Objection Decision as required by section 93(2) of the Taxation Administration Act 1996 and requesting a substantive response to the Applicant's request for particulars dated 18 May 2012.
43. On 10 September 2012 the Respondent filed and served Supplementary Documents pursuant to section 58 of the Administrative Decisions Tribunal Act 1997.
44. On 10 September 2012 the Respondent filed and served a supplementary statement of reasons for the Objection Decision.
Unless the context otherwise requires words and phrases defined in SAF have the same meanings when used in these reasons. It is for this reason that Mrs Annabel Jane Gunns is generally referred to without disrespect as "Annabel" and Mr Stephen Gunns is generally referred to again without disrespect as "Stephen".
The Promissory Note figures largely in this matter; it is included in the section 58 documents at page 33 ; it reads as follows:
Dated 30 June 2010
Landfall Pty Limited ACN 120566387 as trustee for the Gunns Family Trust No 2 c/- 16-18 Findlay Avenue Roseville NSW2069
Dear Sirs
In consideration of the purchase from you of a life estate in the property situated at 871 Pacific Highwood 2076 being Folio Identifier 1, 2 and 7/SP17870 by the Gunns Superannuation Fund, Stephen Gunns and Annabel Jane Gunns as trustees for the Gunns Superannuation Fund promises to pay on demand the sum of $520000 to Landfall Pty Limited as trustee of the Gunns Family Trust No 2.
This demand may be made by the address or his assigns of this note.
Yours faithfully
Stephen Gunns and Annabel Jane Gunns as trustees for the Gunns Superannuation Fund
The sequence of events with respect to the Promissory Note constituted, so the Chief Commissioner contended, a clear and circular round robin. In amplification of the content in this regard of SAF (and see in particular clauses 19 to 23 of SAF) I include with approval clauses 44 to 49 of RS (excluding footnotes although the footnotes have been checked and found to be correct) as follows:
44.The Applicant's submissions do not refer to the sequence of events set out in paragraphs 19, 20, 21, 22, and 23 of the SAF. More particularly, that sequence of events with respect to the Promissory Note discloses a clear, circular, round robin passing of the Promissory Note.
45.That is, by paragraph 20, Stephen and Annabel Gunns in their capacity as trustees of the Superannuation Fund:
(a) draw the promissory note;
(b) promise to pay $520,000 on demand to Landfall Pty Ltd as trustee of Gunns No 2 Trust; and
(c) by implication, hand the promissory note to Landfall Pty Ltd as trustee of Gunns No 2 Trust.
46 Then, by paragraph 22, Landfall Pty Ltd as trustee of Gunns No 2 Trust as the holder of the note:
(a) decides to make a loan to Stephen and Annabel Gunn in their personal capacity;
(b) handed the Promissory Note to Stephen and Annabel Gunn; and
(c ) thereby the effect being, Stephen and Annabel Gunn in their capacity as trustees of the Superannuation Fund as the issuer of the Promissory Note, will pay Stephen and Annabel Gunn in their personal capacity, as the holders of the promissory note $520,000 on demand.
47.Then, by paragraph 23, Stephen and Annabel Gunn in their personal capacity:
(a)decide to make a contribution of property to the Superannuation Fund;
(b)Stephen and Annabel Gunn in their personal capacity hand the promissory note to themselves acting in their capacity as trustees of the Superannuation Fund;
(c)The Promissory Note was handed over as satisfaction "of the contributions made" by Stephen and Annabel Gunn to the Superannuation Fund; and
(d) accordingly, Stephen and Annabel Gunn acting in their capacity as trustees of the Superannuation Fund become the holders in due course of their own promissory note, first drawn and handed to Landfall as per paragraph 40 above.
48. The circle or round robin is thus complete. The promissory note is passed; from the Superannuation Fund to Landfall Pty Ltd, from Landfall Pty Ltd to Stephen and Annabel Gunn in their personal capacity as a loan, and then handed back to Stephen and Annabel Gunn as trustees of the Fund as a contribution.
49. On the assumption the draft unexecuted Financial Statements are admissible, it is noted that the accounts do not address much less mention the existence, perhaps even fleeting or transitory, of the Promissory Note.
Although the loan in the sum of $55000 referred to in clause 17 of SAF was documented in full as to its relevant terms in accordance with the Loan Agreement, the loan transaction in terms whereof the Promissory Note was delivered to Annabel and Stephen was not. Clause 22 of SAF sets out merely that the Promissory Note was handed to Annabel and Stephen as a loan from the Gunns Trust. The Tribunal was not furnished with any evidence whatever as to the terms and conditions in respect of the clause 22 loan; that it was a loan and not a different transaction is set out as a statement of fact in clause 22 of SAF. Nor was the Tribunal furnished, in respect of the loan of $520,000, with any relevant resolution by the Applicant as trustee of the Gunns Trust. The Tribunal considers it surprising that the loan in the sum of $55000 to the Superannuation Fund should have been documented in detail but not the larger loan of $520000 to Annabel and Steven arising from the delivery to them of the Promissory Note. In this context Annexure F to SAF is a resolution of the Applicant dated 30 June 2010 which referred in categorical terms to the loan of $55000 to the Superannuation Fund but there is no mention of the loan of $520000 to Annabel and Stephen, and notwithstanding the fact that the two amounts in aggregate were closely interrelated and required to fund the acquisition of the Life Interest. The fact that there was no evidence of any kind as to the loan in the sum of $520000 must have a bearing on the finding by the Tribunal that all of the transactions in respect of the Promissory Note did indeed constitute a round robin and whereby in respect of the acquisition by the Superannuation Fund of the Life Interest no monetary consideration of any kind either changed hands or for that matter, was intended to change hands.
In the same context the Loan Agreement, which is referable to the $55000 loan to the Superannuation Fund, is open to question. The loan is in its terms repayable on the Final Repayment Date which, as defined, refers to a date agreed between borrower and lender. The term "Repayment Date" as defined means "monthly in arrears commencing from the Initial Drawdown Date"; however the provisions of the Loan Agreement as set out in clause 5 merely require repayment of the Loan on or before the Final Repayment Date, and so that the relevance of the definition of "Repayment Date" is not clear. The Loan Agreement contains no provision whatever as to what is to occur if the borrower and lender cannot agree as to the date which is the Final Repayment Date. The term "Interest Rate" as defined refers to the "Variable Business Edge Loan Reference Rate as published by Bank West or such other rate as the Lender and Borrower agree in writing." The Loan Agreement makes no provision for the possibility of the Bank West rate no longer being issued and the parties being unable to agree a substitute rate. Regarded overall the Loan Agreement must be categorised as imprecise.
The Applicant claims that it is entitled to the benefit of section 55(1) (a) of the Act in respect of the Custodian Trust Deed. Section 55 of the Duties Act is set out in full as follows:
"Property vested in an apparent purchaser
(1) Duty of $50 is chargeable in respect of:
(a) a declaration of trust made by an apparent purchaser in respect of identified dutiable property:
(i) vested in the apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property, or
(ii) to be vested in the apparent purchaser upon trust for the real purchaser, if the Chief Commissioner is satisfied that the money for the purchase of the dutiable property has been or will be provided by the real purchaser, or
(b) a transfer of dutiable property from an apparent purchaser to the real purchaser if:
(i) the dutiable property is property, or part of property, vested in the apparent purchaser upon trust for the real purchaser, and
(ii) the real purchaser provided the money for the purchase of the dutiable property and for any improvements made to the dutiable property after the purchase.
(1A) For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser.
(1B) This section applies whether or not there has been a change in the legal description of the dutiable property between the purchase of the property by the apparent purchaser and the transfer to the real purchaser.
Note: For example, if the dutiable property is land, this section continues to apply if there is a change in the legal description of the dutiable property as a consequence of the subdivision of the land.
(2) In this section, "purchase" includes an allotment."
The transfer ("Transfer") of the Life Interest is contained in the section 58 documents at page 3; the Transfer is endorsed to the effect that no duty is payable. In the Transfer the transferor is described as "Landfall Pty Limited CAN 120566387 as trustee of the Gunns Family Trust No 2" while the transferee is described as "Landfall Pty Limited CAN 120566387 a life interest measured by the lives of William Gunns and Oliver Gunns jointly and Landfall Pty Limited CAN 120566387 as trustee for the Gunns Family Trust No 2 an estate in reversion". The Transfer has not, so the Tribunal was informed from the bar table, been registered.
The Transfer was correctly endorsed to the effect that was not dutiable in that it did not fall within section 8(1)(a) of the Act and it also, and because it was a grant, did not fall within any of the categories set out in section 8(1) (b) of the Act.
In respect of the Transfer the Tribunal was referred to a letter by Munro Lawyers addressed to the Office of State Revenue dated 26 August 2011; (page 1 of the section 58 documents); the second third and fourth paragraphs read as follows:
This Transfer is in respect of the grant by the registered proprietor (Landfall Pty Ltd as trustee of the Gunns Family Trust No 2) of a life estate for the lives of Stephen Gunns and Annabel Jane Gunns to the Custodian which holds the Property as bare trustee on behalf of the trustee of the Gunns Superannuation Fund ("Super Fund") The trustees of the Super Fund are Stephen Gunns and Annabel Jane Gunns ("SF Trustee")
We respectfully submit that this Transfer is not liable for duty as a Dutiable Transaction under the Duties At 1997. The reason for our view is that the grant of a life estate is not a "transfer" as defined for the purposes of the Duties Act
We have lodged the Transfer for marking by the OSR solely for the purpose of registering the life estate on title. For the purposes of registering at the Department of Lands the Transfer is required to be marked as exempt.
Leaving aside the error as to the relevant lives (and because the relevant lives were not those of Stephen and Annabel) the Tribunal was advised, as set out previously, that the Transfer has never been registered. In the same context and while referring to the section 58 documents the Tribunal refers also to page 43 of the section 58 documents and the following extract from a paragraph in a letter by Munro Lawyers to the OSR dated 15 December 2011;
First we comment that there is not a Contract for Sale. Rather there is a Deed of Grant of Life Interest for consideration and a Transfer form.
In relation to section 55(1) (a) of the Act this case raises two issues; one of those issues relates to the question of what is meant by "money" in the provision and whether it extends to the provision of consideration in kind. This issue is referred to as the "money issue" and it is dealt with in Part C below. The other issue relates to the question of what is meant by "purchase" and whether it extends to an acquisition which is not (in accordance with relevant case law) a purchase. This issue, which is referred to as the "purchase issue", is dealt with in Part D below. It is clear having regard to the wording of the section, that in order to succeed the Applicant must do so in relation to both issues; to succeed on one issue but not the other will not suffice.
Before proceeding to deal with the two issues it is convenient to deal with a contention by the Applicant that section 55 is a remedial provision and as such deserving of a beneficial construction. .
Part B Beneficial construction
In Statutory Interpretation in Australia (4th edition), Peace and Geddes state at para 9.3 that "it must be clear that the provision is intended to achieve the beneficial purpose claimed." The Tribunal agrees with the Chief Commissioner's submission that Section 55 is not a true remedial provision. It is designed to ensure that where, put in simple terms, property is purchased by an apparent purchaser with money provided by the real purchaser (and where in the normal course duty would have been paid on the transfer to the apparent purchaser) there is no second levy of duty when the property is transferred by the apparent purchaser to the real purchaser. The section does not in its terms provide that it applies only where the first transfer attracted duty although that, at least on a prima facie basis, is its apparent intention.
The correct rule of construction was stated by Hill J in Kidston Goldmines Limited v Commissioner of Taxation (1991) 30 FCR 77, a case about the gold mining exemption. At page 79 - 80 Hill J said:
"Clearly the Parliamentary intention was to encourage goldmining, which has had a special place in Australia's history, and this purpose must be given effect to. However, to accept this proposition is not to say that the court should give to the words used by Parliament a meaning which they do not bear. The ambit of the exemption intended by Parliament is to be found within the very words which Parliament has used. It is to these word (sic) that we should turn."
Madgwick J in Parrett v Secretary, Department of Family & Community Services [2002] FCA 716 at [40] referred to Hill J's dictum and said:
"His Honour observed that whilst the legislation was beneficial and designed to encourage the gold mining industry, the words could not be strained to a meaning they could not bear and cautioned against taking such an approach with statutory construction."
This approach was considered by the Court of Appeal in Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2011] NSWCA 366. The taxpayer there contended at clause 26 that the primary production exemption existed "for the purpose of encouraging, rewarding or protecting some class of activity and should be given a liberal and not restrictive construction". Allsop P with whom Campbell JA and Whealy JA agreed, dealt with that contention at clause 28 as follows:
"28. ... Looking at the terms of s 10AA in its place in the Act, the provision is not to be understood as a statutory encouragement for primary production as that phrase is used in the colloquial sense. The provision concerns land used for primary production as defined. What the provision is apt to achieve and what can be taken as its purpose from its text and context in the Act is the provision of an exemption for land used for primary production to the extent and in the manner referred to in sub-ss (2) and (3). There is no requirement to approach the matter in some beneficial fashion striving to expand the reach of the exemption or to narrow the taxing operation of the section according to strict language."
The Tribunal does not consider that there is any basis upon which the section should be construed otherwise than in accordance with the requirement that the words in question must not be construed so as to give them a meaning which they do not bear.
Part C. The money issue.
There is no dispute as to the fact that the Promissory Note is indeed a promissory note and even though it is not payable at a bank and even though it is payable on demand. This particular Promissory Note is in many respects akin to an acknowledgement of debt but this factor does not detract from its classification as a promissory note. As I have noted no money whatever passed between the Superannuation Fund and the Applicant. The Promissory note was made by the Superannuation Fund and in accordance with the steps to which I have referred passed around in such manner that it came back (on the same day) to the Superannuation Fund which presumably has it still. As I have noted the round robin device ensured that it was not necessary for any money whatever to change hands...
The Applicant contends that the handing over of the Promissory Note constitutes "money for the purchase" in the sense that it is "consideration in kind". Authority for that proposition is said to derive from a partial extract from paragraph [103] of the judgment of Gzell J in Platinum Investment Management Limited v Chief Commissioner of State Revenue (No 2) (2010) 78 ATR 143, [2010] NSWSC 1. In full context, paragraph [103] provides as follows, (and where the Applicant referred only to the first sentence):
"103 The Chief Commissioner accepted that the Duties Act, s 55(1) (a) applies to consideration in kind as well as a payment of money. He relied on the decision in Pendal at 167 CLR 32 that PN was neither the purchaser nor the apparent purchaser of the shares for the purposes of the Stamp Duties Act."
Gzell J at clause 106 (in a passage not referred to by the Applicant), concluded that in the light of his reasons Platinum Investment Management "does not need the aid of ... s.55 (1) (a) and I do not need to resolve this issue". This decision by Gzell J is not authority for the proposition asserted by the Applicant. In CSR Limited v Eddy (2005) 226 CLR 1, [2005] HCA 64 Gleeson CJ, Gummow and Heydon JJ stated at clause 13;
"These events placed the Court of Appeal in a difficult position. It is of course commonplace for the courts to apply received principles without argument: the doctrine of stare decisis in one of its essential functions avoids constant re-litigation of legal questions. But where a proposition of law is incorporated into the reasoning of a particular court, that proposition, even if it forms part of the ratio decidendi, is not binding on later courts if the particular court merely assumed its correctness without argument. "[T]he presidents, sub silentio without argument, are of no moment"." An appeal to the Court of Appeal from the decision of Gzell J was taken: see Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240, [2011] NSWCA 48. The passage from CSR Limited v Eddy at [13] set out above was cited with approval by Macfarlan JA at paragraph [38] in Platinum. At paragraph [120] of Platinum, Handley AJA stated:
"The Deed described the Cliffords as the Sellers, Queens Hill Pty Ltd as the Buyer, and the taxpayer as the Nominee, and is relevantly indistinguishable from the deed in Pendal. In these circumstances the taxpayer was not the apparent purchaser and it is not necessary to consider whether the exemption applies to an exchange where "money for the purchase" does not change hands."
It cannot be doubted that there is a distinction between the concept of "money" on the one hand and "other consideration" or "moneys worth "on the other. By way of example and in John v FCT (1989) 166 CLR 417 at 450, Brennan J described sec 44 of the Income Tax Assessment Act as taxing "an amount" being the "par value of bonus shares" that were issued. He described the par value of bonus shares "which is money's worth but not money and the sale of the bonus shares converts the money's worth into money".
Moreover the distinction is drawn in the Act itself. The definition of a "right" to shares or units in the Dictionary means such a right "whether or not on payment of money or for other consideration". Further, in that respect, section 21(1)(a) of the Act refers to:
"the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration)"
Although "consideration in kind" must fall within the concept of "non-monetary consideration" in section 21(1) (a) of the Act, dutiable value is not relevant to the narrower concept of "money" in section 55(1) (a) of the Act. "Monetary consideration" and "non-monetary consideration" are clearly distinguishable concepts.
In the Exposure Draft for the Stamp Duty Rewrite (the precursor to the Act) the initial draft was in the following terms:
"An acquisition by a beneficiary under a trust of the legal estate in dutiable property that has been acquired by the trustee with a consideration provided wholly by the beneficiary is not chargeable with duty under this Chapter. It is immaterial whether the trust is an express or resulting trust."
Hill J., writing extra judicially in Stamp Duty Rewrite LBC Information Services 1997 at page 185, described the final version of sec 55 as "narrower". The initial draft used the more expansive words "acquisition" and "consideration provided". The words "consideration" or "consideration in kind" have an accepted legal meaning as a very wide concept. By way of example, Bowen LJ in Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256 at 273 adopted this definition from Selwyn's Nisi Prius (8th Edition) as follows:
"Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience sustained by the plaintiff, provided such act is performed or such inconvenience suffered by the plaintiff, with the consent, either express or implied, of the defendant."
The earlier form of the exemption in the Stamp Duties Act 1920 (NSW) was contained in paragraph (1) of the item Declaration of Trust in the Second Schedule which provided:
"Any instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase money therefor."
Having regard to the legislative history, including the prior specific requirement for the person to have "actually paid the purchase money", the change from a proposed requirement of "consideration provided" to the provision of "the money for the purchase" was clearly intentional.
The Tribunal considers that this issue must now be regarded as settled by the recent decision of Perram J in Messenger Press Proprietary Limited v Commissioner of Taxation [2012] FCA 756. In that case his Honour noted that he was not ultimately required to decide whether the delivery of a promissory note denominated in foreign currency in exchange for a release of a book debt denominated in Australian dollars was an exchange of foreign currency. However, and as a matter of caution, his Honour fully considered the issue on general principles and concepts. His Honour stated at clauses 195 and 196;:
"195 Lest I be wrong about that I should record my view that these concepts, at least for legal purposes, are not money. In this area difficult issues about the nature of Australian money and foreign money may arise. In Moss v Hancock [1899] 2 QB 111, Darling J approved at 116 the definition of FA Walker in Money, Trade and Industry (London, 1882) that money is
that which passes freely from hand to hand throughout the community in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it and without the intention of the person who receives it to consume it or apply it to any other use than in turn to tender it to others in discharge of debts or payment for commodities.
196 No doubt, this definition has its limitations: C. Proctor, Mann on the Legal Aspects of Money (Oxford University Press, 6th Ed, 2005) at [1.07]-[1.14]. It was adopted by Emmett J of this Court in Travelex Ltd v Federal Commissioner of Taxation (2008) 71 ATR 216; [2008] FCA 1961 at [25]. The definition suffers from the obvious defect that it does not include the exchange settlement funds held by banks with a central bank. Such funds are not available to the community at all, passing only between banks. They nevertheless constitute the monetary base of the payments system. Regardless of where the lines might be drawn I do not think, however, that promissory notes or book debts where the party liable is not a bank or deposit-taking institution can constitute 'money'. There was no evidence that the promissory notes had taken on the quality of being able to be used throughout the community for the discharge of debts and, if they did have that quality, any reasonable person would certainly make inquiries as to the 'character or credit' of the issuer before accepting such a note. There was no evidence that the promissory notes were an integer in some payment system. Nor, where the promissory notes were not presented for payment, is it possible to identify another flow of funds which might usefully be seen as 'money' (i.e. that which might have occurred if a bank account had been credited on presentation of each note). In any event, it is not necessary to pursue these matters further."
Section 55(1) (a) of the Act requires that the whole of the "money for the purchase" be provided by the real purchaser and not only some of it: see Hill Stamp Duties Rewrite (supra) at page 185. Here, on the authority of, amongst other, the decisions of Perram J in Messenger Press and Emmett J in Travelex Ltd, the whole of the "money for the purchase" were not provided by the Applicant because the handing over of the Promissory Note was, not relevantly "money".
Put in succinct terms the payment for the grant of the Life Interest through the provision (in large part) of the Promissory Note did not constitute a payment of money and the Applicant must therefore fail in respect of the money issue.
It is not necessary for me to determine whether a promissory note of this round robin nature constitutes consideration of any kind although I doubt it. The Promissory Note was made on 30 June 2010 and on the same day came back to the maker who, as I have said, presumably still has it. It does not seem likely that it was ever designed to produce any payment of any kind.
Part D The purchase issue.
Having found that the Applicant must fail under the payment issue it is not strictly necessary for me to consider the purchase issue, and I do so as a matter of completeness, and in case it can be said that I have erred in respect of the payment issue.
The Tribunal agrees with the contention of the Chief Commissioner that, in accordance with established cases, a purchase and sale is the transfer of ownership of pre-existing property from one person (the transferor or assignor) to another person (the transferee or assignee) who owns that property after the sale. As such, the concept of a purchase and sale does not include the grant or creation of property or property rights which were not previously in existence and owned by the vendor/transferor.
A purchase and a sale are mirror images of the one transaction. Thus in ANM Trading Pty Ltd v Commissioner of Business Franchises [1996] 2 VR 312 at 323 Batt J said:
""Purchase" is not defined in the Act but it is the counterpart or reciprocal of a sale, or perhaps a sale viewed from the point of view of the purchaser, and therefore it must have a meaning corresponding to or consonant with that of "sale" ... "
This contention accords with the views stated by Gilliard J in Victoria Gardens Developments Pty Ltd v CSR [1999] VSC 10 at [47] to [51] as follows:
47. The Act does not define what is a sale. Accordingly, it is necessary to go to the cases to determine what is required to establish a sale of real property.
48. Mr Boaden extracted dicta from various cases as to what constituted a sale. The factors were variously described as
* parting with property for money consideration, and delivery of the property sold on payment of money;
* an agreement between two parties, one parting with something and the other giving something for it;
* the conveyance of property from one person to another for money or moneys worth;
* the transfer of property for a money price.
49. ... [citations omitted]
50. The common thread running through the cases is that there is a transfer of property from one person to another for money or money's worth.
51. The House of Lords considered the question in Littlewood's Mail Order Stores Ltd v. IRC supra and Viscount Simonds, with whom Lord Devlin agreed, stated what had to be proven to establish a sale at p.152 when he said -
"I quote, as did Harman LJ, from Benjamin on Sale, 8th ed. p.2:
'It (a sale) may be defined to be a transfer of the absolute or general property in a thing for a price in money. Hence it follows that, to constitute a valid sale, there must be a concurrence of the following elements, viz:-
(1) parties competent to contract;
(2) mutual assent;
(3) a thing, the absolute or general property in which is
transferred from the seller to the buyer; and
(4) a price in money paid or promised.'"
Consistent with this contention The Loose-leaf Service, Australian Stamp Duties Law notes at [10.0007] that:
"However, a "transfer will generally involve property moving from one person to another and will not extend to the creation of a new right, such as by grant of a lease or an option or the grant of a licence."
The Tribunal was referred to Hill J. (writing extra judicially) in Stamp Duty Rewrite LBC Information Services 1997 at page 49 as follows:
"Although the word "transfer" has a wide definition it would not seem to cover cases where property vests in another without being divested from some person who previously owned it. Hence a lease would not be a "transfer" because the subject-matter of the lease is not transferred, although it is created out of a freehold estate so that it vests in the lessee: Littlewoods Mail Order Stores Ltd v Inland Revenue Commissioners [1961] Ch 597 at 623-624. So, too, an option would not be a transfer of the right the subject of the option since that right was not divested from some other person but was, as a result of the grant created or vested in the grantee of the option: compare Commissioner of Taxes (Qld) v Camphin (1937) 57 CLR 127."
The Tribunal agrees that this is the proper meaning of the word "purchase" in the context of duties legislation generally and the Act in particular. The Tribunal considers that the relevant principles are clearly stated in re V.G.M Holdings Limited [1942]1 Ch. 235 and Commissioner of Taxes (Qld) v Camphin (1937) 57 CLR 127; it may be noted that the decision in Camphin was one of the authorities relied on by Hill J.
The Applicant contends that purchase has the meaning of "to acquire by the payment of money or its equivalent"; paragraphs [27] to [36] of AS constitute in substance an attack on the correctness, applicability, and relevance of the decision together with the reasoning in VGM. More particularly, the Applicant says:
a) The decision is explicable (clause 31 of AS), because the legislation there "used specific terminology" re allotment vis-à-vis the word purchase;
b) The legislation in VGM "was for the protection of shareholders as opposed to a remedial or beneficial provision"(clause 32 of AS) and was construed narrowly;
c) On general concepts an allotment of shares by a company "would be a purchase under the ordinary meaning" (clause 35 of AS);
d) The authority of VGM as a precedent is limited to cases involving the allotment of shares (clause 33 of AS);
e) There is no "meaningful similarity"(clause 36 of AS) between the grant of a life interest and the allotment of shares in a company; and
f) Most significantly of all, "there is no indication that it has ever been applied in relation to any other chose in action or any interest in real estate" (clause 33 of AS).
The head-note in VGM sets out the terms of the relevant section of the Companies Act 1929 (UK), (the financial assistance provision) being that "it shall not be lawful for a company to give ... any financial assistance ... in connection with a purchase made ... by any person of any shares in the company ..." In respect of the Applicant's contention, one might consider that the financial assistance prohibition is a quintessential remedial or beneficial provision, at least from the perspective of pre-existing shareholders. The head-note records the decision as:
"The acquisition of shares in a company by application and allotment is not a "purchase" within the subsection, which accordingly, does not cover a transaction by which a company provides money to assist a subscription for its own shares".
Thus, as the head-note makes clear, shares may be acquired by subscription and allotment, but such an acquisition is not a purchase (and sale).
The reasons for decision in VGM were given by Lord Greene and the key passage appears at pages 240-241 as set out below. It is relevant to note that the Applicant has quoted part of the passage, and has failed to refer to that portion commencing with the words "Quite apart from those considerations ..." which appear approximately half way down the passage below. His Lordship stated:
"In the first place, throughout the whole of the Companies Act, 1929, the language which is used with regard to the issue of shares to subscribers is invariably confined to words like "issue," "subscription," "application," "allotment," and so forth. There is not a single passage in the Act to which we were referred, or to which my fairly complete recollection of the Act goes, in which the word "purchase" is used in relation to the transaction of subscription. That being so, it seems to me that a very clear context would be required to enable a meaning to be put on the word "purchase" in this section which would extend it so as to cover the acquisition of shares by subscription. Quite apart from those considerations of mere language of the Act, it seems to me that the word "purchase" cannot with propriety be applied to the legal transaction under which a person, by the machinery of application and allotment, becomes a shareholder in the company. He does not purchase anything when he does that. Mr. Wynn Parry endeavoured heroically to establish the proposition that a share before issue was an existing article of property, that it was an existing bundle of rights which a shareholder could properly be said to be purchasing when he acquired it by subscription in the usual way. I am unable to accept that view. A share is a chose in action. A chose in action implies the existence of some person entitled to the rights which are rights in action as distinct from rights in possession, and, until the share is issued, no such person exists. Putting it in a nutshell, the difference between the issue of a share to a subscriber and the purchase of a share from an existing shareholder is the difference between the creation and the transfer of a chose in action. The two legal transactions of the creation of a chose in action and the purchase of a chose in action are quite different in conception and in result."
The decision in VGM does not without selective quotation bear out the Applicant's assertions. The Court did consider the "specific terminology" of the Companies Act. But, as it expressly says, its ultimate decision is quite apart from the "mere language of the Act". The distinction drawn by the Applicant is incorrect. I note in general terms that I have not sought to deal in detail with a number of cases cited by the Applicant in AS and more particularly because it is my view that they are of doubtful relevance. In general terms the cases cited would appear to relate to different legislation.
In the context of the concept of remedial or beneficial legislation, the Court foreshadowed Hill J, Madgwick J and Allsop P by a number of years. At page 239.7 Lord Greene referred to the notorious practices underlying the provision, but the sole question was:
"If as a matter of construction, "purchase" extends to cases such as the present where the money is used not in connection with the purchase of the company's shares but in connection with the subscription for the company's shares, that construction must be put on the language".
As to the Applicant's contention that the ordinary meaning of purchase would include an acquisition by allotment and subscription, the Court of Appeal said, the word purchase "cannot with propriety" be applied to an allotment and "he does not purchase anything when he does that".
The actual result in VGM has been reversed by section 55(2) of the Act as regards an "allotment", which expression applies to the subscription and allotment of shares in a company. However, as set out below, section 55(2) of the Act says nothing concerning, and has no application to, other forms of property not separately in existence and not created by "allotment". Section 55(2) has no application to the grant of: an option or lease (considered in Camphin), or an easement, a licence, or a profit `a prendre. Put in other words Section 55 (2) reverses VGM but only in relation to an allotment and not otherwise.
The extract from Hill J above refers to the decision of the High Court in Camphin. That decision specifically applies a VGM proposition to both the grant of a lease (a property interest) and an option (a chose in action). VGM is not named as such in Camphin but then Camphin predates VGM. In Commissioner of Taxes (Qld) v Camphin (1937) 57 CLR 127 Latham CJ stated at pages 133 to 134:
"When an owner of land grants a lease the lessee obtains a proprietary interest in the land, which is personal property, but the owner has not sold this personal property to the lessee. He himself never was the owner of that personal property. He has created a term in the lessee, and the lessee owns a proprietary interest which he did not own before, but that interest has not been sold to him. The transaction is properly described by saying that the owner of the land has leased his land and has created a term in the tenant and a reversion in himself. The result of giving an option for value is that the person to whom the option is given acquires an equitable interest. But this equitable interest has not, in my opinion, been sold to him. The equitable interest is measured by what a court of equity would decree in an action for specific performance. The right of the person who may be called the owner of the option is a right to prevent the owner of the property in question from disposing of it inconsistently with the option, together with a right, if he exercises the option, to compel the owner of the property to carry out the contract which has been made by the exercise of the option. This right of the optionee is a right which has been created by the option, but it is not a right which the owner of the property ever possessed. He has created a new right in the optionee which is a right of property, but he has not transferred to the optionee any right which previously belonged to him as the owner of the property in relation to which the option was given. Thus there has been no sale of any property."
Per Batt J in ANM Trading (supra), the concepts of purchase and sale are interchangeable and mirror image concepts and thus the last sentence in the extract from Camphin can properly read "there has been no purchase or sale of any property". The decision in Camphin has been specifically approved by higher authority.
In Commissioner of State Revenue v TEC Desert Pty Ltd [2009] WASCA 128 Wheeler JA with whom Newnes JA agreed, stated at paragraphs 88 and 89:
"88 The concept of sale is discussed in Littlewoods Mail Order Stores Ltd v Inland Revenue Commissioners [1963] AC 135. To summarise the effect of that case, sale, according to ordinary legal terminology, is (quoting Benjamin on Sale (8th ed, 1950), page 2), "a transfer of the absolute or general property in a thing for a price in money". It follows that, to constitute a valid sale, there must be: "(1) Parties competent to contract; (2) mutual assent; (3) a thing, the absolute or general property in which is transferred from the seller to the buyer; and (4) a price in money paid or promised" (per Viscount Simonds, at 152).
89 It follows that, as Latham CJ said in Commissioner of Taxes (Queensland) v Camphin [1937] HCA 30; (1937) 57 CLR 127 (at 133) " ... it cannot properly be said that whenever a proprietary interest is created in return for a money payment the proprietary interest has been sold to the person in whom it becomes vested." For example, when an owner of land grants a lease, the lessee obtains a proprietary interest in the land, but the owner has not sold this personal property to the lessee, never having been the owner of it himself."
In Trust Company Limited v Chief Commissioner of State Revenue [2007] NSWCA 255 Giles JA stated at paragraph 55:
"55 Upon the creation of the lessee's interest in the land the lessor was said to have a reversion, also called a reversionary estate. As long ago as Lord Ward v Lumley (1680) 5 H & N 88; 157 ER 1112 it was said (at 94; 1114), "When a man demises land for a term of years, reserving to himself a rent, the effect of it is to create two estates, viz the estate of the lessee, and the reversion of the lessor ... ". In Commissioner of Taxes v Camphin [1937] HCA 30; (1937) 57 CLR 127 Latham CJ (with whom Rich and McTiernan JJ agreed) said at 133 -
"When an owner of land grants a lease the lessee obtains a proprietary interest in the land, which is personal property, but the owner has not sold this personal property to the lessee. He himself never was the owner of that personal property. He has created a term in the lessee, and the lessee owns a proprietary interest which he did not own before, but that interest has not been sold to him. The transaction is properly described by saying that the owner of the land has leased his land and has created a term in the tenant and a reversion in himself."
Gibbs J in the High Court in Adamson v Hayes (1974) 130 CLR 276 at 303-304 also quotes from the above passage from Camphin and continues:
"It follows clearly from this statement [in Camphin] that the interests created by the agreement to give the options in the present case were not interests subsisting at the time of the agreement: they were new interests, thereby created."
The Applicant's contentions in this context are contrary to established authority. The word "purchase" does not have the meaning in section 55 of the Act attributed to it by the Applicant. Relevantly, within section 55(1) (a) there is no "purchase of the dutiable property", there is rather in this matter only an agreement for the creation of new estates and interests (that is, the Life Interest) out of the freehold.
Part E Conclusion
At the risk of laboring the point the transactions which are relevant in this context involve the acquisition by the Superannuation Fund from Gunns Trust of a Life Interest in the Property. The nature of the Life Interest, having regard to the ages of the two children whose lives are the measuring device, is such that the value of the life interest cannot be much less than the value of the freehold interest in the Property.
The overall effect of all of the transactions and having regard to the round robin nature of the Promissory Note arrangement must give rise to the view that the Superannuation Fund obtained a significant interest in the Property whose value was not much less that the freehold value without paying anything at all for it.
In the circumstances the decision under review must be affirmed.
I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.
Registrar
**********
Decision last updated: 18 December 2012
34
9
1