Commissioner for ACT Revenue v Araghi and Dorsett [2013] ACTSC 43

Commissioner for ACT Revenue v Araghi and Dorsett [2013] ACTSC 43 - ACTSC 2013 case summary — Zoe

[151]

First, that where there are both an agreement to sell land and an agreement by the vendor to build upon the land sold, the considerations being distinct and the building to commence only after conveyance of the land, these are distinct matters in respect of which duties are separately leviable of the appropriate kinds and amounts. Secondly, that in cases which fall within s. 41(1) of the Stamp Duties Act the ascertainment of the ad valorem duty to be charged is to be by reference to the property agreed to be sold or conveyed regarded as that which, viewing the matter as at the date of the agreement, will be, under the terms of the agreement, the subject of conveyance at the time when, under the terms of the agreement, the conveyance is to be executed. Stated differently, whatever, in accordance with the agreement, is to be transferred or vest or accrue by force of the conveyance to be executed pursuant thereto is the property agreed to be sold or conveyed. The amount or value of the consideration for its sale, and its unencumbered value, are the relevant sums for the purpose of applying the formulas contained in s. 66 (2) to the assessment of the ad valorem duty upon the agreement for sale or conveyance charged with duty by s. 41 (1).

The two conclusions stated lead to the result that if the whole building is to be completed before conveyance, then the dutiable "matter", in the form of an agreement for the sale or conveyance of property, which is contained in the instrument is constituted by an agreement for the sale or conveyance of the land with the building upon it; and consideration and unencumbered value for the purpose of assessing ad valorem duty are to be assessed accordingly. The opposite result is reached, where, under the agreement, erection of the building is to be commenced only after conveyance of the land. Here what is dutiable is an agreement for the sale or conveyance of the land alone, and ad valorem duty is to be assessed by reference to the purchase price of the land alone or its unencumbered value. (emphasis added)

[206]

134. Certainly it is true that the condition of the land when transferred, and the economic value of the land at that point, neither of which is as such, a term of the contract (as distinct from assumptions arguably implicit in provisions such as the requirement to erect a building and the sale price of the lease), were different from the condition and economic value of the land when the land sale contract was entered into. The test in the Duties Act is whether the transfer is in conformity with the agreement. It is not whether the value of the dutiable property transferred, or the condition of that property, has changed since the agreement was made (a circumstance that would frequently be the case, and a circumstance in respect of which specific provision is made in some cases, for instance in s 20(2)). I cannot see that it could be said that the transfer of land that had been burnt out by a bushfire, or that had been re-zoned, between a contract for sale and the subsequent transfer, was not transferred in conformity with the agreement. The Duties Act also makes specific provision for transactions in which the purchase price changes between agreement for transfer and the actual transfer (s 30), but it says nothing about a case where the purchase price stays the same but the value of the property has changed in that interval. Furthermore, the transfer of the land with a residence built on it was, in fact, exactly the transfer that was contemplated by the agreement by virtue of cl 30.1(b) (by which the Buyer accepted the obligation to develop the land concerned) and of the cl 2.6 requirement on the Buyer to complete the land sale contract within a period determined, among other things, by the Date of Practical Completion under the building contract (cl 22). The land sale contract did not refer to the details, or the price, of the building contract, nor even require that the building contract be already entered into - but it clearly not only contemplated but required that there would be such a contract and that it would be completed. I cannot see that a transfer that took place in exactly the circumstances contemplated by the agreement for the transfer, and exactly as contemplated, can be said for the purposes of the Duties Act to have been not in conformity with the agreement and therefore subject to ad valorem duty.

[296]

180 Transfer of land subject to building and development provision

(1) If a lease of territory land contains a building and development provision, the lease, or an interest in the lease, is not capable of being assigned or transferred, either at law or in equity unless -

(a) the lessee has died; or

(b) the transfer or assignment is made under any of the following orders:

(i) an order of the Family Court;

(ii) an order of another court having jurisdiction under the Family Law Act 1975 (Cwlth);

(iii) an order under the Domestic Relationships Act 1994, part 3.2 adjusting the property interests of the parties in a domestic relationship; or

(c) the transfer or assignment happens by operation of, or under, bankruptcy or insolvency; or

(d) the lessee has obtained -

(i) a certificate of compliance under section 179; or

(ii) the consent of the planning and land authority under subsection (2) or (3).

Note A consent under the City Area Leases Ordinance 1936 may be taken to be a consent under s (2) (see s 292).

(2) The planning and land authority may, in writing, consent to a legal or equitable assignment or transfer of a lease, or an interest in a lease, mentioned in subsection (1) if -

(a) the authority -

(i) is satisfied that the proposed assignee or transferee intends to comply with the building and development provision; and

(ii) has been given the security (if any) required by the authority for compliance with the provision by the proposed assignee or transferee; and

(b) either -

(i) the authority is satisfied that the lessee cannot, for personal or financial reasons, comply with the building and development provision; or

(ii) the proposed transferee or assignee (the homebuyer) has a contract with the person (the builder) proposing to transfer or assign the lease and, under the contract, the builder is required to build a home on the leased land for the homebuyer.

Note A fee may be determined under s 287 for this provision.

(3) The planning and land authority may also, in writing, consent to a transfer of a lease, or an interest in a lease, mentioned in subsection (1) if the proposed transfer is the first sale of an individual lease of undeveloped land by the person who provided the infrastructure on, and subdivided, the holding lease of which the individual lease is a subdivision.

Note A fee may be determined under s 287 for this provision.

(4) In deciding under subsection (2) or (3) whether to consent to an assignment or transfer of a lease, the planning and land authority must take into consideration any matters determined by the Minister, in writing, for the subsection.

(5) A determination under subsection (4) is a disallowable instrument.

Note A disallowable instrument must be notified, and presented to the Legislative Assembly, under the Legislation Act.

At a glance

Court

Decision date

Before

Source

Judgment (296 paragraphs)

Commissioner for ACT Revenue v Araghi and Dorsett [2013] ACTSC 43 (14 March 2013)

Parties

Legislation Cited (20)

Cases Cited (4)