Lewis v Chief Commissioner of State Revenue
[2007] NSWADT 89
•16 April 2007
CITATION: Lewis & Ors v Chief Commissioner of State Revenue [2007] NSWADT 89 DIVISION: Revenue Division PARTIES: APPLICANTS
Sydney John Lewis, Colleen Mildred Lewis, David Andrew Lewis and Anne Rochelle Lewis
RESPONDENT
Chief Commissioner of State RevenueFILE NUMBER: 066122 HEARING DATES: 16 March 2007 SUBMISSIONS CLOSED: 16 March 2007 EXTEMPORE DECISION DATE: 16 March 2007
DATE OF DECISION:
16 April 2007BEFORE: Seve J - Judicial Member CATCHWORDS: Taxation Administration Act - reassessment of duty MATTER FOR DECISION: Principal matter LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Duties Act 1997
Interpretation Act 1987
Taxation Administration Act 1996CASES CITED: Alter v Comptroller of Stamps 91 ATC 2019
Aoun Investments Pty Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1394
Calverly v Green (1984) 155 CLR 242
McDonald’s Australia Ltd v Chief Commissioner of State Revenue [2005] NSWSC 6
Shergold v Commissioner of State Revenue (Taxation) [2006] VCAT 694
Sportscorp v Chief Commissioner of State Revenue [2004] NSWSC 1029
Trust Co of Australia v Chief Commissioner of State Revenue [2006] NSWSC 792
Trustees of the Property of Zoltan Sandor, a Bankrupt v Ramirez [1999] NSW CA 261REPRESENTATION: APPLICANT
RESPONDENT
S Janes, Barrister
H El Hage, SolicitorORDERS: The reviewable decision is affirmed
1 The Tribunal’s decision and an outline of reasons were delivered orally at the conclusion of the hearing of this matter on 16 March 2007. The Tribunal has since received a request under s 89(3)(a) of the Administrative Decisions Tribunal Act 1997 (“the ADT Act”) from one of the Applicants, Sydney John Lewis, to give a statement in writing of the reasons of the Tribunal for its decision. The following is a statement in writing of those reasons. It is a revised version of the oral reasons given at the hearing.
2 The application in this matter was originally made by Sydney John Lewis alone. At the request of Sydney John Lewis and with the consent of the Respondent (“the Commissioner”), at the hearing, the Tribunal ordered that Colleen Mildred Lewis and David Andrew Lewis and Anne Rochelle Lewis be added to Sydney John Lewis as applicants in this matter.
3 The application is for review of a decision of the Commissioner, in letter dated 21 March 2006, not to reassess and refund $11,240 transfer duty and $7,785 vendor duty assessed and paid on a written transfer (“the Transfer”).
4 The Applicants submitted that s 55(1)(b) of the Duties Act 1997 (“the Duties Act”) as it relevantly applied, applies to the Transfer and in the alternative, s 56(1) of the Duties Act applies to the Transfer, so that ad valorem duty was not chargeable on the Transfer and in consequence, vendor duty, as it relevantly applied, was not chargeable on the Transfer, pursuant to s 162X(1)(a) of the Duties Act.
5 The Tribunal had before it, documents lodged pursuant to s 58 of the ADT Act and written submissions on behalf of the Applicants dated 1 February and 9 March 2007 and written submissions on behalf of the Commissioner dated 28 February 2007. The Tribunal also heard oral submissions at the hearing from each of the parties’ representatives.
6 The representative for the Applicants had witnesses available for cross-examination by the Commissioner at the hearing. However, the Tribunal found it unnecessary to continue the proceedings to cross-examination. This was because in the Tribunal’s view, irrespective of the evidence sought to be the subject of cross-examination, application of the law to the facts agreed between the parties and the evidence before the Tribunal made cross-examination unnecessary.
7 The following facts were not in dispute between the parties:
- (1) The Transfer is a Real Property Act 1900 transfer of Torrens Title land (“the Land”) dated 29 June 2005 from David Andrew Lewis and Anne Rochelle Lewis to Sydney John Lewis and Colleen Mildred Lewis as joint tenants. The consideration in the Transfer was expressed as $1.
(2) One of the Applicants, Sydney John Lewis was, immediately prior to registration of David Andrew Lewis and Anne Rochelle Lewis as registered proprietors of the Land, the registered proprietor of the Land.
(3) On 8 July 1994, Sydney John Lewis, as registered proprietor of the Land, entered into a contract for sale of the Land with David Andrew Lewis and Anne Rochelle Lewis as joint tenant purchasers for a consideration of $112,500.
(4) On 8 August 1994, the contract for sale was completed and Sydney John Lewis executed a transfer of the Land in favour of David Andrew Lewis and Anne Rochelle Lewis as joint tenants.
(5) The whole of the purchase price for the purchase of the Land by David Andrew Lewis and Anne Rochelle Lewis was paid out of a secured investment loan from Westpac Banking Corporation made to David Andrew Lewis and Anne Rochelle Lewis under a loan agreement between Westpac Banking Corporation and David Andrew Lewis and Anne Rochelle Lewis.
8 The submissions of the Applicants included Statutory Declarations made by each of the Applicants. The following are extracts from the Statutory Declaration of Sydney John Lewis made on 1 February 2006:
- “7. In mid 1994 the business experienced severe financial problems. Myself and Dietrich Flamme agreed to raise further funds for the business by borrowing against the equity in our homes. We were also concerned that if the business became insolvent that we would face bankruptcy and our homes would be in jeopardy.
8. Dietrich and myself both agreed that we would transfer our respective family homes in to the names of our children and would then in the names of children borrow against the equity in the homes in order to inject capital into the business.
9. On 8 July 1994 I enter into a contract for the sale of the property at 11 Tahlee Crescent Leumeah to David Andrew Lewis and Anne Rochelle Lewis … All expenses relating to the sale were paid by myself. Annexed and marked “C” is a copy of the first page of the contract for sale.
12. Once the contract of sale had been signed I arranged to borrow the sum of $132,544.00 excluding fees and charges. This covered the entire contract price from Westpac Banking Corporation under loan account number ... This loan was in the names of my son and daughter in law but it was made clear to them that the monies borrowed belonged to myself for use in the business and that I would be responsible for the repayment of the loan.
21. The loan from Westpac was repaid by myself from the general business account number … with the exception of payments made on 5 September 1994 and 5 January 1995 which were paid by me in cash and the payment on 5 May 2003 which was paid from the account of my wife and I being account number … Annexed and marked “J” is a table showing the date, amount, cheque number and bank statement page of each repayment. Original documentation verifying each repayment can be produced upon request.
22. Although the loan to Westpac was repaid by myself largely from the general business account number…the funds drawn from that account represented the repayment of monies advanced by me to the business together with undrawn profit plus interest due on these amounts. These funds were not the property of the business or entity but comprised my money which was due to me as a debt by the business.
23. In 2005 the marriage of my son and daughter in law broke down. They subsequently divorced. Fearing that our family home would become embroiled in a family dispute I requested David and Anne to transfer back to my wife and I the property at 11 Tahlee Crescent Leumeah. This transfer took place on 29 June 2005. All expenses related to this transfer were paid by my wife and I and no consideration was received by my son and daughter in law in respect of the transfer. Annexed and marked “K” is a copy of this transfer.
24. The loan to Westpac was paid out upon the transfer referred to in paragraph 23 above. In order to pay out this loan my wife and I obtained from Westpac a ‘First Option Home Loan’ in the amount of $70,000. After costs associated with this transfer were paid an amount of $57,531.58 remained to payout the Westpac loan in the names of David and Anne Lewis. Annexed and marked “L” is a copy of a letter dated 5 July 2005 from Westpac to myself setting out the details of this new loan.”
9 The Applicants submitted that the Land was originally purchased by David Andrew Lewis and Anne Rochelle Lewis on resulting trust for Sydney John Lewis and that the Transfer qualified for liability of $10 fixed duty under s 55(1)(b) of the Duties Act or, in the alternative, that the Transfer qualified for liability to $10 fixed duty under s 56(1) of the Duties Act.
Legislation
10 Section 55(1)(b) of the Duties Act as it relevantly applied provides as follows:
- “(1) Duty of $10 is chargeable in respect of:
- (a) …
(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.”
11 Section 56(1) and s 56(3) of the Duties Act as they relevantly applied provide as follows:
- “(1) If:
- (a) dutiable property (other than marketable securities) that was transferred to a person to be held by that person as trustee for the transferor is transferred back to the transferor by the trustee, and
(b) no person other than the transferor has had a beneficial interest in the dutiable property (other than the trustee’s right of indemnity) between its transfer to the trustee and its transfer back to the transferor,
(2) …
(3) In this section, trustee includes a trustee appointed in substitution for a trustee or a trustee appointed in addition to a trustee or trustees.”
12 Section 162X(1)(a) of the Duties Act as it relevantly applied provides as follows:
- “(1) Subject to this Division, no vendor duty is chargeable under this Chapter on a vendor duty transaction if:
- (a) ad valorem duty is not chargeable on the transaction as a dutiable transaction under Chapter 2 because of any of the provisions of Parts 6 and 7 of Chapter 2 (other than sections 61 and 62) , or ”
13 Section 86 of the Taxation Administration Act 1996 (“the TAA”) relevantly provides as follows:
- “(1) A taxpayer who is dissatisfied with:
- (a) an assessment that is shown in a notice of assessment served on the taxpayer, or
(b) any other decision (within the meaning of section 6 of the Administrative Decisions Tribunal Act 1997 ) of the Chief Commissioner under a taxation law,
(2) However, a taxpayer may not lodge such an objection in respect of the following:
- …
(d) a decision not to reassess the taxpayer’s tax liability where the taxpayer seeks to lodge the objection more than 60 days after the date of service of the notice of the initial assessment.
14 Section 9 of the TAA relevantly provides as follows:
- “(1) The Chief Commissioner may make one or more reassessments of a tax liability of a taxpayer.
(2) A reassessment of a tax liability is to be made in accordance with the legal interpretations and assessment practices generally applied by the Chief Commissioner in relation to matters of that kind at the time the tax liability arose except to the extent that any departure from those interpretations and practices is required by a change in the law (whether legislative or non-legislative) made after that time.
(3) The Chief Commissioner cannot make a reassessment of a tax liability more than 5 years after the initial assessment of the liability, unless: …
(4) The initial assessment of a tax liability remains the initial assessment of the liability for the purposes of this Act even if it is withdrawn under section 13.”
15 Section 18 of the TAA provides as follows:
- “(1) If a taxpayer has paid a greater amount of tax in relation to a tax liability than the amount assessed for that liability, the Chief Commissioner must refund the difference to the taxpayer, subject to this Part.
(2) For the avoidance of doubt, it is declared that an amount by which tax is overpaid is taken to be tax for the purposes of this Part.”
16 As the application in this matter relates to a decision of the Commissioner not to reassess, although not raised by either of the parties, s 86(2)(d) of the TAA will first briefly be addressed in these written reasons, in connection with jurisdiction of the Tribunal in this case.
17 The Tribunal has jurisdiction to review a decision of an administrator if an enactment provides that applications may be made to the Tribunal for a review of such a decision as referred to in s 38(1) of the ADT Act. Section 96(1) of the TAA provides that an application may be made to the Tribunal for a review of a decision of the Commissioner that has been the subject of an objection under Division 1 (of Part 10 of the TAA). Where s 86(2)(d) of the TAA applies (and is not defeated by s 86(3)), an objection lodged in respect to a decision of the kind referred to in s 86(2)(d) will not be an objection under Division 1 since s 86(2)(d) prohibits lodgment of such an objection under Division 1. Accordingly, the Tribunal would not have jurisdiction to review a decision of the kind referred to in s 86(2)(d) unless s 86(3) applies.
18 Section 86(2)(d) of the TAA appears not to be applicable, but even if it is, s 86(3) of the TAA would apply to defeat the operation of s 86(2)(d) in this case, for the following reasons.
19 The Transfer was stamped however, there was no evidence of “service of the notice of the initial assessment” as referred to in s 86(2)(d) of the TAA. Although s 297 of the Duties Act deems stamping of an instrument to be “evidence of an assessment”, neither that section nor any other provision in the Duties Act or the TAA, deems a stamped instrument to be a notice of an assessment. In McDonald’s Australia Ltd v Chief Commissioner of State Revenue [2005] NSWSC 6, Mr Justice Gzell held [at 44]:
- “44 It was pointed out that the Duties Act 1997, s 297 provided that the stamping of an instrument was taken to be evidence of an assessment of the duty payable under the Act in respect of the instrument. But that does not deem the stamping to be a notice of assessment. The legislation draws a clear distinction between an assessment and a notice of it.”
20 If there was no “service of the notice of the initial assessment”, s 86(2)(d) of the TAA can not be applicable to the lodgement of an objection to a decision of the Commissioner not to reassess the relevant tax liability.
21 If the letter dated 21 March 2006 could be and was, in addition to being notice of the decision of the Commissioner not to re-assess and refund, “the notice of the initial assessment”, the 60 day period referred to in s 86(2)(d) of the TAA was complied with in this case and again, s 86(2)(d) of the TAA is inapplicable.
22 Even if there was in fact and had been “service of the notice of the initial assessment” earlier than 60 days before lodgement of the objection in this case, the Commissioner’s response to the objection, with a decision on the objection in letter dated 21 March 2006, would be evidence that the Commissioner permitted lodgment of the objection, so that s 86(3) of the TAA would apply to annihilate the operation of s 86(2)(d) of the TAA in this case.
23 Accordingly, the jurisdiction of the Tribunal in this case should not be in question.
The Reviewable Decision
24 The Commissioner has power to reassess under s 9(1) of the TAA. A taxpayer has a right to a refund under s 18 of the TAA if the taxpayer has paid a greater amount of tax in relation to a tax liability than the amount assessed for that liability. Accordingly, a right to a refund would exist under s 18 of the TAA if the amount paid on an initial assessment was greater than the amount assessed on a reassessment of the subject tax liability.
25 The Commissioner’s power to reassess is expressed as non-mandatory in s 9(1) of the TAA: “The Chief Commissioner ‘may’ make one or more reassessments…”. Section 9 of the TAA does not give the taxpayer a right to require the Commissioner to reassess, however, the fact that s 86 of the TAA specifically mentions in subsection (2)(d), a decision of the Commissioner not to reassess, indicates that the Commissioner’s decision under s 9(1) of the TAA is intended to be reviewable (other than where s 86(2)(d) applies and s 86(3) does not) and that s 9(1) does not confer an absolute discretion.
26 Whether a decision of the Commissioner not to reassess under s 9(1) of the TAA is correct will be affected by whether the initial assessment is correct. If an initial assessment is correct, a decision of the Commissioner not to reassess would be a correct decision under s 9(1) of the TAA.
27 Under s 100(3) of the TAA, the Applicants have the onus of proving the Applicants’ case on the application in this matter. The following considers the Applicants’ submissions and concludes that those submissions do not establish that the initial assessments of transfer duty and vendor duty on the Transfer were incorrect. It is therefore unnecessary for this Tribunal to decide anything in respect to where a decision not to reassess is made in circumstances where the initial assessment is incorrect.
Section 55 (1)(b) of the Duties Act
28 Dealing firstly with s 55(1)(b) of the Duties Act, s55 has been amended since the date of the Transfer. The State Revenue Legislation Amendment Act 2006 (“the SRLA Act”) which came into operation from the date of assent on 20 June 2006, omitted s 55(1)(b) and inserted a replacement s 55(1)(b) and a new s 55(1A) and 55(1B) in the Duties Act. Section 55 as so amended provides as follows:
- “55(1) Duty of $10 is chargeable in respect of:
(a) a declaration of trust …,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.
(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.”
29 The Applicants submitted that s 55(1A) applies retrospectively in respect to the Transfer or, in the alternative, it clarifies the existing law as it applied prior to the SRLA Act.
30 Section 30(1) of the Interpretation Act 1987 provides as follows:
- “(1) The amendment or repeal of an Act or statutory rule does not:
- (a) revive anything not in force or existing at the time at which the amendment or repeal takes effect, or
(b) affect the previous operation of the Act or statutory rule or anything duly suffered, done or commenced under the Act or statutory rule, or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act or statutory rule, or
(d) affect any penalty incurred in respect of any offence arising under the Act or statutory rule, or
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability or penalty,
31 Section 5(2) of the Interpretation Act 1987 provides that “This Act applies to an Act or instrument except in so far as the contrary intention appears in this Act or in the Act or instrument concerned”.
32 The effect of s 30(1) and s 5(2) of the Interpretation Act 1987 is that legislation is not retrospective in operation unless a contrary intention appears. There is no evidence of any such contrary intention that the amendments to s 55 of the Duties Act effected by the SRLA Act should be retrospective. Section 2(1) of the SRLA Act provides that except as provided by subsection (2), the Act commences on the date of assent. Section 2(2) provides that the provisions listed in that Section commence, or are taken to have commenced, on the dates indicated. Some of the provisions listed in s 2(2) indicate retrospective dates of commencement. However, the amendments to s 55 of the Duties Act are not listed in s 2(2) of the SRLA Act. It is therefore clear from s 2 of the SRLA Act, that the amendments to s 55 of the Duties Act commence from the date of assent to the Bill for the SRLA Act and not earlier or otherwise.
33 In support of this interpretation, the Explanatory Notes to the Bill which became the SRLA Act make no mention of any intended retrospectivity in respect to the amendments to s 55 of the Duties Act. The Explanatory Notes include the following statements which indicate that the intended effect of the SRLA Act was to “extend” the position under s 55 as it pertained to transfers prior to the SRLA Act (indicating that the previous position was narrower):
- “The objects of this Bill are:
(a) to amend the Duties Act 1997:
- …
(iii) to extend a concession for transfers made between an apparent and a real purchaser, (emphasis added)……….
…
(c) extends to cases where the purchase money was provided as a loan and is to be repaid by the real purchaser, and (emphasis added).”
34 The scheme of the Duties Act is to make provision expressly where provisions are intended to have retrospective effect, such as by way of transitional provisions in Schedule 1 to the Duties Act. There is nothing in Schedule 1 or elsewhere in the Duties Act that indicates that the amendments to s 55 effected by the SRLA Act are intended to have retrospective operation.
35 Accordingly, it is not accepted that s 55(1A) of the Duties Act applies retrospectively in respect to the Transfer or that s 55(1A) of the Duties Act necessarily clarifies the existing law as it applied prior to the SRLA Act.
36 A provision relevantly similar to s 55(1)(b) (as it applies in this case) in Victoria, namely, s 34(1)(a) of the Duties Act 2000 (VIC) (as it then applied to the relevant facts, s 34 having since been amended) was most recently considered in the Victorian Civil and Administrative Tribunal by Mr Justice Bowman in Shergold v Commissioner of State Revenue (Taxation) [2006] VCAT 694 (“the Shergold Case”). In the Shergold Case, Mr Justice Bowman [at 72 and see 60] relied upon Calverly v Green (1984) CLR 242 and Alter v Comptroller of Stamps 91 ATC 2019 in holding that, where payment of a purchase price is made under a loan, it is the borrower under the loan that “provided the money for the purchase”. Repayments of the loan by another person are repayments of the loan and are not payments of the purchase money.
37 Since s 55(1)(b), as it applies in this matter, is relevantly similar to the provision that was under consideration in the Shergold Case, and since there is no dispute that the purchase price for the purchase of the Land by David Andrew Lewis and Anne Rochelle Lewis was funded entirely out of a loan from Westpac Banking Corporation made to David Andrew Lewis and Anne Rochelle Lewis, if the approach adopted in the Shergold Case is applied in this case, s 55(1)(b) of the Duties Act is not satisfied. This is because, on the Shergold Case approach, the person “who provided the purchase money for the purchase of the dutiable property” was the borrower under the loan and that person was David Andrew Lewis and Anne Rochelle Lewis (i.e. the apparent purchaser from Sydney John Lewis), irrespective of who made the repayments on the loan.
38 In an earlier decision, of the NSW Court of Appeal, that was not considered in the Shergold Case, namely, Trustees of the Property of Zoltan Sandor, a Bankrupt v Ramirez [1999] NSWCA 261 (“the Ramirez Case”), Mr Justice Sheller, with whom Justices Meagher and Beazley agreed, held [at 68] as follows:
- “68 The trustee submits that since Mr Sandor borrowed approximately $110,000 from the mortgagee and was responsible for the repayment of this loan and paying interest on it the proceeds of the loan used to pay the purchase price of the Baltimore Road property must be treated as his contribution to the purchase price. However, there is nothing in Caverley v Green directed to the situation where a person borrows money on behalf of another and the money so borrowed is used to pay the purchase price of a property bought by the first party on behalf of the second. Young J's finding, which was open on the evidence, that Mr Sandor entered into the mortgage as Ms Ramirez's nominee means that the passage in Caverley v Green on which the trustee relies is inapplicable. Accordingly, payment to the purchaser of the monies borrowed is not a contribution to the purchase price by Mr Sandor, but by Ms Ramirez.”
39 The Ramirez Case is authority that where a person borrows money on behalf of another, the person “who provided the purchase money” for the purchase of property that is funded entirely by the borrowing, can be someone other than the borrower, namely, the person on whose behalf the borrowing was made. Whether this authority applies in the context of s 55(1)(b) of the Duties Act as it applies in this case need not be decided in this matter for the following reason.
40 It was not asserted by the Applicants and the evidence before the Tribunal did not support that David Andrew Lewis and Anne Rochelle Lewis borrowed the money from Westpac Banking Corporation on behalf of Sydney John Lewis and Colleen Mildred Lewis. Even if the moneys borrowed by David Andrew Lewis and Anne Rochelle Lewis from Westpac Banking Corporation were borrowed on behalf of Sydney John Lewis, so that (assuming the authority in the Ramirez Case applies to s 55(1)(b)), it was Sydney John Lewis who provided the money for the purchase, and, as was submitted by the Applicants, the Land was purchased on resulting trust for Sydney John Lewis, the Transfer did not satisfy s55(1)(b) for two reasons. Firstly, in these circumstances, one of the transferees under the Transfer was not a real purchaser (i.e. Colleen Mildred Lewis). Secondly, in these circumstances, the dutiable property acquired by Sydney John Lewis (alone) under the Transfer (i.e. an interest in the Land as joint tenant) lacked the necessary identity with the dutiable property vested in the apparent purchaser (i.e. the entire fee simple estate in the Land) for s 55(1)(b) to be satisfied (Sportscorp v Chief Commissioner of State Revenue [2004] NSWSC 1029 at 53 and extract from Aoun Investments Pty Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1394 at 21 below).
41 For the foregoing reasons, s 55(1)(b) of the Duties Act does not apply to the Transfer.
42 Accordingly, it is unnecessary for this Tribunal to decide on other issues connected to s 55(1)(b), such as whether any presumption of advancement might have applied or, whether other factors might have prevented the Transfer from qualifying under s 55(1)(b).
Section 56 (1) of the Duties Act
43 Turning to s 56(1) of the Duties Act, that section requires that dutiable property that was transferred to a person to be held by that person as trustee for the transferor, is transferred back to the transferor by the transferee (or the transferee/trustee and any additional trustee or, a trustee appointed in substitution) and no other person than the transferor has had a beneficial interest in the dutiable property (other than the trustee’s right of indemnity) between its transfer to the trustee and its transfer back to the transferor.
44 The Applicants submitted that s 56(1) of the Duties Act applied on the grounds, inter alia, that the Transfer was a transfer of the same dutiable property that was originally transferred by Sydney John Lewis to the transferors under the Transfer, back to Sydney John Lewis. This submission requires that the other transferee on the Transfer, namely, Colleen Mildred Lewis, be disregarded which is artificial and can not be accepted.
45 The Commissioner’s submission that the intent of s 56(1) is directed towards where there has been a transfer from an owner to a trustee and there is a transfer back to the original owner “solely” is convincing, having regard to:
- (1) the language of “transferred back” and “transfer back” in each of subsections (a) and (b) of s 56(1); and
(2) the restriction to the application of the section in subsection (b), to circumstances where there has been no beneficial interest in the dutiable property held by any other person (other than the trustee’s right of indemnity) between its transfer to the trustee and its transfer back to the transferor.
46 The Applicants submitted that in the alternative, although not named in the original transfer to David Andrew Lewis and Anne Rochelle Lewis, Colleen Mildred Lewis was also originally a “transferor” of the Land to David Andrew Lewis and Anne Rochelle Lewis, with Sydney John Lewis, so that the Transfer was a transfer back to Sydney John Lewis and Colleen Mildred Lewis to which s 56(1) applies.
47 Even if it were able to be established (as is necessary for this submission) that, immediately prior to the transfer of the Land to David Andrew Lewis and Anne Rochelle Lewis, Sydney John Lewis held the Land on trust for Colleen Mildred Lewis or, for himself and Colleen Mildred Lewis jointly, the submission that Colleen Mildred Lewis was also originally a “transferor” must fail for the following reasons.
48 In s 56(1) of the Duties Act, the “transferor” must mean the person who originally transferred the dutiable property the subject of the original transfer. In this case, that person was Sydney John Lewis alone. Even if Colleen Mildred Lewis was a beneficial owner of the Land at the time of the original transfer of the Land from Sydney John Lewis to David Andrew Lewis and Anne Rochelle Lewis, it was still only Sydney John Lewis alone who originally transferred (and was the transferor of) the Land to David Andrew Lewis and Anne Rochelle Lewis. Since Colleen Mildred Lewis was not a “transferor” of the Land at general law, Colleen Mildred Lewis was not a “transferor” of the Land within the meaning of s 56(1) of the Duties Act.
49 As noted by the representative for the Commissioner at the hearing, in Sportscorp v Chief Commissioner of State Revenue [2004] NSWSC 1029, Mr Justice Gzell held [at 62] that there is no necessity to give the word “transferor” in s 56(1) of the Duties Act a broad interpretation, given that there is a specific provision for transfers from trustee to beneficiary in s 57(1) of the Duties Act.
50 If s 56(1) is considered from the perspective of the original transferor, namely, Sydney John Lewis alone, the property that was transferred by Sydney John Lewis to David Andrew Lewis and Anne Rochelle Lewis was the whole estate in fee simple in the Land. This is not the same property that was “transferred back” (that expression not even being appropriate in this context) to Sydney John Lewis (alone) by the Transfer. Under the Transfer, Sydney John Lewis acquired an estate in the Land as a joint tenant.
51 The nature of the interest of a joint tenant was recently encapsulated in the decision of Mr Justice Gzell in Aoun Investments Pty Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1394 [at 21] as follows:
- “Each joint tenant is seised of the whole of the estate or interest in the land, subject only to the rights of other tenants. A joint tenant does not hold a right to any particular part of the land. In Wright v Gibbons (1948-1949) 78 CLR 313 at 330, Dixon J cited with approval from Radcliffe’s Real Property Law , at 33 the rights of joint tenants:
- ‘Each of them has a right shared with his co-tenants to the whole of the common property, but no individual right to any undivided share in it…for this reason, joint tenants should not be spoken of as holding undivided shares.’”
52 As the interest in land of a joint tenant is different property to the entire estate in fee simple in the land, the property that was originally transferred by Sydney John Lewis to David Andrew Lewis and Anne Rochelle Lewis was different to the property that was acquired by Sydney John Lewis under the Transfer.
53 Implicit in the decision of Mr Justice Gzell [at 51] in Trust Co of Australia v Chief Commissioner of State Revenue [2006] NSWSC 792, was that “the” “dutiable property” where referred to for a second time in s 24 of the Duties Act must be the same estate or interest in property as the “dutiable property” first referred to in s 24. So too must be the case for “the” “dutiable property” where referred to for a second time in s 56(1) of the Duties Act. The definition of “dutiable property” in s 11(1) of the Duties Act includes “(l) an interest in dutiable property referred to in preceding paragraphs of this section” except for certain specified interests. It necessarily follows that “the” “dutiable property” as referred to for a second time in s 56(1) of the Duties Act must be the same estate or interest in property as the “dutiable property” first referred to in s 56(1).
54 Accordingly, the Transfer fails to satisfy s 56(1) of the Duties Act for 2 reasons. Firstly, one of the transferees under the Transfer (i.e. Colleen Mildred Lewis) was not an original transferor of the Land to David Andrew Lewis and Anne Rochelle Lewis. Secondly, the dutiable property acquired by Sydney John Lewis (alone) under the Transfer (i.e. an interest in the Land as a joint tenant) was not the same dutiable property that Sydney John Lewis originally transferred to David Andrew Lewis and Anne Rochelle Lewis (i.e. the entire fee simple estate in the Land). This is so, irrespective of whether any trust in respect to the Land existed immediately prior to the Transfer.
55 Although the decision in Trust Co of Australia v Chief Commissioner of State Revenue [2006] NSWSC 792 is on appeal and the decision in Aoun Investments Pty Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1394 may yet go on appeal, unless and until overturned, those decisions are binding on this Tribunal.
Section 162X(1)(a) of the Duties Act
56 Finally, considering s 162X(1)(a) of the Duties Act which is an exemption from vendor duty which duty was introduced on 1 June 2004 and abolished on 2 August 2005, being a period in which the Transfer occurred.
57 Unless ad valorem duty is not chargeable on the Transfer under Chapter 2 because of any of the provisions of Parts 6 and 7 of Chapter 2 (other than s 61 and s 62), s 162X(1)(a) of the Duties Act is not satisfied.
58 Since the Applicants have not shown that the Transfer was not chargeable with ad valorem duty under Chapter 2, the Commissioner could not be satisfied and this Tribunal is not satisfied that s 162X(1)(a) applies.
Conclusion
59 For the foregoing reasons, the Applicants have not established that the initial assessments of transfer duty and vendor duty on the Transfer were incorrect or the decision of the Commissioner not to reassess and refund the transfer duty and vendor duty assessed on the Transfer was incorrect.
Order
60 The correct and preferable decision is to affirm the reviewable decision of the Commissioner.
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