Pharmos Nominees Pty Ltd v Commissioner of State Taxation

Pharmos Nominees Pty Ltd appealed to the Full Court of the Supreme Court of South Australia against a decision of the Commissioner of State Taxation concerning stamp duty. The dispute arose from an agreement executed on 23 December 2005, which involved the transfer of control of a trust and its assets, including a commercial property. Pharmos, as the new trustee, argued that the instrument was not a dutiable conveyance, while the Commissioner contended it was.

The central legal issues before the Court were whether the instrument effectively removed the trustee's discretion regarding income and capital distribution, thereby converting Pharmos from a potential beneficiary to holding a vested beneficial interest. Consequently, the Court had to determine if the instrument constituted a "conveyance" within the meaning of section 60 of the *Stamp Duties Act 1923* (SA), or if it was deemed to be a conveyance under sections 71(3)(a) and (4) of the Act. If found to be a conveyance, the Court also needed to ascertain the relevant value of the interest in property vested in Pharmos.

The Court, in upholding the trial judge's decision, reasoned that the instrument did vest an interest in property in Pharmos, thus qualifying as a conveyance under section 60 of the Act. While the instrument did not convey the entire beneficial interest in the trust's assets, it did convey a significant interest. The Court found that Pharmos had not exercised reasonable care in assessing its stamp duty obligations, given the complexity of the transaction and the instrument, and the decision not to seek an opinion on its dutiability.

The Court ordered that the parties be heard on the issue of the valuation of the property conveyed to Pharmos before final orders were made, and agreed with the trial judge's conclusion regarding the imposition of penalty tax.