Barisic v Chief Commissioner of State Revenue

The Tribunal's jurisdiction

1. While the applicant's administrative review application was lodged out of time, on 28 September 2021, by consent, the Tribunal extended the time within which the applicant was to lodge her application for review: Taxation Administration Act 1996 (NSW) (TA Act) s 99(1) and Civil and Administrative Tribunal Act 2013 (NSW) s 41. There is otherwise no dispute that the Tribunal has jurisdiction to hear and determine the applicant's application: Administrative Decisions Review Act 1997 (NSW) (ADR Act) s 9, and TA Act s 96(1).
2. The role of the Tribunal on administrative review is to determine the correct and preferable decision having regard to the material before it, including the relevant factual material and the applicable written and unwritten law: ADR Act, s 63(1). For this purpose, the Tribunal may exercise all the functions conferred or imposed by any relevant legislation on the respondent in making the decision he made: ADR Act, s 63(2).

Onus

1. In these proceedings, the applicant has the onus of proving that s 63 applies to 50% of the transfer: TA Act, s100(3). That is, the onus is on the applicant to prove that the transfer of the Property to her was a transfer to her as a 'beneficiary' of her father's estate because: 1. the Deed varied her father's Will by granting her a 50% share in the Property; or 2. the Deed set aside her father's Will and she acquired a 50% share in the Property under intestacy under Chapter 4 of the Succession Act 2006 (NSW) (Succession Act).
2. For the reasons set out below, I am not satisfied that the applicant has discharged her onus. Instead, I find that s 63 of the Duties Act is of no application because: 1. the transfer of the Property to the applicant and her husband was a transfer from the applicant's brother in his personal capacity and not a in his capacity as the Executor of the father's estate; 2. the transfer of the Property was a transfer to the applicant and her husband as joint tenants; not a transfer of 50% share to the applicant and a 50% share to her husband; 3. the dutiable value of the Property is that determined by an accredited valuer and ad valorem duty is payable on the entire amount of that value; and 4. there is no evidence to support an estoppel as contended by the applicant.

The Duties Act

1. There is no dispute that the Property is land in NSW and hence 'dutiable property' under ss 8(1) and 11(1)(a) of the Duties Act.
2. Liability for duty arises when a transfer occurs and the person liable to pay that duty is the transferee: Duties Act, ss12(1) and 13.
3. Duty is charged on the dutiable value of the dutiable property, which is the greater of the consideration for the dutiable transaction, or the unencumbered value of the property: Duties Act, ss 19 and 21(1). Section 32 of that Act sets out the rates to be charged on the dutiable value of the dutiable property.
4. In this case, there is no dispute about that the ad valorem amount of duty charged in the respondent's Notice of Assessment is correct in the event the concessional amount of duty contended for by the applicant does not apply.
5. Part 6 of Chapter 2 provides for "Concessional rates of duty".
6. Division 3 of Part 6 provides for miscellaneous concessions. The first section in Division 3 is s 63 which relevantly provides as follows: 63 Deceased estates (1) Duty of $50 is chargeable in respect of - (a) a transfer of dutiable property by the legal personal representative of a deceased person to a beneficiary, being - (i) a transfer made under and in conformity with the trusts contained in the will of the deceased person or arising on an intestacy, or (ii) a transfer of property the subject of a trust for sale contained in the will of the deceased person, or (iii) an appropriation of the property of the deceased person (as referred to in section 46 of the Trustee Act 1925) in or towards satisfaction of the beneficiary's entitlement under the trusts contained in the will of the deceased person or arising on intestacy, and (b) (Repealed) (c) a transmission application by a devisee who is also the sole legal personal representative, and (d) a declaration by an executor of a will under section 11 of the Trustee Act 1925 if the Chief Commissioner is satisfied that the declaration is consistent with the entitlements of beneficiaries under the trusts contained in the will. (2) If a transfer of dutiable property is made by a legal personal representative of a deceased person to a beneficiary under an agreement (whether or not in writing) between the beneficiary and one or more other beneficiaries to vary the trusts contained in a will of the deceased person or arising on intestacy, the dutiable value of the dutiable property is to be reduced by the portion of the dutiable value that is referable to the dutiable property to which the beneficiary had an entitlement arising under the trusts contained in the will or arising on intestacy. …
7. I have dealt with this provision in more detail below.

Material before the Tribunal

1. In support of her application, the applicant relied on the following material: 1. an indexed large bundle of documents that were copies of documents that had been provided by the applicant and her husband, in support of their cross-claim in the 2017 Supreme Court proceedings (Ex R1); and 2. written submissions in response filed on 9 November 2021, additional short submissions in reply emailed on 18 November 2021 and further short outline of submissions emailed at the conclusion of the hearing.
2. In support of its case, the respondent relied on the following material: 1. a large and tabulated bundle of s 58 documents being those which the respondent held that it considered to be relevant to the decision the subject of review (Ex R1): 2. an affidavit sworn by Lisa Springer, solicitor employed by the solicitor for the respondent (Ex R2); 3. a copy of the Will (Ex R3); 4. replacement and additional pages to Tab 18 of the s 58 documents (Ex R4); and 5. written submissions provided on 28 October 2021.

The Will and the Deed

1. A large portion of the material provided by the applicant is of no relevance to the issues that are to be determined in this case. What is relevant are the terms on which the Property was transferred to the applicant and her husband. In this regard it is not disputed that the transfer occurred in accordance with the terms of the Deed. It is appropriate to briefly deal with the relevant terms of the Deed and the father's Will.

The Deed of Settlement and Release

1. On page 2 of the Deed, the applicant's brother is described as a party to the Deed in his capacity as Executor of the estate of his late father and "where the context admits, in his personal capacity'.
2. On the same page of the Deed, the Recitals (i.e. the background to the agreement) include the following matters: 1. the 2017 Supreme Court proceedings which are referred to as the 'Proceedings' commenced by the father against 'Ivanka and Ivan' (i.e. the applicant and her husband) (Recital C); 2. Robert (the applicant's brother) is named as sole Executor and beneficiary in the Last Will of the father dated 18 August 2014 and codicil dated 29 June 2018 and was granted Probate on 2 November 2018 (Recital E); and 3. Recital F which is in the following terms: Without admission of liability, Robert, Ivanka and Ivan (the Parties) have agreed to enter into this Deed to resolve the Proceedings and otherwise all matters the subject of the Proceedings and or claims that they may have against each other on the terms and conditions of this Deed (this Deed).
3. Clause 2.1 of the Deed notes that the Parties agree to have the 2017 Proceedings dismissed.
4. Clause 3 relates to the Property and relevantly provides as follows: 3.1 This clause relates to … [the "Property"]. The term Settlement Moneys, as used in this Deed, shall mean the amount which is 50% of the Agreed Price or Determined Valuation (as defined herein, and as determined in accordance with this Deed). 3.2 Ivanka and Ivan are hereby granted the option to purchase the Property on or before Thursday, 29 October 2020 on the terms of this Deed (herein referred to as the 'Option'). 3.3 The purchaser may be Ivanka and/or Ivan. … 3.7 The consideration for the transfer of the Property pursuant to the Option shall be the Settlement Moneys as adjusted by this Deed.
5. The applicant and her husband exercised the Option in accordance with the Deed and the 'Settlement Moneys' was 50% of the valuation determined by a valuer. In the event the applicant and her husband did not exercise the Option, the Deed made provision for the Property to be auctioned and the nett proceeds of the auction were to be divided 50% to Robert (the applicant's brother) and 50% to the applicant and her husband: the Deed cl 3.20.
6. In the event the applicant and her husband exercised the option, cl 4A.1 of the Deed made provision for the applicant to, at her own expense, do all things necessary to withdraw the caveat over the Property at the time of the transfer 'so as to permit the Property to be transferred to Robert as Executor' of their father's estate '(the Transmission Application) and to enable Robert to effect the grant of Probate and to comply with the terms of the Deed'.
7. Clause 4A.2 and 4A.3 provided that within 24 hours of lodgement of the Transmission Application, Robert was to inform the applicant and her husband of the fact of lodgement and on being so advised, the applicant and her husband were given the right to re-lodge the caveat subject to the transfer of the Property from Robert to the applicant and her husband.
8. Clause 5 of the Deed made provision for the payment of the settlement moneys in the event the applicant and her husband exercise their option to purchase the Property. This included the applicant being responsible for 50% of the amount outstanding on the bank loan that was secured by mortgage against the Property.
9. Clause 6 made provision for the applicant and her husband to remain in occupation of the Property pending the sale or transfer of the Property. The applicant and her husband also agreed to pay $400 per week while in occupation of the Property.

The father's Will

1. In cl 2 of his Will, the father appointed his son, the applicant's brother (Robert), as the sole executor of his Will.
2. In cl 4 of his Will, the father devised and bequeathed all his 'real and personal estate of whatsoever kind and description and wheresoever situate unto' his son Robert '(for his own use and benefit absolutely)'
3. In cl 7 of the father's Will provided as follows: FOR REASONS best known to me I hereby exclude my daughter [the applicant] from the provisions of this my last Will.

The transfer documents and the dealings as recorded in the Register of dealings concerning the Property

1. Included in the material relied on by the respondent are the following documents: 1. a s 93 Real Property Act 1900 (NSW) (RPA) Transmission Application form completed by Robert, as executor of the Will for which Probate was granted on 2 November 2018, in which he sought to be registered as the proprietor of the Property (EX R1, p 196). Noted on the form was that a copy of the Will was attached; 2. a RPA Transfer form of the Property from Robert to the applicant and her husband (EX R1, p 6). In that form, the share transferred is stated to be 'a One Half Share (50%)'. There is no evidence of this Transfer form having been acted on; 3. a RPA Transfer form of the Property from Robert to the applicant and her husband (EX R4, T18L). In that form, the share transferred is stated to be the 'Whole Share'; and 4. an 20 August 2020 NSW Land Registry Services Title Search of dealings registered in regard to the Property (EX R2 p1 and 3). That search includes a record of the following dealings: 1. the 11 April 2017 caveat; 2. the withdrawal of the caveat on 25 July 2020; 3. the re-lodging of the caveat on 17 July 2020; 4. a Transmission Application (Executor, Administrator, Trustee) on 25 September 2020; 5. the withdrawal of the caveat on 26 October 2020; 6. a Transfer of the Property on 29 October 2020; and 7. the applicant and her husband becoming the registered owners of the Property on 29 October 2020 as joint tenant.
2. Each of these dealings are consistent with the terms of the Deed.

Consideration

1. In her email of 22 November 2022, the applicant summarised her case as follows: A Deed of Family Arrangement confirms the change of distribution in the will and gives the executor legal protection from any beneficiary who may later change their mind about agreeing to the change My father lacked testamentary capacity at the time of making his will (medical records have been provided) and the Will was never effective My entitlement existed at the time of the Will I should be entitled to main residence exemption I am a beneficiary as I received proceeds from the deceased estate the DOS is a legally binding document and was done to save litigation costs in principle the DOS is exactly the same as if the Will was varied the Will became intestate once it was varied s63(2) of the DA concession focuses on beneficiaries (sic) original entitlement to the property rather than the whole value Revenue NSW should have advised to complete a Purchaser/transferee Declaration during settlement where an exemption applied to someone occupying property as principle (sic) residence I had a vested interest in the property and provisions were made accordingly a Will can be contested in NSW through mediation and that is what we essentially did
2. The respondent did not object to this summary being considered by the Tribunal. However, he continued to rely on his written submissions provided prior to the hearing. The submissions addressed many of the matters raised in the applicant's summary and explained why, in his opinion, the terms of the Deed were inconsistent with or contrary to the contentions of the applicant.
3. In my opinion, the respondent is correct in his explanation.
4. A DEED OF FAMILY ARRANGEMENT? -, although a party to the Deed is the applicant and her brother and it relates to their father's estate it is not a Deed of Family Arrangement.
5. A Deed of Family Arrangement is one that is made in settlement of an application made, to the NSW Supreme Court, by an eligible person, under s 57(1)(c) of the Succession Act, for a family provision order in respect of the estate of a deceased person. Where an order is made in favour of the eligible person, it is in effect and order that varies the will of the deceased person and makes provision for the eligible person in accordance with what is determined by the Court.
6. As a child of her father, on his death, the applicant did have a right to make an application for a family provisions order seeking a 50% interest in the Property. As pointed out by the respondent in his written submissions, in the material provided by the applicant there is a reference to the applicant's ability to make an application for a family provisions order after her father died. However, there is no evidence of an application of this kind having been made. There are undoubtedly good reasons why this was so.
7. In this case, as noted in the Recitals of the Deed, the objective of the Deed was to resolve the 2017 Supreme Court proceedings, without any admission of liability. The Deed also provided that the 2017 proceedings were to be withdrawn. This meant that no declarations or orders were made by the Court in relation to the father's claim or the cross-claim of the applicant and her husband. Instead, the parties agreed to settle all matters in dispute in accordance with the agreed terms of the Deed.
8. DID THE FATHER LACK CAPACITY TO MAKE THE WILL? The Tribunal has no jurisdiction to consider and determine the testamentary capacity of the applicant's father at the time he made the Will. Nor did the terms of the Deed have the effect of the parties having agreed that the father lacked capacity. On the contrary, as noted in the Recitals, the Deed was based on the Will having been validly made and that probate had been granted on the Will.
9. In Estate of Kouvakas; Lucas v Konakas [2014] NSWSC 786 at [190] and [228] Lindsay J pointed out the following (citations omitted): 190 The commentary on s 44 (still, substantially, in force as s 44(1) of the Probate and Administration Act 1898) included the following as to the effect of a grant of probate: "The grant of probate, when made and while continuing unrevoked, is conclusive proof of the testamentary character of the instrument …; of the appointment of the executor …; of the validity and contents of the will …; in every part of it …; and as to whether or not the will is contained in distinct instruments ... Nor can the grant be impeached in any other Court even by evidence of fraud ... The grant of administration is similarly conclusive as to who is entitled thereto.... … " 228 A grant of probate or administration, in whichever form it takes, is a judicial act in the character of an order of the Court: …
10. Hence, in the absence of the Will being set aside by the Supreme Court the Tribunal can only take account of the provisions as they appear in the Will: Ferguson v Commissioner of State Revenue [2010] WASAT 179 at [21]. In this case, the applicant was expressly excluded as a beneficiary under the Will.
11. WAS THERE AN EXISTING ENTITLEMENT? - I accept that the applicant believed she had already been promised the Property before her father made his Will. However, it was not an existing entitlement. This is evidenced in her having lodged a caveat on the Property. As I have explained above, it was the 2017 Supreme Court proceedings in which she and her husband pressed their claim of an interest/entitlement in the Property. However, that claim was never determined by the Court. Instead, the applicant's interest/entitlement became that which was agreed between the parties as set out in the Deed.
12. MAIN RESIDENCE EXEMPTION - I do not understand what the applicant means by the 'main residence exemption'. Section 63 does not contain any such express exemption. I note that s 97 of the Duties Act makes provision for the exemption of duty, in the specified circumstances, on the transfer of land that was subject to a 'special trust' on 11 September 1990. That section, in my opinion, is of no relevance to the circumstances in this case as there is no evidence of the Property being subject to such a trust on 11 September 1990: see Land Tax Management Act 1956 (NSW) s 3A which defines the term 'special trust'.
13. IS THE APPLICANT A BENEFICIARY? - Not being legally trained, I understand how the applicant might see herself as a beneficiary of her father's estate because she did get the Property transferred to herself and her husband. However, this ignores the specific terms of the Deed to which she and her husband agreed in settling the 2017 Supreme Court proceedings and all matters the subject of those proceedings and any claims they may have against each other. That Deed, as I have noted, was expressly based on a valid Will and probate having been granted to her brother. She was not a beneficiary under the Will and in the absence of a family provisions order from the Supreme Court did not receive her interest in the Property as a beneficiary of her father's estate. Instead, she acquired the Property, from her brother in his personal capacity, in accordance with the terms of the Deed. As I have pointed out, the Deed provided a mechanism whereby the applicant and her husband could purchase the Property, from the applicant's brother, for 50% of its value, or alternatively receive 50% of the proceeds of the sale of the Property.
14. IS THE DEED LEGALLY BINDING - Yes, the Deed is a legally binding document in that the parties are each bound by its terms. At the same time, I accept that the Deed was entered by the applicant and her husband so as to save on any further litigation costs. However, its primary purpose was to bring an end to the 2017 Supreme Court litigation.
15. IS THE DEED THE SAME AS IF THE WILL IS VARIED? - For the reasons I have given above, the Deed did not vary the terms of the Will. What it did provide is a mechanism/option whereby the applicant and her husband could purchase the Property from the applicant's brother for 50% of its value.
16. DID THE WILL BECOME INTESTATE ON IT BEING VARIED - I reiterate, the Deed did not vary the Will. A will does not become intestate - a deceased person is intestate when that person dies 'and either does not leave a will or leaves a will but does not dispose effectively by will of all or part of his or her property: see Succession Act s 102. For the reasons set out above, the applicant's father did not die intestate as he had a Will on which probate was granted.
17. DOES s63(2) apply? - In Watts v Chief Commissioner of State Revenue [2017] NSWCATAD 320 at [79] the Tribunal described the application of s 63(2) as follows: Section 63 (2) only applies if there is an agreement (whether or not in writing) between the beneficiary and one or more other beneficiaries to vary the trusts contained in a will of the deceased person or arising on intestacy.
18. I re-iterate, for the reasons set out above, the applicant is not a beneficiary under the Will. Nor do the terms of the Deed seek to vary the trust contained in the Will. Hence, s 63(2) of the Duties Act is of no application to the circumstances in which the applicant acquired her interest in the Property.
19. PURCHASER/TRANSFEREE DECLARATION -I do not understand the relevance of the applicant's contention that the respondent should have advised her to complete a Purchaser/Transferee Declaration. I assume a Declaration of this kind was completed by the applicant and her husband at the time of purchase as, since June 2016, a Declaration of this kind is required on any purchase of land within NSW so that the respondent can assess if the purchaser is a foreign person and liable to pay the 4% surcharge duty: Duties Act Chapter 2A.
20. DID THE APPLICANT HAVE A VESTED INTEREST IN THE PROPERTY? - I reiterate - (a) on the material before the Tribunal, prior to the execution of the Deed, the applicant had no more than a claim for an interest in the Property. In the absence of a Court order, there is no evidence to support her claim of a vested interest in the Property, and (b) yes, a will can be contested by bringing an application to the Supreme Court under the Succession Act and through mediation the parties to those proceedings can agree to seek an order from the Court that the will be declared invalid. This is not what the applicant and her husband sought or agreed to when signing the Deed.
21. As noted above, the Deed contained an option for the applicant and her husband to purchase the property that was 50% of the value of the property, or alternatively they were to receive 50% of the net proceeds of the sale of the property. It was not an agreement that she would acquire a 50% share of the Property at no cost and that her husband would acquire the other 50% share for the cost of half the value of the Property.
22. OTHER MATTERS - The applicant does not otherwise dispute the sequence of events (transactions) leading to the transfer of the Property to her and her husband as joint tenants.
23. In Aoun Investments Pty Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1394, at [21] to [22], Gzell J gave the following description of the differences between joint tenant and tenants in common: 21 In Wright v Gibbons (1948-1949) 78 CLR 313 at 330, Dixon J cited with approval from Radcliffe's Real Property Law, at 33 the rights of joint tenants: "Each of them has a right shared with his co-tenants to the whole common property, but no individual right to any undivided share in it … for this reason, joint tenants should not be spoken of as holding undivided shares." 22 A tenant in common has an undivided share and a right to occupy the whole of the property in common with others. In Nullagine Investments Pty Ltd v Western Australian Club Inc (1992-1993) 177 CLR 635 at 643-644, Brennan J analysed the concept thus: "The share or interest which a tenant in common has in land is an 'undivided' share, that is to say, 'a distinct share in property which has not yet been divided among the co-tenants'. A division of the property is repugnant to the nature of a tenancy in common, for it is an essential characteristic of a tenancy in common that each of the tenants has the right to occupy the whole of the property in common with the others. Like joint tenants, tenant in common have a unity of possession; unlike joint tenants, they need not have a unity of interest, nor a unity of title, nor need there be a unity in the time when the interests of the co-owners vest. Each tenant in common has a separate and individual title to the property, limited according to the estate or term granted to or acquired by the tenant. Thus one tenant in common may be seised of an estate in fee simple, another seised of an estate for life, while a third may be a tenant for term of years, each of their interests being separately acquired at different times. There is no right of survivorship among tenants in common." (footnotes omitted).
24. Having regard to the terms of the Deed and the relevant transactions leading to the transfer of the Property to the applicant and her husband, I find that the transferor of the Property was the applicant's brother, in his personal capacity, and not in his capacity as the Executor of his father's estate. He was able to do so, after the applicant and her husband withdrew the caveat so that he could, as Executor (i.e. legal personal representative) of his deceased father's estate, transfer the Property into his own name. This was a transaction falling within s 63(1)(c) of the Duties Act. However, for the reasons I have given, I find that the subsequent transfer from the applicant's brother to the applicant and her husband does not fall within s 63.
25. Finally, I agree with the respondent that, regardless of what the applicant understood she had been told by the officer from the Office of the respondent, this cannot act as an estoppel preventing the respondent from correctly assessing the duty payable under the relevant terms of the Duties Act. As noted by the former Administrative Decisions Tribunal in Stature Pty Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271 at [10] and [11]: 10 It is fairly basic to say that "moral and ethical grounds" have very little role in construing revenue statutory provisions. … 11 I also agree with the Chief Commissioner's submission that the doctrine of estoppel does not apply to prevent the Chief Commissioner from attending to his statutory duties. It is well established that the doctrine of estoppel cannot be invoked by a taxpayer so as to prevent the Commonwealth Commissioner of taxation assessing tax pursuant to the statutory duty so to do. (citations omitted). As stated by Hill J, very succinctly and unequivocally, in AGC(Investments) Ltd v FC of T 91 ATC 4180 at p. 4195: "....there is no room for the doctrine of estoppel operating to preclude the Commissioner of Taxation from pursuing his statutory duty to assess tax in accordance with law. The Income Tax Assessment Act imposes obligations upon the Commissioner and creates public rights and duties, which the application of the doctrine of estoppel cannot be invoked by a taxpayer so as to prevent the Commissioner assessing pursuant to his duty so to do. The cases certainly support that view." 12 The accepted view is, therefore, clearly that no conduct on the part of revenue can operate as an estoppel against an obligation imposed by revenue legislation to assess for the correct amount of tax subject, of course, to any specific statutory provisions which prevent the revenue from exercising its statutory duties. …
26. As noted in Zhuang at [49] the respondent has a statutory responsibility to act within the statutory framework of the law, in this case the Duties Act which includes the specified circumstances, exemptions and concessions that apply to all taxpayers where the specified circumstances are established. For the reasons I have given, I am satisfied that the respondent has fulfilled his statutory responsibilities and assessed the correct amount of duty payable on the transfer of the Property to the applicant and her husband, which does not include any concessional amounts by reason of s 63.

Conclusion and Orders

1. For the reasons set out above, I am not satisfied that the applicant has established that the concessions duty in s63 of the Duties Act applies to the transfer of the Property to the applicant and her husband.
2. However, I am satisfied that the Duties Notice of Assessment issued by the respondent on 28 October 2020 is the correct and preferable decision and should be confirmed.

Order 1. The 28 October 2020 Duties Notice of Assessment decision of the respondent is confirmed.

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: 27 July 2022