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[2026] NSWSC 761
Supreme Court of NSW
2026-06-30
Hmelnitsky J
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Forever Grateful Holdings Pty Ltd v Chief Commissioner of State Revenue [2026] NSWSC 761
Hearing dates: 16 April 2026
Date of orders: 30 June 2026
Decision date: 30 June 2026
Jurisdiction: Equity - Revenue List
Before: Hmelnitsky J
Decision: (1) The Court orders that the assessment dated 26 June 2024 with Duties Assessment Number 10927423-002 be revoked and, in its place, that the transfer of the Moama property on 15 July 2024 be assessed in the amount of $100.
(2) Direct the parties to file and serve any evidence and short submissions on the question of costs on or before 14 July 2026.
(3) Direct the parties to file and serve any evidence and short submissions in reply on the question of costs on or before 28 July 2026.
Catchwords: TAXES AND DUTIES — Dutiable transactions — Liability — Time when liability arises — Where plaintiff is a trustee — Where plaintiff as successor trustee was transferred trust property from former trustee — Where unsigned transfer form was uploaded to Revenue NSW eDuties portal — Where trust deed was amended to give plaintiff the benefit of exemptions from ad valorem duty and surcharge purchaser duty — Where amendment took place after uploading transfer form to eDuties portal but before transfer form was digitally signed — Where transfer form is an ‘electronic registry instrument’ — Whether liability for duty arises on the date the instrument is first digitally signed per s 12(4)(a) Duties Act 1997 (NSW) or when the Chief Commissioner first receives information relating to the instrument per s 12(4)(b)
Original judgment source is linked above.
Legislation Cited: Duties Act 1997 (NSW), ss 8, 9, 9A, 9B, 9C, 10, 12, 54(3), 104ZK, 290 and 295
Electronic Conveyancing (Adoption of National Law) Act 2012 (NSW), s 5
Electronic Conveyancing National Law (NSW), s 3
State Revenue Legislation Amendment (Electronic Transactions) Act 2014 (NSW)
Cases Cited: Chief Commissioner of State Revenue v Benidorm Pty Ltd (2020) 104 NSWLR 232; [2020] NSWCA 285
Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240; [2011] NSWCA 48
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; [1982] HCA 14
Gardiner v Chief Commissioner of State Revenue (2004) 59 NSWLR 549; [2004] NSWSC 107
Platinum Investment Management Limited v Chief Commissioner of State Revenue (No 2) [2010] NSWSC 1; (2010) 78 ATR 143
The Salvation Army (New South Wales) Property Trust v Chief Commissioner of State Revenue (2018) 96 NSWLR 119; [2018] NSWSC 128
Wm. Cory & Son Ltd v Inland Revenue Commissioners [1965] AC 1088
Texts Cited: Explanatory Note to the Revenue, Fines and Other Legislation Amendment Bill 2023 (NSW)
New South Wales Legislative Assembly, Parliamentary Debates (Hansard), 1 August 2023 at 23
Category: Principal judgment
Parties: Forever Grateful Holdings Pty Ltd (Plaintiff)
Chief Commissioner of State Revenue (Defendant)
Representation: Counsel:
D Lewis (Plaintiff)
S Kanagaratnam (Defendant)
Solicitors:
Maddocks (Plaintiff)
NSW Crown Solicitor’s Office (Defendant)
File Number(s): 2024/462926
Publication restriction: Nil
The plaintiff is the trustee of the Hume Enterprises Family Investment Trust (the Trust), having been so appointed on 5 March 2024. The former trustee was Hume Contracting Pty Ltd (Hume Contracting), who retired on that day.
On 15 July 2024, Hume Contracting, as transferor, and the plaintiff, as transferee, executed a transfer in respect of a property in Moama, New South Wales (the Moama property). The Moama property had been acquired and held by Hume Contracting as trustee of the Trust and the transfer was executed in consequence of its retirement and the appointment of the plaintiff as the new trustee.
Section 54(3) of the Duties Act 1997 (NSW) relevantly provides that duty of $100 is chargeable in respect of a transfer of dutiable trust property as a consequence of the retirement of a trustee or the appointment of a new trustee if the Chief Commissioner is satisfied that certain requirements have been met. Where s 54(3) applies, a transfer will also be exempt from surcharge purchaser duty under Chapter 2A of the Duties Act by reason of s 104ZK(1)(a).
There is no dispute that when Hume Contracting and the plaintiff executed the transfer on 15 July 2024, the requirements of ss 54(3) and 104ZK were met.
However, on 24 May 2024 an unexecuted form of transfer, which was different to the version eventually executed on 15 July, had been provided to the Chief Commissioner in advance of the transaction occurring. As at that date, the terms of the Trust did not yet exclude a trustee from becoming a beneficiary and so did not at that time meet all of the requirements of s 54(3). The terms of the Trust were in due course amended to ensure compliance with s 54(3) (and in turn s 104ZK(1)(a)), however this did not occur until 24 June 2024. This was before the transfer was executed but after the Chief Commissioner first learned about the proposed transfer.
On 26 June 2024, before any transfer had been executed, the Chief Commissioner assessed the plaintiff to ad valorem duty under Chapter 2 of the Duties Act and surcharge purchaser duty under Chapter 2A of the Duties Act on the basis of a contentious construction of s 12 of the Duties Act. Section 12 is reproduced at paragraph [39] below.
The parties agree that the unexecuted form of transfer provided to the Chief Commissioner on 24 May was an ‘electronic registry instrument’ within the meaning of the Duties Act. The Chief Commissioner took the view that the effect of s 12(4)(b) was that this draft document was taken to have been first executed on that day, being the day he first received information about it. The Chief Commissioner reasoned that the combined effect of subsections 12(2) and 12(4) was that a liability for duty in relation to a future transfer of the Moama property therefore arose on 24 May, which was a day when the terms of the Trust did not meet all of the requirements of s 54(3).
The plaintiff disputes this reasoning. It contends that s 12(4) only applies to deem the first execution of an instrument that otherwise effects a transfer within the meaning of s 12(2), which the 24 May draft did not. It says that the later transfer of the Moama property on 15 July was effected by an electronic registry instrument but that this instrument was signed on that day, attracting the operation of subsection (4)(a). It also says that, in any event, the electronic document signed on that day was in a different form to the 24 May draft form. The plaintiff therefore submits that the time that liability arose in relation to the transfer, as worked out under s 12(2), was 15 July, a time when the terms of the Trust met all of the requirements of ss 54(3) and 104ZK(1)(a).
The principal issue in the proceedings concerns the proper construction of s 12.
The Trust was settled by a deed executed on 1 February 2005. The settlor was Mr George Psiakis, the initial appointor was Mr Michael Van Vlaanderen and the initial trustees were Mr Van Vlaanderen and Ms Lisa Van Vlaanderen.
The Trust is discretionary both as to income (cl 3) and capital (cl 4). The beneficiaries are defined in cl 13 to include the ‘Primary Beneficiaries’, which is in turn defined in the schedule to the trust deed, and the ‘General Beneficiaries’ which are certain individuals or entities related to the Primary Beneficiaries. Clause 19 gives the appointor power to appoint a trustee. Clause 11 gives the trustee power to amend the Trust.
Mr Van Vlaanderen is the sole director and secretary of both the plaintiff and Hume Contracting. He is also the sole shareholder of Hume Contracting and a 50% shareholder of the plaintiff, the other 50% being held by Ms Naomi Van Vlaanderen. Mr Van Vlaanderen continues to be the appointor of the Trust.
On 9 April 2008, Mr and Ms Van Vlaanderen resigned as trustees and Hume Contracting was appointed as trustee.
The Moama property was acquired by Hume Contracting as trustee on 15 July 2013.
On 6 March 2024, Hume Contracting, the plaintiff and Mr Van Vlaanderen (in his capacity as appointor) entered into a Deed of Appointment and Retirement of Trustee by which Hume Contracting resigned and was replaced by the plaintiff, effective on the date of the Deed. Clause 2.4 obliged the plaintiff, as the new trustee, to do all things necessary to perfect its title to the assets of the Trust.
On 19 April 2024, the plaintiff as vendor entered into a contract for the sale of the Moama property. The purchaser was an unrelated third party. The plaintiff’s solicitor was Rotstein Commercial Lawyers (Rotstein Lawyers). The date of completion was to be 25 June 2024. At the time the contract was entered into, the plaintiff was not yet the registered proprietor of the Moama property. The Moama property was still owned by the former trustee, Hume Contracting. This circumstance was addressed by cl 1 of the Special Conditions to the contract, which provided as follows:
“1.1 As at the Day of Sale, the registered owner of the Property is registered owned [sic] by Hume Contracting Pty Ltd ACN 060 571 593 as trustee for The Hume Enterprises Family Investment Trust (Trust).
1.2 On 5 March 2024, Hume Contracting Pty Ltd ACN 060 571 593 resigned as trustee of the Trust and the Trust appointed Forever Grateful Holdings Pty Ltd ACN 675 137 701 as the new trustee of the Trust. On this basis, Forever Grateful Holdings Pty Ltd ACN 675 137 701 warrants that it has the power to sell the Property in accordance with the terms of the Trust’s deed.
1.3 Settlement under this Contract is subject to and conditional upon the transfer of title and ownership of the Property from Hume Contracting Pty Ltd ACN 060 571 593 (the retiring trustee) to Forever Grateful Holdings Pty Ltd ACN 675 137 701 (the new trustee) being registered by NSW Land Registry by Settlement.
1.4 Forever Grateful Holdings Pty Ltd ACN 675 137 701 must best endeavours [sic] to procure the transfer of title and ownership of the Property as contemplated [by] this special condition 1 by 25th of June 2024.
1.5 Despite any other conditions of this Contract, settlement of this Contract will be due on the later of the following:
1.5.1 25th of June 2024; and
1.5.2 the date which is 14 days after the date that Forever Grateful Holdings Pty Ltd ACN 675 137 701 becomes registered as the proprietor of the Property.”
On 10 May 2024, Rotstein Lawyers created on the PEXA Exchange an undated and unexecuted form of transfer of land (the unexecuted transfer) that identified the fee simple in the Moama property as the estate being transferred, Hume Contracting as the transferor and the plaintiff as the transferee. The electronic document stated that the transfer was for no monetary consideration and that it was to give effect to a change in manner of holding.
On 24 May 2024, Rotstein Lawyers, as the legal representative for the plaintiff, uploaded onto the Revenue NSW eDuties portal a cover letter and certain documents attached to that cover letter, including the unexecuted transfer. The unexecuted transfer was undated and made no provision for the transferor to sign.
On 31 May 2024, Revenue NSW sent a requisition letter to Rotstein Lawyers (the first requisition). The first requisition requested a copy of the Land Tax Assessment Notice and market appraisal for the Moama property, confirmation that there were no previous variations or amendments to the trust deed, and an ASIC search of the plaintiff. In response to the first requisition, Rotstein Lawyers uploaded the requested documents as well as an ASIC search for Hume Contracting, a property ‘Verification of Identity’ form and identity documents for the shareholders of the plaintiff.
On 3 June 2024, Revenue NSW sent another requisition letter to Rotstein Lawyers asking that Revenue NSW be directed to where the trust was amended to exclude foreign beneficiaries (the second requisition). The second requisition included a link to the Chief Commissioner’s Practice Note CPN 004, which sets out how surcharge purchaser duty and surcharge land tax will be applied to situations where land is owned by a discretionary trust.
On 11 June 2024, seemingly prompted by the second requisition, a ‘Deed of Amendment of The Hume Enterprises Family Investment Trust’ (the 11 June Deed) was signed by Hume Contracting and Mr Van Vlaanderen, the latter as appointor. It appears that Hume Contracting entered into the 11 June Deed as the purported trustee of the Trust, although at this point it was no longer the trustee and had not been so for months.
Clause 2.1 of the 11 June Deed provided for the trust to be amended in the manner prescribed in Sch 2. These included the insertion of a new cl 13(g) which, inter alia, excluded any ‘foreign person’ or ‘foreign trustee’ within the meaning of the Duties Act from being a beneficiary, as follows:
“(g) Notwithstanding any other clause in this Deed, a person, corporation, trust, partnership or other entity is not a ‘Beneficiary’ for the purposes of this Deed:
(i) a ‘foreign person’ or ‘foreign trustee’ as defined by the Duties Act 1997 (NSW);
…
(Excluded Person).
Any person, corporation, trust, partnership or other entity that is an Excluded Person because of this clause 13(g) is irrevocably and permanently excluded as a Beneficiary of the Trust. For the avoidance of doubt, this clause 13(g) is irrevocable and not capable of amendment under clause 11.
Any Income or capital of the Trust Fund paid to, applied or set aside for the benefit of any Excluded Person must be returned to the Trustee.”
“1. Date of this Deed: The date that the last Party executes this transfer.
2. Amendment Date: The date that the last Party executes this transfer.”
“1. Date of this Deed: 11 June 2024.
2. Amendment Date: 11 June 2024.”
Mr Van Vlaanderen says that he did not sign both versions of the 11 June Deed, and that he only recalls ever signing one of them. He also does not recall Rotstein Lawyers asking him for instructions to take the signature page from one version of the deed and apply it to the other version. In the end, nothing turns on the fact that there are two versions of this deed in existence. Neither document was effective to alter the terms of the Trust because Hume Contracting was at that point no longer the trustee.
Revenue NSW then sent another requisition letter on 20 June 2024 (the fourth requisition). The fourth requisition asked for evidence of the value of the dutiable property being transferred and stated that the requirement under s 54(3) of the Duties Act had not been satisfied with respect to the trust deed, with the result that ad valorem duty was payable on the transfer. It included a link to the Chief Commissioner’s Revenue Ruling DUT 037 setting out the circumstances in which a transfer of dutiable trust property will be liable to nominal duty under s 54(3).
In response to the fourth requisition, on 21 June 2024 Rotstein Lawyers uploaded another ‘Deed of Amendment of The Hume Enterprises Family Investment Trust’ which was unsigned (the 21 June Deed). Although unsigned, it was expressed as a deed between the plaintiff as trustee and Mr Van Vlaanderen as appointor. It was in materially identical terms to the 11 June Deed but importantly included in Sch 2 a further amendment to insert a new cl 13(h) (in addition to a new cl 13(g)). The new cl 13(h) was to be as follows:
“(h) Notwithstanding any other clause in this Deed,
(i) none of the continuing trustees remaining after the retirement of the Trustee is or can become a beneficiary under the Trust; and
(ii) none of the new trustees after the appointment of a new (whether additional or substituted) trustee is or can become a beneficiary under the Trust.
(Excluded Trustee).
Any person, corporation, trust, partnership or other entity that is an Excluded Trustee because of this clause 13(h) is irrevocably and permanently excluded as a Beneficiary of the Trust. For the avoidance of doubt, this clause 13(h) is irrevocable and not capable of amendment under clause 11.
Any income or capital of the Trust Fund paid to, applied or set aside for the benefit of any Excluded Trustee must be returned to the Trustee.”
“‘Excluded Person’ has the meaning given to that term in clause 13(g).
‘Excluded Trustee’ has the meaning given to that term in clause 13(h).”
“1. Date of this Deed: The date that the last Party executes this transfer.
2. Amendment Date: The date that the last Party executes this transfer.”
A fifth requisition (the fifth requisition) was made by Revenue NSW on 24 June 2024. It required (a) that the 21 June Deed be executed and dated, (b) evidence of the stamping or endorsement of the trust deed (or reasons why it was not required to be stamped by Revenue NSW), and (c) confirmation that all variations to the trust had been lodged.
Rotstein Lawyers responded to the fifth requisition on 25 June 2024 by uploading the requested information. The cover letter stated that Rotstein Lawyers ‘withdraw[s] the executed Deed of Amendment of The Hume Enterprises Family Investment Trust dated 11 June 2024 [the 11 June Deed], as the document was drafted in error’. The letter attached a deed identical to the 21 June Deed but now signed by the plaintiff and Mr Van Vlaanderen (the 24 June Deed). However, dates were not inserted in the ‘Date of this Deed’ and ‘Amendment Date’ fields in Sch 1, and so it remained as set out at [29] above.
On 26 June 2024, the Chief Commissioner issued to the plaintiff the assessment that is the subject of these proceedings. The notice of assessment stated the following:
“The documents have been reviewed and the matter has been assessed and is not in accordance with Section 54(3) of the Duties Act 1997.
A PEXA transfer was lodged with the liability date being 24 May 2024 showing the transferee as Forever Grateful Holdings Pty Ltd atf The Hume Enterprises Family Investment Trust.
The trust deed was amended on 24 June 2024 to include the ‘irrevocable clause’ being after the liability date of 24 May 2024 therefore this transaction is liable to ad valorum [sic] duty and Surcharge Purchase Duty.”
On 15 July 2024, the transfer form was electronically signed on behalf of each of the transferor and the transferee by Rotstein Lawyers, which was a ‘subscriber’ within the meaning of the Electronic Conveyancing National Law (NSW). The transfer form was identified by the same PEXA document number but was now different (apart from the fact of being digitally signed), in that it was dated and made provision for both the transferor and transferee to sign.
The assessment included ad valorem transfer duty of $93,055 pursuant to Chapter 2 of the Duties Act and surcharge purchaser duty of $160,000 pursuant to Chapter 2A. The plaintiff objected to the assessment on 2 August 2024, and the Chief Commissioner disallowed that objection on 25 October 2024.
The plaintiff now seeks a review of the assessment by this Court pursuant to s 97 of the Taxation Administration Act 1996 (NSW).
Chapter 2 of the Duties Act relates to transactions concerning dutiable property.
Section 8(1)(a) provides that duty under Chapter 2 is charged on transfers of dutiable property. Section 8(1)(b) provides that Chapter 2 also charges duty on nine further categories of transaction.
Section 9 is entitled ‘Imposition of duty on dutiable transactions that are not transfers’. Subsection (1) provides that duty is to be charged on a dutiable transaction of a kind referred to in s 8(1)(b) as if such transaction were a transfer. Subsection (2) specifies (a) the property that is taken to be the subject of the transfer, (b) the parties to the transfer, and (c) the time at which the transfer is taken to have occurred.
Section 12 deals with the question of when liability for duty arises. It provides as follows:
12 When does a liability for duty arise?
(1) A liability for duty charged by this Chapter arises when a transfer of dutiable property occurs.
(2) However, if a transfer of dutiable property is effected by an instrument, liability for duty charged by this Chapter arises when the instrument is first executed.
(3) A liability for duty in respect of a dutiable transaction that is charged with duty as if it were a transfer of dutiable property arises even if the dutiable property is not in existence at the time that the transfer is taken to have occurred, or the instrument effecting the transfer is first executed, as the case requires.
(4) An electronic registry instrument is taken to be first executed—
(a) if the instrument is digitally signed by a subscriber within the meaning of the Electronic Conveyancing National Law (NSW)—on the date the instrument is first digitally signed by the subscriber, or
(b) otherwise—when the Chief Commissioner first receives information relating to the instrument.
electronic registry instrument means a registry instrument (within the meaning of the Electronic Conveyancing National Law (NSW)) that is in a form that enables it to be lodged electronically under that Law.
...
instrument includes a document, written statement or any record of information that exists in a digital form and is capable of being reproduced, transmitted, stored and duplicated by electronic means.
registry instrument, for the purposes of the application of this Law as a law of a participating jurisdiction, has the meaning given by the application law of the jurisdiction.
registry instrument means any document that may be lodged under the land titles legislation for the purpose of—
(a) creating, transferring, disposing of, mortgaging, charging, leasing or dealing with in any other way an estate or interest in land, or
(b) getting something registered, noted or recorded in the titles register, or
(c) getting the registration, note or record of something in the titles register changed, withdrawn or removed.
The parties proceeded on the basis that both the unexecuted transfer of the Moama property that was uploaded to the Revenue NSW eDuties portal on 24 May 2024 and the transfer that was executed on 15 July were ‘electronic registry instruments’ within the meaning of the Duties Act.
The question of when an instrument is generally taken to be first executed for the purposes of the Duties Act is addressed in s 295. That section provides:
295 Execution of instruments
(1) For the purposes of this Act, an instrument is taken to be first executed the first time that it is signed and sealed, or signed (as the case may be) by any party to it.
(2) However, a contract made by acceptance of an offer contained in an instrument is taken to be first executed when the offer is accepted.
(3) If an instrument is ineffective by reason of a failure of the necessary parties to execute it, a refund may be made of any money paid for stamping.
290 Special procedures for electronic registry instruments
(1) The Chief Commissioner may approve procedures for the payment of duty in respect of electronic registry instruments and the endorsement or certification of those instruments in a way that indicates that duty has been paid, is payable or is not chargeable.
(2) An electronic registry instrument is taken to be duly stamped if the instrument is endorsed or certified in accordance with such a procedure.
(3) An approved procedure may permit the endorsement or certification of an instrument before it is digitally signed but, in that case, the instrument is taken to be duly stamped only when the instrument is digitally signed in accordance with the Electronic Conveyancing National Law (NSW).
(4) The endorsement or certification of an instrument under this section—
(a) is not evidence of an assessment of the duty payable under this Act in respect of the instrument, and
(b) does not affect any liability for payment of the duty in relation to the instrument under this Act.
(5) Particulars of any procedure approved under this section are to be published on the website of Revenue NSW.
(6) A person who endorses or certifies an electronic registry instrument otherwise than under and in accordance with a procedure approved under this section so as to suggest or imply that the instrument has been endorsed or certified in accordance with the procedure is guilty of an offence.
Maximum penalty—100 penalty units.
54 Change in trustees
…
(3) Duty of $100 is chargeable in respect of a transfer of dutiable trust property to a person (other than to a licensed trustee company, a special trustee, a trustee of a self managed superannuation fund or a trustee of a special disability trust) as a consequence of the retirement of a trustee or the appointment of a new trustee if the Chief Commissioner is satisfied that, as the case may be—
(a) none of the continuing trustees remaining after the retirement of a trustee is or can become a beneficiary under the trust, and
(b) none of the trustees of the trust after the appointment of a new trustee is or can become a beneficiary under the trust, and
(c) the transfer is not part of a scheme to avoid duty that involves conferring an interest, in relation to the dutiable trust property, on a new trustee or any other person (whether or not as a beneficiary) so as to cause any person to cease holding the whole or any part of a beneficial interest (or potential beneficial interest) in that property.
If the Chief Commissioner is not so satisfied, the transfer is chargeable with the same duty as a transfer to a beneficiary under and in conformity with the trusts subject to which the property is held, unless subsection (3A) applies.
There is no dispute that the Moama property was ‘dutiable trust property’ and that the plaintiff was a ‘new trustee’, as both of those expressions are defined in s 54(1). There is no suggestion that subsection (3A) has any role here.
Section 104ZK contains the relevant exemption from duty under Chapter 2A of the Duties Act. That Chapter charges surcharge purchaser duty on certain transactions concerning residential land that are, or are taken to be, transfers to foreign persons. Section 104ZK is as follows:
104ZK Transactions exempt from ad valorem duty under Chapter 2
(1) Subject to this Part, no surcharge purchaser duty is chargeable on a surcharge duty transaction if—
(a) ad valorem duty is not chargeable on the transaction as a dutiable transaction under Chapter 2 because of any of the provisions of Parts 6 and 7 of that Chapter (other than sections 55, 57, 62, 62A and 62B), or
(b) the transaction is a relevant transfer to which section 61 applies, or
(c) the transaction is a dutiable transaction to which section 62 applies, or
(d) the transaction is a transfer, or an agreement for the sale or transfer, of residential-related property and a duty concession is granted under Division 5 of Part 8 of Chapter 2 in respect of the transaction.
(2) To avoid doubt, the exemptions and concessions provided for in Part 8 of Chapter 2 do not (except as provided by subsection 1(d)) apply in respect of surcharge purchaser duty.
Before addressing the arguments concerning s 12, it is appropriate to mention one preliminary matter.
The implicit starting point in the Chief Commissioner’s case, which was not explicitly addressed in his submissions, is that the question of whether the exemptions under ss 54(3) and 104ZK were available in relation to the transfer of the Moama property is to be worked out on the basis of the circumstances that existed on the date liability arose by reason of s 12, rather than the date on which the transfer occurred.
In Platinum Investment Management Limited v Chief Commissioner of State Revenue (No 2) [2010] NSWSC 1; (2010) 78 ATR 143 (‘Platinum’), Gzell J said:
“[16] The Duties Act, s 12(1) provides that a liability for duty arises when a transfer of dutiable property occurs. But s 12(2) provides that if a transfer of dutiable property is effected by a written instrument, liability for duty arises when the instrument is first executed.
[17] Liability for duty depends upon circumstances that existed at the relevant time determined by the Duties Act, s 12 (Wm. Cory & Son Ltd v Inland Revenue Commissioners [1965] AC 1088 at 1105).”
However, a question could arise as to whether the proposition in paragraph [17] of his Honour’s reasons is universally true. The issue in Platinum was whether a particular clause in a share sale agreement, which was executed on 4 April 2007 ahead of a later public offering of shares, was dutiable as a ‘declaration of trust’ within the meaning of the Duties Act. Under the share sale agreement, the promoters of the transaction agreed to sell their shares in a certain operating company to Queens Hill Pty Ltd. Queens Hill Pty Ltd would be converted into a public company and would subsequently make a public offering of its shares. The consideration for the sale by the promoters of their shares in the operating company to Queens Hill Pty Ltd was stated to be certain ‘Consideration Shares’ to be issued in due course by Queens Hill Pty Ltd to a nominee for the promoters. The issue in dispute was whether the share sale agreement was dutiable as a declaration of trust over the Consideration Shares, which were not in existence as at the time of execution of the share sale agreement.
Gzell J held that the share sale agreement was not dutiable as a declaration of trust over dutiable property: Platinum at [81] and [98]. The Court of Appeal by majority (Macfarlan JA dissenting) held that it was: Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240; [2011] NSWCA 48 at [25] (Campbell JA) and [88] (Handley AJA).
On the facts in Platinum, there is no doubt that the relevant question was whether the 4 April 2007 share sale agreement was a ‘declaration of trust over dutiable property’ within the meaning of ss 8 and 9 of the Duties Act. If it was, it was taken to be a transfer when the declaration was made (s 9(2)(c)), which was the same day on which the agreement was ‘first executed’ (s 12(2)).
The authority on which Gzell J relied for what he said at paragraphs [16] and [17] of his Honour’s reasons was Wm. Cory & Son Ltd v Inland Revenue Commissioners [1965] AC 1088 (‘Wm. Cory & Son’) at 1105. Wm. Cory & Son was decided under the former UK legislation which, like the former Stamp Duties Act 1920 (NSW), was concerned with a charge on instruments, not transactions. It would, with great respect to Gzell J, perhaps be more accurate to say that Wm. Cory & Son stands for the proposition identified by Mason J in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; [1982] HCA 14 at 454, namely:
“The general rule is that the liability of an instrument to stamp duty is to be ascertained by reference to the circumstances which exist when the instrument is executed, though the court can have regard to subsequent events in order to discover the true position at the time of execution (Wm. Cory & Son Ltd., per Lord Reid).” (footnotes omitted)
That proposition is readily understood in the context of the former NSW duties legislation, which is the context in which it was made. It is less obvious that either that proposition or anything in Wm. Cory & Son has much to say about the overall scheme of the Duties Act. Under the Duties Act, liability is imposed on dutiable transactions, not on the instruments by which they are effected. The time at which a transfer occurs, or is taken by the Act to occur, will sometimes be different from the day on which liability for duty arises. The amount of a taxpayer’s liability may depend upon a range of considerations under the Duties Act, including the availability of concessions or exemptions. The time at which the relevant circumstances are taken into account for working out liability will be the time to which the legislation directs attention, whether for charging duty or for determining the availability of a concession or exemption: The Salvation Army (New South Wales) Property Trust v Chief Commissioner of State Revenue (2018) 96 NSWLR 119; [2018] NSWSC 128 at [151]-[152] (Ward CJ in Eq).
In the case of surcharge purchaser duty, for example, liability for duty is made to depend on the state of affairs that exists ‘when a liability for duty charged by Chapter 2 on the transaction arises (or would arise but for section 53A or a concession or exemption from duty under that Chapter)’: s 104J(3). At the same time, however, the ‘change in trustees’ concession on which the plaintiff seeks to rely here is contained in s 54(3), which appears to depend upon the Chief Commissioner’s satisfaction about matters in existence at the time of transfer, which may or may not coincide with the time when liability arises under s 12.
Be all of that as it may, there was no dispute in this case that if a liability for duty in respect of the 15 July transfer arose on 24 May by reason of the combined operation of s 12(2) and s 12(4), as the Chief Commissioner contends, the plaintiff was not entitled to the benefit of the exemptions to which it would have been entitled on 15 July when the transfer actually took place. I will therefore proceed to deal with the matter on that basis.
The particular issue in dispute between the parties concerns the operation of ss 12(2) and 12(4). In the Chief Commissioner’s submission, subsection (4) ‘specifies when liability to duty arises in circumstances where a transfer of property is effected by an instrument which is an electronic registry instrument’ by creating ‘a statutory fiction expressed in [paragraphs] (a) and (b) as true alternatives’. By that, he meant the following:
“That is, if an electronic registry instrument (being an instrument in a form that enables it to be lodged electronically) is digitally signed, then it is taken to be executed on the date the instrument is first digitally signed and liability for duty arises on that date.
Otherwise (that is, if an electronic registry instrument is not digitally signed), the instrument is taken to be executed when the Chief Commissioner first receives information relating to that instrument and liability to duty arises on that date.”
(emphasis in original)
The Chief Commissioner next submitted that where s 12(4)(b) applies, its effect is to cause the unsigned electronic registry instrument to be treated as one that gives rise to a liability by reason of subsection (2). He submitted that the combined effect of these provisions in this case was therefore that a liability for duty arose on the day the Chief Commissioner received the unexecuted transfer, notwithstanding that the unexecuted transfer was not yet one that otherwise effected a transfer within the meaning of the Duties Act and notwithstanding that, at that point, it was not known whether the transfer would ever be executed.
The Chief Commissioner submitted that it would therefore not have mattered if he had been expressly told on 24 May that the unexecuted transfer was only a draft and that it was intended to be executed at a later date when the Trust complied with s 54(3). He submitted that the effect of s 12(4) in such a case would be the same: the draft transfer, being an ‘electronic registry instrument’, would be taken by s 12(4)(b) to have been ‘first executed’ and, therefore, an instrument that either effected or would in the future effect a transfer within the meaning of subsection (2) when it was provided to the Chief Commissioner. The Chief Commissioner did not however contend that the effect of s 12(4) was to deem a transfer to have occurred on the date worked out under s 12. Rather, his point was that the unexecuted 24 May transfer was to be treated in the same way as a transfer that had otherwise been executed by one party on 24 May, namely that (according to his submission) it gave rise to an immediate liability for duty on that day in respect of the future transfer to which it related, whenever that may occur.
The plaintiff, on the other hand, submitted that it was first necessary to identify a relevant ‘transfer’ within the meaning of the Duties Act before attempting to determine, by way of s 12, when a liability in relation to that transfer arose. The plaintiff submitted that s 12(4) is a deeming provision with respect to electronic registry instruments that are instruments by which a transfer is effected within the meaning of s 12(2). It submitted that s 12(4) applies only in relation to those electronic registry instruments that effect a transfer within the meaning of the Act. It does not cause an instrument that does not effect a transfer to give rise to a liability as if it did. Because the transfer in this case occurred on 15 July and because it was effected by an instrument that was first digitally signed on that day, the combined effect of ss 12(2) and 12(4)(a) was that liability arose on that day. So far as the unexecuted 24 May transfer form was concerned, the plaintiff said additionally that it was a different instrument to the one that effected the transfer of the Moama property in any event.
In my view, s 12(4) operates in the way the plaintiff contends. It applies where a transfer is effected by an instrument within the meaning of subsection (2), where that instrument is an electronic registry instrument. In doing so, it specifies when such an electronic registry instrument is taken to have been first executed for the purpose of identifying when liability arises, but that is all it does. Neither alone nor in combination with subsection (2) does it cause an instrument which does not otherwise effect a transfer to create a liability for duty as if it did. On this construction, s 12(4) still operates to bring forward the date for imposition of liability in the manner discussed by Gzell J in Gardiner v Chief Commissioner of State Revenue (2004) 59 NSWLR 549; [2004] NSWSC 107 (‘Gardiner’) at [17]-[18] (reproduced at [74] below), but it does so only where the instrument in question is one that effects a transfer within the meaning of s 12(2).
My reasons for reaching that conclusion are as follows.
Chapter 2 of the Duties Act charges duty on dutiable transactions. The transactions made subject to duty in this way are transfers of dutiable property (s 8(1)(a)) and the various other transactions and dealings identified in s 8(1)(b), as understood in the light of ss 8AA and 8A. In Chief Commissioner of State Revenue v Benidorm Pty Ltd (2020) 104 NSWLR 232; [2020] NSWCA 285 (‘Benidorm’), Leeming JA (Meagher and Payne JJA agreeing) described the role of s 8 within the scheme of Chapter 2 as being the ‘critical provision imposing duty’: at [54].
Section 9(1) provides that the duty charged by Chapter 2 on a dutiable transaction referred to in s 8(1)(b) is to be charged ‘as if each such dutiable transaction were a transfer of dutiable property’. To give effect to this notion, the balance of s 9 specifies the various ways in which such transactions are to be treated as transfers for the purpose of the Act, including by identifying who is taken to be the transferee, when the transfer is taken to have occurred, and what the property transferred is taken to be. Similar but slightly more elaborate provision is made for certain specific transactions in ss 9A, 9B and 9C.
Section 12, in turn, specifies when a liability for duty imposed by s 8 arises. It does so by reference to the same basic concept that, by reason of s 8, is central to the imposition of the charge in the first place, namely ‘a transfer of dutiable property’.
Subsection (1) states a basic rule: liability arises when a transfer of dutiable property occurs. In those cases where a transfer of dutiable property is ‘effected by an instrument’, subsection (2) provides that liability arises when the instrument is ‘first executed’. These provisions do not alter the way in which a dutiable transaction is identified in the first place, nor do they affect when a transfer is taken to have occurred. Those are matters addressed by the earlier provisions of Chapter 2. When s 12(1) refers to ‘a transfer of dutiable property’, it means a transfer within the meaning of those earlier provisions, namely a transfer (s 8(1)(a)) or some other dutiable transaction within the meaning of s 8(1)(b) that is taken to be a transfer for the purposes of the Act by reason of s 9. When s 12(2) refers to ‘a transfer of dutiable property’ that is ‘effected by an instrument’, it means a transfer within the meaning of those same provisions.
In this context, s 12(4) must be seen as being epexegetical to s 12(2). Where a transfer ‘is effected by an instrument’ within the meaning of subsection (2), and where that instrument is an ‘electronic registry instrument’, subsection (4) tells when that instrument is ‘taken to be first executed’. In doing so, it determines when liability for duty that is otherwise charged on that transfer arises. In such a case, liability will arise on the date the instrument is first digitally signed by a subscriber: subsection (4)(a). But if the electronic registry instrument by which a transfer is effected is not digitally signed by a subscriber, it will be taken to be first executed at the time when the Chief Commissioner receives information relating to it: subsection (4)(b).
Were it otherwise, the effect would be to cause duty to be charged where there had been and would be no transfer of dutiable property effected by the instrument in question, contrary to the basic scheme of the legislation.
If the Chief Commissioner’s construction were correct, markedly different consequences would flow from the form of a proposed transaction. On the Chief Commissioner’s construction, when he receives information about a proposed but as yet unexecuted transfer in the form of an electronic registry instrument, liability arises immediately, even if the instrument is only digitally signed at a later date. However, when he receives that identical information about a proposed but as yet unexecuted transfer in paper form, no liability arises unless and until the relevant instrument is first signed by a party to the transfer: s 295(1). It is most unlikely that this was the outcome intended by the introduction of s 12(4)(b). Such a result would be contrary to s 10, which provides that the duty charged by Chapter 2 is payable whether a dutiable transaction is effected by an instrument or by any other means. In my view, the purpose of s 12(4)(b) is to deal with those cases where there has been a transfer effected by an instrument within the meaning of the Duties Act, where the instrument in question is an electronic registry instrument that has not been executed by anyone.
In this case, the 24 May unexecuted transfer was just that: unexecuted. It was not dated, nor was it signed by anyone, digitally or otherwise. It did not effect a transfer of or any other dutiable transaction in relation to the Moama property. It did not involve any ‘alteration in legal or equitable rights’: Benidorm at [82]. When the property was eventually transferred on 15 July, the transfer was effected by an electronic registry instrument that was digitally signed, and thus taken to be first executed, on that day: s 12(4)(a). In the plaintiff’s circumstances, there is no need for s 12(4)(b) to have any deeming effect because the electronic registry instrument that effected the relevant transfer was not ‘otherwise’ than ‘digitally signed by a subscriber’, which would be the prerequisite circumstance for s 12(4)(b) to apply rather than s 12(4)(a).
Furthermore, although I do not consider that it matters on my preferred construction of the legislation, I note that the electronic registry instrument which effected the 15 July transfer was different to the 24 May draft transfer. It made provision for both parties to sign and was dated. Although it had the same PEXA dealing number, it was not the same instrument that effected the transfer of the Moama property on 15 July, which is the hypothesis on which the assessment rests. To impose duty by reference to the unexecuted 24 May transfer would be to impose duty by reference to an instrument which never effected a transfer.
In Gardiner Gzell J described the operation of s 12(2) at [17]-[18] as follows:
“[17] Duty was charged on a transfer of dutiable property under the Duties Act, s 8(1)(a). The term ‘transfer’ was not defined other than, relevantly, to include an assignment and an exchange. ‘Dutiable property’ was defined to include land in New South Wales under s 11(1)(a) and an interest in land under s 11(1)(l). Unlike earlier stamp duty legislation, it was the transaction and not the instrument that gave rise to the charge to duty. Section 10 provided that it was immaterial whether or not a dutiable transaction was effected by a written instrument.
[18] The charge to duty arose when the transfer of dutiable property occurred under the Duties Act, s 12(1). However, the legislation contained an advance collection mechanism. Section 12(2) provided that if a transfer of dutiable property was effected by a written instrument, liability for duty arose when the instrument was first executed. The duty was payable within three months of the liability for duty arising under s 16(1).”
The Chief Commissioner sought to rely on this passage to support his construction. He submitted that Gzell J’s description of s 12 as containing an ‘advance payment mechanism’ was consistent with his submission that s 12 has the effect for which he contended.
His Honour’s description of s 12(2) was appropriate. As his Honour explained, s 12(2) can give rise to a liability for duty on a transfer at a time prior to when the transfer actually occurs. However, neither that description of s 12 nor his Honour’s reasons generally support a conclusion that s 12(4)(b) operates in the way the Chief Commissioner contends. To the contrary, his Honour explained at [20] that any ‘advance payment mechanism requires some form of relief in the event that the transfer or other transaction does not eventuate’ (my emphasis). His Honour’s reference to the later transfer or transaction must have been to the transfer or transaction ‘effected’ by the instrument in question.
On my preferred construction of s 12 the Chief Commissioner does not lack power to collect duty in relation to a proposed transfer on the basis of a draft or partially executed instrument provided to him, whether electronically or otherwise. Section 290 contemplates that he may do so and contains a power to approve procedures for this to occur in relation to electronic registry instruments. However, any duty collected in this way must ultimately relate to duty charged by s 8 in relation to a dutiable transaction, which – when the transaction occurs – will give rise to a liability at a time worked out by reference to s 12. That may be a date other than the date on which he was first provided with an unexecuted draft instrument. This will be so regardless of whether the unexecuted draft instrument is an electronic registry instrument or not.
Finally, I do not consider that the history of s 12 supports the Chief Commissioner’s construction. When it was first introduced by the State Revenue Legislation Amendment (Electronic Transactions) Act 2014 (NSW), s 12(4) provided as follows:
(4) An electronic registry instrument is taken to be first executed when it is first digitally signed by a subscriber (within the meaning of the Electronic Conveyancing National Law (NSW)).
Expressed in that way, former s 12(4) supplied a straightforward rule that was on all fours with the general rule about execution of documents contained in s 295(1). The rule in former s 12(4) is now embodied in s 12(4)(a).
However, Parliament was apparently concerned to address a particular difficulty that can arise in the case of electronic registry instruments, namely that they are sometimes uploaded without anyone having signed them. Although it is hard to know what, exactly, Parliament had in mind when subsection (4)(b) was introduced, one possibility is that it was concerned with instruments like deposited plans creating easements which are typically not signed by anyone but which do effect transfers within the meaning of the Duties Act.
Whatever may have been the particular concern, it is clear that subsection (4)(b) was concerned with cases where an instrument was not signed by anyone, as opposed to draft instruments to be digitally signed at a later date. The explanatory note to the Revenue, Fines and Other Legislation Amendment Bill 2023 (NSW) said of the amendment to s 12(4):
“Schedule 1[2] clarifies that an instrument lodged electronically under the Electronic Conveyancing National Law (NSW) that is not digitally signed is taken to have been first executed when the Chief Commissioner of State Revenue (the Chief Commissioner) first receives information relating to the instrument.”
“The bill also contains a number of minor duty amendments. Every year more duty transactions involving electronic instruments are occurring. Uncertainty has arisen as to when and where an electronic instrument is first executed. When an electronic instrument is first executed determines when duty is due and whether interest and penalty tax apply. Currently, the Act provides that an electronic registry instrument is first executed when it is digitally signed by a subscriber to the Electronic Lodgment Network, such as a legal practitioner. However, there are instances where an instrument is not digitally signed and is uploaded without a digital signature. To address that, the bill deems the time and date when an unsigned electronic instrument is first executed to be when information relating to it is received.”
In my view, the assessment should be revoked. The Chief Commissioner accepted that if he was wrong in his construction of s 12, then the orders sought by the plaintiff should be made. In particular, he did not suggest that it would be necessary to remit the matter to him to consider whether he was satisfied that the s 54(3) requirements were met as at 15 July 2024.
The plaintiff asked to be heard on the question of costs.
The orders of the Court will therefore be as follows:
The Court orders that the assessment dated 26 June 2024 with Duties Assessment Number 10927423-002 be revoked and, in its place, that the transfer of the Moama property on 15 July 2024 be assessed in the amount of $100.
Direct the parties to file and serve any evidence and short submissions on the question of costs on or before 14 July 2026.
Direct the parties to file and serve any evidence and short submissions in reply on the question of costs on or before 28 July 2026.
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Forever Grateful Holdings Pty Ltd
Chief Commissioner of State Revenue
(2020) 104 NSWLR 232
(2011) 80 NSWLR 240
(1982) 149 CLR 431
(2004) 59 NSWLR 549
(2018) 96 NSWLR 119