Al Haddad v Chief Commissioner of State Revenue

NCAT Administrative and Equal Opportunity|2017-12-11

The Applicant's case

Expansive submissions on behalf of the Applicant were set out in the Application, in the written submissions dated 13 June 2017, in further written submissions dated 14 November 2017 and by Mr Al-Shahidi, the solicitor for the Applicant, at the hearing. In summary the case for the Applicant is as follows: 1. There was an express trust created orally on an unspecified date which, as I understand it would have been reasonably proximate to and probably prior to the date of exchange of contracts for the purchase of the Villawood property in February 2010. 2. The trust so created was to the effect that the Applicant (as the real purchaser) would arrange for the purchase of the Casula property in the name of his son Mr Mohammad Al Haddad. 3. I understood it to be suggested that the Deed of Trust executed some 5 years later was essentially merely a confirm the tree formalisation of the oral express trust referred to in (1), in that it provided greater clarification of the role and obligations of the trustee. 4. It follows that upon completion of the purchase of the Casula property title in that property was vested in the apparent purchaser (Mr Mohammad Al Haddad) upon trust for the real purchaser (the Applicant). 5. The evidence establishes that the Applicant as real purchaser provided all monies for the purchase of the Casula property. 6. It must follow from the above that the Applicant is able to take advantage of the provisions for concessional stamp duty set out in s 55 (1) (b), all the elements of that paragraph having been satisfied. 7. It follows that the decision under review by the Chief Commissioner was incorrect and should be revoked, so as to allow for the refund to the Applicant of the ad valorem duty of $24,740

Did the real purchaser (the Applicant) provide the money for the purchase?

The starting point of the analysis of this limb is the additional interpretation provision contained in subsection (1A) of section 55 in the following terms: "For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser." (Emphasis added)
While the application of this subsection to the facts was not specifically covered in the written or oral submissions made on behalf of the Chief Commissioner, there is no indication that the Chief Commissioner was satisfied, in the terms required by the sub-section; that is, satisfied as to the matters represented by the words underlined in the quotation above. Indeed, that would be a surprising result, given the direction and content of the Chief Commissioner's case.

"Money"

The leading authorities make it clear that the notion of "money" for the purposes of this sub-section is quite a narrow one. In Justice Hill's "Stamp Duty Rewrite" (LDC Information Services, 1997 at p185) the learned author notes that previous drafts of the provision which became s55(1) used the term "consideration" or the phrase "consideration in kind" rather than "money". In Landfall Pty Ltd v Chief Commissioner of State Revenue [2012 ]NSWADT 270 at [28]-[30], Judicial Member Block noted that the words "consideration" and "consideration in kind" have an accepted legal meaning as very wide concepts and that, having regard to the legislative history, the change from a proposed requirement of "consideration provided" to the narrower concept of "the money for the purchase" was clearly intentional.
Perram J in Messenger Press Proprietary Ltd v Commissioner of Taxation [2012] FCA 756, cited with approval the observations by Darling J in Moss v Hancock [1899] 2 QB 111 that money was: that which passes freely from hand to hand throughout the community in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it and without the intention of the person who receives it to consume it or apply it to any other use than in turn to tender it to others in discharge of debts or payments for commodities.
Although such a definition appears not to have contemplated more modern developments such as the exchange of settlement funds held by banks with a central bank (as noted by Perram J in the Messenger Press Case), His Honour was satisfied that "money" must have a narrow meaning and he noted that the definition above was adopted by Emmett J in Travelex Ltd v Federal Commissioner of Taxation (2008) 70 1ATR216; [2008] FCA 1961 at [25].
Such a conclusion is not inconsistent with the observations made by O'Connor P of the Administrative Decisions Tribunal in Della-Franca v Chief Commissioner of State Revenue (2005) NSW ADT 106 at [35]. That was a case involving subsection (1) of section 55, which applies to duty payable on a declaration of trust, but the principles apply equally in considering subsection (2). The learned President was of the view that in order for the subsection to apply there needs to be good evidence that at the time of the transaction the real purchaser must have supplied the funds. However he added an alternative possibility: that the real purchaser may: … perhaps (have) had within the framework of a broader venture …sufficient credits due to him, which would clearly be allowed as credits in his favour for the purpose of the purchase.
In my view the inclusion "credits" by the President makes sensible allowance for the way in which payment of money due from the purchaser can be effected at completion of large-scale or complex transactions, but it appears to have little relevance to straightforward conveyancing transactions such as the purchase of the Casula Property in this case and it does not in my view expand the concept of "money" for the purposes of s 55 (1) (b).

The whole of the money must be paid by the real purchaser

The law on this point is clear. It was stated by Priestley JA in Triantafilis v Commissioner of Stamp Duties for New South Wales [1998] NSWSC 112, in the following terms( at page 4.8): The provision in my view is talking about one conveyance where the whole of the purchase money has been actually paid by the real purchaser although title has been taken to the property by an apparent purchaser. In my view a condition of non-chargeability with ad valorem duty is that the whole of the purchase money for the one property conveyed by the instrument must have been actually paid by the real purchaser before the exemption from ad valorem duty is available.
It is true that Justice Priestley's conclusions were based on section 73 of the old Stamp Duties Act which uses the phrase: "actually paid", but his construction was followed in the Landfall Case cited above at [27] and was approved in Hill's "Stamp Duty Rewrite" (as cited above) at p185. It is clear that Justice Priestley's construction applies to the current s 55 (1) (b).

Did the Applicant pay the whole of the purchase money?

In the Applicant's written submissions, his two written statements and in his oral testimony he strenuously asserted that he had provided "every last cent " of the purchase money. That was supported by the evidence of his son, the apparent purchaser, whose response to many questions in his examination-in chief was to the effect that "everything was paid by my father". At the hearing his solicitor repeated that assertion, but significantly at one point (Tcpt, disk 3, 28:20) he submitted that the Applicant: "provided almost every single dollar of the purchase and the loan repayment". (Emphasis added).
I accept that this may have been said in haste and that it was inconsistent with the remainder of the submissions for the Applicant on this point, but I record it because there was no express submission on the Applicant's behalf that a refund of the ad valorem duty could properly be made where a small part of the purchase monies were paid by someone else; that is, someone other than the Applicant. Indeed, in light of the authorities cited above, such a submission would not have succeeded.
Did the Applicant in fact provide the whole of the purchase money ("every last cent") in this case? It is clear that he did not.
It was not disputed that Mr Mohammad Al Haddad had, in his own name, made application for and had received a First Home Owners Grant in relation to his purchase of the Casula property. Indeed it is clear that in his application for that grant Mr Mohammad Al Haddad declared, in response to question 4, that he applied in his capacity as a natural person, whose interest in the property: "is not held subject to a trust".
It also is undisputed that by this method $7000 was provided by Mr Mohammad Al Haddad towards the purchase monies for the Casula property. The Applicant alleges that he "repaid this amount within 18-24 months of the settlement to the trustee" (his statement of 13 July 2017 at [2] (a)). I have no reason to doubt that, but the mere fact of "repayment" does not alter the stark reality that this is the contribution received from Mr Mohammad Al Haddad through his First Home Owners Grant which patently constitutes money "provided… for the purchase of the dutiable property" by someone other than the real purchaser.
That finding, on a strict view of it, concludes the matter. However, for completeness, I deal with two of the contentions on behalf of the Chief Commissioner that there were other components of the purchase price of a property which constituted a payment for the purchase by parties other than the real purchaser. They are as follows. 1. It was alleged by the Chief Commissioner and does not seem to be disputed that $10,000 was provided to the Applicant by way of two personal loans, each for $5000 from friends of the Applicant, Mr Sattar Al Ubudy and Mr Hamid Al-Aliawy. However, under subsection (1A) of section 55, money provided by a person other than the real purchaser will be taken to have been provided by him if the Chief Commissioner is satisfied that that money was provided as a loan and has been or will be repaid by the real purchaser. My examination of the substantial documentary material lodged by the Applicant prior to the hearing and the statutory declarations provided by each of the lenders establishes to my satisfaction that the $10,000 was in fact repaid. In my view, although Chief Commissioner has not expressed his satisfaction that the repayment was made, he could not reasonably be satisfied that otherwise. I therefore regard the loans of $10,000 as money provided by the real purchaser. 2. Although the evidence on this aspect is far from clear, it appears from the applicant's answers in cross-examination that in addition there was some pooling between family members of monies, which apparently largely constituted Centrelink benefits, and that the pooled amount was contributed towards the repayment of the Westpac mortgage loan taken out to assist the purchase of and secured by the Casula property. Although this establishes that the Applicant was not the sole contributor towards those repayments I cannot see that it amounts to provision of money for the purchase itself by parties other than the real purchaser.
Notwithstanding my conclusions in the previous paragraph, my findings and conclusions in [36] to [38] must mean that the Applicant has failed to establish that he provided the whole of the money for the purchase of the Casula property. It matters not that he provided the substantial part of it, or, as he asserts (and which appears to be the case) that he paid all other outgoings due on the property and all monies for its improvement after the purchase.
s 55 (1) (b) (ii) is not satisfied.
It must follow that the concessional rate of stamp duty available under section 55 is not available to the Applicant in respect of the transfer of the Casula property. As noted above at [16] the Applicant bears the onus of establishing his entitlement to a refund of the duty. He has failed to do so.
In light of those conclusions it is not necessary for me to determine whether the first limb of subsection 55 (1) (b) is applicable. In terms, the subsection requires both limbs of the paragraph to be satisfied in order for the concessional rate of duty to be available.

Conclusion

For these reasons I conclude that the Chief Commissioner's refusal the Applicant's request for a refund of duty on 4 May 2016 was correct and valid. It follows that the application for review fails and that I should order that the Chief Commissioner's decision under review is affirmed.

Orders 1. The Applicant is allowed to make this application for review after the period prescribed by s99 (1) of the Taxation Administration Act 1996 (NSW). 2. The Chief Commissioner's decision under review is affirmed.

I order accordingly.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 April 2018

REVENUE LAW- Duties Act 1997(NSW)

The decision under review

Although the Application is not completely clear in this regard, it appears to seek a review of the Chief Commissioner's decision of 7 December 2016, by which he disallowed the objection to his original decision.
However, it is clear from Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [28] that the proper construction of s96(1) of the TA Act, which is reproduced below at [17], is that the decision which is reviewable by this Tribunal is the original decision by which an assessment was issued to the taxpayer. It is not the decision of the Chief Commissioner to disallow the taxpayer's objection. I could discern no lack of procedural fairness or other prejudice to either party by proceeding on the basis that the decision under review here was the 4 May Decision; that is, the one which initially disallowed the refund, notwithstanding the way in which the Application had been expressed. I understood that the parties were content for me to proceed on that basis and I did so.

The powers of the Tribunal on review and the onus of proof

Under section 96 of the TA Act a taxpayer may apply to this Tribunal for administrative review of an assessment or other decision to which the taxpayer has objected, where the taxpayer is dissatisfied with the Chief Commissioner's determination of the objection. Under s101 (1) of the TA Act, on review the Tribunal may confirm or revoke the decision of the Chief Commissioner, make an assessment or other decision in place of the Chief Commissioner's decision, make an order for payment to the Chief Commissioner, remit the matter to the Chief Commissioner for determination or make any further order as to costs or otherwise as it thinks fit. However, nothing in section 101 of the TA Act limits the operation of section 60 of the Civil and Administrative Tribunal Act 2013 (NSW), which governs the award of costs in Tribunal proceedings.
Under section 63 of the Administrative Decisions Review Act 1997 (NSW) ("the ADR Act"), in determining the application for review the Tribunal must decide what the correct and preferable decision is, having regard to the material then before it, including any relevant factual material and any applicable written or unwritten law. For that purpose, the Tribunal may exercise all of the functions which are conferred or imposed by any relevant legislation on the administrator who made the decision: in this case, the Chief Commissioner. This is sometimes, and perhaps somewhat loosely, described as the Tribunal "standing in the shoes" of the Chief Commissioner as decision-maker.
Under s 100 (3) of the TA Act, in any review by this Tribunal the applicant in proceedings has the onus of proving its case. The requisite standard of proof is the balance of probabilities: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [31] and B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187.

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