Harvey v Chief Commissioner of State Revenue

NCAT Administrative and Equal Opportunity|2020-09-21

Introduction

At issue in this proceeding is whether the applicants are entitled to a concessional rate of duty upon a transfer to them of a property at Yamba (Property) by reason of the operation of s 55(1)(b) of the Duties Act 1997 (Duties Act).
On 7 January 2020, the respondent decided that the applicants were not entitled to a concessional rate of duty, on the basis that not all the elements of s 55(1)(b) of the Duties Act had been satisfied. On 5 March 2020, the applicants lodged an objection to that decision and on 3 April 2020, the respondent disallowed that objection.
By application dated 28 May 2020, the applicants seek administrative review of the respondent's 7 January 2020 decision not to apply a concessional rate of duty to the transfer.
For the reasons developed below, the correct and preferable decision is to confirm the decision under review.

Jurisdiction and applicable law

As the decision has been the subject of an objection and the applicants are dissatisfied with the respondent's determination of their objection, the Tribunal has jurisdiction to review the decision, pursuant to s 96 of the Taxation Administration Act 1996 (TA Act), s 9 of the Administrative Decisions Review Act 1997 (ADR Act) and s 28 of the Civil and Administrative Tribunal Act 2013. In conducting that review the Tribunal is required to determine the correct and preferable decision having regard to the materials before it and the applicable law: s 63 ADR Act. The applicants have the onus of proving their case: s 100(3) of the TA Act.

Materials before the Tribunal

The materials before the Tribunal are: 1. the application for administrative review; 2. affidavits of each of the applicants; 3. a company search of Tiarco Pty Ltd (Tiarco); 4. the documents lodged by the respondent with the Tribunal under s 58 of the ADR Act; 5. an affidavit of Ms Kathleen Kerr, a senior solicitor in the employ of the Crown Solicitor; 6. an affidavit of Ms Jacqueline Sullivan, an assistant review officer in the employ of Revenue NSW; 7. a Purchaser/Transferee Declaration signed by Mr Harvey on behalf of Tiarco and dated 9 August 2018; and 8. written and oral submissions on behalf of the applicants and the respondent.

Factual findings

The underlying facts are uncontroversial and are set out below.
On 15 December 2016, Tiarco was registered as a company, with Mr Harvey as its sole director and shareholder. On the same day, and pursuant to a trust deed (Trust Deed) the Tiarco Family Trust (Trust) was settled, with Tiarco appointed as the trustee of the Trust holding the Trust Fund (defined as including 'property accepted by the Trustee as an addition to the property held as part of the property of the Trust') on the trusts set out in the Trust Deed.
The Trust is a discretionary trust. The beneficiaries of the Trust were and remain Mr and Mrs Harvey, together with various other persons including the children of the applicants, the grandchildren of the applicants, the children of any beneficiaries, any company in which shares are owned by the beneficiaries and Tiarco itself.
On 2 August 2018, $51,000 was transferred from a bank account in Mr Harvey's name along (Mr Harvey's Account) to a bank account held jointly by Mr and Mrs Harvey (Joint Account). On the same day, $51,000 was withdrawn from the Joint Account.
On 3 August 2018, Tiarco entered into a contract for the purchase of the Property (Contract), at a price of $510,000. The purchaser on the Contract was recorded as 'Tiarco Holdings Pty Ltd ... as trustee for the Tiarco Family Trust'. The Contract recorded that the deposit payable was $51,000. The $51,000 withdrawn from the Joint Account was used to pay the deposit.
On 9 August 2018, Mr Harvey signed, on behalf of Tiarco, a Purchaser/Transferee Declaration. In that document Mr Harvey declared as true and correct various statements, including that Tiarco was the purchaser/transferee of the Property, that Tiarco was acting as a trustee of the Trust and the Trust was a discretionary trust.
On 16 August 2018, $480,000 was transferred from Mr Harvey's Account to the Joint Account. On the same day $479,255.37 was withdrawn from that account and used to pay the amount due on settlement of the purchase of the Property (including duty of $18,440).
The purchase of the Property was completed. At the time of this purchase, the applicants were managing a hotel in Tweed Heads South and could not immediately occupy the Property. They intended that the Property would become their home after they finalised managing the hotel at Tweed Heads South.
The evidence of Mr Harvey includes: ... 2. At the time we were looking for a home to purchase we were also having discussions with our Accountant including in relation to issues arising out of a loss incurred by Tiarco Holdings Pty Ltd in respect of a business previously conducted that Company. 3. I recall that we mentioned to our Accountant that we were buying a house. The house was to be our home and principal place of residence but we advised our Accountant that we might have to initially rent it out until we were able to move to Yamba. I believe the Accountant misunderstood us because he advised us to use Tiarco Holding Pty Ltd to buy the house so that we would be able to use the capital loss for Tiarco Holdings Pty Ltd against the income producing asset so Tiarco Holdings Pty Ltd should buy the house. 4. It is my recollection that we made it clear that it was our place of residence. It was always intention that this was to be our home. 5. Our Accountant has now retired and I am not aware of his current whereabouts.
On 16 December 2019, Tiarco executed a transfer form for the transfer to the applicants of all of Tiarco's interest in the Property for $1.
On 17 December 2019, the applicants' solicitor wrote to the respondent in the following terms: I act for the parties in the abovementioned matter. I note that I previously acted for Tiarco Holdings Pty Ltd in relation to a purchase of the property pursuant to Contract for the sale of land dated 3 August 2018, a copy of which is enclosed herein. I am instructed by the Harveys, that as a result of advice being received from their Accountant the property was acquired in the name of the corporate entity rather than their individual names. I am instructed that there may have been a misunderstanding between my clients and their Accountant. The proposed transfer from Tiarco Holdings Pty Ltd to Phillip Kenneth and Tania Mary Harvey is attached herewith for assessment. I am instructed to seek advice as to whether an exemption is available under Section 55 of the Duties Act.
On 7 January 2020, the respondent replied, notifying the applicants' solicitors of its decision that s 55 of the Duties Act was not applicable.
On 5 March 2020, the applicants' solicitor responded to the 7 January 2020 letter. The applicants' solicitor's letter included a Notice of Objection.
On 3 April 2020, the respondent notified the applicants' solicitor that the objection had been disallowed.
No Notice of Assessment has yet been issued.

Issues requiring resolution

The applicants contend that s 55(1)(b) of the Duties Act applies to the transfer of the Property from Tiarco to the applicants. Section 55(1) provides: (1) Duty of $50 is chargeable in respect of: (a) a declaration of trust made by an apparent purchaser in respect of identified dutiable property - (i) vested in the apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property, or (ii) to be vested in the apparent purchaser upon trust for the real purchaser, if the Chief Commissioner is satisfied that the money for the purchase of the dutiable property has been or will be provided by the real purchaser, or (b) a transfer of dutiable property from an apparent purchaser to the real purchaser if: (i) the dutiable property is property, or part of property, vested in the apparent purchaser upon trust for the real purchaser, and (ii) the real purchaser provided the money for the purchase of the dutiable property and for any improvements made to the dutiable property after the purchase.
It is common ground that there has been a transfer of dutiable property from Tiarco to the applicants, namely the transfer of the Property occurring on 16 December 2019. For the applicants to succeed they must establish, on the balance of probabilities, that each of s 55(b) (i) and (ii) has been satisfied.
If the applicants are unsuccessful in establishing either of these matters, then the respondent wishes the Tribunal to assess the duty owing and interest.

Section 55(1)(b)(i): was the Property vested in Tiarco upon trust for the applicants?

Section 55(1)(b)(i) requires that the dutiable property be property, or part of property, vested in the apparent purchaser upon trust for the real purchaser. In the present case, this reduces to a consideration of whether the Property was vested in Tiarco (as apparent purchaser) upon trust for the applicants (as real purchasers).

Applicants' submissions

The applicants' submissions on this issue may be summarised as follows: 1. the resolution of this issue turns on the application of the statutory text to the facts, rather than upon of the law of trusts and within the statutory text the key words are 'upon trust for'; 2. s 55(1)(b)(i) does not require a resulting trust; 3. the Property had vested in Tiarco upon trust for the applicants because: 1. Tiarco purchased the Property in its capacity as trustee of the Trust; 2. the applicants were beneficiaries of the Trust; 3. for the purposes of s 55(1)(b), the class of persons for whom the Property is be held on trust may be wider than the real purchasers. In other words, the existence of additional beneficiaries does not mean that the Property is not held on trust for the applicants within the meaning of the section; 1. if, contrary to the above submissions, s 55(1)(b) does require a resulting trust then there was such a trust because: 1. a resulting trust arises from the applicants having provided all the purchase moneys; 2. it is not necessary to consider evidence of intention beyond the fact of the provision of the purchase moneys; 3. Tiarco's only involvement was as the apparent purchaser; 4. the fact that Tiarco was already the trustee of a trust is irrelevant.

Respondent's submissions

The respondent's submissions on this issue may be summarised as follows: 1. s 55(1)(b) requires that as at the point of time of the dutiable transaction the subject of the analysis (here the transfer of the Property from Tiarco to the applicants on 16 December 2019), the Property must already be 'vested in the apparent purchaser upon trust for the real purchaser'; 2. the reference in s 55(1)(b) to the concepts of 'apparent purchaser' and 'real purchaser' is necessarily a reference to resulting trusts (citing Truskett v Commissioner of Stamp Duties (1976) 6 ATR 1 at 5); 3. a presumption of an intention to create a resulting trust may be displaced by evidence of a contrary intention; 4. therefore, it is necessary to consider what the intention of the applicants and Tiarco was prior to 16 December 2019 and most particularly at the time of Tiarco's acquisition of the Property in August 2018; 5. that intention was that the Property was to be held on trust for all the beneficiaries of the Trust. In particular: 1. the acquisition was made by Tiarco on behalf of the Trust as appears from the Contract and other documents; 2. the beneficiaries of the Trust are not only the applicants but also various other persons; 3. further, the Trust is a discretionary trust and none of the beneficiaries have any specific interest in any of the trust property, as is made clear by cll 3(a), 3(b), 3(g), 4(a), 5(a), 6(a), 22(a) of the Trust Deed.
The respondent has also submitted that the facts that : 1. the applicants subsequently decided to live at the Property; 2. their intention may have later changed; 3. are irrelevant to the issues under consideration.

Consideration

For the purpose of considering the application of s 55(1)(b)(i), I will assume that s 55(1)(b)(ii) is satisfied and thus that the applicants were the real purchasers of the Property and that they provided all the purchase moneys for the Property.
Section 55(1)(b)(i) requires that the Property be 'vested in the apparent purchaser upon trust for the real purchaser'. Thus, the applicants must establish that, immediately prior to the transfer of the Property from Tiarco to the applicants, Tiarco was the apparent purchaser, that they were the real purchasers, and that the Property was vested in Tiarco upon trust for themselves.
The terms 'apparent purchaser' and 'real purchaser' appear in ss 55, 73, 104T and 104ZM of the Duties Act, however they are not defined in that Act.
The term 'apparent purchaser' suggests a person whom it appears to others is the purchaser of a particular piece of property, for example because that person executed the contract of sale and purchase as purchaser: see Ross v Chief Commissioner of State Revenue (No 2) [2010] NSWADT 51 at [29]. The term 'real purchaser' suggests a person who is in fact the purchaser because that person provided the moneys for the purchase.
Often the person named on the contract of sale and purchase will also be the person who supplied the purchase moneys. In such a case, the 'apparent purchaser' will also be the 'real purchaser' and s 55 (1)(b) will have no operation. Section 55 (1)(b) requires that the 'apparent purchaser' and the 'real purchaser' be different persons.
I am satisfied that Tiarco was the apparent purchaser of the Property. It entered into the Contract. It also executed the Purchaser/ Transferee Declaration in the capacity as purchaser. There is no suggestion that any other person was the apparent purchaser.
As noted above, it is assumed that the applicants were the real purchasers.
The next, and critical, question is whether the Property was vested in Tiarco on trust for the applicants. In the present case, this requires consideration of the following questions: 1. is the reference in s 55(1)(b) to a trust limited to a resulting trust? 2. if the answer to (1) is 'yes', was the Property vested in Tiarco on a resulting trust for the applicants?; 3. if the answer to (1) is 'no', was the Property vested in Tiarco on a different trust for the applicants?

Is the reference in s 55(1)(b) to a trust limited to a resulting trust?

The word 'trust', in isolation, is broad enough on its face to include trusts other than resulting trusts. However, the expressions 'apparent purchaser' and 'real purchaser' within s 55(1)(b) suggest that the legislative intention was that the trust was a resulting trust.
Further, s 55 and its predecessors have been interpreted as applying only to resulting trusts.
Section 55 (1) deals with two distinct scenarios. The first is a declaration of trust made by an apparent purchaser in favour of the real purchaser in respect of identified dutiable property (s 55(1)(a)). The second is a transfer of dutiable property from the apparent purchaser to the real purchaser (s 55(1)(b)).
Prior to the Duties Act, those scenarios were the subject of provisions of the Stamp Duties Act 1920 (Stamp Duties Act). More particularly: 1. paragraph (1) of the Second Schedule to the Stamp Duties Act provided relief from the imposition of ad valorem duty in respect of 'Any instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase money therefor'; 2. section 73(1)(e) of the Stamp Duties Act provided relief from the imposition of ad valorem duty for 'A conveyance whereby the apparent purchaser of property that is vested in him upon trust for the person who was the real purchaser and who has actually paid the purchase money therefor, conveys the same to the real purchaser'.
In Truskett v Commissioner of Stamp Duties (NSW) (1976) 6 ATR 1, Rath J held that paragraph (1) of the Second Schedule applied only to a situation in which a resulting trust arose (at page 5.35).
In Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1, Mason CJ said at pages 16-17: Moreover, par (1) is concerned with the situation in which a document reveals a certain person as the purchaser of property and does not reveal that another person has ' actually paid the purchase-money", but contains a declaration of trust by the "apparent purchaser" in favour of that other person. This is not the situation in the present case. Furthermore, the situation envisaged by the paragraph is one in which the law would ordinarily impose a resulting trust in favour of the provider of the purchase money, and par (1) is therefore concerned with a declaration which does no more than record the existence of such a trust: see Truskett v Commissioner of Stamp Duties (NSW) (1976) 6 ATR 1.
Whilst each of Truskett and Pendal Nominees involved paragraph (1) of the Second Schedule to the Stamp Duty Act, which is the predecessor to s 55(1)(a), in my view, and contrary to the applicants' submission, s 55(1)(b) is also concerned only with resulting trusts. In this regard, in Truskett Rath J considered an argument that there was a distinction between paragraph (1) of the Second Schedule (the predecessor to s 55(1)(a)), and s 73(1)(e) (the predecessor to s 55(1)(b)). At page 5.15-25, his Honour held: Counsel for the plaintiffs conceded that s 73(1)(e) appears to be dealing with a true resulting trust situation, but said that it was the contrast between the phrases "the apparent purchaser" and "the real purchaser" that was significant for this purpose. I do not think that in fact there is any particular significance in the different wording of s 73(1)(e) and para (1) of the Second Schedule. The similarities are more important than the differences, and are sufficient to show that the same class of resulting trust situation is being dealt with in each place. (emphasis added)
I note also that the respondent has also taken the view in its rulings over many years that both 55(1)(a) and (b) and their predecessors apply only to resulting trusts: see, e.g. Revenue Ruling SD 007 Conveyance of Property Fixed Duty - Transfer From Apparent Purchaser to Real Purchase dated 1 December 1985, Revenue Ruling No. SD 120-Resulting Trust Situation Property Vested In An Apparent Purchaser dated 26 November 1988 and Revenue Ruling No. DUT 30-Property Vested in an Apparent Purchaser dated 13 November 2006.
For the above reasons, I am satisfied that s 55(1)(b) applies only to a resulting trust arising from the real purchaser providing the moneys for a purchase in the name of the apparent purchaser.

Did Tiarco hold the Property on a resulting trust for the applicants?

The prima facie position is that the beneficial ownership of real property is commensurate with its legal ownership: Zhang v Metcalf [2020] NSWCA 228 at [47] per Gleeson JA (Payne and White JJA agreeing).
Where, as in the present case, a person or persons purchase property in the name of another person who provided none of the purchase money, the question of whether the latter person acquired a beneficial interest in the property depends upon the intention of the former person(s). Absent a particular feature of the relationship between the two persons as would give rise to a presumption of advancement, it is presumed that the person(s) providing the purchase money did not intend the other person to take the property beneficially. Absent evidence rebutting the presumption that the person(s) providing the purchase money did not intend the other person to take the property beneficially, a resulting trust arises in favour of the person(s) providing the purchase moneys: see, e.g., Calverley v Green (1984) 155 CLR 242 at 246 per Gibbs CJ and 266-267 per Deane J.
As noted above, an assumption made for the purposes of the issue under consideration is that Tiarco provided none of the purchase moneys and the applicants provided all the purchase moneys. There is no suggestion that the presumption of advancement applies. In those circumstances, a rebuttable presumption arises that the applicants did not intend Tiarco to take the property beneficially and that it was intended that Tiarco hold the Property on a resulting trust for the applicants.
This presumption is rebuttable, and has been described as the 'starting point of a factual enquiry' about the intention of the party or parties who provided the purchase moneys, such an intention not being a subjective intention, but rather an objective intention inferred from the conduct of that party or those parties, and determined as at the date of the purchase: see Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [164] - [165] per Ward CJ in Eq. and the authorities there cited; Jain v Amit Laundry Pty Ltd [2019] NSWCA 20 at [89(3), (6) and (7)] per Beazley P (Bathurst CJ and White JA agreeing). Such evidence may be direct, or inferences drawn from the circumstances and includes acts and declarations before or at the time of purchase, or so immediately thereafter the purchase as to constitute part of the transaction: see Zhang v Metcalf at [53] per Gleeson JA (Payne and White JJA agreeing) and the authorities there cited; see also Amit Laundry Pty Ltd v Jain at [165].
In the present case, the question of intention is informed by the following events contemporaneous with Tiarco's acquisition of the Property using the moneys provided by the applicants: 1. on 3 August 2018, Tiarco, a company for which Mr Harvey was the sole director, entered in the Contract in its capacity as trustee of the Trust; 2. on 9 August 2018, Mr Harvey signed the Purchaser/Transferee Declaration, in which he declared as true and correct that Tiarco was the purchaser/transferee of the Property, that Tiarco was acting as a trustee of the Trust and the Trust was a discretionary trust.
The clear inference to be drawn from this evidence, and in particular the evidence that Tiarco was not simply the purchaser but was described as acting as trustee, is that Tiarco was acting, not as a mere apparent purchaser, but in its capacity as the trustee of the Trust.
The evidence of the applicants that Tiarco was used to purchase the Property on the advice of the applicants' accountant is not evidence that they intended that Tiarco hold the Property on a resulting trust for them and in any event is at best subjective, rather than objective, evidence of the applicants' intentions. Similarly, their evidence that they intended the Property to ultimately be their residence.
As a result, the intention of the applicants, objectively ascertained, was not that Tiarco held the Property on a resulting trust for the applicants but instead that Tiarco held the Property on trust for all the beneficiaries of the Trust which include, but are not limited to, the applicants. It follows that the presumption of a resulting trust in favour of the applicants is rebutted.

Was the Property vested in Tiarco on an express trust for the applicants?

In view of the conclusions reached with respect to the previous two issues, it is unnecessary to determine this issue.
For all the above reasons, the applicants have not proven that that s 55(1)(b)(i) is satisfied.

Other issues

In view of the conclusions reached above, it is not necessary to decide whether s 55(1)(b)(ii) is satisfied, and the decision under review should be confirmed.
As noted above, the respondent has submitted that should the Tribunal decide that the decision should be confirmed, then the Tribunal should exercise its power under s 101(1)(b) to assess duty and interest. The applicants have not objected to such a course.
Section 101 of the TA Act provides: (1) The court or tribunal dealing with the application for review may do any one or more of the following: (a) confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, (d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit.
In my view the preferable course is for the Tribunal to not make an assessment because there is doubt as to whether s 101(1)(b) enables the Tribunal to make an assessment in place of the decision under review in circumstances where s 101(1)(b) might properly be read as enabling the making of assessments only in place of assessments and the making of decisions only in place of decisions.
Thus, the preferable course is to simply confirm the decision under review, under s 101(a) of the TA Act.

Order 1. The decision under review is confirmed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 March 2021

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Judgment (15 paragraphs)

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