What is the matrimonial property?
46 The dispute regarding matrimonial property concerns not so much the question as to whether there is matrimonial property but rather what is the nature of that matrimonial property.
47 The Respondent argues that section 68 contemplates only the transfer of the whole of the matrimonial property and not portions or fractions of it. The Respondent also maintains that what was actually transferred was the whole of the Property.
48 Importantly, subsections 8(1)(a) and (b)(i) of the Act provides that:
"This Chapter charges duty on:
(a) the transfer of dutiable property, and
(b) the following transactions.....
an agreement for the sale or transfer of dutiable property."
49 Thus, duty is charged on certain transactions that relate to dutiable property. Again, it is not the instrument or the contract on which duty is charged. Rather, duty is charged on the transactions which, in cases where an instrument or contract exists, are transactions which are evidenced by the relevant instrument or contract.
50 The term dutiable property is itself defined in section 11(1)(a) of the Act in the following manner:
Dutiable property is any of the following:
(a) Land in New South Wales...
51 Furthermore, section 11(1)(l) of the Act includes as "dutiable property" any interest in any dutiable property referred to in the preceding paragraphs of this section.
52 Thus, an interest in land in New South Wales is also itself a separate item of dutiable property.
53 The term "matrimonial property" is defined in section 68(5) of the Act to mean
"property in relation to the parties to a marriage or of either of them (within the meaning of the Family Law Act 1975 of the Commonwealth ), including any property treated as property in relation to the parties or of either of them as a result of an order made under that Act".
54 The term property is not defined in the Act but the term land is defined in an inclusive way only such that it includes a stratum. Nothing more is said - thus, the meaning of that term can be taken from section 21 of the Interpretation Act 1987 (NSW) and in that context:
" land "includes messuages, tenements and hereditaments, corporeal and incorporeal, of any tenure or description, and whatever may be the estate or interest therein "
55 Thus, land for the purposes of the definition of "dutiable property" as contained in the Act includes any interest in the land.
56 Interestingly there is a similarly broad definition of the word 'property' in the Interpretations Act which would appear to have relevance as a result of section 5 of that Act. That definition makes it clear that property would include an interest in real property whether that interest is present or future and whether vested or contingent.
57 It would seem from the above that the term land in New South Wales and property would include both the whole of the property as well as a part or share of the whole of the property. This conclusion seems to be endorsed in the decision of Mason P in Trust Co Ltd V Chief Commissioner of State Revenue (2007) NSWCA 225 where the observation was made that:
"In legal usage 'land' is not confined to the physical thing and can mean one of many legal constructs involving an estate in the land or an interest in the land ."
58 Thus, this logic would seem directly applicable in this case where there are tenants-in-common and two co-owners holding an interest in land in proportionate shares. Whilst there is no physical division of the land, the tenants-in-common have interests in the land which are distinct and separate and can be bought and sold as distinct interests.
59 Brennan J in Nullagine Investments Pty Limited v Western Australian Club Inc (1992-93) 177 CLR 635 observed of the character of an interest that tenants-in-common have that:
"Each tenant in common has a separate and individual title to the property, limited according to the estate or term granted to or acquired by the tenant"
and on this point the majority in Nullagine agreed adding that
"...... There is a clear distinction between the individual "interest or share" owned by one or two or more tenants in common of the freehold interest in land and the freehold interest itself"
60 Section 100 of the Real Property Act 1900 (NSW) recognises the separate title of tenants in common and provides that the Registrar-General may create separate folios of the register and issue separate certificates of title to each tenant in common.
61 Thus, I conclude that prior to the sale of the Property, Danny Knezevic and his wife held separate and individual titles to the Property and after the acquisition of the Property, the Applicants each held separate and individual titles to the property. Notwithstanding the fact that there was only one contract that gave rise to the transfer which followed, Danny Knezevic acquired a separate and individual title to the property. The only thing that is relevant under the current Act is whether there were transactions which in this case were effected by a single contract.
62 In other words, notwithstanding that there was one contract, Danny Knezevic and his wife each conveyed their own share of the Property and each of the Applicants acquired their own share in the Property.
63 It is true that Danny Knezevic and his wife concurred in the conveyance of the shares in the Property as a whole but in law they in fact sold their individual interests. By parity of reasoning the Applicants acquired their own distinct shares in the Property even though by concurrence the purchase of the Property was achieved by way of one contract and one transfer.
64 In construing the relevant legislation, the focus must be on what it is that has been transferred and not the manner by which the transfer was affected. Here the manner of transfer was the relevant contract but the dutiable property was 2 interests as tenants in common in certain property. The fact that the manner of transfer was under one contract only, does not change the content of what it is that was transferred.
65 The issue under consideration here was also canvassed but in a somewhat different context in the case of In re Hannagan v Chief Commissioner of State Revenue 2012 NSWADT 15. In that case the Tribunal considered the application of the exemption in section 68 the Act. In that case, there was a transfer by a husband of his interest in matrimonial property to his wife as part of the settlement of family law proceedings. Subsequently, the relevant transfer document was amended to include the wife's new husband as a transferee as tenants in common in equal shares with the wife.
66 The Tribunal there found that the transfer of matrimonial property had been done in 2 transactions rather than as a single composite transaction. Accordingly, the exemption under section 68 would apply in respect of the transfer to the party to the marriage that had broken down but not in respect of the transfer wholly to a third party.
67 The Respondent has characterised the facts in Hannigan as having arisen by virtue of two transfers, where there was first a transfer of the matrimonial property by the husband to the wife and a subsequent transfer by the wife to her new husband.
68 Even if that characterisation of the facts in Hannigan is correct, it does not in my view matter. What matters is not how many transfers there were but what was the content of the transfer or transfers. In this case, as in Hannigan, there were two transactions involving two interests in the Property. In Hannagan that may have been more obvious than it is in this case but in my view the outcome is the same.
69 The Respondent has also sought to rely on the decisions in Zhang v Chief Commissioner of State Revenue (2013) NSWADT 103 and Warner v Chief Commissioner of State Revenue (2011) NSWADT 212 as authorities for the proposition that where there is more than one purchaser disclosed on a contract, it is the sale of the whole and not a sale of the part.
70 Both cases involved a different legislative provision namely section 18 of the Act.
71 Both cases fall short of considering whether the dutiable property in question could include an interest or share in the whole of a property. Further, they do not consider the interest that a tenant in common has and acquires under a contract and there is no discussion of the principles referred to in Nullagine discussed above.
72 In the context of section 16 which the Tribunal is addressing in this case, it is my view, after careful consideration of the authorities including the High Court decision in Nullagine, that the emphasis here should always be not on the means by which property is transferred but on the content of what is being transferred and whether that content is dutiable property which may include part of the whole.
73 Accordingly, I conclude that notwithstanding that there was one contract and one transfer Danny Knezevic acquired a separate and individual title. The transaction in question here involved 2 interests both held as tenants in common in the Property and both interests are matrimonial property for the purposes of section 68. In other words, each of the parties to the marriage conveyed their own shares in the Property. They concurred in a sale of the whole of the Property but in fact they sold their individual interests. By the same token the Applicants each acquired their own and distinct shares in the Property even though this was conveyed to them through a sale and purchase of the whole of the Property under one contract.
74 Finally, in this context I simply note that the Property could have been acquired by the Applicants under separate contracts. If that had occurred then it would seem readily apparent that the exemption provided by section 68 of the Act would have applied with respect to that part which Danny Knezevic had acquired under a separate contract.
75 It would seem anomalous that the exemption would be attracted in circumstances where two contracts were utilised rather than one where the economic outcomes are identical.