Warner v Chief Commissioner of State Revenue
[2011] NSWADT 212
•05 September 2011
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Warner v Chief Commissioner of State Revenue [2011] NSWADT 212 Hearing dates: 12 July 2011 Decision date: 05 September 2011 Jurisdiction: Revenue Division Before: J Block, Judicial member Decision: The decision under review is affirmed
Catchwords: Meaning of "purchaser" and "transferee" where in each case there is more than one- whether section 18(3) of the Duties Act requires the necessary relationship for all parties constituting each of the purchaser and the transferee- relevance of Sharpe's case Legislation Cited: Duties Act 1997
Interpretation Act 1987Cases Cited: Sharpe v Chief Commissioner of State Revenue [2002] NSWADT 6;
Lake Victoria Ltd v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262;
Vickery v Woods (1951) 85 CLR 336;
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 ;
Scarfo v Chief Commissioner of State Revenue [2010] NSWADT 288 ;
Beecham v Smith (1858) 120 ER 574;
Amalgamated Society of Engineers v Adelaide Steamship Company (1920) 28 C.L.R 129.
Owen v Wilkinson (1858) 141 ER 213;
Re Jeffery; Ex parte Honey (1871) 7 Ch App 178Category: Principal judgment Parties: Ben Nicholas Warner (Applicant)
Cassandra Warner (Applicant)
James Dudley Warner (Applicant)
Sylvia Mary Warner (Applicant)
Chief Commissioner of State Revenue (Respondent)Representation: Counsel
J Dawson (Applicant)
J Mitchell (Respondent)
Cara Marasco & Co (Applicant)
Crown Solicitor (Respondent)
File Number(s): 116009
REasons for decision
Part A Preliminary and Background
The decision under review in this matter is the disallowance by the Respondent (who is sometimes referred to as the "Chief Commissioner") of an objection against an assessment of duty made under the Duties Act `1997 ('the Duties Act") in respect of a transfer ('the Transfer") of land with folio identifier 4/11356 ('the Property") by Werner Ackerman ('the Vendor" to Ben Nicholas Warner ("Ben") and Cassandra Warner ("Cassandra") as joint tenants as to a half share, and as tenants in common with and to James Dudley Warner ("James) and Sylvia Mary Warner ("Sylvia") (as joint tenants) as to the other half share.
The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997; it admitted as Exhibit A1 the contract ("Contract") for the sale of the Property dated 31 May 2010 and as Exhibit A2 a witness statement. In accordance with the Contract Ackerman sold the Property to Ben and Cassandra as joint tenants in respect of a half share and as tenants in common with Danachee Pty Limited ("Danachee") as to the other half share. Written submissions were received from the parties at the hearing; at the conclusion of the hearing a time-table was arranged in respect of further submissions; in particular the Respondent was allowed 3 weeks for further submissions and whereafter the Applicant was allowed the same period for submissions and culminating with a right of reply to the Respondent within a further week. In the result further submissions were indeed received from the parties; however the Respondent notified the Tribunal that he did not intend to exercise his right of reply.
Although Danachee did not ex facie the Contract enter into it as trustee of a discretionary trust the Chief Commissioner accepted that it did in fact do so; in respect of that discretionary trust ('the Trust") all of the Applicants except Cassandra is a named beneficiary and Cassandra is also a beneficiary as the wife of Ben. James and Sylvia are married to each other as are Ben and Cassandra. Ben is the son of James and Sylvia and accordingly Cassandra is their daughter-in-law.
Specifically in respect of the Contract:
a) The Contract relevantly stated:
The vendor sells and the purchaser buys the property for the price under these provisions instead of Schedule 3 Conveyancing Act 1919, subject to any legislation that cannot be excluded.
b) The Property was defined in clause 1 of the Contract to be:
The land, the improvements, all fixtures and the inclusions, but not the exclusions.
c) The land was defined on the cover page as:
108 Nareen Parade, North Narrabeen
Title Folio Identifier 4/11356 Being Lot 4 in Deposited Plan no. 11356.
d) Clause 16.3 of the Contract relevantly provided:
Normally, on completion the vendor must cause the legal title to the property (being an estate in fee simple) to pass to the purchaser free of any mortgage or other interest, subject to any necessary registration.
The presumption that the estate in fee simple was the subject of the transfer is supported by s 47(2) of the Conveyancing Act 1919 which relevantly provides:
Where land is conveyed to or to the use of any person without words of limitation, such conveyance shall be construed to pass the fee simple or other the whole estate or interest the person conveying had power to dispose of by deed in such land unless a contrary intention appears by such conveyance.
e) Clause 20.4 of the Contract relevantly provided:
If a party consists of 2 or more persons, this contract benefits and binds them separately and together.
f) The Transfer relevantly provided:
The transferor acknowledges receipt of the consideration of $923,500.00 and as regards the above folio of the Register transfer to the transferee an estate in fee simple.
g) At paragraph (F) of the Transfer space was provided for the share of that estate to be specified. No entry was made next to that space.
There is no issue of fact between the parties and there was therefore no need for oral evidence. It is also relevant to note that, having regard to the definition of "related person" contained in the Duties Act all four Applicants are related to the Company in that they are beneficiaries of the Trust of which the Company is the trustee; Ben is related to James and Sylvia as their son but Cassandra is not because she is their daughter-in-law.
Part B Legislation
In accordance with section 8(1) of the Duties Act each of the Contract and the Transfer is a dutiable transaction.
In accordance with section 18 of the Duties Act duty on the Transfer is $10, if it is made in conformity with the Contract. The 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; Vickery v Woods (1951) 85 CLR 336 at 343-4 per Dixon J; Sharpe v Chief Commissioner of State Revenue [2002] NSWADT 6 at [27]-[29]. (The decision of the Tribunal in Scarfo v Chief Commissioner of State Revenue [2010] NSWADT is a rare exception to the general rule; that decision is the subject of an appeal, and the ration in Scarfo is not in any event relevant for the purposes of this decision.)
It is clear that the persons named in the Contract are not the same as the persons named in the Transfer and so that Section 18(2) of the Duties Act does not apply.
Section 18(3) relevantly provides:
18(3) 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:
...
(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.
Section 18(3) (d) of the Duties Act refers to "the purchaser" and "the transferee" in the singular form.
Section 8(b) of the Interpretation Act 1987 relevantly provides:
a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form,
It is clear that section 8(b) of the Interpretation Act will apply to section 18(3)(d) of the Duties Act, except insofar as the contrary intention appears in the Duties Act : section 5(2) Interpretation Act 1987. There is nothing in the Duties Act which evidences an intention that the word "purchaser" should not include purchasers and the word "transferee" should not include transferees. It follows that the phrase " the purchaser " as it appears in section 18(3)(d) of the Duties Act includes the purchasers and the phrase the transferee includes the transferees . (It will be remembered that the Contract in its terms expressly provides that if a party consists of two or more persons they are bound "separately and together")
Part C Sharpe's case and commentary
The case for the Applicant relies, to some considerable extent, on the proposition that the exemption applies where a majority of the persons constituting the purchaser and the transferee are related to each other in accordance with the definition contained in the Duties Act. The Applicants rely, in this context, on the decision of the Tribunal in Sharpe v Chief Commissioner of State Revenue [2002] NSWADT 6.
.
In Sharpe's case there was a single contract but two separate transfers. The Chief Commissioner contends, correctly in my view, that Sharpe is distinguishable; an extract from the Respondent's additional submissions (and being the submissions furnished after the hearing) is included (excluding at this stage the first sentence in clause 37 which appears as a footnote) with the Tribunal's approval as follows:
:
3.2 The folio referred to in the contract should be presumed to contain a description of the land, the estate or interest therein for which it is created, a description of the proprietor for the estate or interest, particulars of any other estates or interests affecting the land and other information relating to the land: s 32(1) Real Property Act 1900. It was that which the vendor agreed to sell and the purchasers agreed to purchase.
3.3 Under the terms of the contract the vendor agreed to transfer his estate in fee simple to the purchasers. That was an agreement for the purpose of s 8(b)(i) of the Duties Act 1997.
3.4 The contract was not made up of divisible agreements to each of the tenants in common. That is because each of the purchasers and together the purchasers were, by reason of clause 20.4 of the contract, obliged to pay the purchase price as well as meet other obligations under the contract: Beecham v Smith (1858) 120 ER 574; Owen v Wilkinson (1858) 141 ER 213; Re Jeffery; Ex parte Honey (1871) 7 Ch App 178 . Consequently, the purchasers agreed to purchase the estate in fee simple jointly pursuant to an agreement and accepted the joint and several consequences of doing so.
3.5 Had the vendor wished to consummate agreements with each of the tenants in common he could have entered separate contracts and separate transfers. By doing so the purchasers would have avoided joint and several liability under the contract. As they did not do so it is clear that the parties intended for there to be an agreement for the sale and purchase of the estate in fee simple in the land.
3.6 Similarly the transfer was a transfer of land, being the estate in fee simple in the land identified in Folio Identifier 4/11356. That was plain on the face of the transfer. The fact that there was only one transfer suggests that the parties were ad idem that there be an agreement and a transfer of the estate in fee simple in the land identified in Folio Identifier 4/11356.
3.7 This distinguishes the present case from Chief Commissioner of State Revenue v Sharpe [2002] NSWADT 6 . In Sharpe there was one contract for sale of land and two transfers, each for a half share in the land. That fact was determinative of the Tribunal's decision in Sharpe as it enabled the Tribunal to find that the dutiable property being transferred was a one half share of the land, and not the land itself: see Sharpe at [32]-[34]. Such a finding was open to the Tribunal in Sharpe as the vendor and purchasers had demonstrated, by their execution of multiple transfers, the intention to depart from the terms of the agreement and transfer two separate interests in the same land.
3.8 It is respectfully submitted that the reasoning in the first sentence in paragraph [37] of Sharpe does not hold true in the present case and is of doubtful provenance if Sharpe was based on the same standard form contract for sale of land that is before the Tribunal in the present case. In the present case, the vendor did not agree to sell two half shares in the land. He plainly agreed to sell the land recorded in Folio Identifier 4/11356. That is evidenced by the front page of the contract, the definition of property in clause 1 of the contract and the following provision of the contract:
The vendor sells and the purchaser buys the property for the price under these provisions instead of Schedule 3 Conveyancing Act 1919, subject to any legislation that cannot be excluded.
3.9 The fact that the vendor and purchasers agreed that the vendor had rights against each purchaser in respect to the contract for sale of that land, including rights as to the payment of the purchase price for that land, reinforces that proposition: see clause 20.4.
3.10 It cannot be said that the vendor agreed to limit his rights against each of the purchasers to those applying to two half shares or that the agreement was constituted by two agreements, each for a half share in the land. There is no evidentiary basis for such a finding in the context where the property and land are so clearly defined and specified.
3.11 Nor does the contractual principle of joint and several liability which is embodied in clause 20.4 of the contract have the effect postulated in Sharpe at [37] on the estate agreed to be sold and purchased under the contract. Clause 20.4 affords the vendor contractual rights against all of the purchasers and each purchaser named in the contract. The principle of joint and several liability has its foundations in contract and not property law: see Re Jeffrey per James LJ at 181 and per Mellish LJ at 183; Beecham at 575-6 per Campbell CJ, Coleridge, Erle and Crompton JJ ; Owen v Wilkinson (1858) 141 ER 213 at 214 per Crowder, Byles and Willes JJ . Accordingly, in circumstances where the definition of property in clause 1 of the contract and the specification of land on the front of the contract are clear on their face and makes no mention of clause 20.4 and clause 20.4 does not make reference to the property the subject of the contract, Clause 20.4 does not have the further consequence of dividing the estate into two half shares.
3.12 Further, where there is such clear evidence as to the subject matter of the contract there is no evidentiary basis for interpolating from clause 20.4 that the parties agreed to sell and purchase two half interests in that land. Such an analysis is perverse in the face of the weight of evidence: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 368 per Deane J.
The footnoted sentence in clause 37 of Sharpe, (as to which the Respondent expresses doubt) reads:
Given that the obligations and rights of Venacom and Alsof under the Agreement were joint and several and were not solely joint and given that references to the NSW Property in the Agreement were references to the whole and each part of it, I find that it would not be incorrect to describe each of Venacom and Alsof as "the purchaser" under the Agreement of a one half share each of the NSW Property".
That Sharpe is distinguishable on its facts appears in particular (but not only) from clause 29 of the decision in Sharpe as follows:
Each of Lake Victoria Ltd v Commissioner of Stamp Duties (supra) and Vickery v Woods (supra) are authority that for a transfer to be "in conformity" with an agreement, the transfer of the property must be made to the person identified in the agreement as the transferee of the subject property. Neither of Lake Victoria Ltd v Commissioner of Stamp Duties (supra) nor Vickery v Woods (supra) is authority that a transfer of a part of or an interest in the property the subject of an agreement for transfer to the person identified in the agreement as the transferee of the property, cannot be in conformity with the agreement. There is in fact contrary suggestion in Lake Victoria Ltd v Commissioner of Stamp Duties (supra). In that case, by written agreement, a vendor agreed to sell to the named purchaser or his (unidentified) nominee or nominees, certain lands and other property for a lump sum purchase price. The named purchaser nominated three companies as purchasers of parts of the said lands and by three separate instruments, the vendor transferred the respective parts to the respective three companies as tenants in common. Nowhere in the judgement of Jordan CJ is any comment or suggestion made that the fact that each transfer was a transfer of only part (and not the whole) of the property agreed to be transferred under the agreement, precluded the transfers from being "in conformity with" the agreement. The only reason given by Jordan CJ that the transfers were not in conformity with the agreement was that the transfers were not made in favour of the purchaser identified in the agreement as the purchaser of the property the subject of each transfer. Jordan CJ did not indicate that a transfer of a part of or an interest in the property the subject of an agreement for transfer to the person identified in the agreement as the transferee of the property, could not be a transfer in conformity with the agreement.
. .
It is also relevant to note that the Tribunal in Sharpe had regard to explanatory material for the purposes of its decision. It is my view that apart from the fact that Sharpe does not apply in this case, it is not necessary to seek assistance from explanatory material because the legislation is clear and unambiguous and so that there is no basis for a finding which does not accord with it. It is not permissible for the Tribunal to depart from the language of the statutory provision under consideration, Amalgamated Society of Engineers v Adelaide Steamship Company (1920) 28 C.L.R 129 . In any event I do not think that the relevant explanatory note (and it is not necessary to quote it in these reasons) supports an alternative construction.
There are contentions in the submissions as to what precisely was sold under the Contract; it is unnecessary for me to refer to those contentions simply because it is abundantly clear that it was the fee simple in the Property as a whole (and not any other interest) which was sold to the purchaser under the Contract.
In submissions furnished after the hearing the Applicant contended that the Respondent has consistently applied the decision in Sharpe. The Tribunal has no knowledge of whether or not this is so but nothing turns on the point since the Tribunal has found that Sharpe is distinguishable... The Applicant contends also that there is a presumption against the imposition of double duty; that contention too appears to the Tribunal to be misconceived having regard to the statutory regime which has been referred to in some detail earlier in these reasons, The Applicant contends moreover that it is entitled to the benefit of the exempting provision because Danachee purchased as trustee and all four of persons constituting the transferee are beneficiaries of the Trust of which Danachee is the trustee. That contention would be relevant and tenable if Danachee had been the only party constituting the purchaser but it was not, and I have found that, as a matter of interpretation, the necessary relationship must exist in respect of all (and not some only of the) persons constituting a party. Other contentions by the Applicant relate to the nature of the relevant interest in the Property; it is unnecessary for me to deal with those contentions having regard to my finding that the interest was in fact the fee simple.
Part D Conclusion
This case is in my view, and on analysis, not complex. It is clear, as I have said, that the persons named as purchaser and as transferee are not the same and so that section 18(2) of the Duties Act cannot apply.
Section 18(3) of the Duties Act will have the effect that the Transfer attracts nominal duty if, and only if, all (and not some) of the persons named as the purchaser in the Contract are related to all (and not some) of the persons named as the transferee in the Transfer. In respect of section 18(3) (d) (i) of the Duties Act this not so because Cassandra is not related to either of James or Sylvia; section 18(3) (d) (ii) of the Duties Act does not apply because, although Ben and Cassandra and Danachee entered into the Contract as purchaser, and although Danachee contracted as trustee, Ben and Cassandra did not.
Sharpe is, as contended by the Respondent, distinguishable and does not assist the Applicant.
In the circumstances the decision under review is affirmed.
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Decision last updated: 05 September 2011
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