Nunc Coepi Pty Ltd atf Viera Family Unit Trust v Chief Commissioner of State Revenue

[2025] NSWCATAD 143

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Nunc Coepi Pty Ltd atf Viera Family Unit Trust v Chief Commissioner of State Revenue [2025] NSWCATAD 143

Hearing dates:

14 November 2024

Date of orders:

18 June 2025

Decision date:

18 June 2025

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

J Gatland, Senior Member

Decision:

The assessment of the liability of Nunc Coepi Pty Ltd atf Viera Family Unit Trust to land tax for the years ended 31 December 2019, 2020, 2021, 2022 and 2023 is affirmed.

Catchwords:

TAXES AND DUTIES — Land tax — Liability — whether the taxpayer is a special trust or a fixed trust

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW), ss 58, 63

Land Tax Act 1956 (NSW), Sch 13, Pt 2

Land Tax Management Act 1956 (NSW), ss 3, 3A, 7-9

Taxation Administration Act 1996 (NSW), ss 96, 100(3)

Cases Cited:

Attorney-General (Cth) v Oates (1999) 198 CLR 162

B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187

Byrnes v Kendle (2011) 243 CLR 253

Cornish Investments Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 25

CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98

David & Ros Carr Holdings Pty Ltd v Ritossa [2025] NSWCA 108

Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490

Marius Street Developments Pty Ltd ATF The Gerryjohn Unit Trust v Chief Commissioner of State Revenue [2020] NSWCATAD 291

Sahab Holdings Pty Ltd ATF Kanjian Family Trust v Chief Commissioner of State Revenue (RD) [2010] NSWADTAP 4

Sayden Pty Ltd v Chief Commissioner of State Revenue [2013] NSWCA 111

Sejaca Pty Ltd v Chief Commissioner of State Revenue [2010] NSWADT 95

TECH 1 Pty Ltd atf ROVI Investments Unit Trust v The Chief Commissioner of State Revenue [2015] NSWCATAD 123

Texts Cited:

“Commissioner’s practice note: Unit trust deed amendments”, CPN 003, Revenue NSW, 19 December 2017

D C Pearce and R S Geddes, Statutory Interpretation in Australia (8th Ed, 2014 LexisNexis Butterworths)

Category:

Principal judgment

Parties:

Nunc Coepi Pty Ltd atf Viera Family Unit Trust (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Counsel:
S Clarke (Respondent)

Solicitors:
J Viera, authorised representative (Applicant)
Crown Solicitor (Respondent)

File Number(s):

2024/00216579

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. The Applicant is the corporate trustee of the Viera Family Unit Trust (VF Unit Trust), which was established by a deed dated 8 May 2018 (Deed).

2. In its capacity as trustee, and for the period relevant to the proceedings, the Applicant was the registered proprietor of land in New South Wales comprising four commercial properties.

3. On 26 October 2023, the Chief Commissioner determined that the VF Unit Trust was a special trust and not, as the Applicant had considered it, a fixed trust. The consequence of that determination was that the Chief Commissioner issued the Applicant with a single notice of Land Tax Assessment for the land tax years ended 31 December 2019, 2020, 2021, 2022 and 2023. The liability payable under that notice was $39,076.60.

4. The Applicant objected to the Chief Commissioner’s assessment in December 2023. While it was making that objection, the Applicant received a further assessment of $11,920 for the 2024 land tax year.

5. On 12 April 2024, the Chief Commissioner disallowed the objection to the land tax assessment for the years ended 31 December 2019 to 2023.

6. On 12 June 2024, the Applicant sought administrative review of the assessment by this Tribunal.

7. At the hearing of the proceedings in the Tribunal, the parties were given the opportunity to tender evidence and supplement their written submissions by oral submissions, including oral submissions in reply for the Applicant. I also gave the Chief Commissioner the opportunity to make brief supplementary submissions addressing various documents that the Applicant sought to rely upon at the hearing but which the Applicant had been permitted to rely on though it had not served them prior to the hearing.

Jurisdiction and Onus

8. The application is for administrative review under the Taxation Administration Act 1996 (NSW), s 96 and the Administrative Decisions Review Act 1997 (NSW), s 63.

9. As such, the Applicant bears the onus of proving its case; Taxation Administration Act, s 100(3). The requisite standard of proof in such a review is the "balance of probabilities": Cornish Investments Pty Limited v Chief Commissioner of State Revenue [2013] NSWADTAP 25 at [31]; and B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187 at [104].

10. In that regard, I note that much of the Applicant’s submissions were focused on the Chief Commissioner’s conduct, including a failure to adhere to his own practice note CPN003 “Commissioner’s practice note: Unit trust deed amendments” issued on 19 December 2017 (CPN003). At one point in the written submissions, the Applicant accused the Chief Commissioner of acting in “bad faith” in determining the objection due to the interpretation given by the Chief Commissioner to the relevant statutory provisions. Those aspects of the submissions were misconceived, without proper basis and irrelevant to the matters to be determined by the Tribunal in these proceedings.

11. By contrast to the Applicant’s position, the Chief Commissioner is not required to produce evidence of the due making of an assessment. This was observed in Cornish at [5]-[6], where the Appeal Panel of the predecessor tribunal observed:

"The Tribunal focussed upon s 100(3) of the Taxation Administration Act 1996 (NSW) (TAA) which provides that the 'applicant has the onus of proving the applicant's case in an application for review'. The Tribunal contrasted this with the absence, in s 100, of any onus on the Respondent to show that the assessment was correct: see [24] to [34] of the Decision. The Tribunal drew support from various authorities in the Federal jurisdiction concerned with a similar provision, s 190(b) of the Income Tax Assessment Act 1936 (Cth) (now found in s 14ZZK and s 14ZZO of the Taxation Administration Act 1953 (Cth)). That section provided that an applicant has the burden of proving that the assessment is excessive. Mason J said in Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 at 89:

The Act does not place any onus on the Commissioner to show that the assessments were correctly made. Nor, is there any statutory requirement that the assessments should be sustained or supported by evidence. The implication of such a requirement would be inconsistent with s 190(b) for it is a consequence of that provision that unless the appellant shows by evidence that the assessment is incorrect, it will prevail.

This view was approved in Commissioner of Taxation v Dalco (1990) 168 CLR 614."

The issue

12. The issue to be determined in these proceedings is whether the VF Unit Trust is a fixed trust or a special trust under the Land Tax Management Act 1956 (NSW) (LTM Act).

13. If the Applicant is the trustee of a fixed trust, it will not be liable for land tax until it exceeds the tax-free threshold, which is calculated by reference to the value of the land it owns. Further, it will not be liable to a premium rate until the value of the land exceeds a further threshold. However, if the trust is found to be a special trust, then the Applicant is liable to be assessed for land tax at a premium rate for the entire value of the land it owns without the benefit of any threshold.

14. The VF Unit Trust will discharge its onus if it can demonstrate that it meets the requirements of either the LTM Act, s 3A(2) or s 3A(3A), thus making it capable of being considered a fixed trust for the purposes of the LTM Act.

Evidence

The Applicant’s evidence

15. The Tribunal received into evidence a written statement from Mr Viera, who is a director of the Applicant and who appeared for the Applicant at the hearing.

16. The Applicant also prepared a tender bundle which included both evidential material; a copy of the Deed, the relevant notices of assessment, and correspondence between the parties; and authorities and other materials such as practice note CPN003.

The Chief Commissioner’s evidence

17. The Chief Commissioner tendered the bundle of documents previously filed under the Administrative Decisions Review Act, s 58 (s 58 Bundle).

18. Those documents substantially replicated the Applicant’s tender bundle in terms of the essential evidential materials.

Facts

19. Except for the following matter, the facts were not in dispute. There was some uncertainty about when the Deed was first provided to the Chief Commissioner. In the Chief Commissioner’s correspondence with Mr Viera, the date of receipt was said to have been 31 December 2023. However, it was Mr Viera’s unchallenged evidence, which I accept, that the Applicant had sent the Chief Commissioner a copy of the Deed on or around 9 May 2018 and that the Chief Commissioner had acknowledged receipt at that time. While Mr Viera’s evidence on that point should be preferred, nothing turns on this fact because the terms of the Deed are unchanged and, it is those terms which make the VF Unit Trust a fixed trust or a special trust – the length of time the Chief Commissioner had a copy of the Deed is not presently relevant.

20. Mr Viera explained in his statement that after hearing nothing back from the Chief Commissioner when it had submitted a copy of the Deed, the Applicant proceeded on the assumption that the trust met the requirements of a fixed trust. It continued to conduct its business, including entering into various commercial leases.

21. The copy of the deed in evidence before me revealed that the VF Unit Trust had three “Initial Unitholders”: a company called HSDCTLVMB Pty Ltd, Mr Viera and the other director of the Applicant, Samantha Viera. At the hearing, Mr Viera informed the Tribunal that HSDCTLVMB was a company that was owned and controlled by the other two unitholders. None of those matters were controversial.

The Deed

22. Given the nature of the issue to be determined, the Tribunal’s focus is on the terms of the Deed and whether its terms are capable of being interpreted or construed in such a way as to allow the Applicant to discharge its onus.

23. To determine whether the VF Unit Trust is a fixed or a special trust requires that I construe its terms. In approaching that task, I have taken into consideration the intention, objectively ascertained from the text of the Deed.

24. That is the approach suggested in the reasons of Heydon and Crennan JJ in Byrnes v Kendle (2011) 243 CLR 253 at [114]-[115] where their Honours were considering not only an intention to create a trust, but also the issue of intention in the construction of the terms of the trust:

“… But the “intention” referred to is an intention to be extracted from the words used, not a subjective intention which may have existed but which cannot be extracted from those words. This is as true of unilateral declarations of alleged trust as it is of bilateral covenants to create an alleged trust. It is as true of alleged trusts which are not wholly in writing as it is of alleged trusts which are wholly in writing. In relation to alleged trusts which are not wholly in writing, the need to draw inferences from circumstances in construing the terms of conversations may in practice widen the extent of the inquiry, but it does not alter its nature.

As with contracts, subjective intention is only relevant in relation to trusts when the transaction is open to some challenge or some application for modification – an equitable challenge for mistake or misrepresentation or undue influence (182) or unconscionable dealing or other fraud in equity, a challenge based on the non est factum or duress defences, an application for modification by reason of some estoppel, an allegation of illegality (183), an allegation of “sham” (184), a claim that some condition has not been satisfied (185), or a claim for rectification. But subjective intention is irrelevant both to the question of whether a trust exists and to the question of what its terms are."

[emphasis added]

Key clauses of the Deed

25. The central document to be considered was the Deed, which, on the evidence, had been drafted by a solicitor. The key parts of the Deed are as follows.

26. Recital B, which provided that:

“It is further intended by this Deed that, while the Trustee is the registered proprietor of real estate in the State of New South Wales, the Trust can be treated as a “fixed trust” under section 3A of the Land Tax Management Act (NSW) 1956.”

27. The use of the word “can” in the Recital does not provide any clarity that the Deed, objectively construed, intended the VF Unit Trust to be a fixed trust. “Can” is a permissive or facultative word. The context provided by Recital B is that the VF Unit Trust can, i.e. has the capacity to be, a fixed trust, not that it shall, or will, be a fixed trust in those circumstances.

28. Part 3 of the Deed pertains to the trust fund. The most relevant clauses for the proceedings were cll 3.2, 3.3 and 3.4. They provided:

“3.2 The Trustee holds and shall continue to hold the Trust Fund for the benefit of the Unitholders in accordance with the terms and conditions of this Deed.

3.3 The Trust Fund shall include any property which is acquired by the Trustee in its capacity as Trustee of the Trust and includes but is not limited to property acquired:

(a) by the transfer of property to the Trustee by a Unitholder or any other person;

(b) by purchase or by the exercise of the Trustee’s powers of investment; and

(c) by accumulation of the Income of the Trust

3.4 Subject to clause 4.4, the Unitholders shall be entitled to the Trust Fund in the proportion in which they hold Units from time to time, but no property in the Trust vests in possession in any Unitholder except in the circumstances set out in this Deed.”

29. Clause 4.4 of the Deed, which is referred to in cl 3.4, is concerned with the units of the VF Unit Trust. It provided:

“The Trustee, on the authority of a Unanimous Resolution, may issue Units of different classes at a premium or otherwise with such preferred, deferred or other special rights or such restrictions whether in regard to income, capital or otherwise as the Trustee shall, in any particular case, determine but only if the Trustee is not obliged to conduct the Trust as a Restricted Trust.”

30. In his statement, Mr Viera stated that cl 4.4 and cl 13.6 (which relates to income) had the effect of ensuring the unitholders of the VF Unit Trust were presently entitled. However, that cannot be the case where the operation of cl 4.4 is curtailed in circumstances where, as the Applicant has asserted, the trust is obliged to operate as a fixed trust.

31. Clauses 9.4 and 10.1 of the Deed concern some of the circumstances in which units may be redeemed. In that regard:

1. Clause 9.4 provided:

“Upon receipt of a transfer notice, the Trustee may elect to redeem the Units specified in the notice in its discretion within twenty-one days of receipt of the notice.”

2. Clause 10.1 provided:

“The Trustee may redeem the Units of a Unitholder:

(a)   for cash or for their value in property in the Trust in specie in accordance with clause 11.4 at the Fair Value fixed in accordance with clauses 9.13 and 9.15 either on the request of the Unitholder or with the authority of a Special Resolution and after giving seven days notice in writing to the Unitholder of the redemption; or

(b)   by a Unanimous Resolution at a value fixed in accordance with the Unanimous Resolution but only if the Trustee is not obliged to conduct the Trust as a Restricted Trust.”

32. The Chief Commissioner submitted that the effect of these clauses was to permit the Applicant, as trustee, discretion to redeem units specified in a notice or, relying on cl 10.1(a), to redeem units of a unitholder without the unitholder’s consent in certain circumstances. The consequence being that the unitholders were presently entitled to the income of the trust (including the capital), subject to the Applicant exercising its powers as trustee. At the hearing, Mr Viera submitted that the provisions were relevantly meaningless given the close association between the unitholders. That is not to the point. The fact of the power is the relevant consideration. Further, there are circumstances where the interests of the individual unitholders may differ; this was a point of discussion in the recent decision of David & Ros Carr Holdings Pty Ltd v Ritossa [2025] NSWCA 108 at [88]-[89] which restricts the application of Sayden in circumstances where there is more than one unitholder.

33. The Chief Commissioner submitted, and I so find, the subjection of the unitholder’s entitlement under the above cll 9.4 and 10.1 of the Deed is contrary to one of the “relevant criteria” set out in s 3A(3B)(b). The effect of that finding alone is that, unless the Applicant can establish that the VF Unit Trust is a fixed trust under the LTM Act s 3A(2), then it is to be considered a special trust.

34. Clause 15 provided:

"15.1 The Trustee may distribute any of the capital in the Trust Fund to the Unitholders in accordance with their vested interests prior to the Vesting Day

15.2 The Trustee may apply capital from the Trust Fund to offset any losses of the Trust even if they are an income nature."

35. The effect of these cl 15 was that the Applicant, as trustee, was provided with the discretionary power to distribute the trust’s capital to the unitholders or apply the trust capital to offset any losses incurred by the VF Unit Trust. The powers given to the Applicant under cl 15 are not subject to compulsion by the unitholders, and thus the exercise of the Applicant’s discretion is limited only by the terms of the deed.

The applicable legislative provisions

36. Part 3 of the LTM Act provides that land tax is payable by the owner of all land in New South Wales, except for land that is exempt from taxation under that Act.

37. An owner of the land is defined under s 3, that definition is as follows:

Owner includes—

(a)  in relation to land, every person who jointly or severally, whether at law or in equity—

(i)  is entitled to the land for any estate of freehold in possession, or

(ii)  is entitled to receive, or is in receipt of, or if the land were let to a tenant would be entitled to receive, the rents and profits thereof, whether as beneficial owner, trustee, mortgagee in possession, or otherwise,

(b)    (Repealed)

(c)  in relation to any leasehold estate in land, whether legal or equitable (other than under any lease to which section 21C or 21D applies), a person, or a person who is a member of a class or description of persons, prescribed for the purposes of this paragraph, and

(d)  a person who, by virtue of this Act, is deemed to be the owner.

38. The tax year is each period of 12 months commencing on the first day of January, and land tax is charged on land owned as at midnight on 31 December immediately preceding the tax year: LTM Act, ss 7-9.

39. Part 2 of Schedule 13 to the Land Tax Act1956 (NSW) provides that, in respect of land subject to a special trust, land tax is payable in respect of the taxable value of the land. Accordingly, the tax-free threshold applicable to land not held by a special trust does not apply.

40. Section 3A of the LTM Act defines what constitutes a special trust and a fixed trust for the purposes of land tax in New South Wales. Section 3A relevantly provides:

3A   Special trust—meaning

(1)  For the purposes of this Act, a trust is a special trust if—

(a)  the trust property includes land, and

(b)  the trustee of the trust is the owner of the legal estate in the land, and

(c)  the trust is not a fixed trust.

(2)  For the purposes of this section, a trust is a fixed trust if the equitable estate in all of the land that is the subject of the trust is owned by a person or persons who are owners of the land for land tax purposes (disregarding section 25 (3)).

(3)  For the purpose of determining whether a trust is a fixed trust under this section, any equitable interest of the trustee as trustee of the trust is to be disregarded.

(3A)  If a trust satisfies the relevant criteria, the persons who are beneficiaries of the trust under the trust deed are taken to be owners of an equitable estate in the land that is the subject of the trust and, accordingly, the trust is taken to be a fixed trust.

Note.

Under section 25, owners of an equitable estate or interest in land are liable in respect of land tax as if they were legal owners of the land. Owners of an equitable estate in land are treated as secondary taxpayers.

(3B)  For the purposes of this section, the relevant criteria are as follows—

(a)  the trust deed specifically provides that the beneficiaries of the trust—

(i)  are presently entitled to the income of the trust, subject only to payment of proper expenses by and of the trustee relating to the administration of the trust, and

(ii)  are presently entitled to the capital of the trust, and may require the trustee to wind up the trust and distribute the trust property or the net proceeds of the trust property,

(b)  the entitlements referred to in paragraph (a) cannot be removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by the trust deed,

(c)  if the trust is a unit trust—

(i)  there must be only one class of units issued, and

(ii)  the proportion of trust capital to which a unitholder is entitled on a winding up or surrender of units must be fixed and must be the same as the proportion of income of the trust to which the unitholder is entitled.

…

41. The first two of the three criteria for a special trust that are set out in LTM Act, s 3A(1) are fulfilled in this case; part of the trust property of the VF Unit Trust includes land; and the Applicant, as trustee, is the owner of the legal estate in that land.

42. That, of course, means that the VF Unit Trust can only escape liability as a special trust if it can demonstrate that it is a fixed trust, meeting the requirement under the LTM Act, s 3A(1)(c).

43. Both parties referred, in their written submissions, to Marius Street Developments Pty Ltd ATF The Gerryjohn Unit Trust v Chief Commissioner of State Revenue [2020] NSWCATAD 291 at [12]-[13]. In that case, Senior Member Frost, having extracted the relevant parts of the LTM Act, s 3A, then noted:

“In simple terms, and by reference to the distinction explained in s 3A, unless the Applicant can establish that the Unit Trust was a ‘fixed trust’ on each of the taxing dates, it will have been a ‘special trust’ on those dates, and the assessments will have to be confirmed.

Now, there are two ways for the Unit Trust to be classified as a ‘fixed trust’:

(a) if the equitable estate is in all of the land that is the subject of the trust is owned by a person or persons who jointly or severally, whether in law or in equity, are entitled to the land for any estate of freehold in possession (relying on s 3A(2), in conjunction with subparagraph (a)(i) of the definition of ‘owner’ in s 3); or

(b) if the relevant criteria in s 3A(3B) are satisfied, which would make the Unit Trust a fixed trust under s 3A(3A).”

44. Mr Viera’s statement concluded with the following submission, which largely encapsulates the Applicant’s approach to the characterisation of the VF Unit Trust as a fixed, and not a special, trust:

“It is clear that the initial basis of rejecting the Trust Deed as being a Fixed Trust Deed was that it failed to comply with Sec 3A(3B) of the LMTA despite the inclusion of the override clause.

It is clear that the Review of the objection follows a similar path; however, it seeks to impose a rule that a Trust Deed that includes an over-ride clause has to have relevant criteria or elements of the relevant criteria in order to be compliant. This is in contradiction to the Gzell decision that said to the exclusion of any provision of the deed or in spite of any other Provisions of the Deed.

We would argue that the Deed includes the relevant criteria that they mention however this is a moot point under the advice of Justice Gzell.”

Equitable Estate – ss 3A(2) and s 3 of the Land Tax Management Act

45. It is not the case that, given legal ownership vests in a trustee, the beneficiaries or unitholders are automatically considered to hold the equitable estate rather than some, lesser equitable interest: Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 at 497, CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98 at 112-113, 117.

46. Rather, whether the unitholders may be considered owners of the equitable estate requires, as noted in Marius Street, a consideration of the terms of the Deed and the application of the LTM Act, s 3A(2) in conjunction with the definition of ‘owner’ under s 3(a)(i).

47. In Sahab Holdings Pty Ltd ATF Kanjian Family Trust v Chief Commissioner of State Revenue (RD) [2010] NSWADTAP 4 at [13], the Appeal Panel of the predecessor tribunal after considering relevant authorities including Glenn and CPT Custodian, said:

“We have reviewed the authorities to which the parties have referred. In our view the following principles emerge:

(1) the term ‘estate of freehold in possession’ refers to an estate of which some person has a present right of enjoyment, as distinct from a right of future enjoyment

(2) it is not material that the person has no immediate right of occupation (the land may, for example, be leased, or be the subject of a life tenancy)

(3) it does not follow that because there is a legal estate of the freehold vested in a trustee that there must necessarily be an equitable estate of the freehold vested in the beneficiary or beneficiaries of the trust – the mere presence of rights protectible by a court of equity does not necessarily mean that those rights will be seen as amounting to a right to freehold in possession

(4) the question of whether beneficiaries under a trust have a right to a freehold in possession as distinct from some lesser type of equitable interest depends on the terms of the trust, which, ordinarily, will be found recorded in writing in a formal instrument such as a will or a deed of trust

(5) it is necessary, therefore, to examine the terms of the trust deed, and the rights, powers and restrictions for which it provides

(6) in the case of a unit trust, the fact that the unitholder has a 100% interest in the assets of the fund is not conclusive as to whether the unit trust holder is an owner in the relevant sense; the terms of the trust as a whole must be examined

(7) finally, in a statutory scheme of the present kind where liability is fixed on a specified date (here, midnight, 31 December 2007), the question is whether there is a presently subsisting interest in the land at that date.”

48. Consistent with the established authorities, the Chief Commissioner submitted that the Applicant cannot be considered a fixed trust on the basis that the unitholders are owners of the equitable estate. That is because, according to the Chief Commissioner’s written submissions;

1. the Deed does not permit trust property to vest in unitholders except in certain circumstances, under cl 3.4 of the Deed,

2. the Applicant as trustee holds a right to the accumulation of income in priority to the rights of unitholders, under cl 3.3 of the Deed, and

3. the Applicant, as trustee, is permitted, under cl 15.2 of the Deed, to apply the capital of the trust against losses including loss of income.

49. The Applicant submitted that the VF Unit Trust is a fixed trust because its provisions are consistent, or broadly consistent with s 3A(2). In particular, the Applicant relies on clauses 3.2, 3.3 and 3.4 of the Deed. Furthermore, the Applicant relied on Recital B and clause 2.9 to argue that the fiscal objectives of the trust's makers were sufficiently clear. However, for the reasons which I set out below, I have concluded that clause 2.9 does not operate as an effective override of the other provisions in the deed because of the manner in which it has been drafted.

50. The Chief Commissioner submitted that the effect of these clauses was to reveal that while the Applicant was entitled to accumulate trust income (cl 3.3(c)), that accumulation right was in priority to the rights of the unitholders to income of the VF Unit Trust since they did not have a proprietary interest in the land in respect of which the Applicant was the registered proprietor. That submission is, with respect, correctly made.

51. Moreover, there was no evidence before the Tribunal to suggest that in any of the years the subject of the assessment, there had been a resolution to vest any of the property of the VF Unit Trust in the possession of any of its unitholders. That absence of evidence in this regard places the Tribunal in a similar position the Tribunal in Sejaca Pty Ltd v Chief Commissioner of State Revenue [2010] NSWADT 95 at [36]-[38] where it could not be established whether the trustee would exercise its power of accumulation or its other powers affecting the income available to the sole beneficiary of that trust for distribution.

52. Accordingly, I cannot be satisfied that VF Unit Trust should be considered a fixed trust having regard to the LTM Act, ss 3A(2) and the definition of “owner” in the LTM Act, s 3.

53. The Applicant submitted that the operation of s 3A(2) and the relevant criteria under s 3A(3B) are “intended to be congruent”. That submission appeared to be addressing a controversy over whether the VF Unit Trust was considered by the Chief Commissioner at objection as being asserted to be a fixed trust under s 3A(2) or meeting the relevant criteria set out in s 3A(3B) with the effect that it should be considered fixed trust under s 3A(3A). Ultimately, nothing turns on that submission; either the trust meets the various legislative requirements to be considered a fixed trust or it is to be treated as a special trust.

The relevant criteria under s 3A(3B) of the Land Tax Management Act

54. As set out above, the LTM Act, s 3A(3B) sets out relevant criteria by which a trust, that might otherwise be determined to be a special trust, may be considered, instead, to be a fixed trust. From the plain text of the LTM Act, s 3A(3A), it appears that a trust must meet each of the relevant criteria in order to be considered a fixed trust.

55. The Chief Commissioner, in submissions, referred to TECH 1 Pty Ltf v ROVI Investments Unit Trust v The Chief Commissioner of State Revenue [2015] NSWCATAD 123. At [20]-[21] of that decision, Senior Member Verick noted:

“The principal question for determination in this matter is whether the Trust was a ‘special trust’ or a ‘fixed trust’ in the relevant land tax years. In order to determine that question it is necessary to consider three issues. Firstly, as required by s 3A(3B)(a)(i) of the Act, whether the beneficiaries of the Trust were in the relevant years ‘presently entitled to the income of the trust’, subject to payment of proper expenses by the trustee relating to the administration of the Trust. Secondly, as required by s 3A(3B)(a)(ii) of the Act, whether the Unit Holders were in the relevant years ‘presently entitled to the capital of the Trust Fund and had the power to require the Trustee to wind up the Trust Fund and distribute the trust property or the net proceeds of the trust property’. Thirdly, as required by s 3A(3B)(b) of the Act, whether the entitlements referred to in the first and second issues could not be removed, restricted or otherwise affected by the exercise of any discretion, or by a failure to exercise any discretion, conferred on a person by the Trust Deed in the relevant years.

In the determination of these issues, it is necessary to have a clear understanding of the two concepts referred to in s 3A of the Act – ‘present entitlement to a share of the trust income of a trust’ and ‘present entitlement to the capital of the trust’.”

56. After the above passage, the Tribunal in TECH 1, briefly discussed some relevant High Court authority on present entitlement to income before then proceeding to a detailed consideration of the decision of the NSW Court of Appeal in Sayden Pty Ltd v Commissioner of Taxation [2013] NSWCA 111, and the principal judgment of Gzell J, with whom Meagher JA and Tobias AJA agreed.

57. The Applicant here has submitted that the Deed was drafted in a manner to ensure the fiscal objectives under the Deed contemplated are sufficiently clear in the manner contemplated by the Court of Appeal in Sayden, and as such, the VF Unit Trust should be considered to be a fixed trust.

Are all the beneficiaries presently entitled to the income of the trust?

58. As noted above at [33], I have already found with the Chief Commissioner’s submission that the subjection of the unitholder’s entitlement under the above cll 9.4 and 10.1 of the Deed is contrary to one of the “relevant criteria” set out in s 3A(3B)(b). Having concluded that this criterion is not met, I likewise, cannot find that all the relevant criteria provided under the LTM Act, s 3A(3B), are met. However, it is appropriate that some recognition be given of the other bases upon which such a determination can also be made.

59. In Sayden, after observing that present entitlement to income was well established, referring to Harmer v Commissioner of Taxation (1991) 173 CLR 264 and (then recent) Commissioner of Taxation v Bamford (2010) 240 CLR 481, Gzell J at [17], stated:

“By contrast, present entitlement to capital is novel. Presumably it means an interest in the trust property vested in interest and in possession in that there is no other interest in the property that precedes it, together with a present legal right to demand division of the trust property or its proceeds among the beneficiaries.”

60. The Chief Commissioner submitted that the entitlement of unitholders to income of the VF Unit Trust was subject to the discretion of the Applicant, which would be contrary to s 3A(3B)(b). Specifically, the Chief Commissioner noted that:

1. Clauses 9.4 and 10.1 of the Deed give the Applicant discretion to redeem the units of a unitholder.

2. Clause 3.4 of the Deed provides that there is no present entitlement to the property of the VF Unit Trust save where the Deed otherwise allows.

3. The Applicant, as trustee, is permitted, under cl 15.2 of the Deed, to apply the capital of the trust against losses including loss of income.

61. Clause 15 is inimical to the characterisation of the VF Unit trust as a fixed trust.

62. Therefore, in addition to my consideration above, and having regard to the terms of the Deed, and in particular the discretionary powers of the Applicant to apply the capital of the trust against losses, including loss of income, I am satisfied that the unitholders in the VF Unit Trust did not have an immediate right to vesting or redemption. Accordingly, they were not presently entitled to the income of the trust at the taxing date in each year.

The effect of the over-riding clause

63. The clause of the Deed which received most attention at the hearing was cl 2.9, which provided:

“If the Trustee is obliged to conduct the Trust:

(a) as a Non-Geared Unit Trust, the most logical provisions conceivable not expressed in this Deed necessary to enable compliance with Division 13.3A of the Superannuation Industry (Supervision) Regulations 1994 to permit the Trustee to either act or to refrain from acting in a manner those regulations allow shall be taken to apply to this Deed as provisions of this Deed overriding the express provisions of this Deed; or

(a) a Fixed Trust where the Trust owns real estate in New South Wales the most logical provisions conceivable not expressed in this deed necessary to enable the Trust to be a Fixed Trust shall be taken to apply by this deed as provisions of this deed overriding the express provisions of this deed excepting paragraph (a).”

64. The Applicant referred to cl 2.9 in submissions and evidence as “the over-ride clause”. In his statement, Mr Viera asserted that the VF Unit Trust had been conducted as both a Non-Geared Unit Trust and a Fixed Trust. Mr Viera asserted that cl 1.22 of the Deed allowed the trust to operate as a Non-Geared Unit Trust, a Fixed Trust or both. That is not correct. Clause 1.22 is a definitional clause that defines a “Restricted Trust” as being a Non-Geared Unit Trust and a Fixed Trust or both. It otherwise has no operational intent. Mr Viera did not give any further evidence on the extent to which or the circumstances in which the VF Unit Trust was both a Non-Geared Unit Trust and a Fixed Trust.

65. The Applicant contended that Recital B and cl 2.9, in particular, gave:

“… a sufficiently clear expression of the fiscal objectives of the makers of the Deed as contemplated in Sayden Pty Ltd v CCSR.”

66. However, the terms of the deed that was the subject of judicial consideration in Sayden differed materially from clause 2.9 of the Deed, even when that clause is considered in the context of Recital B and the terms of the Deed as a whole.

67. In Sayden, the so-called override clause not only mirrored the language of the LTM Act, ss 3A(3A) and 3A(3B), but it also provided an added protection by providing that the entirety of the sub-clause would apply, “notwithstanding any other provision” of the deed. In that regard, Gzell J stated at [31]-[32] that:

“In order to attract the benefit of s 3A(3A) and s 3A(3B) of the Management Act, the Deed was amended on 11 December 2010 by the addition of cl 2(c) in the following terms:

‘2(c) Notwithstanding any other provision of this Deed, the Trustee hereby admits that the Registered Holders:

(i) are presently entitled to a fixed proportion of any distribution of income or capital of the trust, made by the Trustee, based on the proportion of income or capital units which each person owned in the Trust; and

(ii) are presently entitled to all of the income and capital of the Trust, subject to the payment of the expenses properly incurred by the Trustee in the authorized administration of the Trust; and

(iii) may require the Trustee to wind up the Trust and distribute either the land or the net proceeds of the sale of the land; and

(iv) the Trustee shall not remove, restrict or otherwise affect by the exercise of any discretion, or by a failure to exercise any discretion, paragraphs (i), (ii) and (iii) of this sub-clause.’

Apart from cl 2(c)(i) of the Deed, the provisions mirror s 3A(3A) and s 3A(3B) of the Management Act. The additional provision defines a Registered Holder's present entitlement to a fixed proportion of income and capital by reference to the proportion of income or capital units held by the Registered Holder. And it adds further protection to that provided by cl 2(c)(iv), by also providing that the provisions of cl 2(c) stand, notwithstanding any other provision of the Deed.”

68. In submissions, the Chief Commissioner noted that the “notwithstanding any other provision of this deed” as drafted into the Sayden deed, was included as a chapeau to the clause and that phrase was interpreted to mean that the clause operated to the exclusion of, or in spite of, any other provisions of that deed. I agree that this was the effect of the phrase in the deed considered in Sayden.

69. The word “notwithstanding” is a term frequently used in drafting statutes. In that context, the learned authors of Statutory Interpretation in Australia (8th Ed, 2014 LexisNexis Butterworths) at [12.4] note that the phrases “subject to” and “despite” are synonymous with the phrase, referring, in part, to the decision in Attorney-General (Cth) v Oates (1999) 198 CLR 162 at [33].

70. Here, however, the Deed does not have a chapeau drafted in similar terms; nor does the Deed refer to, or mirror, any of the relevant criteria set out in the LTM Act, s 3A(3B). In fact, and by contrast to the deed considered in Sayden, clause 2.9 of the Deed does not appear to operate expressly or automatically as an override to other clauses in the Deed. While the clause uses the word “overriding”, that word must be read must be read in the context of cl 2.9(b) as a whole; which includes a confusing and vague phrase that obliges the Applicant to conduct the VF Unit Trust by applying “the most logical provisions conceivable not expressed in this deed necessary to enable the Trust to be a fixed trust”. That phrase suggests that the Applicant, in carrying out its obligations to conduct the VF Unit Trust as a fixed trust, must have regard to a source of power provisions which are not contained in the Deed, and for which the only requirement is logicality. The manner of drafting clause 2.9(b) in this way is, in my view, fatal to the Applicant’s position that the clause operates to override other provisions of the Deed, which cause it to fall outside the definition of a fixed trust under either the LTM Act, s 3A(2) or the LTM Act, s 3A(3B).

68. In his oral submissions, Mr Viera suggested that the intention of the drafting of cl 2.9 of the Deed was to ensure the Deed complied with the requirements of a fixed trust for the LTM Act s 3A, ensuring that this overriding clause was paramount. Mr Viera further submitted that the Deed was drafted for present and future purposes, contemplating, for example, the sale of the land in New South Wales and the purchase of other property elsewhere. Mr Viera submitted that the recitals and clause 2.9 of the Deed were “clear” in regard to the intention that the VF Unit Trust should be a fixed trust if it owned land in New South Wales.

69. From reading and construing the terms of the Deed in the orthodox manner, it is clear that there was an intention, objectively ascertained from the text and context, that the VF Unit Trust would operate in different ways depending on where it owned land. However, I am unable to construe the clauses of the Deed in such a way as to detect an intention, objectively ascertained, that it met the definitional requirements of a fixed trust under either the LTM Act, s 3A(2) or ss 3A(3A) and 3A(3B).

Conclusion

73. When construed as a whole using the orthodox approach of construction, the Deed in this case does not establish a fixed trust for the purposes of the LTM Act. Since it is not a fixed trust, it is, as presently drafted, a special trust.

74. The Applicant has not discharged its onus of demonstrating that the Chief Commissioner’s assessments are excessive.

Orders

75. Accordingly, I make the following order:

1. The assessment of the liability of Nunc Coepi Pty Ltd atf Viera Family Unit Trust to land tax for the years ended 31 December 2019, 2020, 2021, 2022 and 2023 is affirmed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 18 June 2025