Vlahos v Chief Commissioner of State Revenue

[2013] NSWADT 215

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:	Vlahos v Chief Commissioner of State Revenue [2013] NSWADT 215
Hearing dates:	6 September 2013
Decision date:	02 October 2013
Jurisdiction:	Revenue Division
Before:	A Verick, Judicial Member
Decision:	The application to review the decision made by the Chief Commissioner of State Revenue on 1 June 2012 is dismissed.
Catchwords:	STATE REVENUE - Duties Act 1997- transfer "in partial conformity with" the contract - meaning of "related person" -review on grounds of estoppel and "fairness".
Legislation Cited:	Duties Act 1997 Taxation Administration Act 1996 Administrative Decisions Tribunal Act 1997 Interpretation Act 1987
Cases Cited:	Lake Victoria Ltd v Commissioner of State Revenue (1949) 49 SR (NSW) 262 Vickery v Woods (1951) 85 CLR 336 Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 Commissioners of Inland Revenue v Brooks (1915) AC 478 Maritime Electric Co. Ltd v General Dairies Ltd (1937) AC 610 BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003 R v Inland Revenue Commissioners; Ex parte Preston (1985) AC 835 R v Inland Revenue Commissioners; Ex parte National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617
Category:	Principal judgment
Parties:	Paul John Vlahos (Applicant) Elizabeth May Vlahos (Applicant) Vicki Rochelle Vlahos (Applicant) Joshua Paul Vlahos (Applicant) Stella Maria Kondilis (Applicant) Issac Chami (Applicant) Chief Commissioner of State Revenue (Respondent)
Representation:	Counsel M Sealey (Respondent) P Vlahos (Applicant - Agent) Crown Solicitor (Respondent)
File Number(s):	136017

reasons for decision

1. On 26 April 2012, the applicants entered into a contract to purchase 79a Denison Street, Rozelle (the "property").

1. The property was a dutiable property in terms of s 11(1)(a) of the Duties Act 1997 (the "Act") being land in New South Wales. Section 8(1)(b)(1) provided that duty was charged on an agreement for sale or transfer of dutiable property. Further, s 9(1) provided that the duty on the dutiable transaction was to be charged as if the dutiable transaction was a transfer of dutiable property. An ad valorem duty of $53,435 as required by the Act was paid to the Chief Commissioner.

1. On 1 June 2012, the applicants (now excluding Issac Chami) executed a transfer of the property. A fixed duty of $10 was paid by the applicants on the transfer pursuant to s 18(2) of the Act, which provided 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 $10 if the duty chargeable in respect of the agreement has been paid.

1. Lori Steel, a licensed conveyancer from All Districts Conveyancing, a firm situated in Summer Hill, attended to both the contract and transfer on behalf of the applicants.

1. On 1 August 2012, the Chief Commissioner informed Lori Steel that he was "undertaking an audit on matters relating to s 18(3) of the NSW Duties Act" and requested copies of the stamped contract and the transfer executed in the purchase of the property. Section 18(3) provides as follows:

The duty chargeable in respect of a transfer of dutiable property that is not made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if:

(a) the duty chargeable in respect of the agreement has been paid, and

(b) the transfer would be in conformity with the agreement if the transferee was the purchaser under the agreement, and

(c) the transfer occurs at the same time as, or proximately with the completion or settlement of the agreement, and

(d) at the time the agreement was entered into, and at the completion or settlement of the agreement:

(i) the purchaser under the agreement and the transferee under the transfer are related persons, except as provided by subparagraph (ii), or

(ii) if the purchaser purchased as a trustee, the transferee and the beneficiary are related persons.

1. In response, All District Conveyancing forwarded the documents requested and also a statutory declaration made by Lori Steel setting out the relationship between the ultimate purchasers of the property. The relationship was explained as follows. Paul John Vlahos and Elizabeth May Vlahos are father and mother of Vicki Rochelle Vlahos and Joshua Paul Vlahos. Issac Chami is Vicki's spouse and Stella Maria Kondilis was at the relevant time a de facto partner of Joshua. They have since been married.

1. On 19 September 2012, the Chief Commissioner informed the applicants, in writing, that he was not satisfied that s 18(3) applied to the transfer dated 1 June 2012 but that he was prepared to reduce the duty payable on the transfer to the amount of $5,969.50 pursuant to provisions of s 64C of the Act. Section 64C provides for a duty concession in respect of a transfer of dutiable property that is made in partial conformity with an agreement for the sale or transfer of the property.

1. The applicants, being dissatisfied with the decision of the Chief Commissioner contained in his letter of 19 September 2012, lodged an objection under s 86(1)(b) of the Taxation Administration Act 1996 (the "TA ACT"). The objection was lodged on the grounds that the applicants had acted on advice given to their conveyancer by an officer of the Office of State Revenue and that "Issac Chami's removal from the purchase was solely to facilitate the processing of our mortagage". Attached to the objection was a statutory declaration dated 30 October 2012 made by Lori Steel stating that she was given oral advice by an officer of the Office of State Revenue that the transfer could be stamped "not in conformity" on the basis of the relationships of the purchasers.

1. The Chief Commissioner disallowed the objection under s 91(2) of the TA Act. The applicants sought a review of the decision of the Chief Commissioner by the Tribunal under s 96.

1. In disallowing the objection, the Chief Commissioner also issued under s 8(1) of the TA Act a notice of assessment to assess the applicants to an additional duty of $5,856.28. This was calculated on the basis that the final five purchasers had acquired a further 1/6th share in the property, being Issac Chami's share under the contract.

1. The applicants did not produce any evidence at the hearing and relied entirely on their application and oral submissions made by Paul John Vlahos.

1. The Tribunal had before it, in addition to the documents lodged under s 58 of the Administrative Decisions Tribunal Act 1997, an "Additional Tender Bundle" of documents and the Chief Commissioner's written submissions.

1. The applicants' case was essentially that the full ad valorem duty had been paid on the contract and that the provisions of s 18(3) should, in fairness, apply to the transfer. It was further submitted that the applicants had not entered into any arrangements to pay less duty than the proper duty payable and that their conveyancer had acted entirely on advice given by an officer of the Chief Commissioner. It was submitted that Issac Chami was excluded because the bank providing the funds to purchase the property informed the applicants that it was not necessary to include him to support their application for the loan to fund the purchase. This, it was submitted, was done "solely to facilitate the processing of the mortgage loan".

1. The issues arising in the present application are as follows:

(1) Whether the applicants were entitled to the concession under s 18 of the Act in respect of the transfer dated 1 June 2012.

(2) If s 18 had no application, to what extent the provisions of s 64C apply in relation to the transfer dated 1 June 2012.

(3) Whether the viva voce advice given by an officer of the Office of State Revenue to Ms Steel confirming that the provisions of s 18 applied to the transfer supplants the terms of the law.

(4) Whether the applicants are entitled to "fairness".

1. The scheme of s 18 quite simply operates to avoid double duty in relation to a dutiable transaction. Section 18(1) provides that if a dutiable transaction is effected by more than one instrument, only one instrument is to be stamped with the full duty payable.

1. Section 18(2) further provides that the duty chargeable in respect of a transfer made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if the duty in respect of the agreement has been paid.

1. The Chief Commissioner's submission was that, in this matter, s 18(2) did not apply to the transfer because it was not made in conformity with the agreement, as a party, Issac Chami, to the contract was excluded in the transfer of the property. I agree with the submission. It is well established that a transfer will not be in conformity with the contract unless the persons named in the transfer are the same as the persons named in the contract: Lake Victoria Ltd v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262 at 265 per Jordan CJ and Vickery v Woods (1951) 85 CLR 336 at 343-4 per Dixon J.

1. The concession is available even if the transfer of dutiable property is not made in conformity with the agreement for the sale or transfer of the dutiable property provided the conditions set out in s 18(3) are satisfied.

1. Counsel for the Chief Commissioner correctly conceded that the applicants satisfied the requirement of s 18(3)(a), (b) and (c) but submitted that the applicants were also not entitled to the concession under s 18(3) because the applicants failed to satisfy the requirement of s 18(3)(d)(i).

1. Counsel also conceded "that at the time of the Contract was entered into and at the time of its settlement or completion: (a) each of Paul, Elizabeth, Vicki and Joshua were related persons on the basis that Paul and Elizabeth are parents of Vicki and Joshua; and (b) Issac was related person of each of Paul, Elizabeth, Vicki and Joshua as Issac was the spouse of Vicki". But submitted that "irrespective of whether Stella was the de facto partner of Joshua, Issac was not at any relevant time a 'related person' of Stella." And that, as such, the applicants failed to satisfy the test in s 18(3)(d).

1. So far as it is relevant, "related person" is defined in the dictionary to the Act as follows:

related person means a person who is related to another person in accordance with any of the following provisions:

(a) natural persons are related if:

(i) one is the spouse or de facto partner of the other, or

(ii) one is the parent, brother or sister of the other, or

(iii) one is the spouse, or de facto partner, of a parent, child, brother or sister of the other

1. The concession under s 18(3) would have only been available to the applicants if, at the time the contract was entered into, and at the completion or settlement of the contract, the applicants were related persons.

1. The Chief Commissioner's decision not to grant the concession is based entirely on the legal test found in s 18(3). Issac was not at the relevant time a "related person" of Stella. There was no discretion to grant the concession under the test prescribed by s 18(3) against the facts in this matter.

1. The second issue relates to the concession under s 64C which is in the following terms:

64C Transfers made in partial conformity with agreements

(1) The duty chargeable in respect of a transfer of dutiable property is to be calculated in accordance with this section if:

(a) the transfer is made in partial conformity with an agreement for transfer or sale of the dutiable property, and

(b) the duty chargeable in respect of the agreement has been paid.

(2) A transfer is made in partial conformity with an agreement for transfer or sale if the transfer conforms with the agreement, apart from the fact that a share in the dutiable property transferred to one or more of the transferees under the transfer exceeds the share agreed to be transferred to the relevant transferee under the agreement.

(3) Duty is to be charged only on the excess proportion of the dutiable value of the dutiable property transferred.

(4) The excess proportion is the proportion, or the total of the proportions, by which the share or shares in the dutiable property transferred to each transferee exceed the share or shares in the dutiable property (if any) agreed to be transferred to each transferee.

(5) If a share in dutiable property is transferred to a transferee under the agreement for transfer or sale, this section applies as if the share agreed to be transferred to that transferee is nil.

(6) This section does not apply if section 18(3) applies in respect of the transfer.

1. I agree with the following submission in the Chief Commissioner's written submissions -

42 In the current circumstances, the "excess proportion" (as defined in s64C) of the dutiable value of the dutiable property transferred is 1/6th of the dutiable value of the Property, that being the share of the Property which was agreed to be transferred to Isaac under the Contract but which was ultimately transferred to the Transferees (excluding Isaac) under the Transfer.

1. The next issue was whether the Chief Commissioner is bound in any way by the advice given by one of his officers on the application of the law. Is the Chief Commissioner estopped from carrying out his statutory duties in circumstances where a contrary oral or written advice was given to a taxpayer who acted upon it?

1. The accepted view following the judgment of the High Court in Federal Commissioner of Taxation v Wade [1951] 84 CLR 105, as expressed by Kitto J at 117 is that -

No conduct on the part of the commissioner could operate as an estoppel against the operation of the Act: cf. Commissioners of Inland Revenue v. Brooks (1915) A.C. 478, at pp. 491, 492; Maritime Electric Co. Ltd v. General Dairies Ltd (1937) A.C.610.

1. And in BBLT Pty Ltd v Chief Commissioner of the Office for State Revenue [2003] NSWSC 1003 at para 111 Gzell J noted "that estoppel does not lie against a fiscal authority on the basis that the authority cannot be prevented from carrying out the public duties cast upon it by legislation".

1. In this matter, the applicants' conveyancer claims an officer of the Office of State Revenue gave the advice orally. In submissions, counsel for the Chief Commissioner indicated that the Chief Commissioner, in limited circumstances, accepts as binding rulings he provides in writing to taxpayers or advisers. But the Chief Commissioner does not accept as binding any rulings given orally. That is a matter for the Chief Commissioner who has the general administration of the Act, a power given to him under s 61 of the TA Act. Under that provision the Chief Commissioner may do all such things as are necessary or convenient to give effect to this Act.

1. But in the specific provisions under consideration in this matter, no discretion is given to the Chief Commissioner and the Tribunal is not able to override the statutory provisions, which require the additional duty in circumstances not within those prescribed by s 18. The Chief Commissioner was entitled to rule that an additional duty was payable on the facts of this matter, subject to the concession pursuant to s 64C.

1. However, it should be noted that the Chief Commissioner is given a statutory discretion when exercising his assessing powers set out in the TA Act. Under the TA Act, the Chief Commissioner may make an assessment (s 8) or one or more reassessments (s 9) or a compromise assessment (s 12). The use of the term "may" in each case "indicates that the power may be exercised or not, at discretion" (s 9 Interpretation Act 1987).

1. Without conclusively defining the discretion, an observation can be made that the discretion would be available in cases where the Chief Commissioner takes the view that the cost of making the assessment will exceed the revenue to be collected or where it would be impossible to recover the amount (for example, the taxpayer is insolvent or bankrupt) or where it would be a very harsh or inequitable outcome to issue an assessment. As the relevant assessment in this matter is not before the Tribunal it is not necessary to rule whether the discretion should have been exercised in this matter where the full duty had been paid on the contract and the property after the transfer remains in the possession of the Valhos family.

1. Finally, I need to briefly deal with the submission by the applicants that they had paid the full duty on the contract and it was unfair to make them pay any additional duty on the dutiable transaction.

1. The courts in England have ruled that, in exceptional circumstances, a taxpayer is entitled to judicial review of a decision taken by the revenue within the ambit of an abuse of power if a decision is "unfair" because there is an obligation on the revenue to treat a taxpayer fairly and not to discriminate between one taxpayer and another: R v Inland Revenue Commissioners; Ex parte Preston [1985] AC 835 at 866-867; R v Inland Revenue Commissioners; Ex parte National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617 and R v Inland Revenue Commissioners; Ex parte Unilever Plc. [1996] BTC 183.

1. These cases were considered by the Full Federal Court in Bellinz Pty Ltd v Federal Commissioner of Taxation (1998) 84 FCR 154 and the court expressed the view that there "is little difficulty in accepting that, where a decision-maker, including the Commissioner of Taxation, has a discretion, a principle of fairness will require that that discretion be exercised in a way that does not discriminate against taxpayers".

1. In this matter, it is suffice to say that the principle of fairness has no application when considering a revenue legislative provision, which imposes a duty or tax in the absence of any discretionary power in the provision. Duty payable under s 9 of the Act having regard to the concession provided by s 18 and s 64C on any particular set of facts clearly does not involve any question of administrative discretion on the part of the Chief Commissioner.

1. The application for review of the decision made by the Chief Commissioner on 19 September 2012 must accordingly be dismissed.

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Decision last updated: 02 October 2013