CPT Manager Ltd v Chief Commissioner of State Revenue

Supreme Court of NSW|2006-12-05|Before: Gzell J

CITATION : CPT Manager Ltd v Chief Commissioner of State Revenue [2006] NSWSC 1286 This decision has been amended. Please see the end of the judgment for a list of the amendments.

DECISION : The Court's satisfaction in terms of the Duties Act 1997, s 54(3A) substituted for the Chief Commissioner's lack of satisfaction.

CATCHWORDS : TAXES AND DUTIES - Stamp duties - Instrument of transfer of land - $10 payable under the Duties Act 1997, s 54(3A) if as a consequence of the appointment of a new responsible entity of a managed investment scheme if Chief Commissioner satisfied that only beneficial interest acquired is by new responsible entity solely because of its appointment - Whether Chief Commissioner should have been satisfied - Whether Court can substitute its satisfaction under Taxation Administration Act 1996, s 101(1)(b) - Observations about the nature of the interests transferred - Chief Commissioner submitted unit holders held no equitable interest and only entitled to due administration - Whether a "beneficiary" with no equitable interest could obtain a decree for general administration under old Chancery practice

Corporations Law (Cth) Duties Act 1997 State Revenue Legislation Amendment Bill 2000 Stamp Duties Act 1920 LEGISLATION CITED : Stamps Act 1958 (Vic) Duties Act 2000 (Vic) Income Tax Assessment Act 1936 (Cth) Taxation Administration Act 1996 Land Tax Act 1958 (Vic) Conveyancing Act 1919

Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 3 Perpetual Trustee Co Ltd v Commissioner of State Revenue (2000) 44 ATR 273 Commissioner of State Revenue v Challenger Property Nominees Pty Ltd (2006) 63 ATR 65 Reseck v Federal Commissioner of Taxation (1975) 133 CLR 45 McIntosh v Federal Commissioner of Taxation (1979) 45 FLR 279 DGSS v Hangan (1982) 70 FLR 212 CASES CITED : Fagan v Crimes Compensation Tribunal (1982) 150 CLR 666 Kavalee v Burbidge (1998) 43 NSWLR 422 Affinity Health Ltd v Chief Commissioner of State Revenue (NSW) 2005 ATC 4637 CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 Charles v Federal Commissioner of Taxation (1954) 90 CLR 598 Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 80 ALJR 519 McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623

PARTIES : CPT Manager Ltd - Plaintiff Chief Commissioner of State Revenue - Defendant

COUNSEL : Mr A H Slater QC/ Mr R L Hamilton SC - Plaintiff Mr S W Gibb SC/ Mr I S Young - Defendant

SOLICITORS : Freehills Solicitors - Plaintiff I V Knight Crown Solicitor - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1138/06 CPT MANAGER LTD v CHIEF COMMISSIONER OF STATE REVENUE JUDGMENT Introduction 1 The land upon which the Dubbo City Centre stands ("the subject land") was transferred to ING Management Ltd ("ING"), under its former name, as trustee of a unit trust called the Dubbo City Centre Trust ("DCCT"). All the units in DCCT were held by ING as trustee of the Prime Property Syndicate - Fund No 3 ("PPS"), the name of which was subsequently changed. PPS was registered as a managed investment scheme under the then Corporations Law (Cth), s 601EB with ING as the responsible entity under s 601FA. A responsible entity holds scheme property on trust for scheme members under s 601FC(2). The constitutions of DCCT and PPS were, for all practical purposes, identical. 2 Consequent upon the takeover of the holding company of ING, an acquisition agreement was executed under which, amongst other matters, CPT Manager Ltd ("CPT"), the plaintiff, in consideration of ING relinquishing its rights to act as manager or responsible entity of PPS and another unit trust, Prime Investment Syndicate - Fund No 3, agreed to pay ING $678,000 upon the appointment of CPT as manager or responsible entity of the trusts. Before that could happen, an extraordinary resolution of the members of PPS approving CPT to be the new responsible entity was required under the Corporations Law (Cth), s 601FL(1). 3 Approval having been given, ING retired and CPT was appointed trustee and responsible entity of PPS. Later, ING retired and CPT was appointed trustee of the DCCT. Later still, a transfer of the subject land for nil consideration "consequent upon the retirement of the existing trustee and the appointment of a new trustee" was executed. It was stamped at $10 but was subsequently lost. In its replacement, the transfer presently in issue was executed in like terms. The Chief Commissioner of State Revenue ("Chief Commissioner") assessed the second transfer to duty at ad valorem rates on an unencumbered value of $25.85 million. The issues 4 The questions in issue were whether the interest in the subject land on transfer had an unencumbered value as claimed by the Chief Commissioner, an unencumbered value of nil, or an unencumbered value equivalent to ING's share of the $678,000 attributable to PPS. 5 The second issue was whether the transfer was chargeable with $10 only as a consequence of the retirement of a responsible entity and the appointment of a new one. The change of responsible entity concession 6 I address the second issue first because, if decided in favour of CPT, that is the end of the matter. 7 The Duties Act 1997, s 54(3A) is in the following terms: "Duty of $10 is chargeable in respect of a transfer of property as a consequence of the retirement of a responsible entity of a managed investment scheme or the appointment of a new responsible entity of a managed investment scheme if the Chief Commissioner is satisfied that the only beneficial interest acquired by a person in relation to the property as a result of the transfer is a beneficial interest acquired by the replacement or new responsible entity solely because of its appointment as responsible entity for the scheme." 8 The Chief Commissioner submitted that the use of the word "solely" indicated that the object of the provision was to protect the revenue when a transfer was the consequence of another factor or factors. 9 In my opinion, that is a misreading of the provision. It is not the transfer that is to be solely as a consequence of the retirement or appointment of a responsible entity. It is the only beneficial interest acquired by the responsible entity that is to be solely because of the appointment. 10 The provision has two elements. First, a transfer as a consequence of the retirement or appointment of a responsible entity. Secondly, the Chief Commissioner's satisfaction that the only beneficial interest acquired as a result of the transfer is a beneficial interest acquired by the responsible entity solely because of its appointment. The Chief Commissioner's interpretation transposes the word "solely" from the second element to the first. 11 Reference was made to the explanatory note to the State Revenue Legislation Amendment Bill 2000 by which the provision was introduced. But little is to be gleaned from it. It merely paraphrases, as I have done, the provision. It states: " Schedule 2 [1] makes it clear that a concessional rate of duty is payable in respect of the transfer of property as a consequence of the appointment of a new trustee for a managed investment scheme, but only if the Chief Commissioner of State Revenue is satisfied that the only beneficial interest in property being acquired is by the new trustee because of its appointment as trustee for that scheme." 12 It was not in issue that the reference to a beneficial interest acquired by the responsible entity is a reference to a trustee's right of indemnity from trust assets, a right of reimbursement or exoneration. 13 In Chief Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 the material provision was that a conveyance of property made without consideration in money or moneys worth was to be charged with ad valorem duty on the greater of the unencumbered value of the property or the amount or value of all encumbrances subject to which the property was conveyed (Stamp Duties Act, 1920, s 66). In one aspect of the judgment, the High Court considered whether a trustee's indemnity fell within the provision. It was held that, although a trustee had a beneficial interest in the trust property to the extent of the right of reimbursement or exoneration for the discharge of liabilities incurred in administering a trust, that interest did not encumber the beneficiaries' interest. At 246-247 the Court said that the term "trust assets" may be used to identify those held by a trustee upon the terms of the trust, but, in respect of such assets, there exist the respective proprietary rights, in order of priority, of the trustee and the beneficiaries. The trustee's right to exoneration or recoupment takes priority over the rights in, or in reference to, the assets of beneficiaries or others who stand in that situation. For this later proposition reference was made to Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319 at 335. 14 The Chief Commissioner relied upon the decision of Hansen J in Perpetual Trustee Co Ltd v Commissioner of State Revenue (2000) 44 ATR 273. Exemption 23 under Heading VI in the Third Schedule to the Stamps Act 1958 (Vic) was in the following terms: "Any instrument for the conveyance of real property where the Comptroller of Stamps is satisfied that the instrument is made solely in consequence of the appointment or retirement of any trustee or other change in trustees and in order to vest the real property in the trustees for the time being entitled to hold the real property."

At [54] his Honour said: "It is also clear why the legislature has considered it appropriate to use the word "solely" in conjunction with the words "in consequence of". It aids in the achievement of the purpose. It does that by confining the operation of the exemption to instruments solely of the type described. The Oxford Dictionary includes as meanings of the word "solely": (a) a single person or thing, without any other; without aid or assistance; (b) only, merely, exclusively. In its common understanding in its present context the word "solely" in conjunction with the words "in consequence of" means that the exemption will apply only if the instruments of transfer were executed in consequence of the change in trustee and in order to vest the real property of the trust in the name of the new trustee and not in consequence of any other factor. The object is to protect the revenue when an instrument of transfer is the consequence of another factor or factors. The use of the word "solely" indicates the extent of the legislature's concern in that regard. If the word "solely" had not been used, the question would merely have been whether the transfers were a consequence of the change of trustee in the sense of it being sequential or following on from it. It would not matter if the transfers were also a consequence of another factor or factors. In my view however this construction, which was contended for by Perpetual, cannot stand in face of the qualifying word "solely". The expression "solely in consequence of" requires that for the exemption to apply it must be established, as a matter of fact, that the transfer of real property of the trust was executed only in consequence of a change of trustee and in order to vest the real property of the trust in the name of that new trustee. The consequence is that the legislature has imposed a rigorous test of a factual nature which a taxpayer must surmount for the exemption to apply." 15 What is immediately obvious is that what was required to be solely in consequence of the appointment or retirement of a trustee in that case was the instrument of conveyance. In the instant circumstances, as I have explained, what is required to be solely because of the appointment of a responsible entity is the acquisition of a beneficial interest. 16 In the case before Hansen J, four entities owned a large shopping centre as tenants in common. They entered into an agreement under which one of them agreed to purchase the others' interests in the property and it immediately paid the full purchase price thereby constituting the others constructive trustees in favour of it. A series of deeds were then executed under which the appellant replaced the vendors as the trustee of the constructive trust and, thereafter, a transfer of the property to the appellant was executed. Hansen J took the view that one had to have regard to the agreement for sale and, in consequence, the instrument of transfer was but one step in the overall transaction of sale of the property and the transfer of title and was not solely in consequence of the appointment of a new trustee. 17 His Honour's description of the effect of the word "solely" is informative. But it must be remembered that the context here in question is of the acquisition of a beneficial interest. To use his Honour's words in this context the expression "solely because of" requires that for the concession to apply it must be established, as a matter of fact, that the acquisition of a beneficial interest by the new responsible entity was only in consequence of the appointment of the responsible entity. His Honour described this as a rigorous test of a factual nature. 18 The exemption with which Hansen J was concerned has been replaced by the Duties Act 2000 (Vic), s 33(3). It provides: "No duty is chargeable under this Chapter in respect of a transfer of dutiable property to a person other than a special trustee if the Commissioner is satisfied that the transfer is made solely - (a) because of the retirement of a trustee or the appointment of a new trustee, or other change in trustees; and (b) in order to vest the property in the trustees for the time being entitled to hold it." 19 That provision was considered by Hollingworth J in Commissioner of State Revenue v Challenger Property Nominees Pty Ltd (2006) 63 ATR 65. Echoing what Hansen J had said in Perpetual Trustee, her Honour said at [30] that the provision imposed a rigorous factual test of causation. At [34] her Honour said that the question to be asked was: "is the only purpose of the transfer to give effect to the change of trusteeship?" The Chief Commissioner submitted that in the instant circumstances the question is whether the only purpose of the transfer of the subject land was to give effect to the change of responsible entity. 20 For the reasons I have indicated, that is the wrong question. The correct question is: "is the only reason for the new responsible entity's acquisition of a beneficial interest because of its appointment as responsible entity?" 21 The Chief Commissioner submitted that the concession did not apply because the transfer was made because of the acquisition agreement which required it to be made. That is not so. The acquisition agreement clearly contemplated a change in responsible entity. ING would receive no payment unless that happened. Clause 4.6 of the acquisition agreement, however, provided that, despite any other provision, all property and rights, including investments of each trust, would be held at all times by and in the name of the relevant company or a custodian appointed by it or in such other manner as the relevant constitution permitted. ING was a relevant company. 22 In any event, even if the acquisition agreement required ING to transfer the subject land to CPT it would not make this case one like Perpetual Trustee, as the Chief Commissioner submitted. The transaction in that case involved an agreement for sale of land at a stipulated price with the replacement of trustee as but one step in the overall arrangement. In the instant circumstances, there was no agreement for sale. As a result of the takeover of the holding company of ING the acquisition agreement provided for the management of various trusts and managed investment schemes to pass to CPT. 23 Furthermore, the acquisition agreement is totally silent when it comes to the question whether CPT acquired a beneficial interest and whether that acquisition was solely because of its appointment as the responsible entity. There is nothing in the acquisition agreement that relates to any equitable interest that CPT might acquire. 24 The Chief Commissioner also submitted that the concession was not available because the transfer was made to give effect to the change of manager and trustee of DCCT. 25 ING and CPT executed a deed of retirement and appointment of manager with respect to DCCT. ING agreed to retire as trustee on the date of the deed and CPT was appointed as trustee from that date. CPT accepted the appointment and agreed to undertake all the obligations of manager and agreed to be bound by the covenants under the trust deed in relation to the trust to which the manager's retirement related and from the date of the deed, CPT was able to exercise all the powers and discretions and enjoy all the rights and be subject to all the duties and obligations of the manager under the trust deed. 26 Again, the submission of the Chief Commissioner is misconceived because he points to another reason for the transfer. But, as I have explained, that is not the issue. The question is whether CPT's acquisition of any beneficial interest in the subject land was because of anything other than its appointment as responsible entity of PPS. Like the acquisition agreement, the deed of retirement and appointment of manager had nothing to do with the acquisition of beneficial interests in the subject land. 27 If the first element of the Duties Act 1997, s 54(3A) is to be satisfied, the transfer of the subject land must be as a consequence of the appointment of CPT as a new responsible entity of PPS, a managed investment scheme. 28 The former Income Tax Assessment Act 1936 (Cth), s 26(d) included in assessable income only 5% of the capital amount of any allowance, gratuity or compensation where that amount was paid in a lump sum in consequence of retirement from, or the termination of, any office or employment, and whether so paid voluntarily, by agreement or by compulsion of law. 29 In Reseck v Federal Commissioner of Taxation (1975) 133 CLR 45 at 51, Gibbs J said that in the ordinary meaning of those words, a sum was paid in consequence of the termination of employment when the payment followed as an effect or result of the termination. At 56 Jacobs J said: "It was submitted that the words "in consequence of" import a concept that the termination of the employment was the dominant cause of the payment. This cannot be so. A consequence in this context is not the same as a result. It does not import causation but rather a "following on"."

See also: McIntosh v Federal Commissioner of Taxation (1979) 45 FLR 279 at 282-283 and DGSS v Hangan (1982) 70 FLR 212. 30 The transfer of the subject land was as a consequence of the appointment of CPT as a new responsible entity of PPS. There is no requirement of exclusivity of purpose to satisfy the first element under the Duties Act 1997, s 54(3A). The transfer followed as an effect or result of the new appointment and was thus in consequence of it. And PPS was a managed investment scheme. 31 In my view the first element of the Duties Act 1997, s 54(3A) was satisfied. 32 The second element of the Duties Act 1997, s 54(3A) focuses on the acquisition of a beneficial interest as a result of a transfer consequent upon retirement or appointment of a responsible entity. 33 In Fagan v Crimes Compensation Tribunal (1982) 150 CLR 666 at 673, Mason and Wilson JJ said that the words "as a result of" were ordinary English words carrying no special or technical meaning. All that was required was a causal relationship. The fact that other unconnected events might also have had some relationship to the occurrence was not material if the act in question was a cause, even if not the sole cause. (See, also, Kavalee v Burbidge (1998) 43 NSWLR 422 at 443, 446). 34 That requirement was met in the instant circumstances because all that is required by the words "as a result of" is a causal connection. Here there was a causal connection between CPT acquiring the right of reimbursement or exoneration against the subject land and the transfer to it of the subject land. It was the inclusion of the subject land as trust property pursuant to the transfer by which those rights were acquired. 35 And for the reasons already explained, the requirement that the acquisition of the beneficial interest be solely because of CPT's appointment as responsible entity of the managed investment scheme is also met. CPT acquired the right to reimbursement or exoneration against the subject land, the beneficial interest, when the subject land was transferred to it as replacement responsible entity. It was only because of that appointment that it acquired the beneficial interest. 36 In my view, subject to the question of the Chief Commissioner's satisfaction, both elements of the Duties Act 1997, s 54(3A) have been established. 37 The second element in the Duties Act 1997, s 54(3A) requires the Commissioner to be satisfied of the exclusive cause of the acquisition of the beneficial interest in the subject land. 38 The Taxation Administration Act 1996, s 101(1)(b) empowers the Court to make a decision in place of the decision to which the application for review relates. In Affinity Health Ltd v Chief Commissioner of State Revenue (NSW) 2005 ATC 4637, I held that provision enabled me to replace the Chief Commissioner's failure to exercise a discretion by my exercising the discretion. CPT submitted that I could, under that provision, form the satisfaction mentioned in the Duties Act 1997, s 54(3A) in place of the Chief Commissioner's lack of satisfaction. The Chief Commissioner did not challenge that submission. 39 In my view, in determining whether or not he is satisfied in terms of the Duties Act 1997, s 54(3A), the Chief Commissioner makes a decision. He decides that he is satisfied, or he decides that he is not satisfied. It is that decision to which the application for review relates. Thus, the Court is empowered to substitute its decision as to satisfaction for the Chief Commissioner's decision as to lack of satisfaction under the Taxation Administration Act 1996, s 101(1)(b). 40 In my view, the Chief Commissioner should have been satisfied that the only beneficial interest acquired by a person in relation to the subject land as a result of the transfer of the subject land from ING to CPT was a beneficial interest acquired by CPT as new responsible entity of PPS solely because of its appointment as responsible entity for the scheme. In place of the Chief Commissioner's decision that he was not so satisfied, I make the decision that the Court is so satisfied. The interests in the subject land the subject of the transfer 41 In light of my decision that nominal duty only was exigible on the transfer in terms of the Duties Act 1997, s 54(3A), it is unnecessary for me to deal with this issue. 42 In deference to the submissions made on this topic, I make a few observations. But they are observations, merely, and form no part of the determination of this matter. 43 CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 was a land tax case. Unit holders held 100% of the units in some land holding trusts and less than 100% in others. The question was whether they were "owners" of the underlying land under portion of the definition in the Land Tax Act 1958 (Vic), s 3 that included every person entitled to any land for any estate of freehold in possession. 44 The High Court rejected as dogma the proposition that where ownership is vested in a trustee, equitable ownership must necessarily be vested in someone else, because it is an essential attribute of a trust that it confers upon individuals a complex of beneficial legal relations that may be called ownership. The Court approved of what Griffith CJ had said in Glenn v Federal Commissioner of Land Tax (1915) 20 CLR 490 at 497: "The respondent's argument is based on the assumption that whenever the legal estate in land is vested in a trustee there must be some person other than the trustee entitled to it in equity for an estate of freehold in possession, so that the only question to be answered is who is the owner of that equitable estate. In my opinion, there is a prior enquiry, namely, whether there is any such person. If there is not, the trustee is entitled to the whole estate in possession, both legal and equitable." 45 A critical consideration of the court in CPT was the interest held by a unit holder under the trust deed in question. The Court distinguished Charles v Federal Commissioner of Taxation (1954) 90 CLR 598 in which an earlier High Court had held that a unit under the trust deed there in question conferred a proprietary interest in all the property that, for the time being, was subject to the terms of the trust. The deed in that case divided the beneficial interest in the trust fund into units and the trustees were bound to make half yearly distributions to unit holders in proportion to their respective number of units of the cash produce that had been received by the trustees. 46 In CPT, by contrast, the fund was vested in the trustee upon trust for the unit holders. Both the trustee and the manager, in which the management of the fund was vested exclusively, were entitled to fees in significant amounts to be paid out of the fund, and also to monthly reimbursements from the fund of their costs, charges and expenses. The beneficial interest in the fund was divided into units each said to confer an equal interest in all property for the time being held by the trustee upon the trust of the deed, but excluding that part of the fund credited to a distribution account for distribution to unit holders. But no unit conferred any interest in any particular part of the trust fund, or any investment, and each unit had only such interest in the trust fund as a whole as was conferred on a unit under the provisions of the deed. The unit holders were not entitled to require the transfer of any property comprised in the fund, although it was provided by the deed that, by agreement with the manager, distributions in specie might be made upon determination of the fund. A unit holder was not entitled to lodge a caveat claiming an estate or interest in any investment being realty, and unit holders were bound by the terms of the deed as if parties to it. The deed contemplated that all units might be held beneficially by a single unit holder. There was provision for distribution to unit holders of periodic income entitlements and for the realisation of the fund upon its determination and distribution of the proceeds among unit holders. There was a mechanism for the manager to repurchase units for cancellation or resale. 47 At [28] and [36] the High Court approved the decision of Nettle J at first instance that the entitlements of the unit holders in those terms did not make them owners for land tax purposes. 48 In the case before this Court, the Chief Commissioner pointed to the constitution of PPS. Unit holders had no interest in any particular scheme property, a unit conferring only an interest in the trust fund as a whole. There was no power to lodge a caveat, and no right to require a transfer of any trust property. The responsible entity had all the powers in respect of the trust that it was possible under the law to confer on a trustee as though it were the absolute owner of the assets acting in its own capacity. It had discretionary powers to invest and to distribute income. It had duties to realise assets and distribute the proceeds of realisation upon termination, including making provision for liabilities, actual and anticipated. It also had rights to hold units in the trust in any capacity. It had rights to remuneration after the scheme commenced and until final distribution including application fees, monthly management and other fees in respect of the sale of any property that was real property. And it had the right to reimbursement or exoneration for scheme expenses and fees. 49 Upon that analysis, the Chief Commissioner submitted that no unit holder held any equitable interest in the scheme property and all a unit holder had was a right to due administration. 50 There is nothing in CPT nor in the later decision of the High Court in Halloran v Minister Administering National Parks and Wildlife Act 1974 (2006) 80 ALJR 519 to suggest that the holder of a unit in a unit trust lacks an equitable interest in the trust property. 51 In Halloran, the respondent had resumed land. This gave rise to a right to compensation in a person who had a legal or equitable estate or interest in the land. Under a scheme of arrangement, the Federal Court had ordered the land be transferred to Sealark Pty Ltd. That had not happened at the material time. The registered proprietor of the land remained the party ordered to make the transfer. Sealark held an equitable interest in the land. Pacinette Pty Ltd as trustee of the Pacinette Property Trust issued A class units to Sealark. A class units represented a fractional interest in the moneys subscribed for their issue. They gave no entitlement to any other assets of the trust. Pacinette, as trustee, made a written offer to purchase the land from Sealark in consideration for the allotment of further A class units. That offer was accepted and the units were issued. There followed the allotment of ordinary units to Pacinette, the redemption of the A class units of Sealark, and the purchase of the interest in the land held by Pacinette in consideration for the redemption of the ordinary units. 52 The High Court held that there had been a change in beneficial ownership that was not defeated by the Conveyancing Act 1919, s 23C(1) requirement for writing for the transfer of an equitable interest in land, either because of the exception of a constructive trust in s 23C(2), or because to use the statute in the circumstances would constitute it an instrument of fraud. The promise of consideration created the constructive trust or use of the statute as an instrument of fraud regardless of the form of that consideration. Hence, the promised consideration in the form of an allotment of A class units did not enliven the exception under the Stamp Duties Act, 1920, s 44(2)(d) for a change in beneficial ownership occurring as the consequence of the issue or redemption of units in a unit trust scheme.

53 The case foundered because, there being a change in beneficial ownership outside the exception in the Stamp Duties Act, 1920, s 44(2)(d), Pacinette was denied the right to prove that change and, thereby, its entitlement to compensation for resumption of the land, because s 29(3) provided that no unstamped instrument in respect of a transaction to which s 44(1) applied could, except in criminal proceedings, be given in evidence. 54 It follows that if a constructive trust in favour of Pacinette came into existence, it acquired an equitable interest in the land. It was that which caused the change in beneficial ownership. The decision is silent upon the question whether a unit holder in a unit trust holds an equitable interest in the trust assets. 55 Under the old Chancery practice, any beneficiary was entitled, as of right, to have the trust administered by the Court of Chancery and to that end to obtain a decree for general administration (McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 633-638). But that right arose because the beneficiary had an interest in the trust that needed protection. If the "beneficiary" lacked any equitable interest in the trust, there was nothing to protect and, contrary to the Chief Commissioner's submission, there was no entitlement to due administration. A person in that position is a stranger to the trust and cannot be regarded as a beneficiary. 56 I doubt that the Commissioner's submission that what was transferred to CPT was the full legal title to the subject land with an unencumbered value of $25.85 million is correct. 57 As a reality check, if ING put out to tender its replacement as responsible entity no one would be prepared to tender anything like that amount. All the tenderer would gain, if successful, would be a right to remuneration and the right to reimbursement or exoneration. The right to reimbursement or exoneration does not create any reward in the responsible entity. It incurs expenditure on behalf of the scheme and is entitled to be repaid. It reaps no reward except under its entitlement to remuneration. 58 There is a lot to be said for the submission of CPT that the unencumbered value of the congeries of rights acquired by it upon appointment as replacement responsible entity of PPS, was the value of the right to remuneration. 59 One indication of the value of that right was the PPS portion of the $678,000 paid to ING to relinquish its rights to act as manager. Conclusion 60 These latter observations do not bind the Chief Commissioner. My decision in place of his with respect to the operation of the Duties Act 1977, s 54(3A) will. I will hear the parties on the appropriate terms of orders and I will hear the parties on costs. I direct the parties to bring in short minutes of orders reflecting these reasons.

07/12/2006 - Change his Honour to her Honour in reference to Justice Hansen - Paragraph(s) 19

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Stamps Act 1958(Vic)

Land Tax Act 1958(Vic)

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