Schipp v Chief Commissioner of State Revenue - [2004] NSWADT 138

No judgment structure available for this case.

CITATION: Schipp v Chief Commissioner of State Revenue [2004] NSWADT 138 revised - 14/07/2004

DIVISION: Revenue Division

PARTIES: APPLICANT
Murray Joseph Schipp
RESPONDENT
Chief Commissioner of State Revenue

FILE NUMBER: 046004

HEARING DATES: 27/05/2004

SUBMISSIONS CLOSED: 06/22/2004

DATE OF DECISION:
07/12/2004

BEFORE: Seve J - Judicial Member

APPLICATION: Duties Act - oral agreement - duty on transfer - Duties Act - re-assessment

MATTER FOR DECISION: Principal matter

LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Conveyancing Act 1919
Duties Act 1997
Taxation Administration Act 1996

CASES CITED: Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP19
Lake Victoria Ltd and Others v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262
Newton v Federal Commissioner of Taxation (1958) 98 CLR 1
Summergreene v Parker (1950) CLR 304
Vickery v Woods (1952) 85 CLR 336

REPRESENTATION: APPLICANT
D Swan, solicitor
RESPONDENT
T Thawley, barrister

ORDERS: Reassessment of Transfer and assessment of interest set aside and matter remitted for reconsideration by the Respondent in accordance with directions.

1 The objection decision under review is the disallowance by the Respondent, in letter dated 21 November 2003, of an objection by the Applicant against a reassessment of duty payable under the Duties Act 1997 (“the Act”) in respect of a Real Property Act Transfer of unit 11/ 9-13 Smith Street, Wollongong (“the Property”) dated 23 July 2002 from the Applicant’s mother, Mrs DJ Schipp (“the Transferor”) to the Applicant (“the Transfer”) and an assessment of interest payable under the Taxation Administration Act 1996 (“TAA”), each as notified in a Duties Notice of Assessment dated 9 September 2003.

2 At the hearing of this matter, the Tribunal had before it the documents lodged by the Respondent pursuant to section 58 of the Administrative Decisions Tribunal Act 1997, along with written submissions of each of the Applicant and the Respondent.

3 After the hearing of this matter, to assist the Tribunal in its decision, by letter dated 31 May 2004, the Tribunal made the following directions:

(2) Applicant to file and serve within 7 days, a written statutory declaration from each of the parties to the subject Transfer, as to the existence of a prior oral agreement for the sale or transfer of the property the subject of the Transfer, alleged to have been entered into on 28 February 2002 and as to whether the subject Transfer was executed pursuant to and in conformity with any such prior oral agreement; and

(3) Applicant to file and serve within 7 days written submissions on:

Conveyancing Act 1919

(b) on the issue of the powers of the Chief Commissioner under Section 305 of the Act, in particular, whether the Chief Commissioner may assess on the basis of a valuation provided or obtained by a person other than the person liable to duty or the Chief Commissioner himself.

4 In response to the Tribunal’s first direction, on behalf of the Respondent, the Crown Solicitors Office filed with the Tribunal a facsimile dated 1 June 2004 advising that the Transfer was lodged and stamped over the counter with an associated mortgage and valuation and that the Respondent has no record of having received any covering letter at the time of lodgement of the Transfer and that all correspondence in relation to the Transfer received by or sent from the Respondent was included in the documents lodged by the Respondent with the Tribunal pursuant to section 58 of the Administrative Decisions Tribunal Act 1997.

5 In response to the Tribunal’s other directions, on behalf of the Applicant, Access Business Lawyers filed with the Tribunal the following:

“I have a valuation from Australian Certified Valuers. The valuation has come in at $400,000.00. I will come around to your place tonight to discuss the matter.”

12. At about 7.00pm I went to my mothers place and said:

“The valuation has come in at $400,000.00.Here is a copy. That means I have to borrow $320,000.00 from the bank as I can raise $80,000.00.”

13. My mother said to me

“Murray, I would like to offer the property to you for $400,000.00 because unless you buy it, I will lose my home.”

14. I then said

“Ok I will buy the unit for $400,000.00. Regard it as sold.”

15. I state that the Transfer executed by me and dated 23 July 2002 was executed pursuant to and in conformity with my prior oral agreement made on 28th February 2002.”; and

6 On behalf of the Respondent, the Crown Solicitor’s Office filed with the Tribunal under cover of a letter dated 22 June 2004, further submissions in reply to the Applicant’s submissions.

BACKGROUND FACTS

7 Not all facts in this matter were agreed between the Applicant and the Respondent. The following chronology of events, reflected in the documents lodged with the Tribunal by the Respondent pursuant to section 58 of the Administrative Decisions Tribunal Act 1997, were however, not in dispute:

(ii) The Transfer was stamped by the Respondent with duty of $14,635, calculated on the dutiable amount of $400,000, on 25 June 2002.

(iii) Settlement of the Transfer occurred on 23 July 2002, being the date of the Transfer.

(iv) On 6 August 2003, the Respondent contacted Mr Swan of Devitt and Swan Lawyers, by phone to advise that the Transfer was being reviewed. By letter dated 7 August 2003 from the Respondent to Mr Swan, the Respondent advised that “Evidence to hand indicates that the market value of the said unit was at least $475,000 as at the date of the transfer” and that “If it is claimed that the unencumbered value of the unit at the time of purchase was $400,000 evidence to substantiate this claim will be required”.

(v) By letter dated 29 August 2003, Access Business Lawyers, acting through Mr Swan, responded to the letter of 7 August 2003 from the Respondent. Mr Swan noted that the Respondent had asserted that the Property had increased in value between the time of the valuation dated 27 February 2002 and the time of stamping of the Transfer. Mr Swan then advised that “In our view, the correct date for valuing the asset would be the date of the Contract or oral agreement to purchase the property. In this case, it was agreed between Mr Schipp and his mother that a valuation be obtained and Mr Schipp paid the agreed price determined by the valuer. In our view, the correct date of determining the value of the property is at the date of valuation which was also the date of the oral agreement”. At the hearing of this matter, on behalf of the Applicant, Mr Swan advised that the correct date of the alleged oral agreement was 28 February 2002 (not 27 February 2002 as stated in his letter of 29 August 2003) and of 28 February 2002 (not 27 February 2002) was reflected as the date of the alleged oral agreement in the statutory declarations of the Applicant and the Transferor filed with the Tribunal after the hearing.

(vi) By letter dated 9 September 2003 from the Respondent to Mr Swan of Devitt and Swan Lawyers, the Respondent advised, among other things, that: “ I agree with your view that the correct date of valuing the unit for stamp duty purposes would be the date of the contract or oral agreement to purchase the property. I also understand that you are now advising this office that an oral agreement took place between Mr Schipp and his mother on the same date as the valuation, 27 February 2002. The agreement being for the purchase of the unit based on the then valuation of $400,000. However, I refer you to Section 10(1) of the Taxation Administration Act 1996, (TAA), which provides that a person who is liable to pay tax under a taxation law must, before or at the time an assessment of liability is made, fully and truly disclose to the Chief Commissioner all the facts and circumstances affecting the tax liability under the relevant taxation law. From the information at hand there is no indication that the two parties had entered into an oral agreement for the sale of the unit on the same date the valuation was obtained. Therefore I have enclosed an amended assessment to reflect the valuation of the unit at the time the transfer was lodged for stamping on 25 June 2003 (note: should have read 2002) for $475, 000. The assessment includes interest accrued under Section 22 of the TAA”. The Duties Notice of Assessment dated 9 September 2003 enclosed with the letter from the Respondent of the same date notified reassessment of duty in respect to the Transfer in the amount of $16,865 and interest of $412.29 and a total due of $3,783.29 (representing additional duty of $3,375 pursuant to the reassessment plus the interest of $412.29).

(vii) By letter dated 30 September 2003, on behalf of the Applicant, Access Business Lawyers, acting through Mr Swan, objected to the reassessment of duty in respect of the Transfer and assessment of interest each as notified with the letter from the Respondent dated 9 September 2003. Mr Swan advised a chronological sequence of events in the letter of objection and concluded the chronology: “As you will see from the above chronology, the original agreement to enter into the purchase of the property was made during February 2002 which can be evidenced by correspondence between this office and Dibbs Barker Gosling”. Mr Swan also enclosed with the letter, another copy of the First Valuation, as well as a copy of a valuation of the Property dated 7 June 2002, in the same valuation amount as the First Valuation, of $400,000, prepared by Jackson & Co (NSW) Pty Ltd for the independent lender and mortgagee to the Applicant (“the Second Valuation”).

(viii) By letter dated 21 November 2003 from the Respondent to Mr Swan of Access Business Lawyers, the Respondent disallowed the Applicant’s objection. The Respondent advised that: “Your contention that the correct date of determining the value of the subject property is at the date of the oral agreement is not disputed. However, the information provided is inconclusive as to whether there was an oral dutiable transaction prior to the execution of the Transfer. At the time of lodgement of the Transfer a valuation dated 27 February 2002 was enclosed to support the value of the Property. This valuation described the property as a two-bedroom unit. Following investigation, we have determined that the subject Property is in fact a three-bedroom unit that has been converted into a two-bedroom unit. We would argue the transferee did not make a full and true disclosure to the Chief Commissioner at the time of lodgement, and as such was a contravention of Section 10 of the Taxation Administration Act”. The Respondent’s letter also advised that: “The valuation, made for mortgage purposes, dated 7 June 2002 is considered inappropriate for the determination of the dutiable value, as it was prepared for the purpose of whether the property was of sufficient value to secure the proposed borrowing. Accordingly this valuation is not acceptable for duty purposes”. The Respondent’s letter also refered to another valuation (“the Third Valuation”) dated 14 July (should read April) 2003 showing the value of the Property as $475,000 as at 23 July 2002. The letter advises that such valuation takes into account the fact that the property is a three-bedroom unit which has been converted into a two-bedroom unit and that: “Consequently, this valuation showing a value of $475,000 for the Property is considered a truer indication of the unencumbered value of the subject Property”.

(ix) The Applicant lodged with the Tribunal, an Application for Review of the Respondent’s decision, in January 2004.

8 As indicated in the foregoing, the Respondent disputed the Applicant’s assertion that an oral agreement for the transfer of the Property was made between the parties to the Transfer in February 2002.

APPLICANT’S SUBMISSIONS

9 The Applicant’s submissions at the hearing of this matter included the following:

(ii) Having made the decision to purchase the Property, the Applicant engaged Australian Certified Valuers to determine the value of the Property.

(iii) On 27 February 2002, Australian Certified Valuers determined the value of the Property to be $400,000 (ie the First Valuation). This is the relevant date at which duty should be assessed being the date agreed between the parties to proceed with the transaction.

(iv) It was understood by the transferor that a previous owner removed a wall between two very small bedrooms to create a larger bedroom and the Property is two bedroom in layout.

(v) The Applicant was required to borrow money to purchase the Property and a separate valuation (ie the Second Valuation) was prepared by Jackson & Co (NSW) Pty Ltd for the lender, conducted with complete independence. The valuation was dated 7 June 2003 (should read 2002) and also indicated the market value of the Property to be $400,000. This valuation noted the Property as three bedrooms notwithstanding the actual layout was two bedrooms.

(vi) The Third Valuation prepared by Meadow Real Estate Services Pty Ltd dated 14 April 2003 is inappropriate because the valuer is from Sydney and would be predominantly working in the Sydney market, the date of inspection of 14 April 2003 was more than 12 months after the valuation prepared by Australian Certified Valuers, between March 2002 and April 2003, there were significant increases in property values in NSW including the Illawarra, the valuation was determined as at 23 July 2002 which is the incorrect date and the comparative sales identified by the valuer are distinguishable and supportive of the First Valuation and the Second Valuation.

(vii) A copy of a letter from Australian Certified Valuers dated 30 March 2004 confirming that the Property had been renovated as a two bedroom unit at the time of inspection for the First Valuation and that the First Valuation reflects an accurate assessment of worth of the Property as at 27 February 2002.

(viii) Section 12 of the Act provides that if a transfer of dutiable property is effected by a written instrument, liability for duty arises when the instrument is first executed. The Respondent’s reliance on the date of 23 July 2002 is rejected as this was the date of settlement and not the date of first execution of the Transfer.

(ix) As there was no written contract, the appropriate Section of the Act is Section 15. If Section 15 is to apply, a written statement must be made within three months from the date the liability arises. To the extent that the Applicant has failed to file a written statement within the meaning of the section, that is a matter for determination in respect of any breach of Section 15 of the Act. If Section 15 is to apply, the only liability by the Applicant would be for interest on late payment of stamp duty from 27 May 2002 to 26 June 2002, the 27 May 2002 being the date by which a written statement should have been lodged with the Respondent.

(x) At the cost of the Applicant, the Applicant obtained an independent valuation of the Property prior to its purchase (ie the First Valuation). The First Valuation and the Second Valuation support that there is no difference if the Property is valued as a two or three bedroom unit.

(xi) The correct value of the Property for stamp duty purposes is $400,000.

10 The Applicant’s submissions on the matters referred to in paragraphs (3)(a) and (3)(b) of the Tribunal’s letter of directions dated 31 May 2004 were as follows:

Conveyancing Act 1919

(ii) The Respondent has no power to rely upon a valuation provided by anybody other than the person who is liable to pay the duty (Section 305(1) of the Act). Alternatively, the Respondent may have the property valued pursuant to Section 305(3) of the Act. Consequently, the Respondent has no power to rely upon the valuation prepared by a trustee in bankruptcy particularly in circumstances where the bankrupt was not liable to pay the duty at first instance and the valuation has been provided otherwise than in accordance with Section 305 of the Act.

11 The Respondent’s submissions at the hearing of this matter included the following:

(ii) The correct date for determination of the amount of stamp duty payable is 23 July 2002. Whether or not there was an oral agreement for the sale and purchase of the Property is irrelevant.

(iii) The unencumbered value of the Property as at 23 July 2002 was $475,000.

(iv) In his commentary in Duties Legislation at paragraph 3.1090, Justice Hill explains the effect of Section 12 of the Act as: “The time when the liability to pay duty arises differs, depending upon whether the dutiable transaction is carried out in writing, or whether it is effected orally. If the former, then the liability for duty will arise when the instrument effecting the transaction is first executed. If the latter, the liability the liability will arise when the transfer (or other dutiable transaction equated to a transfer), takes effect. It is thought the word “occurs”, a non-technical word, means no more than “becomes effective”.

(v) There was no written agreement. The Transfer took effect on 23 July 2002 and that is, accordingly, the correct date to assess liability for duty.

(vi) No reason is advanced by the Applicant as to how 27 February 2002 can be the correct date for liability to duty in circumstances where there is no written instrument. The contention is plainly inconsistent with Section 12.

(vii) Section 12(1) provides that liability for duty arises when the transfer occurs, namely, 23 July 2002. Section 12(2) applies only where that transfer “is effected by a written instrument”, namely where the transfer came about because of the existence of a written agreement. It is not in dispute that there was no such written agreement.

(viii) The only evidence as to value of the property as at the relevant date, namely 23 July 2002, is the Third Valuation of Meadow Real Estate Services.

(ix) In any event, the valuations provided by the Applicant are inadequate. The evidence of the Applicant’s experts fails to comply with the ordinary rules of admissibility of such opinion as is expressed. Whilst the Tribunal is not bound by the rules of evidence, the proper course in this case – given the inadequacies in the Applicant’s evidence – is to reject it. Alternatively, that evidence ought to be given little, if any, weight.

(x) The Application for Review ought to be dismissed and the decision of the Respondent affirmed or alternatively, if the Tribunal is of the view that the correct date for valuation is 27 February 2002, the matter ought be remitted to the Respondent for consideration of the unencumbered value of the Property as at that date.

12 The Respondent’s further submissions in reply to the Applicant’s submissions on the matters referred to in paragraphs (3)(a) and (3)(b) of the Tribunal’s letter of directions dated 31 May 2004 were as follows:

(ii) Section 8 of the Act provides for the imposition of duty on certain transactions which include “an agreement for the sale or transfer of dutiable property”. It is immaterial whether or not a dutiable transaction is effected in writing or by any other means: Section 10. Land in NSW is included in the definition of dutiable property: Section 11.

(iii) Section 15(1) of the Act provides that a written statement must be lodged with the Respondent in respect of a dutiable transaction, liable to ad valorem duty, which is not effected by a written instrument.

(iv) Section 12 of the Act provides:

(2) However, if a transfer of dutiable property is effected by a written instrument, liability for duty charged by this Chapter arises when the instrument is first executed.

(vi) In relation to an agreement for the sale or transfer of property as per Section 8(1)(b)(i) of the Act, Section 9 seeks to identify the dutiable transaction by attributing to the transfer the earliest date applicable being namely the date of the agreement. Therefore, the Act contemplates that the transfer of dutiable property occurs when the agreement, being either written or oral, is entered into. However, Section 12 of the Act operates so as to recognise the unenforceability of oral agreements in respect of the sale or transfer of land pursuant to Section 54A of the Conveyancing Act. This is so because Section 12(1) operates to restrict the deeming effect of Section 9 by providing that liability for duty charged arises when a transfer (being the actual transfer) of dutiable property occurs. Conversely, Section 12(2) then seeks to allow the deeming effect of Section 9 by providing that where a transfer of dutiable property is effected by a written instrument, liability arises when execution of the execution instrument first arises. The effect of Section 12(2) and its requirement for a written instrument in order to claim the earlier deemed date, is to recognise that an oral agreement for the transfer of land, pursuant to Section 54A of the Conveyancing Act, is unenforceable in law.

(vii) Therefore, pursuant to Section 12(1) of the Act, liability for duty charged on an oral agreement, being an agreement not effected by a written instrument, arises when a transfer of dutiable property is effected. Further, the requirement of Section 12(1) that, in the absence of a written agreement and in respect of a sale or transfer of land, liability for duty first arises at the date of the transfer recognises the operation and effect of Section 41 of the Real Property Act 1900 whereby dealings are not effectual until registered, as well as Section 23C of the Conveyancing Act whereby no interest in land established by parol can be created or disposed of without a written instrument. In the event that the Tribunal finds that an oral agreement existed at 27 February 2002 as between the Applicant and the Transferor, Section 12(1) applies and the correct date for assessing duty is the date of the transfer of the dutiable property, being namely 23 July 2002. Conversely, the only instrument in evidence in relation to any oral agreement that might be found by the Tribunal is the Transfer document dated 23 July 2002 and, pursuant to Section 12(2) of the Act, liability for duty arises when the instrument is first executed.

(viii) Even if the Tribunal finds that an oral agreement existed between the Applicant and the Transferor at 27 February 2002, the operation of either Section 12(1) or Section 12(2) of the Act results in 23 July 2002 being the date at which liability for duty arises (accepting that the date of the first execution of the transfer would have been in close proximity to the 23 July 2002 date).

(ix) The Act provides a discretion in respect of seeking a valuation of property in certain circumstances, and in the event that a valuation is obtained by means other than those countenanced by the provision, being an independent valuation prepared by a competent valuer, the Respondent may rely on that valuation.

(x) Section 305(1) provides that the Chief Commissioner “may” require a person who is liable for duty to submit a declaration by a competent valuer as to the unencumbered value of the property or to provide such other evidence as the Chief Commissioner thinks fit. The provision does not make it mandatory for the Respondent to obtain a valuation exclusively from the liable party in the event that he is dissatisfied with the current valuation. Whilst providing the Respondent with a discretionary power to obtain a valuation from the liable party, it does not preclude him from relying on another competent valuation.

(xi) Section 305(3) provides that the Chief Commissioner “may” have property valued if not satisfied with the value so declared and may assess duty on the basis of the valuation. The provision does not oblige the Respondent to actively seek a valuation. Whilst the discretion afforded to the Respondent by this provision enables him to accept a submitted valuation from the liable party rather than seeking of further valuation himself, it does not preclude him from relying on a further valuation coming into his possession from other means. If Section 305(1) or Section 305(3) made use of the word “shall” rather than “may” to describe the nature of the Respondent’s power, it might be arguable that an obligation was imposed upon him to only have recourse to obtaining a valuation from the liable party or by his own instigation. However, the persistent use of the word “may” throughout Section 305 indicates the Respondent has a discretionary power in respect of obtaining valuations and Acts so as not to preclude the use of a competent valuation obtained by other means.

(xii) The Applicant has submitted that the Respondent in the event that he is dissatisfied with the current valuation, is obliged to either obtain a further valuation from the liable party or through his own volition. The Applicant contends that Section 305 restricts the power of the Respondent as to the method of obtaining and relying on a further valuation. However, the use of the permissive “may” does not restrict the Respondent from relying on a valuation obtained by means other than those countenanced by Section 305(1) and Section 305(3). Where permissive words are added to by the addition of a phrase such as “if he thinks fit”, the intention that the power is discretionary is emphasised. Further, the onus rests with the party asserting that the word “may” has a compulsory meaning to show, as a matter of construction of the legislation taken as a whole, that the word was intended to have such a meaning: Pearce and Geddes at page 267. The Applicant has not discharged this onus.

13 Sections 9 and 3(1) (definition of “assessment”) of the TAA provide as follows:

(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.

3(1) “assessment” means an assessment made by the Chief Commissioner under Part 3 of the tax liability of a person under a taxation law, and includes:

(b) an assessment by the Supreme Court or the Administrative Decisions Tribunal on an application for a review.

14 The following provisions of the Act are also relevant to this matter.

“(1) This Chapter charges duty on:

(b) the following transactions:

(i) an agreement for the sale or transfer of dutiable property,…

(3) In this Chapter:

declaration of trust means …

transfer includes an assignment, an exchange and a buy-back of shares in accordance with Division 2 of Part 2J.1 of the Corporations Act 2001 of the Commonwealth”.

The Dictionary definition of “dutiable transaction” which provides:

“

dutiable transaction

Section 9 which provides:

(2) Accordingly, for the purpose of charging duty under this Chapter, in relation to a dutiable transaction specified in Column 1 of the following Table:

(b) the person specified opposite the dutiable transaction in Column 3 is taken to be the transferee of the dutiable property (and a reference in this Act to a transferee includes a reference to such a person), and

(c) the transfer of the dutiable property is taken to have occurred at the time specified opposite the dutiable transaction in Column 4 (and a reference in this Act to the time at which a transfer occurs includes a reference to such a time).”

Section 10 which provides: “It is immaterial whether or not a dutiable transaction is effected by a written instrument or by any other means, including electronic means”.

Section 12 which provides:

“(1) A liability for duty charged by this Chapter arises when a transfer of dutiable property occurs.

(2) However, if a transfer of dutiable property is effected by a written instrument, liability for duty charged by this Chapter arises when the instrument is first executed.”

Section 13 which provides: “Duty charged by this Chapter is payable by the transferee, unless this Chapter requires another person to pay the duty”.

Section 15 which provides:

“(1) If a dutiable transaction that is liable to ad valorem duty under this Chapter is not effected by a written instrument, the transferee must make a written statement in an approved form.

(2) The written statement must be made within 3 months after the liability arises.

(3) (Repealed)

(4) If a dutiable transaction is completed or evidenced by a written instrument within 3 months after the date on which the dutiable transaction occurs, the requirement to lodge a statement and pay duty in respect of the statement may be satisfied by the lodgement of and payment of duty on the written instrument within 3 months after the date on which the dutiable transaction occurs.”

Section 16 which provides:

“(1) A transferee who is liable to pay duty in respect of a dutiable transaction must, within 3 months after the liability arises, lodge with the Chief Commissioner:

(b) the written statement made in compliance with section 15.”

“A tax default does not occur for the purposes of the Taxation Administration Act 1996 if duty is paid within 3 months after the liability to pay the duty arises.”

Section 18(2) which provides:

“(2) The duty chargeable in respect of a transfer of dutiable property made in conformity with an agreement for the sale or transfer of the dutiable property is $2 if the duty chargeable in respect of the agreement has been paid.”

Section 21(1) which provides:

“The dutiable value of dutiable property that is subject to a dutiable transaction is the greater of:

(a) the consideration (if any) for the dutiable transaction (being the amount of a monetary consideration or the value of a non-monetary consideration), and

(b) the unencumbered value of the dutiable property.”

Section 295 which provides:

“(1)For the purposes of this Act, an instrument is taken to be first executed the first time that it is signed and sealed, or signed (as the case may be) by any party to it.

(2) However, a contract made by acceptance of an offer contained in an instrument is taken to be first executed when the offer is accepted.

(3) If an instrument is ineffective by reason of a failure of the necessary parties to execute it, a refund may be made of any money paid for stamping.”

Section 305 which provides:

“(1) The Chief Commissioner may require a person who is liable to duty determined with reference to the value of property to provide a declaration by a competent valuer as to the unencumbered value of the property or to provide such other evidence of that value as the Chief Commissioner thinks fit.

(2) The Chief Commissioner may assess duty in accordance with the value so declared.

(3) The Chief Commissioner may have property valued if not satisfied with the value so declared and may assess duty on the basis of the valuation.

(4) The Chief Commissioner may recover the cost of obtaining a value under this section from the dutiable person.”

15 Section 54A of the Conveyancing Act 1919 provides as follows:

(2) This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.

(3) This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900.”

FIRST FINDING OF FACT

16 Statutory declarations by each the parties to the Transfer, namely the Transferor and the Applicant, that an oral agreement to transfer the Property was made between those parties on 28 February 2002, were filed with the Tribunal on behalf of the Applicant. Nothing discrediting such sworn evidence of the parties to the Transfer was offered to the Tribunal by the Respondent, other than that the existence of the oral agreement was not raised by the Applicant with the Respondent until the Respondent advised the Applicant’s solicitor that the Transfer was being reviewed. However, the Applicant did lodge with the Transfer, at the time of original stamping of the Transfer on 25 June 2002, a copy of the First Valuation which was dated 27 February 2002, the day before the oral agreement was alleged to have been entered into. This fact, coupled with the sworn evidence of the parties to the Transfer, supports a finding by this Tribunal that an oral agreement to transfer the Property was entered into between the parties to the Transfer on 28 February 2002 (“the Oral Agreement”).

17 The next issue is whether the Oral Agreement was an agreement of the kind referred to in Section 8(1)(b)(i) of the Act and if so, the effect of this on the liability to duty of the Transfer. These issues are dealt with below.

FINDINGS OF LAW AND OTHER FINDINGS OF FACT

Was the Oral Agreement was an agreement of the kind referred to in Section 8(1)(b)(i) of the Act?

18 Section 8(1)(b)(i) of the Act includes “an agreement for the sale or transfer of dutiable property” as a dutiable transaction (Section 8(2)). Chapter 2 of the Act contemplates that a dutiable transaction that is an agreement for the sale or transfer of dutiable property is capable of being completed (Section 15(4) and 18(2)). Chapter 2 also contemplates that a dutiable transaction that is an agreement for the sale or transfer of dutiable property is capable of being made for consideration (e.g. Sections 21(1)(a) and 31) and of containing terms (Section 22(2)) and of being cancelled (Section 50). These provisions indicate (albeit, alone not conclusively) that an agreement for the sale or transfer of dutiable property of the kind referred to in Section 8(1)(b)(i) is intended to mean an agreement that is legally enforceable, that is, a contract enforceable at law or in equity. That this interpretation is intended, is supported by the fact that in other contexts (Sections 11(1)(g)(ii), 11(1)(j), 22(3), 23, 24, 25, 60(1)(c), 64(b), 64B(2) and 66(5)), Chapter 2 uses the expression “arrangement” which has been held to encompass less than a legally enforceable contract (Newton v Federal Commissioner of Taxation (1958) 98 CLR 1) indicating that where Chapter 2 refers to an “agreement”, it is intended to mean a legally enforceable contract. Accordingly, there being nothing to the contrary in Chapter 2 or elsewhere in the Act, I find that for an agreement for the sale or transfer of dutiable property to be an agreement of the kind referred to in Section 8(1)(b)(i) of the Act, it must be a contract enforceable at law or in equity.

19 What is required for a legally enforceable contract for the sale or transfer of land or an interest in land in NSW? Section 54A of the Conveyancing Act 1919 is based on a provision the Statute of Frauds 1672 of the United Kingdom which was enacted to prevent fraud or perjury by precluding the enforcement of certain oral agreements unless there was written evidence of a contract. Citing relevant United Kingdom judicial decisions, the text by Megarry on the Law of Real Property (London, Stevens & Sons Ltd) at page 531 states that where the parties to a purported oral agreement for the sale of land do not dispute the existence of the oral agreement, the Statute of Frauds does not apply. The same applies to Section 54A of the Conveyancing Act (see paragraph 510 of the CCH NSW Conveyancing Law and Practice loose leaf service, at which it is stated that: “Most of the judicial decisions relating to the corresponding portion of the Statute of Frauds apply to this section” (ie Section 54A)).

20 For the foregoing reasons, I do not agree with the Applicant’s submission that Section 54A of the Conveyancing Act has no relevance to the administration of the Act for the purpose of determining duty, nor with the Respondent’s submission that an oral agreement is sufficient to constitute an “agreement” for the sale or transfer of dutiable property within the meaning of Section 8(1)(b)(i) where the dutiable property is land or an interest in land and the agreement is not in writing, notwithstanding Section 54A of the Conveyancing Act. However, there are exceptions to Section 54A such as part performance or where, as is the present case, there is no dispute between the parties to the alleged oral agreement as to the existence of the oral agreement, in which case, Section 54A does not apply. Accordingly, the absence of writing in respect to the Oral Agreement did not preclude it from being capable of being an “agreement for the sale or transfer of dutiable property” within the meaning of Section 8(1)(b)(i) of the Act. All that was required was that the Oral Agreement otherwise be a legally enforceable contract.

21 The pre-requisites for a legally enforceable contract for the sale of property are: (1) consensus on the essential terms of the bargain and (2) that each party has consented to be immediately bound by the agreement (Summergreene v Parker (1950) CLR 304 at 315-316). At paragraph 340 of the CCH NSW Conveyancing Law and Practice loose leaf service, it is stated that the terms essential for enforecement of a transaction involving the sale of land are: (1) the parties to the transaction; (2) the property or subject matter of the transaction; and (3) the price or consideration for the transaction.

22 Each of the statutory declarations of the parties to the Transfer filed with the Tribunal (in particular, paragraph 14 of each) made it clear that the essential terms of the Oral Agreement were agreed between the parties to the Transfer and that each party had consented to be immediately bound by their agreement on 28 February 2002. As such, I find that the Oral Agreement was a legally enforceable contract and was an agreement for the sale or transfer of dutiable property within the meaning of Section 8(1)(b)(i) of the Act.

What was the effect of the Oral Agreement as a dutiable transaction on the liability to duty of the Transfer?

23 Section 18(2) of the Act provides that the duty chargeable in respect of a transfer of dutiable property made in conformity with an agreement for the sale or transfer of the dutiable property is $2 if the duty chargeable in respect of the agreement has been paid. Was the Transfer made in conformity with the Oral Agreement? If so, has the duty chargeable in respect to the Oral Agreement been paid?

24 Paragraph 16 of the statutory declaration made by the Applicant and paragraph 17 of the statutory declaration made by the Transferor and filed with the Tribunal each stated that the Transfer “was executed pursuant to and in conformity with my prior oral agreement made on 28th February 2002”. The existence of the Transfer itself supported this position or at least, did not contradict it. In line with Lake Victoria Ltd and Others v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262 and Vickery v Woods (1952) 85 CLR 336, I find that the Transfer was made in conformity with the Oral Agreement.

25 What was the duty chargeable in respect of the Oral Agreement and has it been paid? The Respondent submitted that if the Tribunal finds that an oral agreement existed between the Applicant and the Transferor at 27 February 2002 (28 February 2002), the operation of either Section 12(1) or Section 12(2) of the Act results in 23 July 2002 being the date at which liability for duty arises (accepting that the date of the first execution of the transfer would have been in close proximity to the 23 July 2002 date). It is noted that this submission is in conflict with the Respondent’s letters to Mr Swan dated 9 September 2003 and 21 November 2003. In the former letter, the Respondent stated: “I agree with your view that the correct date for valuing the unit for stamp duty purposes would be the date of the contract or oral agreement to purchase the property” and in the latter letter the Respondent stated: “Your contention that the correct date of determining the value of the subject property is at the date of the oral agreement is not disputed. However, the information provided is inconclusive as to whether there was an oral dutiable transaction prior to execution of the Transfer”. For the reasons described below, I do not agree with the Respondent’s submission on this point.

26 Chapter 2 of the Act distinguishes between a dutiable transaction that is a “transfer” of dutiable property (Section 8(1)(a)) and a dutiable transaction that is “an agreement for the sale or transfer” of dutiable property (Section 8(1)(b)(i)). Section 9(1) of the Act provides that the duty charged by Chapter 2 on a dutiable transaction referred to in section 8(1)(b) is to be charged “as if each such dutiable transaction were a transfer of dutiable property”. In turn, Section 9(2)(c) provides that for the purpose of charging duty under Chapter 2, in relation to a dutiable transaction specified in Column 1 of the Table which follows, the transfer is taken to have occurred at the time specified opposite the dutiable transaction in Column 4 (and a reference in the Act to the time at which a transfer occurs includes a reference to such a time). In the Table which follows Section 9(2), opposite “agreement for sale or transfer” in Column 1, is the expression “when the agreement is entered into” in Column 4. Section 9 does not deem a dutiable transaction referred to in section 8 (1)(b)(i) to be “the” transfer of the dutiable property. It is possible for there to exist, both a dutiable transaction referred to in section 8(1)(b)(i), as well as a subsequent transfer of the dutiable property pursuant to such earlier dutiable transaction. Each is a separate “dutiable transaction” (see Section 8(2) and the Dictionary definition of “dutiable transaction” of the Act). This is reflected in Section 18(2) of the Act which provides that the duty chargeable in respect of a “transfer” of dutiable property made in conformity with “an agreement for the sale or transfer” of the dutiable property is $2 if the duty chargeable in respect of the agreement has been paid.

27 It follows then, that where Section 12(1) and Section 12(2) of the Act refer to “a transfer of dutiable property”, the reference to “transfer” not only includes a “transfer” as defined in Section 8(3), but, by operation of Section 9(1) of the Act, also a reference to each dutiable transaction of the kind referred to in Section 8(1)(b) of the Act. If this interpretation is not given to Section 12, the Act would otherwise be silent on the issue of when liability to duty arises on a dutiable transaction of the kind referred to in Section 8(1)(b) of the Act which would defeat the inclusion of dutiable transactions of the kind referred to in Section 8(1)(b) of the Act within the ambit of “dutiable transaction” as defined.

28 Accordingly, where Section 12(1) provides that liability for duty charged by Chapter 2 arises “when a transfer of dutiable property occurs”, it is referring, in the case of a dutiable transaction that is a “transfer”, to the time when the transfer occurs, and, in the case of a dutiable transaction that is a “an agreement for the sale or transfer of dutiable property”, to the time when the agreement is entered into (Section 9(2)(c) and the Table in Section 9). And, where Section 12(2) provides that if however, a “transfer of dutiable property is effected by a written instrument”, liability for duty charged by Chapter 2 arises when the instrument is first executed, it is referring, in the case of a dutiable transaction that is a “transfer”, to an instrument that “effects the transfer”, and, in the case of a dutiable transaction that is a “an agreement for the sale or transfer”, to an instrument that “effects the agreement for the sale or transfer”. This is simply an ordinary application of Section 9 to Section 12 of the Act, and is particularly so given that Section 9(1) expressly states that duty charged by Chapter 2 on a dutiable transaction referred to in section 8(1)(b) is to be charged “as if each such dutiable transaction were a transfer of dutiable property” and given that Section 9(2)(c) expressly states that “(a reference in this Act to the time at which a transfer occurs includes a reference to such a time)”. Section 12 of the Act is part of the charging provisions of Chapter 2 contemplated by Section 9(1) as it specifies the time at which liability to duty arises. Section 12 also includes a reference to the time at which a “transfer” occurs as contemplated by Section 9(2)(c).

29 The Respondent’s submission that Section 12(1) operates to restrict the deeming effect of Section 9 by providing that liability for duty charged arises when a transfer (being the actual transfer) of dutiable property occurs, disregards the clear language of Section 9 and is not supported by anything in Section 12 or any other provision of the Act. It also defeats the inclusion of an agreement for the sale or transfer of dutiable property in Section 8(1)(b)(i) as a dutiable transaction and defeats Section 50 (cancelled agreements) of the Act. For these reasons, the Respondent’s submission on Section 12(1) cannot be accepted.

30 Section 12(2) of the Act provides that however, if a transfer of dutiable property is “effected” by a written instrument, liability for duty charged by Chapter 2 arises when the instrument is first executed. The Respondent has submitted that Section 12(2) applies only where a transfer is effected by a written instrument, “namely where the transfer came about because of the existence of a written agreement”. The Respondent has further submitted that the effect of Section 12(2) and its requirement for a written instrument in order to claim the earlier deemed date, is to recognise that an oral agreement for the transfer of land, pursuant to Section 54A of the Conveyancing Act, is unenforceable in law. Each of these submissions interposes in Section 12, a dutiable transaction that is an agreement for sale or transfer of dutiable property of the kind referred to in Section 8(1)(b)(i) that is, by operation of Section 9(1), to be charged with duty “as if it were a transfer”, with another dutiable transaction of the kind referred to in Section 8(1)(a) of the Act, namely a transfer made pursuant to the first-mentioned dutiable transaction. Nothing in Section 12 or any other provision of the Act supports this interpretation. To the contrary, it contradicts Section 9 and its application to Section 12(2). These submissions therefore cannot be accepted.

31 Consistent with the aforementioned interpretation of Section 12(1) and the application of Section 9 to Section 12, reference in Section 12(2) to a “transfer” must, in the case of a dutiable transaction that is an agreement for sale or transfer of dutiable property, mean the agreement for sale or transfer. That is, in the case of a dutiable transaction that is an agreement for sale or transfer of dutiable property, Section 12(2) operates so that if the “agreement” is “effected” by a written instrument, liability for duty in respect to the “agreement” (which is itself a dutiable transaction separate from the dutiable transaction that is the subsequent transfer that may be made pursuant to it) arises when that instrument is first executed.

32 Section 12(2) refers to a transfer that is “effected” by a written instrument whereas Section 15(4) refers to a dutiable transaction that is “completed or evidenced” by a written instrument. Section 16(1)(a) also refers to a written instrument that “effects” a dutiable transaction. A point of distinction between these expressions is that whereas a written instrument that is brought into existence “after” a dutiable transaction has been entered into, can “complete” or “evidence” the dutiable transaction, it can not “effect” it because, by virtue of the dutiable transaction having been earlier entered into, it has already been “effected”. This is on a simple and ordinary interpretation of the word “effect” which is defined in the Concise Oxford Dictionary to mean “bring about, accomplish, cause to exist or occur”. The expression “effect” or “effected” is not defined in the Act or in the Interpretation Act 1987.

33 The evidence in this matter is that the Oral Agreement was not “effected” by a written instrument but by the verbal exchange between the parties to the Transfer on 28 February 2002. The evidence in this matter is that the Transfer that was executed on 25 June 2002 was an instrument executed to complete the Oral Agreement.

34 Section 8(1)(b)(i) of the Act provides that Chapter 2 charges duty on an agreement for the sale or transfer of dutiable property. Section 10 provides that it is immaterial whether or not a dutiable transaction is effected by a written instrument or by any other means, including electronic means. Section 12(1) provides that a liability for duty charged by Chapter 2 arises when a transfer of dutiable property occurs. On the evidence in this matter, the Oral Agreement was not effected by a written instrument and as such, Section 12(2) did not apply. By operation of Section 9 and Section 12(1) of the Act, liability to duty in respect to the Oral Agreement arose when the Oral Agreement was entered into.

35 Section 13 of the Act provides that duty charged by Chapter 2 is payable by the transferee, unless the Chapter requires another person to pay the duty. Nothing in Chapter 2 requires another person to pay the duty in respect of the Oral Agreement or the Transfer in the context of this matter. Section 15(1) of the Act provides that if a dutiable transaction that is liable to ad valorem duty under Chapter 2 is not effected by a written instrument, the transferee must make a written statement in approved form. Section 15(2) provides that the written statement must be made within 3 months after the liability arises. Separately, Section 16 of the Act provides that a transferee who is liable to pay duty in respect of a dutiable transaction must, within 3 months after the liability arises, lodge with the Chief Commissioner, the written instrument that effects the dutiable transaction or the written statement made in compliance with Section 15.

36 Section 15(4) provides that if a dutiable transaction is completed or evidenced by a written instrument within 3 months after the date on which the dutiable transaction occurs, the requirement to lodge a statement and pay duty in respect of the statement may be satisfied by the lodgement of and payment of duty on the written instrument within 3 months after the date on which the dutiable transaction occurs. There is nothing in Section 15 or elsewhere in the Act that gives anyone power to extend the 3 month period referred to in Section 15(4).

37 Although the Transfer was a written instrument which “completed” the Oral Agreement, it was not brought into existence “within 3 months after the date on which the dutiable transaction occurred” within the terms of Section 15(4) of the Act. That is, the Transfer was not brought into existence within 3 months after the date that the Oral Agreement was entered into on 28 February 2002 (applying Section 9 of the Act).

38 Accordingly, lodgement of the Transfer and payment of duty on the Transfer did not and could not satisfy the Applicant’s obligation to lodge a statement in respect to the Oral Agreement and pay duty under Chapter 2 of the Act.

39 The Applicant was required to make a written statement in approved form (Section 15(1)) and to lodge that statement with the Respondent (Section 16(1)(a)) within 3 months after the Oral Agreement was entered into (Sections 15(2) and 16(1)). Separately, the Applicant was also required to pay duty in respect to the Oral Agreement within 3 months after the Oral Agreement was entered into if a tax default was not to occur for the purposes of the TAA (Sections 8(1)(b)(i), 12, 13 and 17(1) of the Act). The Applicant did not comply with any of these obligations within the 3 month period after the Oral Agreement was entered into. As at the date of the hearing of this matter, the Applicant had still not lodged a written statement in the approved form with the Respondent in respect to the Oral Agreement. I find the failure by the Applicant to disclose the existence of the Oral Agreement at the time of lodgement of the Transfer for original stamping and to lodge a written statement in the approved form with the Respondent in respect to the Oral Agreement were mistakes of law on the part of the Applicant, given the correspondence on behalf of the Applicant with the Respondent in respect to the Transfer and the submissions made on behalf of the Applicant in this matter.

40 The correspondence on behalf of the Applicant with the Respondent and the submissions made on behalf of the Applicant in this matter (albeit after lodgement of the Transfer for stamping) indicate that the Applicant intended or regarded the payment of duty at the time of lodgement of the Transfer for stamping, as payment of the duty chargeable in respect to the Oral Agreement. The amount of duty paid on behalf of the Applicant to the Respondent at the time of lodgement of the Transfer for stamping equated to the amount of duty chargeable in respect to the Oral Agreement. The First Valuation that was provided to the Respondent on behalf of the Applicant at the time of lodgement of the Transfer for stamping was dated 27 February 2002 (i.e. one day prior to the date of the Oral Agreement) reflected the amount specified as the consideration in the Transfer itself and in the statutory declarations of the parties to the Transfer filed with the Tribunal. The First Valuation was a valuation of the type contemplated by paragraph 12(a) of Revenue Ruling DUT.012 issued by the Respondent entitled “Dutiable Transactions – Evidence of Value”.

41 Although Section 15(4) of the Act (which in any event does not apply in this case) refers to payment of duty “in respect of the statement”, Section 18(2) refers to circumstances where “duty chargeable in respect to the agreement has been paid”. Section 18(2) does not require that the written instrument (if applicable) or written statement referred to in Section 16(1) of the Act in respect to the agreement for sale or transfer first be lodged with the Respondent before Section 18(2) can operate nor does Section 18(2) require that the agreement or such written instrument or written statement first be assessed or that such written instrument or written statement first be duly stamped. Section 18(2) only requires that the transfer be made in conformity with the agreement for sale or transfer and that the duty chargeable in respect to the agreement “has been paid”.

42 In this matter, the duty chargeable in respect to the Oral Agreement has been paid despite the fact that by mistake of law, the duty has been attributed to the Transfer.

43 Accordingly, since the Transfer was executed in conformity with the Oral Agreement and the duty in respect to the Oral Agreement has been paid, the duty chargeable in respect to the Transfer is $2 under Section 18(2) of the Act. As such, the reassessment of the Transfer and the assessment of interest, each as notified in the Duties Notice of Assessment dated 9 September 2003, were and are incorrect.

Re-assessment

44 The Respondent is empowered to make one or more reassessments of a tax liability of a taxpayer under Section 9(1) of the TAA, however, Section 9(2) requires that any such reassessment be made in accordance with the legal interpretations and assessment practices generally applied by the Respondent 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.

45 Accordingly, subject to the exception in Section 9(2) of the TAA, to satisfy Section 9(2) of the TAA, any reassessment in respect to the Transfer must be made by the Respondent in accordance with the legal interpretations and assessment practices generally applied by the Respondent in relation to matters of that kind, at the time the tax liability on the Transfer arose, namely, on 25 June 2002, being the date that the Transfer was first executed (Sections 12(2) and 295 of the Act). The Respondent is empowered to make a reassessment of the Transfer under Section 9 of the TAA in the amount of $2 pursuant to the application of Section 18(2) of the Act to the Transfer.

Section 305 of the Act

46 It is appropriate in the context of this matter to also make findings in respect to the submissions by the parties on Section 305 of the Act. Section 305 of the Act empowers the Respondent to have a property valued if the Respondent is not satisfied with the value declared in a declaration by a competent valuer provided by a person liable to duty where the Respondent has required such person to provide such a declaration. Revenue Ruling DUT.012 dated 18 March 1999 issued by the Respondent publicly specifies circumstances in which the Respondent requires persons liable to duty to provide a declaration as to value and as such, the Ruling ties in with Section 305.

47 Nothing in Section 305 expressly empowers the Respondent to rely on a valuation obtained otherwise than by the Respondent or provided to the Respondent by or on behalf of the person liable to duty. I do not agree with the Respondent’s submission that because Section 305 does not preclude the Respondent from relying on a valuation coming into his possession from means other than as specified in Section 305, the Respondent is thereby empowered to rely on such a valuation. Section 305 is a specific provision to which the maxim generalia specialibus non derogant (if a matter falls under any specific provision, then it must be governed by that provision and not by the general provision) should apply. That Section 305 should be interpreted as a code in line with this maxim is supported by the uncertainty that would otherwise ensue for taxpayers if the Respondent were to rely on valuations provided otherwise than on behalf of the person liable (such as in the present matter) or obtained by the Respondent himself. Accordingly, I agree with the Applicant’s submission that the power of the Respondent to rely on a valuation in assessing duty is limited to the circumstances described in Section 305 of the Act. If it is intended that the Respondent have wider powers in respect to valuations for assessment of duty than those prescribed by Section 305, then it is a matter for the legislature to prescribe such wider powers by legislation.

48 In this matter, the Third Valuation was not obtained by the Respondent nor was it provided to the Respondent by a person acting on behalf the Applicant, being the person liable. As such, it is not within the power of the Respondent to rely on the Third Valuation.

49 The First Valuation provided to the Respondent at the time of lodgement of the Transfer for stamping and the Second Valuation (in the same amount as the First Valuation) provided to the Respondent with the letter dated 30 September 2003 from Access Business Lawyers were each provided to the Respondent on behalf of the Applicant and are each valuations of the kind that would satisfy Section 305. The First Valuation is of the kind referred to in paragraph 12(a) of Revenue Ruling DUT.012 and the Second Valuation is of the kind referred to in paragraph 12(d) of Revenue Ruling DUT.012. The First Valuation (dated one day prior to the date of the Oral Agreement) particularly should satisfy DUT.012 in respect to evidence of valuation of the Property as at the date of the Oral Agreement.

50 It is noted that in the letter dated 21 November 2003 from the Respondent to Mr Swan, the Respondent advised: “At the time of lodgement of the Transfer a valuation dated 27 February 2002 was enclosed to support the value of the Property. This valuation described the property as a two-bedroom unit. Following investigation, we have determined that the subject Property is in fact a three-bedroom unit that has been converted into a two-bedroom unit. We would argue the transferee did not make a full and true disclosure to the Chief Commissioner at the time of lodgement, and as such was a contravention of Section 10 of the Taxation Administration Act”. I do not agree with the Respondent’s argument that there was a contravention of Section 10 of the TAA. From the evidence in this matter, at the time of the Oral Agreement, the dutiable property was a unit with two bedrooms and it was that unit with two bedrooms that was agreed to be sold under the Oral Agreement and that was transferred to the Applicant pursuant to the Oral Agreement. As such, the relevant dutiable property in respect of which duty could be calculated under Section 21(1) of the Act was the two bedroom unit and the only property in respect of which evidence of value could be required to be provided by the Applicant or obtained by the Respondent under Section 305 of the Act was the two bedroom unit.

Interest and Penalty Tax

51 As the duty chargeable in respect of the Transfer is $2, no interest or penalty tax can be imposed in respect to the late payment of such duty (Sections 23 and 31 of the TAA).

52 The liability to pay duty of $13,490 in respect to the Oral Agreement arose on 28 February 2002 being the date when the Oral Agreement was entered into. Since that duty was not paid within 3 months after that date, but rather, almost one month later, on 25 June 2002, a tax default occurred under the TAA (Section 17(1) of the Act). In consequence, under Section 21 of the TAA, interest is payable by the Applicant in respect of such tax default, unless such interest is remitted in whole or in part by the Respondent under Section 25 of the TAA. Unless remitted, the interest rate applicable is the sum of the market rate component and the premium component each as referred to in Section 22 of the TAA and such interest is calculated on the amount of the unpaid duty of $13,490, on a daily basis from the end of the last day for payment, until the day it was paid, that is, that is, from 29 May, 2002 until 25 June 2002. In addition, in consequence of the tax default, under Section 26 of the TAA, penalty tax is payable by the Applicant unless the Respondent is satisfied in terms of Section 27(3) of the TAA and determines that no penalty tax is payable, or such penalty tax is remitted by the Respondent by any amount under Section 33 of the TAA. Unless determined by the Respondent as not payable under Section 27(3) of the TAA, or remitted by the Respondent by any amount under Section 33 of the TAA, the amount of such penalty tax, in this case, is determined in accordance with Sections 27(1) and 28 of the TAA since, on the evidence in this matter, Sections 27(2), 29 and 30 of the TAA are not applicable. Section 28 is applicable because the Respondent did not inform the Applicant that an investigation relating to the taxpayer was to be carried out and, through the correspondence on behalf of the Applicant with the Respondent relating to this matter and the submissions on behalf of the Applicant in this matter, the Applicant disclosed sufficient information to enable the nature and extent of the tax default to be determined (Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP19). Accordingly, unless determined by the Respondent as not payable under Section 27(3) of the TAA, or remitted by the Respondent by any amount under Section 33 of the TAA, the amount of such penalty tax, in this case, is 25% of $13,490 reduced by 80%, that is, $3,372.50 less $2,698, being $674.50. From the evidence in this matter, the Applicant has not made any submissions to the Respondent in respect to remission of interest and or penalty tax for the late payment of duty in respect to the Oral Agreement. The Applicant may yet do so. Remission of interest and or penalty tax for late payment of duty in respect to the Oral Agreement is not a matter before this Tribunal.

ORDER AND DIRECTIONS:

53 Pursuant to Section 63(3)(d) of the Administrative Decisions Tribunal Act 1997, the reassessment of the Transfer and the assessment of interest, each as notified in the Duties Notice of Assessment dated 9 September 2003, is set aside and the matter is remitted for reconsideration by the Respondent in accordance with the following directions:

(2) the Respondent is to assess the written statement lodged by the Applicant in the approved form in respect to the Oral Agreement with the amount of $13,490 being the duty originally assessed in respect of the Transfer and apply the amount paid by the Applicant on lodgement of the Transfer for stamping of the Transfer on 25 June 2002 against such assessment of the written statement and stamp the written statement accordingly;

(3) the Respondent is to assess interest in respect to the late payment of duty in respect to the Oral Agreement on 25 June 2002 in accordance with this decision subject to any remission of such interest in whole or in part by the Respondent under Section 25 of the TAA and is to assess penalty tax in respect to the late payment of duty in respect to the Oral Agreement on 25 June 2002 in accordance with this decision subject to any determination by the Respondent under Section 27(3) of the TAA or any remission of such penalty tax by the Respondent by any amount under Section 33 of the TAA; and

(4) the Respondent is to issue a re-assessment of duty in respect to the Transfer pursuant to Section 9 of the TAA in the amount of $2 pursuant to Section 18(2) of the Act.

Revised 14 July 2004 - paragrah 33 - grammatical error corrected, paragraph 50 - section reference corrected, second last sentence amended.

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Citations

Schipp v Chief Commissioner of State Revenue [2004] NSWADT 138

Cases Citing This Decision

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Cases Cited

4

Statutory Material Cited

4

Australian Competition and Consumer Commission v BlueScope Steel Limited (No 5) [2022] FCA 1475

Newton v Federal Commissioner of Taxation [1958] HCA 31

Summergreene v Parker [1950] HCA 13

CITATION:	Schipp v Chief Commissioner of State Revenue [2004] NSWADT 138 revised - 14/07/2004
DIVISION:	Revenue Division
PARTIES:	APPLICANT Murray Joseph Schipp RESPONDENT Chief Commissioner of State Revenue
FILE NUMBER:	046004
HEARING DATES:	27/05/2004
SUBMISSIONS CLOSED:	06/22/2004
DATE OF DECISION:	07/12/2004
BEFORE:	Seve J - Judicial Member
APPLICATION:	Duties Act - oral agreement - duty on transfer - Duties Act - re-assessment
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Conveyancing Act 1919 Duties Act 1997 Taxation Administration Act 1996
CASES CITED:	Chief Commissioner of State Revenue v Incise Technologies Pty Ltd & Anor (RD) [2004] NSWADTAP19 Lake Victoria Ltd and Others v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262 Newton v Federal Commissioner of Taxation (1958) 98 CLR 1 Summergreene v Parker (1950) CLR 304 Vickery v Woods (1952) 85 CLR 336
REPRESENTATION:	APPLICANT D Swan, solicitor RESPONDENT T Thawley, barrister
ORDERS:	Reassessment of Transfer and assessment of interest set aside and matter remitted for reconsideration by the Respondent in accordance with directions.