The Appellant is a conveyancing firm offering conveyancing services to members of the public. The Respondents are consumers who had engaged the Appellant to provide conveyancing services with respect to a property they purchased in 2019. On the purchase they incurred transfer duty. They also incurred surcharge purchaser duty, a penalty and interest as a result of one of the two purchasers (Ms Fang) being a foreign person under the relevant provisions of the Duties Act 1997 (NSW) (the Duties Act). They brought an application in the Tribunal as consumers seeking to invoke the Tribunal's jurisdiction under the Fair-Trading Act 1987 (NSW) alleging that the Appellant had not provided services with due care and skill in advising them regarding their liability for the surcharge purchaser duty. They were successful and the Tribunal ordered the Appellant to pay them the sum of $29,708.78, consisting of the following amounts: $21,160.00 for surcharge purchaser duty, $4,232.00 penalty and $4,316.78 interest. The Appellant appeals that order.
The decision under appeal (the Decision) was published on 29 March 2023 and it is necessary, for the purposes of understanding this decision, to set out in summary, the findings made by the Tribunal as recorded in the Decision. That summary is as follows:
1. On 27 August 2019 the Respondents engaged the Appellant to act for them on the purchase of land in New South Wales. The contract included the purchase of a building "off the plan" (ie. a building yet to be built).
2. On the same day the Respondents signed the contract as joint tenants.
3. The Tribunal found that the Respondents asked the Appellant for advice prior to signing the contract whether they, or in particular Ms Fang, would be liable to pay surcharge purchaser duty on the contract by reason of Ms Fang holding a student visa and her partner visa not becoming active until the student visa expired. The Tribunal found that the Respondents showed the Appellant those visas.
4. The Tribunal found that the Appellant advised the Respondents that they would not be liable for surcharge purchaser duty. The Decision records that the Appellant disputed giving that advice. The Tribunal stated that it preferred the Respondents' version as it was supported by a declaration (called a Purchaser/Transferee Declaration - Individual) (the Declaration) which had been completed by the Appellant and which version was also supported by the Appellant's advice to the Respondents to lodge an objection to the determination of the New South Wales Revenue (it having assessed the Respondents as liable for surcharge purchaser duty).
5. The Tribunal found that as the time for assessment and payment of stamp duty was approaching the Appellant, by email dated 28 July 2020, requested the Respondents to sign several documents, including the Declaration. The Tribunal found that the Declaration was blank, was signed by the Respondents and returned to the Appellant who subsequently completed the information contained in the Declaration. The Declaration stated that the "purchaser/transferee" was not a foreign person and was a person ordinarily resident in Australia. In response to the question of whether the purchaser/transferee was an exempt permanent resident who will occupy the property as their principal place of residence for a continuous period of 200 days within the first 12 months after the liability date, the Declaration stated "yes".
6. At [20] the Tribunal found that the Appellant was in breach of the Australian Consumer Law s 60 as the Declaration incorrectly stated that Ms Fang was not a foreign person and was a person ordinarily resident in Australia. The Tribunal found that this "directly caused the imposition of the NSW Revenue penalty and interest". The amount imposed upon the Respondents included not only the surcharge purchaser duty but also an amount for a penalty and interest on the duty.
7. On 14 August 2020 the contract was settled and on 15 July 2021 the NSW Revenue advised the Respondents that it was investigating whether or not the contract was liable for surcharge purchaser duty on the basis that Ms Fang was a foreign person being a temporary resident of Australia. A Notice of Assessment was issued on 31 August 2021 totalling $29,708.78 (comprising the surcharge purchaser duty, a penalty and interest). That amount has been paid by the Respondents.
8. At [30] the Decision referred to the Respondents' contention, that the Appellant had supplied services which were regulated by the Australian Consumer Law (ACL) and in particular that the ACL provided a guarantee that services to a consumer would be rendered with due care and skill (s 60). The Decision stated that, under the Fair Trading Act, the Tribunal only has jurisdiction if the consumer's application is filed within three years of the cause of action arising: s 79L(1)(a) of the Fair Trading Act.
9. The Tribunal found that the Respondents were consumers and that the application had been brought before the Tribunal within the requisite period of three years [30].
10. At [39] the Tribunal found further facts relevant to the establishment of liability, namely that the Appellant did not comply with the statutory guarantee in s 60 of the ACL as there was a "failure by the Respondent [now the Appellant] to exercise due care and skill, either by providing correct advice, or alternatively by advising the Applicants to seek specialist advice on the matter". The Tribunal added that a conveyancer is unlikely to be qualified to give advice on stamp duty and "clients are advised to obtain specialist advice on taxation and stamp duty issues". The Tribunal found that the Appellant did not "adopt that course" with the consequence that the surcharge purchaser duty, penalty and interest was incurred as a result of the failure to exercise due care and skill under s 60.
11. At [41] and [42], the Tribunal found that the measure of the loss incurred by the Respondents as a consequence of the Appellant's breach of s 60 was the liability to pay the surcharge purchaser duty, the penalty and the interest thereon. The Tribunal found that these amounts would not have been payable if Ms Fang was not a joint tenant. Earlier at [14] the Tribunal recorded the Respondents' contention that they specifically sought advice as to whether or not Ms Fang would be liable to pay the surcharge purchaser duty as she was holding a student visa. At [27] the Tribunal recorded the Respondents' evidence that they would not have entered the contract as joint tenants if they had been properly advised by the Appellant that a purchase by them as joint tenants would attract the surcharge purchaser duty and that a purchase made only by Mr Luk would not attract such duty.
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Notice of Appeal
The Appellant lodged a Notice of Appeal on 26 April 2023. The grounds of appeal may be summarised as follows:
1. Ground 1 is that the Tribunal did not have jurisdiction because the Respondents' application was lodged with the Tribunal more than three years after the cause of action had accrued. The Appellant's conveyancing service was provided on 27 August 2019 and the Respondents' application was lodged on 2 November 2022.
2. Ground 2 is that the Tribunal erred in finding that the Appellant gave wrong advice and the Tribunal should have found that the Appellant advised the Respondents that they would incur surcharge purchaser duty as to 50% of the value of the purchase having regard to the fact that the Respondents purchased as joint tenants.
3. Ground 3 is that the Tribunal erred in finding that the purchaser declaration form was completed by the Appellant whereas, in fact, it was completed by the Respondents under the supervision of the Appellant.
4. Ground 4 is that the Tribunal was affected by bias against conveyancers and was predisposed to the view that a conveyancer is unlikely to be qualified to give advice on stamp duty. This ground was also expressed as engaging a basis for granting leave to appeal by reason of the Appellant's assertion that the Decision was not fair and equitable.
The Appellant also sought leave to introduce fresh evidence, namely evidence concerning the attendance by the Appellant at courses relevant to understanding stamp duty issues and correspondence with Revenue NSW relevant to establishing that the Appellant had expertise in issues concerning stamp or transfer duty on purchases including where purchasers are foreign persons.
The Respondents filed a Reply to Appeal opposing the appeal and seeking its dismissal.
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Appellant's Submissions
The Appellant's submissions were largely concerned with the introduction of fresh evidence seeking to establish the Appellant's expertise in giving potential purchasers advice on stamp or transfer duty issues. For reasons, which we will explain later, we do not regard that evidence as determinative or relevant to how the appeal should be decided. At the hearing of the appeal, Mr Ma, who appeared for the Appellant, submitted that this evidence was relevant because it overcame the unfair bias of the Tribunal in its conclusion that conveyancers were unlikely to be able to give accurate advice on stamp duty issues.
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Consideration
The first question requiring attention is whether the Tribunal was in error in determining that it had jurisdiction to determine the dispute between the parties on the basis that the Respondents' tribunal application had been lodged within three years of the date of accrual of the cause of action. This is a question of law as it concerns whether a wrong principle of law has been applied (Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69).
This issue arises because of the provisions of s 79L of the Fair Trading Act which provides that the Tribunal does not have jurisdiction to hear and determine a consumer claim if "the cause of action giving rise to the claim first accrued more than three years before the date on which the claim is lodged". Thus, if the cause of action first accrued when the Appellant gave advice to the Respondents when they entered into the contract (namely 27 August 2019) then the application lodged with the Tribunal was lodged out of time, precluding the Tribunal from having jurisdiction.
Here the Respondents' claim against the Appellant was based on the claim that the Appellant breached its obligation under s60 of the ACL to provide a service with due care and skill and that therefore they had a claim for damages under s236 and s267. The Tribunal correctly in our view had regard to the requirements of those sections.
The issue of when a cause of action accrued under s 82 the Trade Practices Act 1974 (Cth) (the precursor to s 236 to the ACL) was dealt with by the High Court in Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 (Wardley) where the majority (Mason CJ, Dawson, Gaudron and McHugh JJ) held (at pp 526 - 527) (citations omitted):
Under s. 82(1), as under the common law, a plaintiff can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage …
… With economic loss, as with other forms of damage, there has to be some actual damage. Prospective loss is not enough.
In Scarcella v Lettice [2000] NSWCA 289 the NSW Court of Appeal relied on Wardley in setting out the principles regarding when a cause of action in negligence accrues. Relevantly in that case, the Court of Appeal held (per Handley JA at [13] (Giles and Powell JJA agreeing)) that a cause of action in negligence is not complete until the plaintiff first suffers actual loss or damage. Giles JA noted that the plaintiffs' cause of action was complete when they suffered actual damage, whether or not they were aware of the damage (at [41]).
Relying on Wardley, in Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 (Barbour) the Appeal Panel identified the meaning of the term "cause of action" at [64] and held at [65] - [67] that the statutory cause of action for damages under other sections of the ACL does not accrue until the loss and damage arising from the contravention is sustained.
Roberts v Chan & Naylor Parramatta Pty Ltd [2018] NSWCATAP 69 (Roberts) concerned an assertion that one of the parties was negligent in advice given concerning liability to pay land tax. The Appeal Panel held that the cause of action first accrued when the other party acted in such a way that damage was inevitable [33]. Ms Robert's case was that by reason of negligent advice she did not purchase the property in her own name ( thereby losing the benefit of the exemption from land tax which would have been available if she had purchased the property in her own name) [34]. The property was purchased in September 2006 and settled in October 2006. A residence was built and she took up residence in 2009. She was subsequently assessed for payment of land tax for the 2010 to 2013 years (inclusive). She lodged an application in the Tribunal in 2016.The Appeal Panel identified a number of possible dates between 2006 and 2009 for when the cause of action for the negligent advice accrued. The Appeal Panel commented at [40] that if Ms Roberts had not initially intended the property to be her home the cause of action accrued in 2009 when she took up residence or on 31st December 2009 when the liability for land tax accrued. At [41] the Appeal Panel said the possible application of the exemption available to Ms Roberts if she intended to take up residence did not require determination because the application was lodged in 2016 outside the three year period even if that period commenced in 2009.In our view Roberts is authority for the proposition that the cause of action there described first accrued when the liability for the payment of land tax became inevitable. Generally, in the case of land tax that will be the date of 31st December because land tax is based upon land ownership on that date.
Like land tax (as discussed in Roberts), liability to pay duty arises by operation of law. Under Chapter 2, Part 1, s 12 of the Duties Act (as it stood at 1 July 2019) provides:
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.
…
Under Chapter 2A, Part 1, s 104Q of the Duties Act (as it stood at 1 July 2019) provides:
104Q When does a liability for duty arise?
(1) Section 12 applies in respect of surcharge purchaser duty in the same way as it applies in respect of duty charged by Chapter 2.
(2) For that purpose, references in section 12 are to be read as follows:
(a) a reference to duty charged by Chapter 2 is to be read as a reference to surcharge purchaser duty,
(b) a reference to dutiable property is to be read as a reference to residential-related property,
(c) a reference to a dutiable transaction is to be read as a reference to a surcharge duty transaction.
Under s 49A of the Duties Act (as it stood at 1 July 2019):
49A Purchases "off the plan"
(1) Liability for duty on an off the plan purchase agreement arises:
(a) on completion of the agreement, or
(b) on the assignment of the whole or any part of the purchaser's interest under the agreement, or
(c) on the expiration of 12 months after the date of the agreement,
whichever first occurs.
However s 49A(3A) provides:
This section does not apply in relation to an off the plan purchase agreement if any purchaser or transferee under the agreement is a foreign person (within the meaning of Chapter 2A).
It follows that, as Ms Fang met the definition of a foreign person as the holder of a temporary visa, liability to pay surcharge purchaser duty first arose when a transfer of the property occurred. The Contract for Sale was signed on 27 August 2019 and the transaction became liable for duty (including surcharge purchaser duty) on that date.
Regarding the penalty tax and interest, under s 104W of the Duties Act (as it stood at 1 July 2019):
104W When must surcharge purchaser duty be paid?(cf section 17)
A tax default does not occur for the purposes of the Taxation Administration Act 1996 if surcharge purchaser duty is paid within 3 months after the liability to pay the duty arises.
Under s3 the Taxation Administration Act 1996 (the TAA) (as it stood at 1 July 2019), tax default means a failure by a taxpayer to pay, in accordance with a taxation law, the whole or part of tax that the taxpayer is liable to pay. Under ss 21 and 26 TAA, interest and penalty tax become payable in respect of certain tax defaults.
Therefore the Respondents did not become liable to pay the penalty tax and interest until at least three months after the liability to pay the duty arose.
At [5], the Tribunal found that the Respondents' cause of action arose either on 15 July 2021 when they were advised by Revenue NSW that the Declaration made by the Respondent was under investigation, or on 31 August 2021, when Revenue NSW advised Ms Fang, she was liable for the duty, penalty and interest.
We do not agree with the reasoning of the Tribunal but agree with the
Tribunal's conclusion that the application was lodged within three years of the date that the cause of action first accrued. Our reasons are set out below.
Although the liability to pay duty arose on 27th August 2019, the obligation to pay did not arise until three months later (27th November 2019). During that period of three months the liability to pay the duty was potential, likely or prospective but not actual, sustained or inevitable.
The contract of 27th August 2019 may have come to an end consensually, or otherwise by repudiation or recission. Section 50 of the Duties Act provides that a transfer is not liable for duty if the contract is cancelled (which is defined as meaning rescinded, annulled or otherwise terminated without completion). Our view that the actual loss arising from the liability to pay duty does not arise until three months after the date of the contract is consistent with the language of s50.
The application to the Tribunal was lodged on 2 November 2022. As a result of our findings and reasons described above, the application was lodged within the three year period after the cause of action first accrued.
Accordingly, ground 1 is dismissed.
Ground 2 concerns the Appellant's contention that the Tribunal erred in finding as a fact that the Appellant gave wrong advice. No question of law arises under this ground and therefore the question is whether leave to appeal should be allowed on the basis that this ground is brought under clause 12 schedule 4 of the Civil & Administrative Tribunal Act 2013 (NSW) (the NCAT Act). This clause enables the Tribunal to uphold an appeal even in the absence of a question of law provided that the requirements of clause 12 have been satisfied and the Appeal Panel thinks it appropriate to grant leave to appeal. The provisions of clause 12 are set out below:
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12 LIMITATIONS ON INTERNAL APPEALS AGAINST DIVISION DECISIONS
(1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because--
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence, or
(c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
Note: Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds.
(2) Despite section 80(2)(b) of this Act, an internal appeal against a Division decision may only be made on a question of law (as of right) and not on any other grounds (even with leave) if--
(a) the appellant is a corporation and the appeal relates to a dispute in respect of which the Tribunal at first instance had jurisdiction because of the operation of Schedule 3 to the Credit (Commonwealth Powers) Act 2010, or
(b) the appeal is an appeal against an order of the Tribunal for the termination of a tenancy under the Residential Tenancies Act 2010 and a warrant of possession has been executed in relation to that order.
In our view, there is no basis for giving leave to appeal under clause 12. The finding of fact made by the Tribunal at first instance was open on the evidence and the Tribunal's reasoning for preferring the Respondent's evidence over the Appellant's evidence was supported by probative evidence. Ground 2 is dismissed.
Ground 3 concerns the Appellant's contention that the Tribunal erred in finding that the Declaration was completed by the Appellant. There was conflicting evidence in this regard and the Tribunal's finding of fact was open on the evidence. This ground also falls for consideration under clause 12 and, in our view, there is no basis for granting leave to appeal under this ground. Ground 3 is dismissed.
Ground 4 concerns the contention that the Tribunal was biased against conveyancers and that that view influenced the Tribunal into its finding that the Appellant's advice had not been given with due care and skill. Although the Tribunal made a generalised comment concerning the view that a conveyancer is unlikely to be qualified to give advice on duty issues, it is clear from the Decision that the Tribunal's conclusions were not based upon that general view of the role of conveyancers. Rather, the Tribunal analysed the specific evidence concerning what had transpired between the parties and came to the views summarised above to the effect that the Appellant had failed to give advice with due care and skill by not informing the Respondents that surcharge purchaser duty would be incurred by reason of the status of one of the two purchasers. Accordingly, notwithstanding the Tribunal's view about the abilities of conveyancers generally, that view did not, in our opinion, cause the Tribunal to make findings against the interests of the Appellant such that it would give us cause to find, on the balance of probabilities, that there was any actual or apprehended bias on the part of the Tribunal for that reason. Ground 4 is dismissed.
The Appellant sought to introduce fresh evidence concerning the Appellant's expertise with respect to stamp/transfer duty issues. Generally fresh evidence is not permitted to be relied upon in an appeal unless it was not reasonably available at the first hearing. In this case, we are of the opinion that the fresh evidence is not relevant to determining how the appeal should be decided. This is because we do not regard the Tribunal's adverse remarks concerning the abilities of conveyancers on stamp duty issues to have been determinative of the Tribunal's decision to uphold the Respondents' application.
It follows from the reasoning above that the appeal should be dismissed.
We make the following orders :
1. Leave to appeal refused.
2. Appeal dismissed
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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: 26 July 2023