Serana Pty Ltd and Commissioner Of State Revenue
[2006] WASAT 78
•29 MARCH 2006
SERANA PTY LTD and COMMISSIONER OF STATE REVENUE [2006] WASAT 78
| Link to Appeal : | [2008] WASCA 82 |
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2006] WASAT 78 | |
| TAXATION ADMINISTRATION ACT 2003 (WA) | |||
| Case No: | CC:2997/2005 | 17 NOVEMBER 2005, WRITTEN SUBMISSIONS 1 DECEMBER AND 7 DECEMBER 2005 | |
| Coram: | JUDGE J CHANEY (DEPUTY PRESIDENT) | 29/03/06 | |
| 23 | Judgment Part: | 1 of 1 | |
| Result: | Stamp duty assessment reduced to $20 | ||
| B | |||
| PDF Version |
| Parties: | SERANA PTY LTD COMMISSIONER OF STATE REVENUE |
Catchwords: | Stamp duty Transfer of trust property Transfer to trustee of different trust Beneficiaries of both trusts effectively the same Whether passing of beneficial interest Whether scheme to pass beneficial interests Words and phrases "scheme" |
Legislation: | Finance Act 1894 (UK), s 1 Income Tax Assessment Act 1936 (Cth), s 177A(1) Interpretation Act 1984 (WA), s 5, s 19(1)(b)(i) Stamp Act 1921 (WA), s 73AA, s 73AA(1), s 73AA(1)(a), s 73AA(1)(c), s 73AA(1)(d), s 73AA(1)(f), s 73AA(1)(f)(iii) Trustee Act 1962 (WA), s 30(1)(c) |
Case References: | Anthony Hordern and Sons Limited and Others v The Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 Chief Commissioner of Stamp Duties (NSW) v Buckle and Others (1998) 192 CLR 226 Commissioner of State Taxation (WA) v Merifield Cooksey Holdings Pty Ltd (1994) 94 ATC 4774 Commissioner of Taxation v Hart and Other (2004) 217 CLR 216 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (1982) 12 ATR 874 Downey v Trans Waste Pty Limited [1990-1991] 172 CLR 167 Gartside v Inland Revenue Commissioners [1968] AC 553 Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 Reginald John Burrell and the Honourable Patrick Kinnaird v His Majesty's Attorney-General [1937] AC 286 Saraswati v R (1990) 172 CLR 1 Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 41 ATR 29 Commissioner of Stamp Duties (NSW) v Bradhurst (1950) 81 CLR 199 Commissioner of Taxation of the Commonwealth of Australia v Murry (1998) 193 CLR 605 Comptroller of Stamps (Vic) v Yellowco Five Pty Ltd (1993) 93 ATC 4025 Cooper Brookes (Wollongong) Pty Ltd v Fedral Commissioner of Taxation (1981) 81 ATC 4292 Craig Williamson Pty Ltd v Barrowcliff [1915] VLR 450 David Grant & Co Pty Ltd (rec apptd) v Westpac Banking Corporation (1995) 131 ALR 353 Federal Commissioner of Taxation v Commercial Nominees of Australia Limited [2001] HCA 33 John v Federal Commissioner of Taxation (1989) 83 ALR 606 Lam Kym Pty Ltd v Commissioner of State Revenue [2003] VSC 133 Leedale (Inspector of Taxes) v Lewis [1982] 1 WLR 1319 Norilya Minerals Pty Ltd v Commissioner of State Taxation (1995) 16 WAR 266 Scott v Inland Revenue Commissioners [1937] AC 174 United States of America v Flloyd Lovell Fish, Opinion of Circuit Judge Clifton, N. 0330362 DC CR0300032K1 OPINION, Filed 28 May 2004 Wedge and The Acting Comptroller of Stamps (Vic) (1941) 64 CLR 75 Wiseman and the Collector of Imposts (1896) 21 VLR 743 |
Orders | 1. The application is allowed.,2. The stamp duty assessment dated 17 January 2005 relating to the Deed of Variation dated 30 June 2004 between Serana Pty Ltd and Grier Nominees Pty Ltd is reduced from $30 705 to $20. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : TAXATION ADMINISTRATION ACT 2003 (WA) CITATION : SERANA PTY LTD and COMMISSIONER OF STATE REVENUE [2006] WASAT 78 MEMBER : JUDGE J CHANEY (DEPUTY PRESIDENT) HEARD : 17 NOVEMBER 2005, WRITTEN SUBMISSIONS 1 DECEMBER AND 7 DECEMBER 2005 DELIVERED : 29 MARCH 2006 FILE NO/S : CC 2997 of 2005 BETWEEN : SERANA PTY LTD
- Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Stamp duty Transfer of trust property Transfer to trustee of different trust Beneficiaries of both trusts effectively the same Whether passing of beneficial interest Whether scheme to pass beneficial interests
Words and phrases "scheme"
Legislation:
Finance Act 1894 (UK), s 1
Income Tax Assessment Act 1936 (Cth), s 177A(1)
(Page 2)
Interpretation Act 1984 (WA), s 5, s 19(1)(b)(i)
Stamp Act 1921 (WA), s 73AA, s 73AA(1), s 73AA(1)(a), s 73AA(1)(c), s 73AA(1)(d), s 73AA(1)(f), s 73AA(1)(f)(iii)
Trustee Act 1962 (WA), s 30(1)(c)
Result:
Stamp duty assessment reduced to $20
Category: B
Representation:
Counsel:
Applicant : Mr TD Czislowski
Respondent : Ms RC Panetta
Solicitors:
Applicant : Wilson & Atkinson
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Anthony Hordern and Sons Limited and Others v The Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1
Chief Commissioner of Stamp Duties (NSW) v Buckle and Others (1998) 192 CLR 226
Commissioner of State Taxation (WA) v Merifield Cooksey Holdings Pty Ltd (1994) 94 ATC 4774
Commissioner of Taxation v Hart and Other (2004) 217 CLR 216
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (1982) 12 ATR 874
Downey v Trans Waste Pty Limited [1990-1991] 172 CLR 167
Gartside v Inland Revenue Commissioners [1968] AC 553
Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672
Reginald John Burrell and the Honourable Patrick Kinnaird v His Majesty's Attorney-General [1937] AC 286
(Page 3)
Saraswati v R (1990) 172 CLR 1
Case(s) also cited:
Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 41 ATR 29
Commissioner of Stamp Duties (NSW) v Bradhurst (1950) 81 CLR 199
Commissioner of Taxation of the Commonwealth of Australia v Murry (1998) 193 CLR 605
Comptroller of Stamps (Vic) v Yellowco Five Pty Ltd (1993) 93 ATC 4025
Cooper Brookes (Wollongong) Pty Ltd v Fedral Commissioner of Taxation (1981) 81 ATC 4292
Craig Williamson Pty Ltd v Barrowcliff [1915] VLR 450
David Grant & Co Pty Ltd (rec apptd) v Westpac Banking Corporation (1995) 131 ALR 353
Federal Commissioner of Taxation v Commercial Nominees of Australia Limited [2001] HCA 33
John v Federal Commissioner of Taxation (1989) 83 ALR 606
Lam Kym Pty Ltd v Commissioner of State Revenue [2003] VSC 133
Leedale (Inspector of Taxes) v Lewis [1982] 1 WLR 1319
Norilya Minerals Pty Ltd v Commissioner of State Taxation (1995) 16 WAR 266
Scott v Inland Revenue Commissioners [1937] AC 174
United States of America v Flloyd Lovell Fish, Opinion of Circuit Judge Clifton, N. 0330362 DC CR0300032K1 OPINION, Filed 28 May 2004
Wedge and The Acting Comptroller of Stamps (Vic) (1941) 64 CLR 75
Wiseman and the Collector of Imposts (1896) 21 VLR 743
(Page 4)
Summary of Tribunal's decision
1 Serana Pty Ltd (Serana) applied to the Tribunal for a review of a stamp duty assessment in relation to a transfer of trust property to another company, Grier Nominees Pty Ltd (Grier Nominees). Serana held the property as trustee under a trust, the primary beneficiaries of which were members of the family of Mr Henry Valentine Grier and Mrs Teresa Grier. Grier Nominees received the property as trustee of another trust, the beneficiaries of which were effectively, the same as the beneficiaries of Serana's trust.
2 The Commissioner of State Revenue assessed the transfer at ad valorem rates based on the value of a property in Bibra Lake, which was the principal asset being transferred from one trust to the other. Serana objected to the assessment on the basis that the transfer did not effect any alterations in the beneficial interests in the trust property, and argued that the Commissioner should have assessed the transfer with nominal duty in accordance with s 73AA(1)(f) of the Stamp Act 1921 (WA).
3 The issue in the review was whether or not the transfer did pass a beneficial interest in the property, or whether it was made pursuant to a scheme whereby a beneficial interest was passed or may in the future pass. The Tribunal examined the respective trust deeds, and the class of beneficiaries who might potentially benefit under each of the deeds. It concluded that the transfer did not pass any beneficial interest in the property, and was not part of a scheme to achieve that end. Accordingly, the Tribunal amended the assessment of duty to the nominal amount provided for in the second schedule to the Stamp Act 1921.
Introduction
4 The applicant, Serana Pty Ltd (Serana), is the trustee of a trust known as the Grier No 2 Trust which was created by a deed of settlement dated 7 July 1986 (No 2 Trust). Grier Nominees Pty Ltd (Grier Nominees) is the trustee of a trust known as the Grier Family Trust (the Family Trust) which was created by a deed of settlement dated 31 October 1978. By a document entitled "Deed of Variation" made 30 June 2004, Serana and Grier Nominees agreed to the transfer of all of the assets and liabilities of the No 2 Trust to Grier Nominees as trustee of the Family Trust.
(Page 5)
5 The deed was lodged for assessment of stamp duty on 6 July 2004, and after an exchange of correspondence and requisitions between the respondent and the applicant's solicitors, duty was eventually assessed at $30 710 on the basis that the deed constituted a conveyance of a property which comprised the major asset of the No 2 Trust. Serana lodged an objection to the assessment in April 2005. The objection was disallowed in May 2005, and the applicant lodged an application for review with this Tribunal on 29 July 2005.
6 The issue for determination in these proceedings is whether the deed should properly have been assessed in accordance with item 6 of the second schedule by reason of the operation of the provisions of s 73AA(1) of the Stamp Act 1921 (WA). The applicant's contention is that the deed the subject of the assessment is a transfer in respect of which the Commissioner should have been satisfied of the matters referred to in s 73AA(1)(f), namely that the deed does not effect a transfer of a beneficial interest in property, was not made in contemplation of the passing of a beneficial interest in property and is not part of or made pursuant to a scheme whereby any beneficial interest in property has passed or will or may pass. The applicant does not seek to rely on any of the other provisions of s 73AA(1). The respondent contends, however, that the other provisions of the subsection are relevant to the proper construction of s 73AA(1)(f). The respondent contends that a transaction made by a discretionary trustee in the exercise of the power of appointment which does not meet the criteria specified by s 73AA(1)(d) cannot be brought within s 73AA(1)(f). Alternatively, the respondent contends that the conveyance effected by the deed does not meet the requirements of s 73AA(1)(f).
The issues for determination
7 The issues which fall for determination in these proceedings are:
(i) can a transfer made by a discretionary trustee in the exercise of a power of appointment to a beneficiary which is a company be brought within s 73AA(f)?
(ii) if so, does the "Deed of Variation" pass a beneficial interest in the property conveyed or transferred, and
(iii) is the "Deed of Variation" made in contemplation of the passing of a beneficial interest in that property, and
(Page 6)
- (iv) is the "Deed of Variation" part of, or made pursuant to, a scheme whereby any beneficial interest in the property conveyed or transferred has passed or will or may pass?
8 In order to determine the review, it is necessary to examine the deed itself, the respective trust instruments of each of the No 2 Trust and the Family Trust, and then to determine whether s 73AA(1) of the Stamp Act 1921 applies to the deed.
The deed
9 The deed is relatively short, and its recitals and operative provisions can conveniently be set out in full. It describes Serana as "Trustee" and Grier Nominees as "Beneficiary". The deed provides:
"WHEREAS
A. The Grier No. 2 Trust ('the Trust') was created by a Deed of Settlement dated 7 July 1986 but stamped 18 July 1986 ('the Trust Deed').
B. The Trustee is nominated in the Trust Deed as the Trustee of that Trust.
C. The Beneficiary is the Trustee of the Grier Family Trust created by a Deed of Settlement dated 31 October 1978 and became the trustee by a Deed to Change Trustee dated 31 December 1978.
D. Grier Nominees Pty Ltd as trustee of the Grier Family Trust is included in the class of general beneficiaries of the Trust in accordance with Clause 1(c) of the Trust Deed.
E. The Beneficiary is also a beneficiary of the Grier Family Trust in accordance with the terms of the Deed of Settlement for the Grier Family Trust.
F. The Beneficiaries of the Grier Family Trust and the Trust are the same and the terms of the trusts are also the same.
G. Pursuant to either Clause 5 or 6 of the Trust Deed, the Trustee wishes all of the assets and liabilities ('the trust property') of the Trust to be transferred to and vested in
- Grier Nominees Pty Ltd as trustee of the Grier Family Trust.
- H. The transfer is intended to be effected in accordance with Taxation Determination TD 2004/14 and to be stamped in accordance with Section 73AA(1)(f) of the Stamp Act 1921 or otherwise for nominal duty.
I. The vesting date for the Grier Family Trust is prior to the vesting date for the Trust.
NOW THIS DEED WITNESSES:
1. The Trustee wishes to transfer the trust property of the Trust to Grier Nominees Pty Ltd as trustee of the Grier Family Trust as at the date of this Deed in accordance with the terms of the Trust Deed.
2. Nothing in this Deed shall cause a change in beneficial ownership.
3. This Deed shall not take effect unless it is stamped with nominal duty as defined in the Stamp Act 1921.
4. Grier Nominees Pty Ltd as trustee of the Grier Family Trust will hold the trust property in accordance with the terms of the Grier Family Trust for the benefit of the beneficiaries of that trust."
10 As mentioned, the deed is headed "Deed of Variation", but that title does not accurately describe the substance of the document.
11 Recital G in the deed identifies the trustee's wish to transfer the trust assets "pursuant to either clause 5 or 6 of the Trust Deed". At the hearing of this application, counsel for the applicant asserted that the proper basis for the proposed transfer was cl 6(a) of the No 2 Trust deed which provides that the trustee may:
"(a) if it thinks fit at any time or times and from time to time until the Vesting Day raise any sum or sums out of the capital of the Trust Fund and pay the same or transfer any portion of the Trust Fund in its existing form of investment to or for the advancement or benefit of any general beneficiary (whether absolutely or by way of re-settlement upon such trusts as the Trustee thinks fit)
- freed and discharged from the trusts of this Deed and any receipt shall constitute a full and final discharge therefor to the Trustee in relation to the trusts of this Deed."
12 The review has been argued on the basis that, by the Deed of Variation, Grier Nominees, in its capacity as trustee of the Family Trust, has the Trust Fund transferred to it in its existing form of investment to be held in accordance with the trusts of the Family Trust, and that the transfer is made pursuant to cl 6(a) of the No 2 Trust deed.
13 Both parties accept for the purposes of argument, that the transfer is made pursuant to a power of appointment.
The Family Trust
14 The Family Trust was established by a deed dated 31 October 1978 made between Michael Clyne as settlor and Henry Valentine Grier as trustee. Grier Nominees was appointed as the new trustee of the Family Trust by deed dated 31 December 1978.
15 The beneficiaries of the Family Trust are:
(a) the persons who are the primary beneficiaries, being the children of the marriage of Henry Valentine Grier and Teresa Grier;
(b) the persons who are the general beneficiaries which the deed identifies as:
"(i) the primary beneficiaries;
(ii) the spouses, widows, widower's children, grandchildren and great grandchildren (including in each generation's step-children and adopted children) of the primary beneficiaries and the spouses, widows, widowers of such children, grandchildren and great grandchildren as are living from time to time in the period from the date hereof until the Vesting day;
(iii) the trustee of any trust or settlement under which any general beneficiary has an interest whether absolute or contingent or by way of expectancy and whether liable to be defeated by the exercise of any power or appointment or revocation or to be diminished by the increase of a class to which
- he belongs and whether or not such trust or settlement is in existence at the date of this Deed;
- (iv) any company, any share which is beneficially owned or held by the general beneficiary or by the trustee of any trust or settlement described in subclause (iii);
(v) any charitable institution, body or organisation; and
(vi) such additional persons and trusts (if any) as are named and described or defined in the Schedule as additions to the class of general beneficiaries."
16 The Schedule to the Family Trust deed provides that additional members of the class of general beneficiaries are Henry Valentine Grier and Teresa Grier.
17 The definition of "general beneficiaries" in cl 1 of the Trust Deed provides that certain classes of persons are excluded from the class of general beneficiaries. These persons include the settlor, the trustee and any corporations and trusts or settlements in which the settlor or the trustee have an interest. It is further provided that the trustee at any time and from time to time may declare that any person or class of persons shall be excluded from the class of general beneficiaries notwithstanding that, but for such exclusion, he or they would otherwise have been general beneficiaries. The Trustee is empowered to, at any time, revoke such a declaration in whole or part.
18 Clause 3(1) of the Family Trust deed requires the trustee to deal with the net income of the trust fund for the benefit of or for all or any of the general beneficiaries in such manner as the trustee in its absolute discretion thinks fit by paying or holding the income in certain specified ways.
19 Clause 4 of the Family Trust deed provides that as from the vesting date the trustee is to stand possessed of the trust fund and the income from it in trust for such of the general beneficiaries in such proportions as the trustee may appoint and in default, and subject to any such appointment, in trust for the primary beneficiaries living at the vesting date as tenants in common in equal shares.
(Page 10)
20 Clause 5 of the Family Trust deed provides that the trustee may, subject to certain provisos, at any time appoint that any part of the trust fund and income shall be held on trust in favour of the general beneficiaries or any one or more of them. Clause 5(b) provides a power of variation subject to certain provisos.
21 Clause 6 of the Family Trust deed allows the trustee at any time until the vesting day to raise any sum out of the capital of the trust fund and pay that sum or transfer any portion of the trust fund in its existing form of investment for the advancement or benefit of any general beneficiary either absolutely or by way of resettlement on trust.
The No 2 Trust
22 The No 2 Trust was established by a deed dated 7 July 1986 made between Desmond Barry Virgo as settlor and Serana as trustee.
23 The terms of the No 2 Trust and the beneficiaries of the No 2 Trust are similar but not identical to the terms and beneficiaries of the Family Trust.
24 Clause 5(b)(iii) of the No 2 Trust deed is not contained in the Family Trust deed. That subclause contains an additional proviso to the power to vary the deed. The proviso is that "the Trustee shall have power prior to the Vesting Day to vest any part of the Trust Fund in favour of any beneficiary as to such interests and to the exclusion of the other beneficiary or beneficiaries as the Trustee may determine". In substance that provision would seem to reflect the trustees power contained in cl 6 of each deed, and thus may not, in substance, amount to a distinction between the two deeds.
25 Clause 7 of the No 2 Trust deed excludes the provisions of s 30(1)(c) of the Trustee Act 1962. That provision, which empowers a trustee to expend money on improvement of trust property subject to certain limits, is not excluded by the Family Trust deed.
26 The provisions of the No 2 Trust deed do not exclude the settlor from the class of general beneficiaries. There is no suggestion however, that the settlor of the No 2 Trust has been included as a general beneficiary, and the implications of including him would make it highly unlikely that that would occur.
27 The No 2 Trust deed sets out trustee powers in cl 1(h) to 1(ac) not found in the Family Trust deed. The extent to which those provisions
(Page 11)
- reflect powers available to the trustee of the Family Trust at law or as an incident to the wide powers conferred by the Family Trust deed was not analysed by counsel in their submissions.
28 The beneficiaries of the No 2 Trust include as additional members of the class of general beneficiaries "the spouses, widows and widowers of each person hereinbefore described as a beneficiary". That additional class is not specified in the Family Trust deed. As at the date of the transaction the subject of the assessment, there is no suggestion that there is anyone who is a beneficiary of the No 2 Trust by virtue of that additional class. Given that spouses of primary beneficiaries and their children are specified as being included as general beneficiaries, and the two named additional general beneficiaries are married to each other, it is difficult to see that the additional words actually add anything to the class.
29 Grier Nominees is a beneficiary of the No 2 Trust being a member of the class of general beneficiaries as defined in cl 1(c) of the No 2 Trust deed, which is in identical terms to par (iii) of the definition of general beneficiaries in the Family Trust deed set out above.
Section 73AA of the Stamp Act 1921
30 Section 73AA provides:
"Duty on conveyance not passing a beneficial interest
(1) A conveyance or transfer -
(a) made for effectuating the appointment of a new trustee, or the retirement of a trustee, whether the trust is expressed or implied;
(b) made to a beneficiary by a trustee or by another person in a fiduciary capacity, except a discretionary trustee or a unit trustee, under any trust whether express or implied;
(c) made to a beneficiary by a discretionary trustee under any trust whether express or implied otherwise than in the exercise of any power of appointment;
(d) made by a discretionary trustee, in the exercise of a power of appointment over
- the property conveyed or transferred, to a beneficiary who is an individual for his own use and benefit, if -
(i) at the time when the discretionary trustee acquired the property conveyed or transferred the beneficiary was named or described in the instrument which created the power of appointment as a beneficiary or as a member of a class of beneficiaries in whose favour the discretionary trustee was empowered by that instrument to appoint the property; and
(ii) evidence of the acquisition by the discretionary trustee, as such trustee, of the property conveyed or transferred is produced to the Commissioner with that conveyance or transfer;
- (e) made to the holder of a unit in a unit trust scheme by a unit trustee if -
(i) evidence of the acquisition by the unit trustee, as trustee of that unit trust scheme, of the property conveyed or transferred is produced to the Commissioner with that conveyance or transfer; and
(ii) the Commissioner is satisfied that -
(I) the conveyance or transfer has the effect of reducing the rights of the holder of the unit in respect of the property held by the unit trustee to the extent of the property, or the value of the property, conveyed or transferred; and
- (II) the conveyance or transfer does not have the effect of varying, abrogating or altering the rights of the holder or holders of other units under the unit trust scheme in respect of the remaining property held by the unit trustee;
- or
(f) not otherwise coming within this section but which the Commissioner is satisfied -
(i) does not pass a beneficial interest in the property conveyed or transferred;
(ii) is not made in contemplation of the passing of a beneficial interest therein; and
(iii) is not part of, or made pursuant to, a scheme whereby any beneficial interest in the property conveyed or transferred, whether vested or contingent, has passed or will or may pass,
shall be charged with duty in accordance with item 6 of the Second Schedule.
- (2) A conveyance or transfer that is -
(a) made by any trustee or other person in a fiduciary capacity to a beneficiary; or
(b) made by a unit trustee to the holder of a unit in a unit trust scheme,
and that does not conform to subsection (1)(b), (c), (d) or (e), and a conveyance or transfer in respect of which the Commissioner is not satisfied as mentioned in subsection (1)(f), shall be deemed
- to operate as a voluntary disposition and is chargeable with duty under section 75(1)."
The interrelationship of s 73AA(1)(d) and s 73AA(1)(f)
31 Section 73AA(1)(d) refers to conveyances made by a discretionary trustee in the exercise of a power of appointment, but is limited to conveyances to "an individual for his own use and benefit". The word "individual" is not defined by the Stamp Act 1921, but s 5 of the Interpretation Act 1984 (WA) defines the word to mean "a natural person".
32 The respondent relies upon a submission that there is a rule of statutory interpretation that "when a statute specifically deals with a matter and makes it the subject of a condition or limitation, it excludes the right to use a general provision in the same statute to avoid that condition or limitation". The respondent relies on Saraswati v R (1990) 172 CLR 1 at 24 (although cited as (1991) 100 ALR 193 at 208) as authority for that proposition. The principle explained by McHugh J in Saraswati was earlier annunciated by Gavan Duffy CJ and Dixon J in Anthony Hordern and Sons Limited and Others v The Amalgamated Clothing and Allied Trades Union of Australia (1932) 47 CLR 1 at 7 where their Honours said:
"When the Legislature explicitly gives a power by a particular provision which prescribes the mode in which it shall be exercised and the conditions and restrictions which must be observed, it excludes the operation of general expressions in the same instrument which might otherwise have been relied upon for the same power."
33 As McHugh J observed in Saraswati,the principle that a statutory power, expressed in general form, is not to be construed so as to avoid any condition or limitation placed on the exercise of a specific power has been recognised in the High Court on a number of occasions including in Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 678 where Mason J said:
"It is accepted that when a statute confers both a general power, not subject to limitations and qualifications, and a special power, subject to limitations and qualifications, the general power cannot be exercised to do that which is the subject of the special power."
(Page 15)
34 The respondent also relies on Downey v Trans Waste Pty Limited [1990-1991] 172 CLR 167 at 181 where Deane J said:
"Where there is a repugnancy between the general provisions of a statute and provisions dealing with a particular subject matter, as a matter of general construction the latter must prevail. As Dean J. pointed out in Refrigerated Express Lines (A/asia) Pty Ltd. v Australian Meat and Livestock Corporation [No. 2] (1980 44 FLR 455 at 469):
'Repugnancy can be present in cases where there is no direct contradiction between the relevant legislative provisions. It is present where it appears, as a matter of construction, that special provisions were intended exhaustively to govern their particular subject matter and where general provisions, if held to be applicable to the particular subject matter, would constitute a departure from hat intention by encroaching on that subject matter.'"
(Page 16)
- requirements of par (a)–(e). That construction is consistent with the object of the section, namely to provide relief from ad valorem duty where the conveyance does not pass, or is not contemplated to pass, a beneficial interest, or is not a step in a scheme to achieve that end.
36 The respondent contended that it was appropriate to have regard to the second reading speech upon the introduction of s 73AA(1) to the Stamp Act 1921 in 1982, because the provisions are "ambiguous or obscure" within the meaning of s 19(1)(b)(i) of the Interpretation Act 1984. That was the conclusion reached by Kennedy J in Commissioner of State Taxation (WA) v Merifield Cooksey Holdings Pty Ltd (1994) 94 ATC 4774 at 4783. In that regard the Commissioner relies upon a passage of the second reading speech of the Stamp Amendment Bill (No 6) 1982 (WA) where the treasurer said:
"The provisions in the Bill will also ensure that the vesting of assets to the beneficiaries will be subject to full ad valorem duty when the recipient is not a natural person or is not identified in the deed creating the trust, when the trustee acquired the property being transferred."
37 In isolation at the paragraph recited in the Commissioner's written submissions misses the context of the remarks. What the treasurer said (see Parliamentary debates (WA) 1982 Volume 240, 4204) was:
"Firstly, I will deal with the use of discretionary and unit trusts. While I acknowledge the fact that there are some genuine trust situations, it is evident that the vast majority of trusts these days are being used for the sole purpose of avoiding or minimising the payment of taxes of one-type or another. The use of trusts as a means of avoiding or minimising stamp duty payments can be accomplished in a number of different ways.
In the case of a discretionary trust, it is possible under the present legislation to easily appoint a new trustee of the trust.
When the trustee is a corporate body, a change may be achieved by disposing of the shares in the trustee company and so effectively changing the ownership and control of the trust property.
Furthermore, the appointment of a new trustee then affords that trustee with the opportunity to vary or completely change the beneficiaries originally entitled to the assets of the trust.
(Page 17)
- Again, through the use of the discretionary powers of a trustee and the terms under which these trusts are set up, new beneficiaries can be introduced. These beneficiaries may take the form of companies or other trusts and the property of the trust then immediately can be vested in, and moved to, those new beneficiaries under the guise of a beneficial entitlement.
…
The proposals contained in this Bill will ensure that any change, whatsoever, of trusteeship will be charged full ad valorem duty on the value of the trust property at the time of the change. At the same time, provision has been made to protect any change to a genuine trust situation. In this case, it will be necessary only for the Commissioner of State Taxation to be satisfied that the change is not being made in contemplation of the passing of a beneficial interest in the trust assets."
38 The paragraph relied upon by the Commissioner then follows.
39 What the second reading speech demonstrates is that s 73AA is part of a series of anti-avoidance provisions in that preventing the avoidance of stamp duty by the use of trust mechanisms to convey beneficial entitlements in property. Sections 73AA itself is designed to ameliorate the consequence of those provisions by avoiding the imposition of ad valorem stamp duty where no beneficial interest in property does pass or is not contemplated to pass. There is no reason to read down s 73AA(1)(f) so that it does not apply to conveyances which meet some, but not all, of the elements of the conveyances described in sub-paragraphs (a) – (e). So long as the three requirements of s 73AA(1)(f) are met, then the clear purpose of the section is achieved.
Does the "Deed of Variation" pass a beneficial interest?
40 The applicant contends that the conveyance the subject of the assessment does not pass a beneficial interest in the trust property. That contention is based on the proposition that the pool of potential beneficiaries under the Family Trust is the same as the pool of beneficiaries under the No 2 Trust. The respondent contends that there was a passing of beneficial interest from the beneficiaries under the No 2 Trust to the beneficiaries under the Family Trust. He contends that the beneficiaries under the No 2 Trust are a larger group than those under the Family Trust. That submission is based upon the inclusion of par (c) in the definition of "additional members of the class of general beneficiaries"
(Page 18)
- namely "the spouses, widows and widowers of each person herein described as a beneficiary", and the non exclusion of the settlor as a beneficiary under the Family Trust but not the No 2 Trust.
41 As I have already observed, it is doubtful that par (c) of the additional members of the class of general beneficiaries of the No 2 Trust in fact broadens the potential beneficiaries of that trust at all. The spouses, widows and widowers of the primary beneficiaries and the spouses, widows and widowers of the children, grandchildren and great-grandchildren of the primary beneficiaries are all included in the definition of general beneficiaries in any event. Henry Valentine Grier and Teresa Grier are married to each other and are each named as additional members of the class of general beneficiaries in each trust.
42 It is the case that the settlor of the No 2 Trust is not expressly excluded from being included as an additional member to the class of general beneficiaries. Given that the settlor has not been included within that class, it cannot be said that the settlor enjoys any form of beneficial interest in the trust property as at the date of the Deed of Variation. The simple fact is that the settlor is not within the class of general beneficiaries of either the Family Trust or the No 2 Trust, and the distinction between the two trust deeds as to a requirement to exclude the settlor is irrelevant to the question of whether the transfer contemplated by the Deed of Variation effects a passing of a beneficial interest. The question of whether or not a beneficial interest passes is to be determined by reference to circumstances existing at the time of the execution of the instrument, or at least its operation – see DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (1982) 12 ATR 874 at 889. If, in the future, the settlor was to be included within the class of beneficiaries of the No 2 Trust, that would not affect the beneficial interests in the property conveyed since it no longer forms part of the trust property of the No 2 Trust.
43 The respondent relied on the decision in Reginald John Burrell and the Honourable Patrick Kinnaird v His Majesty's Attorney-General [1937] AC 286 to support the proposition that there is a passing of beneficial interest from one group of beneficiaries to another group of beneficiaries in circumstances where some of the beneficiaries are common to both groups and some are not. That case concerned the application of the s 1 of the Finance Act 1894 (UK) to trusts under a will, where an initial trust was established for the life of the testator's son, Harry, and a further trust established on Harry's death. During Harry's life, the persons beneficially interested in the discretionary trusts were
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- Harry, his wife, his sons W and M and his daughter G. After his death, the persons beneficially interested in the trust were W, W's wife and M. The Burrell case is distinguishable from this in that although the two groups of beneficiaries had common members, each had members who are not beneficiaries of the other trust concerned. In this case, as a matter of fact, the class of beneficiaries of the Family Trust is the same as the class of beneficiaries of the No 2 Trust. The fact that Grier Nominees is a beneficiary of the No 2 Trust does not alter that position. It is a beneficiary of the No 2 Trust in its capacity as trustee of the Family Trust. Grier Nominees enjoys no beneficial interest in the trust property of the No 2 Trust. It is the beneficiaries of the Family Trust who enjoy any beneficial interest flowing from Grier Nominees status as a general beneficiary of the No 2 Trust.
44 The respondent argues that even if the two sets of beneficiaries are identical at the time of execution of the deed, there is still a passing of a beneficial interest. Reliance is placed on the passage in Burrell where Lord Russell of Kilburn said, at 301:
"It is said that the fact that certain individuals were members of both groups, shows that part of the beneficial interest in the property resided in the same individual's immediately before and immediately after Harry's death, and therefore it is impossible to say that there was on Harry's death a change of title in the property as a whole, and that therefore there was no passing under section 1. I do not agree. The mere fact that a person becomes entitled to the beneficial enjoyment of property on a death, has already before that death been beneficially an interest in the property does not prevent the property passing under section 1. Instances of this are to be found in the Cowley case and the deTrafford case, in each of which cases a former beneficial interest ceased with the death under a different right. In the present case the beneficial interest of the first group ended with Harry's death, and thereupon the beneficial interest on the second group arose under a different trust; and so to as to each member of the first group, his interest as a member of that group ended with Harry's death, and if (but only if) he fulfilled the qualification required for membership of the second group, a new and different beneficial interest then arose in him under a different trust."
45 Clause 4 of the Deed of Variation provides that Grier Nominees as trustee of the Family Trust is to hold the trust property in accordance with
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- the terms of the Family Trust for the benefit of the beneficiaries of that trust. Prior to the operation of the deed, the property was held by Serana as trustee of the No 2 Trust in accordance with the No 2 Trust deed. As I have already concluded, beneficiaries of both trusts are, as a matter of fact, the same in each trust. The terms of the two trust deeds are substantially the same. To the extent that additional trustee powers are enumerated in the No 2 Trust deed, those powers do not in substance alter the nature or extent of the beneficial interests of the beneficiaries. Although it may be said that, after the transfer in accordance with the deed, the property is held under a "different trust", there is no change to the nature or extent of the beneficial interest of the beneficiaries to the trust property.
46 In my view, no beneficial interest is passed under the Deed of Variation.
Is the Deed of Variation made in contemplation of the passing of the beneficial interest in the property?
47 There is no suggestion, and it is not contended by the respondent, that the deed was made "in contemplation of the passing of the beneficial interest" in the property. The requirement of s 73AA(1)(f)(ii) is satisfied.
Is the Deed of Variation part of or made pursuant to a scheme?
48 Section 73AA(1)(f)(iii) requires that the Commissioner was satisfied that the conveyance "is not part of, or made pursuant to, a scheme whereby any beneficial interest in the property conveyed or transferred, whether vested or contingent, has passed or will or may pass".
49 The Commissioner contends, and I accept, that the expression "scheme" should bear its ordinary meaning namely "a plan of action devised in order to attain some end; a purpose together with a system of measures contrived for its accomplishment; a project, enterprise. often with unfavourably notion, a self seeking or underhand project, a plot" (Oxford English Dictionary).
50 In oral argument, the applicant referred to the High Court's decision in Commissioner of Taxation v Hart and Other (2004) 217 CLR 216. There the interpretation of "scheme" was discussed in the context of part IVA of the Income Tax Assessment Act 1936 (Cth). "Scheme" under the Income Tax Assessment Act1936 is defined in s 177A(1), and it is in that context that the discussion in that case must be seen. The word is not defined in the Stamp Act 1921. Counsel for the applicant accepted, on the
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- basis of the comments in Commissioner of Taxation v Hart and Other that any act could constitute a scheme, and on that basis the Deed of Variation can itself be considered "a scheme" for the purposes of s 73AA. He argued, however, it was not a scheme "whereby any beneficial interest in the property conveyed has passed or will or may pass". In my view, the word "scheme" in s 73AA(1)(f)(iii) must necessarily refer to something more than the single transaction effected by the document which is being assessed for duty. The words "is not part of, or made pursuant to" suggest that the document being assessed is one element of a broader "system of measures" designed to pass, or lead to the passing of, a beneficial interest in the property conveyed. If the document being assessed is the only transaction or step leading to the passing of a beneficial interest in property, then it will not meet the requirements of par (i) or (ii) of s 73AA(1)(f).
51 Having concluded that the Deed of Variation does not, itself, pass a beneficial interest in the property conveyed, there is nothing to suggest that it forms part of, or is made pursuant to, any wider scheme or plan to pass, either immediately or in the future, a beneficial interest in the property.
52 The Commissioner contends that there may be a passing of a beneficial interest as a result of the transfer of the trust property from Serana to Grier Nominees. It is contended that there may be a passing of a beneficial interest in two ways. The first way is expressed by the Commissioner as follows:
"First, as the transferred property, prior to the transfer, was subject to the discretion of Serana Pty Ltd as trustee of the Grier No 2 Trust, and after the transfer, is subject to the discretion of a different trustee, Grier Nominees Pty Ltd as trustee of the Grier Family Trust, there is a possibility that different beneficiaries would have been and will be chosen in the exercise of a power of appointment by different trustees having different views as to how to exercise their individual discretions. For example, Serana Pty Ltd as trustee of Grier No 2 Trust may have exercised the power of appointment in favour of one beneficiary, whereas now the property is transferred, Grier Nominees Pty Ltd may exercise the power of appointment in favour of a different beneficiary. Further, as both Trust Deeds contain clauses allowing each trustee to exclude certain beneficiaries … then the fact that a different trustee is now vested with the transferred property, there may be
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- an exercise of the exclusion power by the different trustee in a different manner to the former trustee. Accordingly, it can be said that with the transfer, the beneficial interest in the property 'may pass' in the future, as an objective possibility."
53 That rather tenuous and speculative argument could be equally applied to a conveyance under s 73AA(1)(a), where a conveyance or transfer is made effectuating the appointment of a new trustee. It elevates the nature of the interest of any beneficiary in the trust fund to something more than a right to call for the due administration of the trust – see Gartside v Inland Revenue Commissioners [1968] AC 553 at 617-618. Whilst I accept that the expression "beneficial interest" for the purposes of s 73AA includes interests of the nature enjoyed by beneficiaries under a discretionary trust (see Chief Commissioner of Stamp Duties (NSW) v Buckle and Others (1998) 192 CLR 226 at [37] and [39]), the same class of beneficiaries enjoys effectively the same rights in relation to the trust property before and after the transfer.
54 Even if it is accepted that one trustee may exercise its discretions differently from the other, there is no reason to suspect that the deed has been executed as a part of any scheme to achieve that end. Both trustees are parties to the transaction. If Serana wished to bring about some particular exercise of discretion, it could simply exercise its own discretion rather than transferring the trust property to Grier Nominees in order for the latter company to exercise some particular discretion. The alteration of beneficial interest by the exercise of a power of appointment may occur at some time in the future, but it cannot be said that there is any present scheme in respect of which that future exercise of discretion can be said to be a part.
55 The second argument relied upon by the Commissioner is expressed as follows:
"Secondly, another objective possibility is that but for the transfer, Serana Pty Ltd as trustee of the Grier No 2 Trust may have never exercised the power of appointment such that the takers in default would have enjoyed the property on the vesting day. Whereas now that property has been transferred, Grier Nominees Pty Ltd as trustee of the Grier Family Trust, being a different trustee may choose to act differently and exercise a power of appointment in favour of a beneficiary. Therefore, it can be said that with the transfer, there is now an objective possibility that the beneficial interests of the takers in default
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- may pass to the beneficiaries or vice versa by virtue of there being a different trustee with a potential to exercise its discretion differently."
56 The second argument is in substance a reformulation of the first. For the same reason that I consider that the first argument is without merit, I reject the second.
Conclusion
57 For those reasons, I have concluded that the Commissioner should have been satisfied that the Deed of Variation does not pass a beneficial interest in the property, is not made in contemplation of the passing of the beneficial interest and is not part of, or made pursuant to, a scheme whereby any beneficial interest in the property has passed or will or may pass. It follows that the instruments should be charged with duty in accordance with item 6 of the second schedule.
Orders
58 The Tribunal accordingly makes the following orders:
1. The application is allowed.
2. The stamp duty assessment dated 17 January 2005 relating to the Deed of Variation dated 30 June 2004 between Serana Pty Ltd and Grier Nominees Pty Ltd is reduced from $30 705 to $20.
I certify that this and the preceding [58] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUDGE J CHANEY, DEPUTY PRESIDENT
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