Chief Commissioner of State Revenue v Webeck

NCAT Appeal Panel|2015-12-01

reasons for decision

On 10 August 2015 the Tribunal set aside a Duties Notice of Assessment Id 1599926415 and remitted the proceedings to the appellant, the Chief Commissioner of State Revenue, to redetermine the assessment of duty payable in connection with a transfer of land being a property located at Newport in New South Wales.
The property had been transferred to the respondent, Mr Webeck who, prior to the transfer had owned the property with Judith Webeck, George Webeck, Clinton Webeck and Tanya Webeck as tenants in common. The transfer had been effected pursuant to an instrument of transfer which had been submitted to the appellant for the purpose of assessment and payment of duty and had been assessed by the appellant to duty in the sum of $38,240.00.
The respondent had paid the duty however objected to the decision of the appellant. The objection was disallowed in consequence of which the respondent applied to the Tribunal to review the decision the subject of the objection.
The application was determined by the Tribunal on the papers following the provision by the parties of various documentary evidence and submissions. The Tribunal published reasons dated 10 August 2015 (Decision).
The respondent had applied to the Tribunal to have various transactions which had been entered into in 2011 and 2014 combined and assessed as a single transaction which, the respondent contended should be dealt with as a partition under s 30 of the Duties Act 1997 (Duties Act). The transactions related to the Newport property and a second property at Turramurra.
The Tribunal rejected this contention and said there was no power or discretion to reconsider the effect of transactions which had been entered into and completed in 2011 pursuant to an earlier deed of arrangement.
However, the Tribunal did determine that the appellant had incorrectly assessed the transfer of the Newport property. This was because the Tribunal concluded it should have been assessed as a partition pursuant to s 30 of the Duties Act.

Grounds of appeal

The appellant filed a notice of appeal on 3 September 2015, having received notice of the decision on 10 August 2015.
Pursuant to leave granted by the Appeal Panel, an amended notice of appeal was filed on 30 September 2015. That notice challenged the order setting aside the assessment made in respect of the transfer of the Newport property. The sole ground of appeal was: Isenberg SM erred in law at paragraph [50] in findings that s.30(1) of the Duties Act 1997 (NSW)("the Act") applied to the transfer of a 50% interest in the property at 78 Bungan Head Road, Newport NSW (Folio Identifier 172/629573("the Newport property") because the whole of the Newport property was: (a) owned by Judith Webeck, George Webeck, Clinton Webeck, Tanya Webeck and John Webeck ("The Respondent"); and (b) the Respondent was the transfee of the 50% interest in Newport property ("the dutiable property") under transfer dealing no. AI810336V.
The appellant contended that the Tribunal: Should have found that s 30(1) of the (Duties) Act did not apply to the transfer of the dutiable property because: (a) the dutiable property was held by Judith Webeck, George Webeck, Clinton Webeck and Tanya Webeck; and (b) the dutiable property was not transferred to any one or more Judith Webeck, George Webeck, Clinton Webeck or Tanya Webeck but was transferred to the respondent.
Accordingly, the appellant contended that the orders made by the Tribunal in connection with Newport transfer should be set aside and the original assessment of duty affirmed.
The appellant provided written submissions and oral submissions in support of his appeal. The essence of these submissions is that the Newport transfer was the transfer of a 50% interest in the Newport property which interest together was held by Judith, George, Clinton and Tanya Webeck and the form of transfer was not to one or more of those people but rather was to the respondent, who held the remaining 50% interest as tenant in common.
Put another way, the appellant contended that the transfer would only have been a partition within the meaning of s 30(1) of the Duties Act if the respondent was both a transferor and a transferee recorded on the form of transfer.
In this regard, the appellant said that the interest which was being transferred was that of Judith, George, Clinton and Tanya, who, as tenants in common, had separate and individual title to the estate limited according to the estate or term granted to or acquired by each of them. The appellant referred to the decision of the High Court in Nullagine Investments Pty Ltd v Western Australia Club Incorporated [1993] 177 CLR 635. The appellant also relied on the decision of the Tribunal in Knezevic v Chief Commissioner of State Revenue [2014] NSWCATAD 183.
In advancing these submissions, the appellant confirmed that there was no challenge to the determination made by the Tribunal that it had jurisdiction to hear the application.
The respondent provided written submissions and oral submissions in reply. The written submissions were dated 9 November 2015. The respondent also filed a Reply to Appeal and an amended reply, the later document being dated 12 October 2015.
The effect of the respondent's submissions was that s 30 should have been applied to the initial assessment and the manner in which the appellant had dealt with the Newport and Turramurra properties having regard to the transactions entered into between various family members in 2011 and 2014. However, in making these submissions the respondent had not himself filed any appeal against the Decision nor had the respondent sought to challenge earlier assessments of duty made in connection with the 2011 transactions referred to in the Decision as being made in connection with a deed of partition and various transfers of property which occurred in 2011.
In oral submissions the respondent said that multiple transactions could be amalgamated in accordance with the provisions of s 30 and that there was a need to consider the whole of the property being transferred. The respondent also referred the Appeal Panel to various authorities and said in relation to the decision of Nullagine Investments Pty Ltd that it should have no application because it was not concerned with a family arrangement such as the present. The respondent however did submit that Nullagine Investments Pty Ltd supported the proposition that tenants in common had an interest in land which was an "undivided" share and even though tenants in common may not have a unity of interest, they do have a common entitlement to possession of the whole of the property.
In submissions the parties also referred to the definitions in the Duties Act as to the meaning of dutiable property as defined by s 11. The appellant submitted that a partition within the meaning of s 30 is in respect of that part of the land identified as the dutiable property which needs to be identified in the transfer.

Consideration

For the following reasons, in our view the appeal should be allowed, the application in respect of the decision concerning the Newport transfer dismissed and the assessment of the appellant in respect of the Newport transfer affirmed.
There is no dispute in the appeal that the Tribunal had jurisdiction to make the Decision.
The appeal is made in connection with a decision made in the administrative review jurisdiction of the Tribunal within the meaning of s 30 of the NCAT Act and is therefore an internally appealable decision within the internal appeal jurisdiction of the Tribunal: see s 32 of the NCAT Act.
The appeal was lodged in time, namely within 28 days from the date of the Decision.
The grounds of appeal raise a question of law concerning the proper construction of s 30(1) of the Duties Act and its application to the assessment of duty in respect of the Newport transfer. Such an appeal is made as of right and does not require leave: see s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NCAT Act).
It is common ground that at the time the Newport transfer was signed the owners of the property as tenants in common were: 1. The respondent as to 50% interest 2. Judith, George, Clinton and Tanya having the remaining 50% interest in proportions 9/120, 17/120, 17/120 and 17/120.
The only issue was whether or not the form of transfer wherein Judith, George, Clinton and Tanya transferred their interests to the respondent was a partition within the meaning of s 30(1) of the Duties Act.
Section 30 of the Duties Act is in the following terms: 30 Partitions (1) What is a partition? For the purposes of this section, a partition occurs when dutiable property comprised of land in New South Wales that is held by persons jointly (as joint tenants or tenants in common) is transferred or agreed to be transferred to one or more of those persons. (2) Single dutiable transaction For the purposes of this section and sections 16 and 18, a partition is taken to be a single dutiable transaction. (3) Dutiable value The dutiable value of a partition is the greater of: (a) the sum of the amounts by which the unencumbered value of the dutiable property transferred, or agreed to be transferred, to a person by the partition exceeds the unencumbered value of the interest held by the person in the dutiable property transferred, or agreed to be transferred, to each person by the partition immediately before the partition, and (b) the sum of any consideration for the partition paid by any of the parties. (4) Minimum duty The minimum duty chargeable on a transaction that effects a partition is $50. (5) Who is liable to pay the duty? Duty charged by this section is payable by the persons making the partition or any one or more of them. (6) Anti-avoidance criteria This section does not apply in respect of a partition if the Chief Commissioner is satisfied that the partition is part of a scheme to avoid duty on an exchange of land that was not jointly held by the parties before the scheme was entered into.
The appellant says it was not a partition because, upon its proper construction, s 30 only applies where the transfer is to one of the parties who had an interest in the dutiable property. In the present case, the appellant submitted that those who had an interest in the dutiable property were Judith, George, Clinton and Tanya and a partition would only occur when one or some of those persons was both the transferor and transferee.
Section 30 defines what a partition is and when it occurs. The section provides that a partition occurs when "dutiable property" comprised of land held "jointly" is transferred to one or more of those persons who hold the land jointly.
As s 30 (1) makes clear, land is jointly held if it is held by the parties as joint tenants or tenants in common.
In the present case, the holders of the Newport property were all tenants in common. The nature of a holding as tenants in common was explained by the High Court in Nullagine Investments. At page 363 of Nullagine Investments Brennan J said: 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 a right to occupy the whole of the property in common with the others. Like joint tenants, tenants 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 an unity in the time when the interests of the co-owners vests. 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.
As Deane, Dawson and Gaudron JJ explained in the same case, at page 656: As a matter of fact and law, there is a clear distinction between the individual "interest or share" owned by one of 2 or more tenants in common of a freehold estate in land and the freehold estate itself. While the theory of our land law is that the radical title of the Crown lies between the physical land and a freehold estate in it, the ownership of the freehold estate has long been, for almost all practical purposes, the equivalent of full ownership of the land. As a result, the freehold estate is, as a matter of legal and popular language, commonly treated as the land itself. On the other hand, the distinct "interest or share" of one or more tenants in common of the freehold estate cannot, on any approach, be equated with the land itself. Indeed, an essential feature of the "interest or share" of a tenant in common, and a condition precedent of its existence or survival, is that the tenant in common does not own the freehold estate and is unable alone to deal with "the land". It is that very distinction between the "interest or share" of a joint tenant or tenants in common and the freehold estate which underlies the enactment of the long series of partition statutes directed towards facilitating or enabling a joint tenant or tenant in common to obtain an effective order for the partition or sale of the land. …
As can be seen, the nature of a partition of land in the situation being dealt with by the High Court involved both physical partitioning of the land and the mutual conveyances by the co-tenants of their interest from one to the other so that the "undivided interest" held as tenant in common over the whole of the land is transferred to the transferee in respect of that part of the land which the transferee is to receive upon partitioning of the land. So for example, where land originally owned by two persons (A and B) as tenants in common in equal shares is to be divided into two parcels (block A and block B) and partitioned, the estate in fee simple in one block to be held by A and the other by B, each of A and B must convey their interests in the respective blocks to effect a transfer of the legal estate. This involves a transfer by one party (transferor) of their interest in the undivided share of the block to the holder of the remaining interest in the undivided share of the block (transferee).
The transfer of each party's interest in land held with other co-tenant to effect a partition of the land in the above example would be a transaction to which s 30 applies and the dutiable property would be that interest being transferred.
If the land in question was registered under the Real Property Act. 1900 (RP Act), such a transfer can occur by a co-tenant transferring to one or more of their co-tenants their interest, without the need for the whole of the land to be conveyed. This is because the Real Property Act, 1900 (RP Act) permits the transfer of the tenant's separate interest in land. In this regard s 46(1) of the RP Act provides: "(1) Where land under the provisions of this Act is to be transferred,…, the proprietor shall execute a transfer in the approved form."
As provided in the definitions in the RP Act: 1. Land includes "any estate or interest therein"; and 2. Proprietor means "any person seized or possessed of any freehold or other estate in land at law or in equity in possession in futurity or expectancy".
Such a transfer does not require the transferee to also be the transferor.
The interpretation of s 30 (1) proposed by the appellant would mean that the co-tenant who is to keep their own interest in this example would, nonetheless, be required to convey that interest to themselves.
In our view, this interpretation is illogical and inconsistent with how a co-tenant may transfer their interest to another co-tenant in order to effect a partition of the land.
Consequently, the appellant's construction of s 30 of the Duties Act should be rejected.
However that is not an end of the matter. This is because the decision of the Tribunal and the submissions by the appellant presuppose that the transaction effected by the Newport transfer was a partition.
In our view this is incorrect.
Section 30 (1) of the Duties Act is headed "What is a partition". The language of the subsection provides a partition "occurs" when "dutiable property comprised of land… is transferred or agreed to be transferred to one or more of those persons". That is the subsection is concerned with the land being partitioned, this occurring in circumstances where co-tenants transfer to one or more of the other co-tenants their interest.
As made clear by the authorities, a partition requires the division of land, not simply the disposition of one party's interest in the whole of the land to another co-tenant. As stated by O'Bryan J in Comptroller of Stamps v Christian [1991] 2 VR 129 at p138 line 20 and following, when referring to the Stamp Duties Act, 1958 (Vic) : What is meant by the word "partition" in s72? "Partition" in the law of property has been defined by many learned authors. Stephen said, p478 "A partition is where two or more joint tenants, co-parceners, or tenants in common, agree to divide the lands so held among them in severalty, each taking a distinct part. Here, as they all hold pro indiviso or promiscuously, it is necessary that they all mutually convey and assure to each other the several estates, which they are to take and enjoy separately " A very similar definition was published in the Encyclopaedia of the Laws of England, 2nd ed, vol 10, p 364 "Partition means a division between co-owners (whether co-parceners, joint tenants or tenants in common) of land, tenements and hereditaments held by them, the effect of such division being that that joint ownership is terminated and the shares of the parties vested in them in severalty".
Such a transfer can occur where co-tenants divide one parcel of land into separate lots. It can also occur where multiple parcels are held and each co-tenant transfers their undivided interest in a particular parcel to another co-tenant. As stated by Vincent J in Christian at p143 line 4 and following: With respect to the submissions concerning the meaning of the term "partition" in property law, as the other members of the court have pointed out, there is support in the authorities and to be derived from passages in all editions of Halsbury's Laws of England for the proposition that the ending of a community of ownership of more than a single parcel of land by means of arrangements under which the parties obtain separate moieties in the different parcels effects a "partition" of real property. No authority to the contrary effect was cited before the court, nor, indeed, was it suggested that there has ever been any doubt cast upon the correctness of this proposition expressed by any of the text writers on the subject Finally, for my part, I can see no conceptual difficulty arising from the adoption of such an approach. The contention advanced on behalf of the appellant on this aspect must, in my view, be rejected.
However, there is no authority of which we are aware that a partition of the land occurs upon the transfer of a co-tenant's "undivided share" or interest in the whole of a single block of land to the other co-tenants. Rather, there must be a division of land for there to be a partition.
In this way, the mechanisms for considering the division of land as one transaction (s 30(2)) and the means by which dutiable value is assessed (s30(3)) are to be understood as applying to each of the parcels of land to which the transfers relate upon division of land. In this regard the expression "dutiable property" in s 30(3) should be understood as a reference to "dutiable property that is land": see Hill's Duties Legislation at [3.2106], an interpretation that is consistent with the expression "dutiable property comprised of land" in s 30(1).
Accordingly, there was no partition to which s 30 could apply because there was no division of the land by the Newport transfer. That transfer simply transferred to the respondent the 50% undivided interest of the other co-tenants in the whole of a single parcel of land to him.
On the other hand, the original separation of interests of both the Turrumurra and Newport properties could have been a partition if the requirements of s 30(1) were met. However it is unnecessary to decide this issue as it does not arise on appeal.
Consequently, the Tribunal was in error and the appeal should be allowed.
Finally, the Appeal Panel was advised that neither party sought costs of the appeal. Orders should be made to this effect.
Orders
The Appeal Panel makes the following orders: 1. The appeal is allowed and order 1 made 10 August 2015 is set aside; 2. The decision in respect of Duties Notice of Assessment Id 1599926415 is affirmed; 3. Each party is to pay their own costs.

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

Amendments 22 December 2015 - Correct typographical errors throughout document. 14 January 2016 - Paragraph 3 - the words "the subject of" were added. 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: 14 January 2016

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Judgment (5 paragraphs)

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