Penalty imposed - discretion to reduce penalty - wrong facts stated in declaration on behalf of registered proprietor - wrong advice given by legal advisers - Taxation Administration Act 19997 ss.30-35.

Land Tax - owner of the land for the purposes of land tax - whether beneficiary pursuant to a resulting trust can be "owner" of the land - cannot "carve out" equitable interest - Land Tax Act 2000 ss.10, 22, 46L, 46M and 67.

Admissibility of unstamped declaration of trust - s.37 Stamps Act 1958.

Konann Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2014] VCAT 1024

1. In relation to proceeding Z68/2014:
   • (a) the land the subject of the proceeding is dutiable at the full rate of duty pursuant to the Duties Act 2000 and the decision relating thereto is confirmed;
   • (b) In relation to the issue of the penalty imposed by the respondent, the decision is varied to reduce the penalty from 60% of the dutiable amount to 40% of the dutiable amount;
   • (c) in relation to the value of the subject land, the proceeding is adjourned to a date to be fixed by the Principal Registrar and the proceeding shall be brought on for a directions hearing at the request of either party.

1. In proceedings Z64/2014 and Z67/2014 the Assessment of the respondent is confirmed.

1. The respondent Pty Ltd (Konann) became the Registered Proprietor of land known as Tulliallan more particularly described in Certificate of Title V 08490 F501 situated at 805 Berwick - Cranbourne Road in the State of Victoria (the Property) which was assessed for both duty and land tax. The three proceedings which are being reviewed concern objections by the applicant to the assessments:
   1. Z68/2014 concerns an objection of 22 June 2012 to an Assessment of Duty under the Duties Act 2000 (and penalty and interest under the Taxation Administration Act 1997 (TAA)). The Assessment concerns the Transfer dated 7 July 2006 (the 2006 Transfer) by which Konann acquired the land described.
   2. Z67/2014 concerns an objection dated 16 November 2012 to an Assessment of land tax under the Land Tax Act 2005 for the 2012 Land Tax Year. Konann was assessed for land tax on the basis that no primary production exemption pursuant to s.67 of the Land Tax Act applied.
   3. Z64/2014 concerns an objection dated 15 March 2013 to an Assessment of Land Tax for 2013, by which Konann was again assessed for land tax on the land on the basis that no primary production exemption applied.

1. Peter White had been a successful businessman over many years. On 1 August 1994, he signed a Contract with a Nominee Clause to purchase the property in the sum of $3 million.
2. By a document purported to be declared by Peter White on 26 September 1994, Peter White inter alia declared:

"By agreement made with the Nominee prior to the date of the Contract I was orally appointed as Agent to execute the Contract".

The Nominee was Peter White and his brother Gary White. On the same day both Peter and Gary White signed a Sale of Real Estate Nomination Form pertaining to the Property. The effect of the Nomination Form was that Peter and Gary White would become the purchasers of the Property. It became clear from the evidence that there was no agreement made with the nominee prior to signing the contract.

1. It should be noted at this point, in 1973 the Peter White Family Trust (PWFT) was established. In the period 1983 - 1993 Peter White had developed three Companies owned by the PWFT into substantial profitable enterprises.
2. In May 1994, Peter White arranged for his then Solicitors, Arthur Robinson and Hedderwick to incorporate Annacott Pty Ltd (Annacott) (the Joined Party in Proceedings Z64 and Z67/2014).
3. The documents in this proceeding show that there was allocation of money, from the Trading Companies which was used to acquire the Property. The money was funnelled through PWFT to Annacott which was a Beneficiary of PWFT. Annacott then used the proceeds of the distributions to pay the purchase price of the Property and repay loans that it had borrowed to purchase the Property. Thus it would appear, that the monies to purchase the property were derived from Annacott Pty Ltd.
4. In relation to the purchase of the property there appears to have been a great deal of confusion between each of Peter White's Legal Advisers and Accountant. Those Legal Advisers were Mr Donaldson from Arthur Robinson and Hedderwick who was in charge of the Conveyancing matters, Mr Musgrove and Richard Szental from Maddock Lonie & Chilshom and Andrew Lean from Mann Judd Accountants who were Mr White's Accountants. Mr Donaldson believed, that the Property was to be purchased by PWFT and Peter and Gary White being the Trustees for PWFT. In fact on the 5 September 1994 Peter White sent a Memorandum by fax to Mr Donaldson stating:

As a result of Peter White's confirmation to Mr Donaldson he prepared the Declaration and Nomination that I have described (see [5] hereof] which are dated and declared the 26 September 1994.

1. A Conference was held with Mr J D Merralls QC on 8 September 1994. The Conference was attended by Mr Lean, Mr Musgrove and Mr Szental. Advice was sought from Mr Merralls QC on the proposal for PWFT to distribute income to a Corporation (Annacott) to be used to purchase a farm property (Tulliallan). Advice confirms that the Trust Deed (of PWFT) confers power to distribute income to a Corporation all the shares of which are held by Beneficiaries of PWFT.
2. The Memorandum from Maddock Lonie and Chisholm to Mr Merralls dated 5 September 1994 inter alia stated:

"The Trust is constituted by a Deed of Settlement dated 3 October 1973 as varied by Deed of Variation dated 1 December 1980."

1. There was a resolution of Directors of Annacott (drawn by Mr Lean) and dated 1 August 1994 resolving to purchase Tulliallan and execute a Declaration of Trust that the Property be purchased by Peter and Gary White in their capacity as Trustee for Annacott.
2. On the 14 September 1994 Peter and Gary White declared that they hold Tulliallan on Trust for Annacott (Annacott Declaration of Trust). The Declaration was drawn by Mr Lean and purported to declare that P and G White were Trustees who 'have become registered as the owners of the Property known as Tulliallan' declared in favour of Annacott as 'the Beneficiary' 'that they hold the Property on Trust for the Beneficiary and agree to transfer the Property in such manner as the Beneficiary from time to time directs.' It is noted, that the Tribunal was provided with a photocopy of this Declaration without having been stamped in accordance with the Stamps Act. As a result the production of this document into evidence was objected to by Mr Kotros who appeared on behalf of the respondent. I will deal with whether this document should be admitted into evidence later in this decision (see [33] ff).
3. The Property was finally settled on the 2 November 1994 and on the 10th of that month, Mr Donaldson wrote a letter to Peter White confirming lodgement for Registration of the Transfer, 'by which you and Gary as Trustee of the PWFT have purchased Tulliallan'.
4. The Accounts of PWFT and Annacott, show that the purchase monies were distributed to Annacott and the loan that was set up from PWFT. The loan to purchase the Property was reduced and eventually paid off.
5. In March 1998, Peter and Gary White retired as Trustee of the PWFT and the applicant Konann Pty Ltd was appointed Trustee. Just prior to this time PWFT sold its shares in various businesses and Peter White retired from business and became a fulltime farmer and investor.
6. In May of 2004, Gary White unfortunately became very ill and requested that his name be removed from the Title of Tulliallan. Around this time on the 4 June 2004 Peter White attempted to explain what he believed was the proper position to Mr Donaldson by way of a fax which enclosed the Declaration of the Trust of 14 September 1994. Peter White wrote as follows:

"Gary and I are Trustees of Annacott Pty Ltd...the purchaser of Tulliallan and not Peter White Family Trust. Why did you conclude property in name of Peter White Family Trust? Declaration enclosed."

1. As a result, of the advice from Peter White to Mr Donaldson, and other conversations and letters passing between them, Mr Donaldson, on 21 September 2004 wrote a letter to the respondent stating that the acquisition of the land in 1994 "should have been completed in the name of Annacott" and the transfer to Annacott was being prepared to rectify the error.
2. On 2 December 2004 Mr Donaldson caused documents to be lodged with the respondent. A letter from Mr Donaldson to the respondent stated that Annacott seeks to take a transfer pursuant to its entitlement in equity as a Beneficiary under the Annacott Declaration of Trust. This was followed by a letter from the respondent requiring certain evidentiary matters that the land in fact belonged to Annacott as beneficiary. Advice was then sought from Mr Murphy SC which inter alia stated:

"Tulliallan is to be transferred to Annacott or it must be deemed to be in the hands of the present Trustee of the [PWFT]".

1. In explaining Mr Murphy's advice on the 9 February 2006 Mr Donaldson wrote that Mr Murphy's advice was to "leave things as they are" and that he would endeavour the proceed the SRO to 'freeze' the transfer to Annacott.
2. On 27 February 2006 Mr Donaldson wrote to the respondent in the following terms:

"We are unable to satisfy your evidentiary requirements as to Annacott's Beneficial Entitlement. In such circumstances, our client has determined that the land should remain registered in the name of PE and GR White as Trustees and has requested that you exercise your power to hold the Transfer at your office without entitling the parties to implement the effect of the Transfer."

As a result of that letter the respondent agreed to impound the Transfer to Annacott pursuant to s.275 of the Duties Act.

1. On this point, in time, Mr White gave evidence that he was advised by Mr Donaldson that the Property was deemed by law to be held in Trust for the PWFT. As a result on 30 June 2006 there was a meeting of Konann (the applicant) attended solely by Peter White where it was resolved that:

"1. Directors resolved that the Company would assume Trusteeship of the Peter White Family Trust (the Trust} to succeed Peter Everett White and Gary Richard White as Trustees under the Trust Deed dated 3 October 1973 (the Deed) and to sign the appropriate Deed of Retirement and Appointment of Trustees.

1. Directors resolved that the Company shall execute a Transfer of Land and such other documents as may be registered to secure registration of the Company as registered proprietor and rated owner of the property known as Tulliallan in its capacity as Trustee of the Trust and therefore hold the said property in accordance with the terms of the Deed."
2. On 30 August 2012, Peter White made a declaration for duty purposes as follows:

"(the transfer arose) as a result of the appointment of Konann as Trustee of the Trust and for no other purpose:

3(a) No consideration has been paid or deemed to have been paid between the parties of the Transfer and no other benefits have been or will accrue to either of the parties nor any other persons as a result of the Transfer.

3(b) The intention of the Transfer is to relieve me and my brother Gary White of the personal obligations of Trusteeship, and to secure the Beneficiaries of the Trust and benefits attaching to perpetual succession secured by the appointment of a Corporate Trustee.

4 Konann as new Trustee will hold the land as Trustee of the Trust subject to the same terms, conditions and obligations as I and Gary White held the land in our capacity as Trustee of the Trust.

5 The said Gary White and I have held the land upon Trust for the beneficiary under the Trust Deed dated 3 October 1973 (the PWFT Trustee) and Konann has agreed to act accordingly to the same Trust and conditions."

1. Relying upon the Statutory Declaration to which I have referred in the last preceding paragraph, the Respondent stamped the Transfer to Konann as "exempt from duty" on the 4 September 2006. The Transfer was registered to Konann on 7 September 2006.
2. On 21 April 2009, the Respondent began investigations in relation to the Transfer of 7 July 2006 and sought an explanation as to why the Property was transferred from the Trustees for Annacott as Trustees for the PWFT .
3. Three Supreme Court Proceedings were brought by Annacott against Konann alleging that the Property was held by Konann as Trustee for Annacott and seeking a declaration to that effect. The first proceeding was dismissed, and the other two proceedings were heard before MacMillan J and dismissed on the basis that there was no proper contradictor and in fact what was sought to be determined was a revenue issue which was properly determined in accordance with the provisions of the Taxation Assessment Act 1997.
4. On 24 April 2012 the Respondent assessed the Transfer of the 7 July 2006 as dutiable pursuant to the Duties Act finding that the value of the land was $20.5 million dollars and that the duty payable and penalty payable was $2,143,313.14.
5. Konann objected to this Assessment which objection was disallowed by the Respondent. It is in relation to the refusal of the objection that this review including the objection has taken place. Further it should be noted, that there was an objection to the penalty that was issued which was included in the Assessment of $676,500. The penalty is also the subject of review in this proceeding.
6. As stated previously this review also deals with the Assessment of Land Tax for the years 2012 and 2013 in respect of the land.
7. For convenience, I reproduce in this decision a revised chronology which has been prepared by the parties. However, I have corrected some mistakes in the chronology and in the case of a resolution of Directors of 1 August 1994 I note that the Applicant objected to the use of the word 'backdated'.

Establishment of Peter White Family Trust (PWFT).

Peter White acquired Annacott Pty Ltd 'to act as a corporate beneficiary of the PWFT'.

Contract of sale/purchase of 'Tulliallan' by Peter White and/or nominee for $3,000,000.

Letter from Donaldson to Peter White seeking confirmation as to the nominated transferees.

Peter White sends memorandum to Lachlan Donaldson re details of purchase of Tulliallan:

'Confirming purchaser Peter White Family Trust. Confirming trustees PE White GR White.'

Brief to counsel (Merralls QC) to advise on proposed distribution of income by PWFT to a corporate beneficiary.

Letter from Donaldson to Peter White - acknowledges White's advice (see T 61) 'that you seek to nominate yourself and Garry White in your capacity as trustees of the Peter White Family Trust to purchase "Tulliallan".' Encloses draft formal nomination for signature and statutory declaration for execution.

Conference with Merralls QC, Geoff Musgrove and Richard Szental (Maddock Lonie & Chisholm), Andrew Lean (Mann Judd).

Advice sought from Merralls QC on proposal for PWFT to distribute income to a corporation (Annacott) to be used to purchase a farm property (Tulliallan). Advice confirms that the Trust Deed confers power to distrubute income to a corporation all the shares of which are held by beneficiaries of the PWFT.

Letter from Maddock Lonie & Chisholm to Mann Judd regarding Merralls QC's advice.

Resolution of directors of Annacott dated '1 August 1994' resolving to purchase Tulliallan and to execute a Declaration of Trust that property be purchased by Peter and Garry White in their capacity as trustees for Annacott.

Resolution was signed, and back-dated, at the suggestion of Lean, having been drawn by him or at his direction. (Applicant objected to the reference of 'back-dating').

Peter and Garry White declare that they hold Tulliallan on trust for Annacott (Annacott Declaration of Trust).

Prepared at the suggestion of Lean, having been drawn by him or at his direction - by which P & G White as 'the Trustees', who 'have become registered as the owners of the property known as "Tulliallan"', declared, in favour of Annacott as 'the Beneficiary', 'that they hold the property upon trust for the Beneficiary and agree to transfer pay and deal with the property in such manner as the Beneficiary from time to time directs'

P White declared to have been appointed orally by P & G White to be their agent to sign a contract to buy the land

Statutory Declaration and Sale of Real Estate Nomination Form signed by Peter White, nominating himself and Garry Richard White as substitute purchaser of Tulliallan.

Letter from AR&H with Statement of Adjustments and Settlement Statement.

Memorandum from Stephen Reid (NAB) regarding AR&H settlement letter, directs cheques to be drawn against account in the name of Coonara Intentional Pty Ltd.

Payment of stamp duty of $165,000 on transfer of Tullianan.

Registration of transfer of land in the names of Peter White and Garry White as joint proprietors.

Letter from Donaldson to Peter White, confirming lodgement for registration of transfer 'by which you and Garry as Trustees of the P E White Family Trust have purchased 'Tulliallan".'

Letter from Donaldson to P White confirming that the title had been registered in the names of P & G White as trustees of the family trust

• Distribution from PWFT of $1,539,694.
• Loan from PWFT for balance of purchase price of Tulliallan ($1,621,924).
• Non-current assets: $3,168,418 ('Tulliallan property').

• Annacott received distribution from PWFT of $899,136.
• Loan from PWFT reduced to $1,167,890.
• Non-current assets: $3,615,048 ('Tulliallan property').

• Annacott received distribution from PWFT of $1,506,652.
• Loan from PWFT reduced to $334,524.
• Non-current assets: $4,300,560 ('Tulliallan' plus improvements).

PWFT sold its shares in Freighter Manufacturing and the businesses conducted by Freighter Australia and Coonara. Peter White retired from his businesses and became a full-time farmer and investor.

• Peter White and Garry White retired as trustees.
• Konann Pty Ltd was appointed as trustee.

Garry White asks Peter White to remove him from the title to Tulliallan.

Letter from Donaldson to White, attaching copy of certificate of title.

Fax from Peter White to Donaldson, enclosing Annacott Declaration of Trust dated 14 September 1994:

'Garry & I are trustees for Annacott Pty Ltd ACN No 060 731 348 the purchaser of Tulliallan not the Peter White Family Trust. Why did you conclude property in name of Peter White Family Trust? Declaration enclosed'.

Letter from Donaldson to Peter White ('no knowledge of Annacott Pty Ltd as purchaser/owner of Tulliallan').

Letter from Peter White to Donaldson enclosing Annacott resolution as discussed.

T 7, Ex LKD17

Letter from Donaldson to Peter White (proposed transfer to Annacott 'to rectify an error made at the time of completion of the purchase.')

Letter from Donaldson to the SRO saying that the acquisition of the land in 1994 'should have been completed in the name of Annacott' and that a transfer to Annacott was being prepared to rectify the error.

First letter from Donaldson to Peter White: 'I need to talk to you regarding the Transfer of the "Tulliallan" property from you and Garry to Annacott Pty Ltd. ... There is no reference in the file to Annacott Pty Ltd at all.'

Second letter from Donaldson to Peter White, asking whether there is any evidence 'to the effect that you and Garry purchased the property as trustee for Annacott Pty Ltd'.

T 7, Ex LKD18

Fax from Peter White to Donaldson re 'Annacott as discussed', enclosing Annacott Declaration of Trust dated 14/9/94.

T 7, Ex LKD20

Letter from Donaldson to Peter White, forwarding transfer of land and statutory declaration re transfer to Annacott from Peter and Garry White as trustees for Annacott.

Documents lodged with SRO. Letter from Donaldson to SRO - Annacott seeks to take a transfer pursuant to its entitlement in equity as a beneficiary under the Annacott declaration of trust.

Letter from SRO seeking documentary evidence that Annacott had paid purchase price for Tulliallan (re Duties Act s 34).

Letter from Donaldson to Peter White ('It is not enough to produce the balance sheet of the company ... we must satisfy the first 3 bullet points of the 3rd paragraph of the letter ...')

Peter White provided Donaldson with books and records of Annacott and PWFT for 1995, 1997 and 2004 financial years, with accompanying explanation of source of purchase moneys.

Memorandum of advice of Terry Murphy SC (confirming advice in conference on 6/2/06).

Note brief to counsel dated 16/12/05 stated (at para 10) that 'Either the land is to be transferred to Annacott or it must be deemed to remain in the hands of the present trustee of the [PWFT]'.

Donaldson advised Peter White that Terry Murphy's advice was to 'leave things as they are', and that he would endeavour to persuade the SRO to 'freeze' the transfer to Annacott.

'we are unable to satisfy your evidentiary requirements as to Annacott's beneficial entitlements. In such circumstances, our client has determined that the land should remain registered in the name of PE & GR White as trustees and has requested that you exercise your power to hold the transfer at your office without entitling the parties to implement the effect of the transfer.'

SRO agrees to impound the transfer to Annacott pursuant to s 275 Duties Act.

'I am pleased to confirm that the State Revenue Office has agreed to impound the Transfer which was the subject of a potential assessment for stamp duty. The Transfer cannot be acted upon and the property will now remain registered in the name of the Transferors - in the names of Peter Everett White and Garry Richard White as trustees of the Peter White Family Trust.'

'Trustee of PWFT is Konann Pty Ltd ... The title should be in this name. How long. What cost to rectify.'

Letter from Donaldson to Peter White regarding documents required for transfer to Konann - 1. Deed of Retirement and Appointment of Trustees; 2. Transfer of Land; 3. Notices of Acquisition and Disposition'.

Letter from Peter White to Donaldson giving instructions to proceed and prepare documentation.

Fax from Peter White to Donaldson attaching draft Deed of Appointment and Retirement of Trustees.

Letter from Donaldson to Peter White enclosing documents for execution.

Resolution of directors of Konann, resolving to assume trusteeship of PWFT and to execute transfer of land.

Resolution was signed by P White, recording a meeting from 10-11 am on that day at which P White alone was present. Resolution stated:

1. ... would assume Trusteeship of The Peter White Family Trust... and... sign the appropriate Deed of Retirement and Appointment of Trustees

1. ... shall execute a Transfer of Land... to secure registration of the Company as registered proprietor... in the capacity as Trustee of the Trust and thereafter to hold the said property in accordance with the terms of the Deed [dated 3 October 1973]

Transfer of land from Peter and Garry White to Konann ), transferring the land from P & G White to Konann for consideration stated as 'Entitlement in Equity'

• Peter White and Garry White retired as trustees.
• Konann Pty Ltd was appointed as trustee.

(Note: superfluous in the light of earlier Deed of Appointment/Retirement of Trustees dated 12/10/98.)

Donaldson receives signed documents from Peter White.

Letter from Donaldson to SRO lodging transfer of land to Konann for assessment of duty.

Letter from SRO to Donaldson requesting the documents to be relodged with a statutory declaration from the new trustee.

Letter from Donaldson to Peter White enclosing a draft statutory declaration of Peter White as retiring trustee and director of the new trustee.

Statutory declaration of Peter White, 'both as retiring trustee and as Director of Konann', stating that P & G White had held the land on the terms of the deed constituting the family trust and that Konann would do likewise.

Letter from Donaldson to Peter White advising that the transfer had been stamped exempt from duty and stating:

the asset is now an asset of the Peter White Family Trust if it was no[t] so recorded previously.

• Investigation in relation to transfer dated 6 July 2006.
• Explain why the property was transferred from the trustees for Annacott to Konann as trustee for the PWFT.

Letter from Hall & Willcox to the SRO (contains a summary of the history of the matter). It was submitted that the 2006 transfer to Konann as trustee of the family trust was made by mistake because Annacott had been the beneficial owner of the land, never the family trust, and there was never any real intention to change that

Statutory declaration of Peter White saying that it was his belief that he and his brother had held the land for Annacott and that a number of documents, including his statutory declaration of 30 August 2006, were mistaken

First Supreme Court proceeding brought (later discontinued), seeking to have the 2006 transfer declared not dutiable and Annacott made the registered proprietor without duty

Letter from SRO to Foster Nicholson Legal regarding application for private ruling on proposed transfer of Tulliallan from Konann to Annacott.

SRO finds that 'it is clear that the Property has always been considered as an asset of Annacott and that all the funds for the purchase of the Property were provided by Annacott even though Peter and Garry White ... were the registered owners of the Property. Therefore in this matter the real purchaser is Annacott whilst the apparent purchaser is Peter and Garry.'

('In this sort of arrangement the apparent purchaser is the registered owner of the property who holds the property on trust for the real purchaser who provides all of the purchase money and has beneficial ownership of the property.')

Second Supreme Court proceeding brought (later dismissed)

Third Supreme Court proceeding brought (later dismissed)

Duties Act issue

1. It is noted, that pursuant to both the Duties Act issue and the Land Tax issue, it is the Applicant who has the onus of proof pursuant to s.98 of the Taxation Administration Act 1997.

Legislative provisions of the Duties Act

1. S.7 of the Duties Act provides for the imposition of duty on certain transactions concerning dutiable property.
2. S.10 provides that dutiable property includes inter alia an estate in fee simple. It should be noted, that the Transfer stamped on 4 September 2006, noted that the interest in land being transferred was an estate in fee simple.
3. Part 5 of the Duties Act provides for exemption and concessional rates of duty in certain circumstances. The exemption that is claimed by the Applicant in relation to the 7 July 2006 Transfer is that it was a transfer merely changing the legal and not the beneficial ownership of the land. The Applicant relies upon on s.33 (3) of the Duties Act, which reads as follows:

[3] No duty is chargeable under this Chapter in respect of a transfer of dutiable property to a person other than a special trustee if the Commissioner is satisfied that the transfer is made solely -

(a) because of the retirement of a trustee or the appointment of a new trustee, or other change in trustees; and

(b) in order to vest the property in the trustees for the time being entitled to hold it.

[4] If the Commissioner is not satisfied as mentioned in subsection [3], the transfer is chargeable with duty, unless subsection [5] applies.

Admissibility of Declaration of Trust dated 14 September 1994 (see [11] hereof) - T68

1. It is s.37 of the Stamps Act 1958 which is still applicable for this purpose even though the Stamps Act has been repealed. S.37 reads as follows:

[37] Unstamped instruments not to be received by public officers

(1) Where a person is under a duty to receive enrol enter or record any original instrument or a copy of any original instrument he shall not if the original instrument is chargeable with duty under this Act or would be chargeable with duty under this Act if it were in Victoria receive register enrol enter or record any such original instrument or copy unless he is satisfied that the original instrument has been duly stamped or is deemed to have3 been duly stamped.

(2) Any such person may refer any question as to the dutiability of an original instrument or copy to the Comptroller of Stamps.

(3) Where an original instrument has not been duly stamped and the Comptroller of Stamps is satisfied that it is not reasonably practicable to produce the original instrument for stamping he may on payment of the duty that would be chargeable on the original instrument denote the payment of the duty on a copy of that instrument and thereupon the original instrument shall for all purposes be deemed to have been duly stamped.

1. Mr Horan of Counsel who appeared on behalf of the Applicant and Joined Party produced an undertaking from his Instructing Solicitor, Mr Foster, that if the Declaration of Trust was admitted into evidence, Mr Foster would undertake to have the Declaration stamped in accordance with the Duties Act.
2. It seems clear from Mr Foster's evidence that the original Declaration has been lost and so has the counterpart if there was in fact one. There is no specific evidence that the Declaration was ever stamped. The highest the evidence can go is that Mr Donaldson said in evidence before the Supreme Court that it was usual practice for his office to have such declarations stamped when they were returned to the office. In my view that evidence is too general to assume that the original of this document was in fact stamped. It is also clear from Mr Foster's evidence that he has made searches for the original document and he is unable to find the same. Mr Horan stated, that I should accept Mr Foster's undertaking and admit the document into evidence. He stated that it was normal practice to accept a document into evidence where such an undertaking had been given. In support of this proposition, he quoted from Australian Stamp Duties Law Vol 1 (Butterworths [3.0330]):

Notwithstanding the express language of all Acts except that in Queensland, it is the practice of Courts in most places including the United Kingdom, South Australia, Western Australia, the ACT and the Northern Territory...that an unstamped document may be admitted on the undertaking of the solicitor to pay the duty and fine.

In support of this proposition he relied on a quotation referred in the Butterworths publication from Hill J in the Federal Court of Australia in Davis v FCT (1989) 86 ALR 195. Hill J commented that:

It had long been the practice of State Courts in Australia for the Court to accept an undertaking from the solicitor of the party seeking to tender the original. The original form of undertaking was the document be stamped before an order was drawn up...where a copy is tendered by way of secondary evidence of a lost document, the procedure in State Courts appears to have been to accept the undertaking from the solicitor to pay the appropriate duty as determined by the Commissioner.

1. Mr Kotros for the Respondent, submitted that as the document was only a photocopy and there was no evidence that he original had been stamped, s.37 of the Stamps Act should be read as a whole and in particular s.37(3) did not permit such a document to be admitted into evidence even with an undertaking to have the document stamped. He said the document should not be admitted into evidence, because it is not capable of being stamped. That is, the undertaking could not be fulfilled. Mr Kotros relied on the reasoning in a private ruling given by the Respondent on 25 September 2012. (T231). It is there stated:

"S,37(3) cannot be read in isolation from 37(1) and 37(2). S.37 has to be construed as a whole. S.37(3) does not suggest that 'any person' other than 'a person' who 'is under a duty to receive enrol enter or record any original instrument' can present a photocopy to the Comptroller (now the Commissioner) for stamping under any circumstances other than where the document is to be 'received enrolled entered or recorded.'...It is further noted that in your letter dated 30 March 2012, you did not recognise the view that 'S.37 first contemplates the referral to the Comptroller on the question of duty by the 'public officer' who has a duty to 'receive' any original instrument or copy before s.37(3) is enlivened.

Accordingly, the circumstances outlined in your request do not enliven s.37(3) of the Act.

1. Mr Heinz of Counsel, who appeared for the Applicant, in the Supreme Court proceedings, gave advice as to the stamping of the Declaration in a writing dated 27 July 2012 (T225). Mr Heinz there stated:

"By S.37(3) of the Stamps Act 1958 (which applies by virtue of the before mentioned provisions of the Interpretation of Legislation Act 1984,), where an original instrument has not been duly stamped and the Comptroller of Stamps is satisfied that it is not reasonably practical to produce the original instrument of stamping he may on payment of the duty that would be chargeable on the original to note the payment of the duty in a copy of the instrument and thereupon the original shall for all purposes to have been duly stamped.

I should think that in the present case, the Commissioner would not act in pursuance of this provision without sworn or affirmed evidence that the original had not been duly stamped."

1. In my view, the evidence of Mr Donaldson as to whether this document has been stamped or not is too vague and uncertain to be relied upon. One does not know whether this document was ever returned to Mr Donaldson's office and if it was returned whether it in fact did not "slip through the cracks" and was not stamped at all. Therefore I cannot be satisfied that the original has been stamped. I agree with what has been said by the Respondent in the private ruling of 25 September 2012. Clearly, s.37 of the Stamps Act must be read as a whole. On reading the section in that manner, it does not appear to me that a copy document is acceptable, as there was no evidence which I accept of the original having been stamped. Subsection (3) makes it abundantly clear that in order for the document to be received it must be received enrolled entered or recorded. This document has not. Given these circumstances, I will not accept the undertaking of Mr Foster as I do not believe that the copy of the Declaration that has been shown to me and tendered for identification is capable of being stamped as the same is only a copy and I was not satisfied the original was stamped.
2. Given the requirements of the Stamps Act, it is not appropriate that I should use my discretion pursuant to s.98 of the Victorian Civil and Administrative Tribunal Act 1998, to allow the Declaration into evidence.
3. It necessarily follows, that I will not allow the document known as T68 to be tendered into evidence. As a result any Trust created, cannot be an Express Trust and must if such a Trust exists be a Resulting, Implied or Constructive Trust.

Applicant's submissions as to s.33(3) of Duties Act in regard to the Transfer stamped on 4 September 2006

1. Mr Horan stated that there is no dispute that Annacott originally purchased the Property as Beneficial Owner. He also said looking at the accounts and records of Annacott, it is clear that all the purchase money for the Property came from that Company. He also referred to a private ruling from the Respondent dated 1 August 2011 (T178) in relation to a proposed transfer of the Property from Konann to Annacott. The private ruling stated that SRO finds that:

"It is clear that the Property has always been considered to be an asset of Annacott and that all funds for the purchase of the Property were provided by Annacott even though Peter and Gary White...were the registered owners of the Property. Therefore in this matter the real purchaser is Annacott whilst the apparent purchaser is Peter and Gary White...

In this sort of arrangement the apparent purchaser is the registered owner of the property who holds the property on trust for the real purchaser who provides all the purchase money and has beneficial ownership of the property."

1. It is noted, that from some point up until the Property Transfer the funds for the property had been provided by Annacott and also up until the time of the transfer the Property was also considered to be beneficially owned by Annacott. Mr Horan stated that the position was no different at the time of the Transfer.
2. Mr Horan also stated that in 2004, when the documents were given to Donaldson, he did not understand the real issue and his focus was on s.34 of the Duties Act. Mr Horan said that, "the Transfer lodged in December 2004 should have been supported by the information that was at all times available, but not assessed or identified by Donaldson, which would have lead to the stamping of the Transfer to Annacott and been stamped as non-dutiable pursuant to s.34(1)(b) and s.34(2A) of the Duties Act."
3. Mr Horan stated that the 2006 Transfer from P and G White to Konann is not dutiable because there was no intention to transfer the underlying beneficial ownership of the Property by transferring it to Konann Pty Ltd. The intention was simply to transfer the legal ownership away from Gary White, so that he would not receive land tax notice and cause him added anxiety at a time of extreme frailty through illness.
4. Mr Horan stated that as Annacott had put up all the purchase money as well as the money for improvements to the property, any transfer by P and G White to Annacott was not a transfer of the beneficial interest but the legal interest only and resulted in Konann holding the Property on a Resulting Trust for Annacott. He said there was only a change of the trustee - "Konann Pty Ltd could only ever be Trustee, having paid no consideration for the Property."
5. He referred to Article 31 of Underhill and Hayden 'Law of Trust and Trustees' 14th Edition at p.269 where the authors stated:

"When a real or personal property is conveyed to a purchaser directly or to others, or to one or more persons other than the purchaser, the resulting Trust will be presumed in favour of the person who has provided (by parole or other evidence) to have paid the purchase money in the character of a purchaser (as opposed to that of a donor or lendor (sic) ).

1. He said it was clear from the un-contradicted evidence of Peter White that at no time did he want to change the beneficial ownership of the Property from Annacott. The reason he signed the documents asked by Mr Donaldson which indicated that the beneficial ownership was in the name of PWFT was that Mr Donaldson told him that it was deemed in law to be owned by PWFT. The only consideration provided for the purchase of the land was provided by Annacott. No consideration was provided by Peter or Gary White, Konann or PWFT. He relied on a decision of Hollingworth J in the Supreme Court of Victoria in Martec Energy Systems Pty Ltd (in liq) v Bell 2005 VSC. There Her Honour was dealing with a .Resulting Trust claim where a factory was purchased in the name of the defendant in a company, but registered only in the name of the company. Her Honour stated at paragraphs [4] and [5] as follows:

"A Resulting Trust is presumed where, upon the purchase of a property, the legal title vests in the name of a person other than the person who provided the purchase money. Presumption may be rebutted by evidence giving rise to a contrary intention, namely, that no Trust was needed.

The general principle is well established...'the clear result in all cases without a single exception, is that the Trust of a legal estate, whether freehold, copyhold or leasehold; will be taken in the name of purchasers or other jointly or in the name of others without the purchaser, whether in one name or several, whether jointly or successive, result to the man who advanced the purchase money. This is a general proposition supported by all the cases and there is nothing to contradict it; and it goes on a strict analogy to the rule of common law that where a feoffment is made without consideration, the use results to the feoffer. It is the established doctrine of a Court of Equity that this Resulting Trust may be rebutted by circumstances in evidence." See Dyer and Dyer (1788) ER 42 at 43.

1. Mr Horan noted that Annacott had previously paid the duty on the Transfer in 1994 and stated that: "the subsequent transfer to Konann involved no change in beneficial entitlement, only a change of a new Trustee and s.33(3)(b) would apply. Equally, there would be no dutiable transfer to Konann by Annacott; s.34(1)(b) and s.34(2A) would apply.
2. Alternatively, Mr Horan submitted that if there was a transfer of the beneficial interest, that transfer would have a nil or nominal dutiable value. He stated:

"(a) the nature of the dutiable property that was transferred to Konann was the bare legal estate in Tulliallan; and/or

(b) in valuing the dutiable property (the estate in fee simple) that was transferred to Konann, it is necessary to have regard to the effect of the prior equitable interest held by Annacott as the beneficial owner of the land.

Accordingly, in the light of Annacott's equitable entitlement to the land, the dutiable value of the property transferred to Konann is a nil or nominal value...

If property is held on a Bare Trust for a third party, any transfer of the property will be subject to the pre-existing equitable interest of the third party, such that the transfer results only in the conveyance of a bare legal estate or interest...Australian Stamp Duties Law at [21.0690]...

The position in this regard can be distinguished from the situation in which full legal and beneficial ownership transfers property to the trustee to be held on trust for the transferor. In this situation, there is no separation of the legal and equitable interests of the estates prior to the transfer and it is not generally accepted that the owner transfers only the bare legal estate to the Trustees retaining the beneficial interest in the property (DKL Holdings Co (2) Pty Ltd v Commission of Stamp Duties (NSW) [1982] HCA 14; (1982) 149 CLR 431). "

1. Mr Horan then referred to Vopak Terminals Australia Pty Ltd v Commissioner of State Revenue [2004] VSCA 10; (2004 12 VR 351) where the Court of Appeal held that it was necessary to take into account existing equitable interests when determining the dutiable value of an estate in fee simple transferred to the appellant.
2. Mr Horan concluded this argument in paragraph 12 of his supplementary submissions by stating:

"In the present case, Annacott had an equitable interest as the beneficial owner of Tulliallan. The transfer to Konann was necessarily subject to the pre-existing equitable interest, which is enforceable in the Courts against Konann (whether in its own right or as Trustee of the Peter White Family Trust). The only estate or interest that was transferred to Konann was the bare legal estate or interest. The prior interest of Annacott cannot be disregarded when determining the amount for which the Property might reasonably have been sold on the open market. A hypothetical purchaser would not pay more than a nominal amount for the property, knowing that it was subject to a pre-existing Trust in favour of Annacott."

1. Further, Mr Horan again emphasised the point that there was no intention to change the beneficial ownership of the property. That equity would protect Annacott's interest by imposing a Constructive or Resulting Trust on Konann.

Respondent's submissions in relation to S.33(3) of Duties Act

1. Mr Kotros emphasised that it was for the Applicant to bring itself within the exemption referred to in s.33(3) of the Duties Act. That is, the 'change of trustee exemption' exempts transfers of land held on trust made merely to give effect to a change in the trustee entitlement to hold the land on trust. See Perpetual Trustee Co. Ltd v Commissioner of State Revenue [2000] VSC 177; (2000) 44 ATR 273 at [53-56] where Hanson J described the exemption as imposing 'a rigorous test of a factual nature which a taxpayer must surmount'.
2. Further Mr Kotros emphasised that on the proper interpretation of the statute, it must be shown by the applicant that there was the same beneficial ownership before and after the transfer was signed and that the trust from Konann to Annacott was in existence prior to the transfer.
3. He emphasised that the Applicant must show these matters using an objective test. He referred to a number of matters which he said objectively pointed to the property not being purchased by Annacott: (a) the memo from Peter White to Mr Donaldson dated 5 September 1994 (T61); (b) the memo to Mr Merralls QC from Maddock Lonie and Chisholm dated 5 September 1994; (c) evidence of Mr White that his subjective intention was that the PWFT would buy the property; (d) letter from Mr Donaldson to Mr White dated 10 November 1994 confirming that the property was held in Trust for PWFT (T74).
4. Mr Kotros further said that the s.33 exemption does not apply, because it cannot be said that the 2006 transfer was made to Konann to hold for Annacott because:

(a) the 2004 Transfer to Annacott was not proceeded with. There was legal advice from Mr Murphy SC not to proceed with the transfer to Annacott. That advice was accepted by a decision taken by the parties. It was their choice;

(b) The parties chose to pursue action of getting the title out of the names of P and G White in the memo of 22 March 2006 (T97) Mr White agreed that the title should be in the name of Konann in capacity as Trustee for PWFT. Konann was appointed Trustee of the Family Trust in 1998. Insofar as the Property was concerned that had not been acted upon. The plan was that Konann would hold the land as trustee for PWFT.

(c) The parties had explored one route of getting the title out of the name of P and G White, having decided not to go that route, in 2006 it explored a different route, which lead to Donaldson being given instructions to draw a number of instruments showing that the land was to be held by Konann as Trustee for PWFT. See Resolution of Directors 30 June 2006 (T49). This resolution sets out the plan adopted by Peter White and signed by him prior to the Transfer. Peter White was the sole director of Annacott and a Director of Konann with Mr Laurensen, his former accountant. The only person at the meeting on 30 June 2006 was Mr White.

1. Mr Kotros said looking at the above matter objectively, the Tribunal should find that Konann was not Trustee for Annacott prior to the transfer or at the time of the transfer. The parties did not on their objective evidence intend that. He noted that for the exemption to apply the transfer must be solely for the retirement of a trustee and must continue with the same beneficiary. In this case there is a different beneficiary that is PWFT. The Applicant must show at all times both before and after the transfer that Konann was appointed on the retirement of P and G White for the same beneficiary that is the same Trust. He stated that there was no evidence that the parties intended Konann to be the Trustee for Annacott. That is, it must be Trustee for Annacott before the transfer was made. He referred to the fact that Mr White in his evidence rejected the fact that Konann was being made Trustee for Annacott. He therefore said that the sole reason of the transfer cannot have been just to change trustees. He again referred to the resolution of 30 June 2006 (T49) which said that Konann was Trustee for PWFT. He referred to the fact that Mr White stated in his evidence that the statutory declaration by him dated the 30 August 2006 stated that the information therein was correct and that it was dated after the transfer. Further, paragraph 5 of that declaration there is no mention made of Annacott. The only trust deed referred to is that of 3 October 1973 which relates to the Trust of PWFT.
2. Mr Kotros said that for the Applicant to succeed it is necessary for the Tribunal to:

"Find that the transfer was made solely because of the retirement of P and G White and the appointment of Konann prior to the transfer. In that case, s.33(3) would apply which includes Annacott continuing to be the beneficiary.

1. In relation to s.33(3)(b) Mr Kotros said that subsection should be read with subsection (a). He said the words "in order" as appearing in s.33(3)(b) are important.
2. He distinguished the case of Kringas v Commissioner of State Revenue (2005) VCAT 424 where I sitting as the Tribunal was concerned with the word "entitled" in s.33(3)(b). He stated further that this situation is different from Kringas, in that steps were not taken prior to the transfer for Konann to hold the property as trustee for Annacott. For this proposition he relied on the statutory declaration of the 30 August 2006.
3. Mr Kotros said that for the words "in order" to be given their proper meaning Konann must be entitled prior to the transfer to hold the property for Annacott. Put a different way, for s.33(3)(b) to apply Konann must have been entitled to call for the transfer as trustee for Annacott prior to the transfer being signed. It was not so entitled. He stated at [26] ff of his submissions "another difficulty is with the idea that Konann is a Resulting or Constructive Trustee for Annacott. One would have thought that, if any such Trust arose by operation of law, it would be between the transferee (Konann) and the transferors (P and G White). It is difficult to see how Annacott could have any claim or interest enforceable against Konann." He then referred to the 'Law of Trusts' by Ford and Lee [1.250] ff. The authors of that book distinguished between different types of Resulting Trusts. The Resulting Trust that may have existed prior to the time of the transfer was a purchase money resulting trust. After the time of transfer, the Applicants maintain that the transfer happened by mistake. Therefore it was a Resulting Trust as a result of a mistake. This is made clear by the submissions by a solicitor employed by the Applicant, Mr Sebo, of Hall and Wilcox made to the Respondent on 3 July 2009 (T120). Mr Kotros then said that in those circumstances, the transfer caused the land to be held in a different type of Resulting Trust and thus, the exemption did not apply. That is, prior to the transfer was held as a "payment" resulting trust and after the transfer it was a "mistake" resulting trust. He concluded by saying that the cause of the transfer was to put the title in Konann's name as Trustee for PWFT.
4. Mr Kotros submitted, that it was wrong to carve out the value of the beneficial interest from the interest in the fee simple when valuing the land being transferred. He referred to the fact that the Duties Act requires duty to be paid on all dutiable transactions except where those transactions are exempt. He therefore concluded that if it was possible to separate the legal and equitable title, the need for the exemptions would be superfluous. In this case, the transfer was "all estate in fee simple".
5. Mr Kotros cited a number of authorities for the proposition that the interest of a beneficiary is not to be carved out of the legal estate. In stating this proposition, he conceded that an exception to the proposition is where there is a registered managed investment scheme. That was the situation in the Commissioner of State Revenue v Lend Lease Funds Management [2011] VSCA 182; (2011) 33 VR 204 where the majority of the Court of Appeal (Tate JA and Pagoni AJA) held that a transfer to a new trustee was exempt from duty pursuant to 2.33(3) of the Duties Act as the new trustee was to perform the same, pre-existing and continuing functions pursuant to the scheme trust. It was held that the termination of the custody agreement did not involve the termination of the scheme trust nor was the transfer made to the trustee of a separate or different trust. The majority therefore concluded that the transfer was made "solely because of" the change of trustee.
6. Mr Kotros said that the managed investment trust was the sole exception to the proposition about not carving the beneficial estate out of the legal estate. In support of this proposition, Mr Kotros went through the Lend Lease case in detail and referred to numerous authorities referred to by the plurality of the judges in the Lend Lease case. He referred to in the judgements of the Court of Appeal in the Lend Lease case where Their Honours went through the authorities inter alia in R Extra Nominees Pty Ltd v Comptroller of Stamps (VRC (1990 21 ATR 3664) where Member Nettle of the AAT as he then was considering the dutiability of a transfer of land, the transferee of which already had a beneficial entitlement to a 25% interest in the land. Having concluded that there was no applicable exemption Member Nettle then dealt with the submission on behalf of the transferee that:

"Because the transfer the subject of the reference purported to transfer that which was already as to 25% beneficially invested in the [transferee] the transfer was to that extent a nullity and therefore not dutiable."

"The transfer was not a nullity even if the units were to some extent already beneficially invested in the [transferee]. It was a transfer of real property and duty is charged upon such a transfer in accordance with the Heading IV in the third Schedule of the Stamps Act whether or not the transferee has some beneficial entitlement to the land, the subject of the transfer, unless there is an applicable exemption.

1. DKLR Holdings (Nr 2) Pty Ltd v Comptroller of Stamp Duty (NSW) [1980) [NSWOR 510 at 518-19] where Hope JA stated:

"(a) An unconditional legal estate in fee simple is the largest estate which a person may hold in land. Subject to qualifications arising under the general law and to the manifold restrictions now imposed by or under Statute, the person seized of the land for an estate in fee simple has full and direct rights to possession and use of the land and its profits as well as full rights of disposition. An equitable estate in land, even where the owner is absolutely entitled and the trustee is a bare trustee, is significantly different. What it is perhaps, its essential character is to be traced to the origin of equitable estates in the enforcement by Chancellors of 'users' or 'trusts.'

(b) [Al]though the equitable estate is an interest in property, its essential character still bears the stamp which the origin placed upon it. Where the trustee is the owner of the legal fee simple, the right of the beneficiary although annexed to the land, is a right to compel the legal owner to hold and use the rights which the law gives him in accordance with the obligations which equity has imposed upon him. The trustee in such a case has at law all the right of the absolute owner in fee simple but he is not free from the use of those rights for his own benefit in the way that he could if no trust existed. Equitable obligations require him to use them in some particular way for the benefit of other persons."

"(c) In Perpetual Trustee Co Ltd v Commissioner of State Revenue [2000] VSC 177 Hansen J 311 referred to Re Transphere Pty Ltd (1986) 5 NSWLR 309 and supported the proposition therein stated, that, "although the right of the beneficiary constitutes and equitable estate in the property, in is engrafted on not carved out of, the legal estate."

"(d) Also in Perpetual at 293 Hansen J made it clear that, "the fact that PT was entitled in equity to the land at the time when the instruments of transfer were executed did not mean that the transfer operated to convey a mere 'bare legal title'. The analysis of Hope JA and McLellan J of the nature of fee simple estate in land indicates that there is one estate onto which is engrafted the equitable estate."

"(d) The case of DKLR Holdings Co (No 2) Proprietary Limited v Comptroller of Stamp Duties (NSW) [1982] HCA 14; 149 CLR 431 (High Court) it was made clear that the equitable estate cannot be carved out of the legal estate." At p474 when Rennan J stated: "An equitable interest is not carved out of a legal estate but impressed upon it."

1. Mr Kotros also referred to the judgement of Maxwell ACJ in the Lend Lease case at p333 where although dissenting he distinguished the case of Vopak which was relied upon by Mr Horan. He there stated:

"Like GazelleJ in Sportscraft I am not persuaded that the decision in Vopak requires any departure from the long line of authority which begins with Oughtred and concludes with Perpetual. On the contrary, in my respectful opinion, the position as between trustee and beneficiary is correctly described in those decisions. The Court in Vopak had no occasion to consider the correctness of those decisions, as it was concerned with a quite different situation, that is, where legal title is held subject to an equitable interest vested in a third party.

As between trustee and beneficiary, the trustee as legal owner of the property has all the rights of ownership. In the case of land, it is the trustee which holds the estate in fee simple. The fundamental point of the Oughtred line of authority is that the fee simple estate of the trustee is not qualified or diminished in any way by the obligation of the trustee to exercise the rights in the interests of the beneficiaries. That is the sense in which their equitable interests are "impressed upon" not "carved out of" the estate, put another way the distance of the trust does not affect the nature of the proprietary right embodied in the fee simple estate. It goes instead to the manner of their exercise."

1. Even though Maxwell ACJ was in the minority in the Land Lease case, Mr Kotros submitted that the distinction he made with Vopak was nonetheless valid.

Conclusions as to the Duties Act issues test

1. In order to determine whether S.33(3) is made out, an objective test must be applied. That is, it is necessary to look at what the applicant and those surrounding it did and said, rather than what they thought. The test is, what would an unbiased observer believe to be the true object of the 2006 Transfer.

S.33(3)(a) of the Duties Act

1. In interpreting both sections (a) and (b), of S.33(3) the word" solely" takes on considerable importance. Mr Horan, in his submissions, put great emphasis on the fact that the beneficial interest was in the hands of Annacott both before and after the transfer, even though the declaration referred to the beneficial interest being in PWFT. He said the "cause of the transfer was to change the trustee from P and G White to Konann".
2. There is a considerable amount of evidence relating to the cause of the transfer. On the one hand, the applicant made it clear that Peter White and his brother wished to retire as trustees. On the other hand, the documentation in particular the resolution of directors on the 30 June 2006, makes it abundantly clear that the cause was to secure the registration of Konann as trustee for PWFT. As Mr Kotros put it, the resolution sets out a plan to be adopted, which plan was signed by Mr White as the only person at the meeting on that day. Both the resolution and the transfer were explained to and agreed to by Mr White. In my view it is entirely subjective that Mr White may have thought "the law was an ass". What he in fact did was to sign documents which on their face clearly indicated that PWFT was to be the beneficiary. PWFT was not the beneficiary prior to the transfer and resolution.
3. To ignore the words "making Konann trustee for PWFT" in the resolution is to ignore the reality of the situation. Mr White agreed to the document on the advice of his lawyer Mr Donaldson. The fact that that advice may be incorrect is not to the point.
4. It is correct, that Annacott had in fact paid the purchase price of the property and had financial accounts and taxation returns indicating the property as its asset however that does not change the nature of the transfer and the circumstances surrounding it. It may be that Annacott is entitled to claim as against PWFT that it is the true beneficiary of the property but that is not what the transfer did. It must be remembered, that Peter White, was the sole shareholder and director of Annacott. Therefore, he was in the perfect position to refuse to sign these documents if all he intended to do was change the trustee as the result of the retirement of himself or his brother or just the appointment of a new trustee.
5. It must be remembered, that the objective documents going back to 1994 suggest that PWFT was in fact the beneficiary of the property. Those documents include the memorandum from Peter White to Mr Donaldson on 5 September 1994 informing him that the property would be in the name of the family trust. The memorandum to Mr Merralls QC of Counsel on 5 September 1994 from Mr White's solicitors refers to the trust as the family trust by reason of the deed of settlement being 3 October 1973. After the original purchase was complete on 10 November 1994, Mr Donaldson wrote to Mr Peter White and informed him that P and G White were trustees for the PWFT. Mr White took no objection to the letter. Also it is noted, that the 2004 transfer transferring the Property to Annacott so that any trust would be "called in" was not proceeded with. The fact that that was done on "wrong legal advice" in my view is not to the point. It was after that that the parties had explored all the other options to have the names of P and G White removed from the title.
6. The fact that Annacott may have a claim as beneficiary of the property subsequent to the transfer, in my view, is not to the point. What I am considering here is the interpretation of s.33(3). The word "solely" must be given its proper meaning. Its meaning is that the transfer must have no other reason other than that described in the subsections (a) and (b) of s.33. For the reasons that I have given above, it seems clear to me that the transfer did have other objective reason other than just transferring the trusteeship of the property. The words on the face of the documents surrounding the transfer are clear and on the objective evidence, I am satisfied that Mr Peter White and the other parties, as the time of the transfer, did not only intend just changing the trustee. They intended to change the beneficiaries. I disagree with Mr Horan when he stated that the transfer was only of the bare legal estate. If that had not been the intention Mr Peter White would not have signed the resolution or the transfer in the form he did. Therefore I find, that the applicant has failed to make out s.33(3)(a). The applicant has failed in this case to "surmount the rigorous test of a factual nature" (see Perpetual Trustee Co case [53 - 56]).

S.33(3)(b)

1. As a result of the finding I have made above it is not strictly necessary that I should make findings as to whether the applicant has made out s.33(3)(b). However because there was considerable argument addressed to me on the point, it is desirable that such findings should be made.
2. In examining s.33(3)(b), I must look at the "purpose" of the transfer. In the case at p212 Maxwell ACJ stated:

"The second limb question concerns the purpose of the transfer: 'was the transfer made solely for the purpose of vesting the property in the trustee for the time being?' That was a quote from Victoria Gardens Case [2000] VSCA 233; (2000) 46 ATR 61 at 72-3."

1. Mr Horan stated that the transfer satisfied the purpose requirement of s.33(3)(b). He said:

"Having formed the intention to transfer the land to Konann as trustee without any change in the beneficial ownership, Konann was registered as the holder of the legal title in the capacity as trustee of the pre-existing trust. The transfer was for the sole purpose of vesting the land in Konann as the trustee for the time being able to hold it."

1. Maxwell ACJ in the Lend Lease case at 210 made it clear, that to satisfy s.33(3)(b), the trustee must be both the trustee before the signing of the transfer and at the time of signing of the transfer. At p210-11, his honour stated:

"The limit arises in the following way. To satisfy the second limb the transfer in question must vest the property 'in the trustee for the time being entitled to hold it'. The phrase 'trustee for the time being' can only mean the trustee of the trust in respect of which 'relevant change' has taken place, being that the trustee(s) in office after the change. It follows that the exemption cannot have application where a trust is terminated, since in that event there are no 'trustees for the time being entitled' to the property the subject of the transfer. That the transfer might hold the property on a different trust would not, of course, suffice. (Emphasis and underlining supplied)."

1. I notice, that the quotation I have referred to above refers to the change of trustee "has taken place" refers to the past tense. Thus what his honour means by what he said is that prior to signing the transfer and at the time thereof, Konann needed to have been trustee for Annacott. There is not sufficient evidence for me to be satisfied that a time immediately prior to signing the transfer, that Konann was the trustee for Annacott. As I have said previously the objective evidence tends to point the other way.
2. Mr Horan relied on a decision of mine in Kringas v Commisioner of State Revenue (2005) VCAT 424 at [55-57]. In that particular instance, the issue was whether the purported trustee was "entitled" to hold the land as referred to in s.33(3)(b). That is what I was considering. In this particular instance, the argument has been put by Mr Kotros that the applicant has not shown that the transfer was made "solely in order" to vest the property in the trustee. As I have previously found, the transfer had more than one purpose, and in this particular instance a purpose was for the beneficial interest in the property to be vested in PWFT. While such a purpose may have had no effect because it may not have been able to replace the interest of Annacott, in my view that is not to the point. In this instance unlike Kringas no steps were taken to replace the trustee prior to the transfer. Konann was not entitled to hold the Property on trust prior to the transfer. The objective evidence before me points to the fact that the transfer was intending to transfer the interest in the property to Konann to hold as trustee for PWFT. I agree with the submission of Mr Kotros.
3. Mr Horan maintained that as a matter of equity, Annacott was the beneficial owner of the property both before and after the transfer. He therefore said that the only purpose of the transfer was to change the beneficial ownership from P and G White to Konann. I agree with Mr Kotros who stated that even if the statement of Mr Horan referred to is accepted, the property was held on a different type of trust both before and after the transfer.
4. He said before the transfer the property was held on a payment trust for Annacott while after the transfer it was held on a mistaken trust for Annacott. That is, that both trusts were resulting trusts but different types of resulting trust, the resulting trust occurred prior to the transfer because Annacott had paid for the land. The resulting trust occurred after the transfer because there was a mistake in the transfer referring to PWFT rather than Annacott. (See 'Law of Trusts' by Ford and Lee [1.250] ff. The authors there state:

"There are various types of resulting trusts ... Another category is where title to the property is transferred and the person transferring or conveying the transfer says nothing about the beneficial interest ... but it can be seen that he or she does not intend the transferee to enjoy the beneficial interest. The transferee then holds on a resulting trust for the person who transfers or causes the transfer .... .... A trustee who transfers trust property to another by mistake has the same right of recovery as another person who transfers the property by mistake".

1. Maxwell ACJ, in the quotation that I have referred to above from the Lend Lease case at p210-11 made it clear, that the exemption would not be made out if the transferee held the property on different trusts.
2. I accept what Mr Kotros has said. Clearly, and there was no argument, that the property prior to the transfer was held on a resulting trust by P and G White for Annacott because of the fact that Annacott had made all the payments for the land. That meant that it was held on a resulting "payment" trust. After the transfer, the beneficial interest was changed to PWFT. That would not be sufficient to defeat Annacott's interest. However the type of trust must necessarily have changed. The change is to a resulting "mistaken" trust.
3. Mr Kotros correctly explained, that in such circumstances as a mistaken trust, the beneficial interest in the property reverts to the original trustees P and G White who in turn hold that interest on a resulting trust for Annacott. Thus, there is a trust upon a trust. Ford & Lee in 'Law of Trusts' stated at [21.000]:

"The principle that a resulting trust responds to an absence of intent on the part of the transferor to confer a beneficial interest on the transferee is susceptible to a wide application, a matter considered in [21.005], but it has in practice usually been confined to three types of cases:

First, where a trust has been expressly created but the interests taken by the beneficiaries do not exhaust the beneficial interest commensurate with the trustee's estate or interest.

Second, where a transferor has voluntarily transferred property, in other words without any consideration having been provided, the transferee being in equity a stranger to the transferor. See [21.170] for the meaning of "stranger".

Third, where the property has been purchased but title to the property is placed in the name of another, being in equity a stranger to the purchaser.

What these three cases have in common is the fact that the trust arises in favour of the settlor: Anderson v McPherson (No.2) [2012] WASC 19 at [95], Edelman J..."

1. I do not believe it is necessary for me to go into the exact nature of the type of resulting trust in which the property was held subsequent to the transfer. It is sufficient to say that it is clearly a different type of trust to which it was held prior to the transfer. That being the case, and applying what the Maxwell ACJ said in the Lend Lease case, that S.33(3)(b) has not been enlivened. Thus the exemption does not apply. Thus to sum up at this point, that s.33(3)(a) is not enlivened, because the sole cause of the transfer was not just the change of trustees. S.33(3)(b) is also not enlivened because the transfer was not made solely for the purpose in order to vest the trust in the property of the trustees for time being entitled to hold it. Konann failed to fill the requirement of being the trustee prior to the transfer. That is, it was not entitled to call for the transfer prior to the transfer being executed. Therefore it was not "entitled". Further, if Annacott was beneficial holder of the land subsequent to the transfer, it was beneficial owner of the land pursuant to a different trust as prior to the transfer. Thus the exemption referred to in s.33(3) does not apply in this situation.

Whether there was value in the property being transferred

"(a) the nature of the dutiable property that was transferred to Konann was the bare legal estate in Tulliallan; and/or

(b) in valuing the dutiable property (the estate in fee simple) that was transferred to Konann, it is necessary to have regard to the effect of the prior equitable interest held by Annacott as the beneficial owner of the land.

Accordingly, in light of Annacott's equitable entitlement to the land, the dutiable value of the property transferred to Konann is a nil or nominal value."

1. Mr Horan referred to s.22 of the Duties Act which refers to, "the unencumbered value of dutiable property is the amount for which the property might reasonably have been sold in the open market..." Mr Horan said that Konann could not have sold the property on the open market excluding Annacott's beneficial interest in it, for any value, because Annacott would have been successfully able to claim a resulting trust in relation to the property.
2. The case of Volpak which I have referred to above, is a different situation to this present. That concerned whether chattels on the land belonging to a third party should be valued with the land when it was transferred. While it was held that those chattels were being held on trust for the third party, in my view that is an entirely different situation to the present. I also refer to the distinction made by Maxwell ACJ in Lend Lease (see 68 hereof).I have mentioned the long line of authority to which Mr Kotros referred in his submissions, which stands for the proposition that the equitable interest cannot be carved out of the legal interest for the purposes of the Duties Act, but must be impressed upon it. In particular, that was made clear by the High Court in the DKLR Holdings (No 2) Pty Ltd case where Brennan J stated that, "an equitable interest is not carved out of the legal estate but is impressed upon it."
3. I also agree with Mr Kotros, that the position in the Lend Lease case is different to the present. That is the case should be confined to what was being considered. That is, a change of trustee in a management investment scheme. That is a very different situation to the present with different considerations because of the different parties holding the beneficial interest.
4. Tate JA in her judgement in the Lend Lease case recognised the special nature of the trust in that case, she stated at [163]:

[163] Had the relationship between TCAL and Lend Lease exhibited the orthodox character of a trustee and beneficiary relationship, I would have agreed with the extensive analysis undertaken by Maxwell ACJ on the dutiable value question; the interest of a beneficiary under a standard trust, although proprietary in nature, does not qualify the trustee's title. However, the relationship between TCAL and Lend Lease was not the orthodox one between a trustee and beneficiary; rather it was a special or sui generis relationship between a custodian-trustee and a scheme trustee, the scheme trustee being the responsible entity of a managed investment scheme. That sui generis relationship had the result, as the High Court recognised in Trust Company of Australia Ltd v Commissioner of State Revenue, of separating out the equitable and legal title so that the equitable title was held on trust by the scheme trustee with the custodian-trustee holding no more than the bare legal estate. In my opinion, in determining the value of what was transferred, the transfer of the legal estate in fee simple from the custodian-trustee to the scheme trustee was of nil value for duty purposes. The trial judge was correct in that conclusion.

The trust question in this proceeding is what Tate JA referred to as the "orthodox character".

1. Thus I find, that the transfer must be assessed for duty pursuant to the Duties Act, on the unencumbered value of the property being "the amount for which the property might reasonably have been sold on the open market".

1. During the hearing of this case, the applicant applied that the hearing should be split in that the determination of the value of the property should take place after the decision was made as to whether the exemption in s.33(3) applied to the 2006 transfer. In my view, it was somewhat presumptuous of the applicant to proceed to hearing on the assumption that the application to split the hearing would be granted. Such application should have been made at a Directions Hearing. However, because the applicant had not been prepared to argue the question of valuation of the property and expert evidence would be required, I decided that it was in the interests of fairness that I should agree with the submissions that were made by the applicant. For that reason, I agreed, that the question of valuation would not be dealt with in the hearing before me. For those reasons, I will adjourn the question of valuation to a further hearing.

1. As part of the assessment concerning the Duties Act, the respondent imposed a 60% penalty of the unpaid duty. The amount of the 60% penalty was $676,500. The power for the respondent to impose a penalty in relation to defaults is contained in Division 2 of the Taxation Administration Act 1992 (TAA). That Act relevantly provides:

S.30(1) the amount of penalty tax payable in respect of default is

(2) the Commissioner may increase the amount of penalty tax payable in respect of tax default to 75% of the amount of tax unpaid if the Commissioner is satisfied that the tax default was caused wholly or partly by the intentional disregard of the taxpayer (or a person acting on behalf of the taxpayer) of a taxation law.

S.31 (2) The amount of penalty tax determined under s.30 is to be reduced by 20% if, after the Commissioner commences an investigation into a known or suspected tax default or notification default by the taxpayer and before it is completed, the taxpayer voluntarily discloses to the Commissioner, in writing, sufficient information to enable the nature and extent of the default to be determined.

S.35 The Commission, in such circumstances as the Commissioner considers appropriate, may remit penalty tax by any amount.

1. In the respondent's letter dated 24 April 2012 accompanying the Assessment, it is stated: "while it is considered that, in providing false and misleading information in order to obtain an exemption, Konann has intentionally disregarded a taxation law I have exercised the discretion provided by s.34 of the Taxation Administration Act 1997 (the TAA) and reduced penalty payable on the transfer from 75% of unpaid duty to 60%."
2. I assume, that the reference to s.34, is a reference to s.31(2) of the TAA as that is the section that permits the reduction of 20% if the taxpayer makes voluntary disclosure before completion of an investigation but after it has commenced. Mr Horan submitted, that I should use the discretion given by reason of s.35 of the TAA to remit the penalty tax in whole or in part.
3. Mr Horan stated, that his client had acted bona fide and on legal advice.
4. Mr Horan further stated, that there had been a prejudice to his client in the time that the respondent had taken to issue the Assessment and determine the objection. He stated that there was no determination of the objection until the respondent had filed its contentions in relation to this review. Further, Mr Horan emphasised that his client had relied on advice throughout the whole matter. He said that from his client's point of view there had been no intentional disregard of the law.
5. Mr Kotros on the other hand said the penalty as imposed by his client should remain. He said that Peter White was prepared at all times to say whatever was necessary in order to avoid stamp duty. He pointed to the following matters in this regard:

(a) The nomination statutory declaration filed on 26 September 1994. In that declaration Mr White declared:

"I was the nominee prior to the date of the contract. I was orally appointed as agent to execute the contracts."

Mr White agreed in cross examination that there was no such oral appointment.

(b) The statutory declaration by Mr White on 30 August 2006 where he referred to the fact that Konann was acting as trustee for PWFT.

Mr Kotros said the above declarations were made to obtain the s.33 exemption. Mr Kotros also pointed to the fact that there had already been a reduction in the penalty by some 15% as a result of co-operation by the applicant between the time that the respondent's investigation commenced and prior to its conclusion.

1. On the evidence before the Tribunal, Peter White, on behalf of himself and a number of other parties involved in this litigation sought expensive legal advice. He is quite apparent that he has obtained advice from at least two of the prestigious legal firms in Melbourne. He has also obtained advice from Senior Counsel. Part of the problem involved in this proceeding was caused by those legal advisers not talking to each other including not talking to Mr White's accountant. When I asked Mr White why there was not communications between his advisers he said, "I did not want to spend the money". I found this to be an extraordinary answer. Although I did not know the amount of money that had been spent on legal advice in relation to matters concerning this proceeding, I believe it is fair to assume that there would have been a considerable amount of money so spent. Why Mr White stopped at that point rather than having conferences between his advisers I am unable to say. If it was a matter of money I believe it was complete foolishness on the part of Mr White. Mr White had and has large financial resources. He gave evidence that he has been a very successful businessman.
2. Taking these matters into account, I think it is wrong to blame Mr White's advisers entirely for what has happened. However, it is equally clear that Mr Donaldson for example has assumed matters that he should not have and acted in a way where he should have insisted upon talking to those that set up the company structure around Mr White.
3. Given those circumstances, I am of the view that a considerable penalty should apply however I do not believe the penalty should be reduce to nil neither do I believe it is appropriate to reduce the penalty to the 25% referred to in s.30 of the TAA. However, having regard to the matters that I have said, rather than just reducing the penalty by 20% as referred to in s.31(2) of the TAA, I believe it is appropriate to reduce the penalty by 40% of the amount referred to in that section. And I will order accordingly.
4. In exercising a discretion pursuant to s.35 of the TAA I have considered all matters that are appropriate in this proceeding. I have taken into account, the dishonesty that has been pointed out by Mr Kotros, and I have also taken into account the way Mr White has been mislead by his legal advisers. It is the combination of those two matters that has lead me to the conclusion which I have stated above.
5. Thus I will order that the penalty tax pursuant to s.30 (1) and (2) be reduced by 40%.

1. The respondent assessed the property for land tax for the years 2012 and 2013 not taking into account the primary production exemption contained in s.67 of the Land Tax Act 2005 (LTA). The applicant objected to the Assessment on the basis that the land was used for primary production at all relevant times and in particular as at the 31 December 2011 and 2012. Dozens of head of cattle were bought and sold and during that time horses were agisted and to some extend bred.
2. At all relevant times, the land was zoned as being in an urban zone of Greater Melbourne.
3. Evidence was given by Mr Peter White, that he spent a great deal of his time working as a primary producer as he was no longer involved with his business interests which had been disposed of. He was also an investor. He mentioned that he employed a farm hand to assist him, however the farm hand's hours were reduced to three days per week when horses were no longer bred. All the revenue and the expenses of the primary production were put through the accounts of Annacott.
4. The exemption, that the applicant claimed is contained in s.67(1) of the LTA. However, it is necessary that other sections be taken into account. S.67 of the LTA relevantly reads as follows:

67 Exemption of primary production land in an urban zone in greater Melbourne

(1) Land is exempt land if the Commissioner determines that -

(iii) used solely or primarily for the business of primary production; and

(b) the owner of the land is a person specified in subsection (2).

(a) a natural person who is normally engaged in a substantially full- time capacity in the business of primary production of the type carried on on the land; or

(b) a proprietary company (not acting in the capacity of trustee of a trust) -

(i) in which all the shares are beneficially owned by natural persons; and

(ii) the principal business of which is primary production of the type carried on on the land; or

(i) the sole business is primary production of they type carried on on the land; and

(ii) each beneficiary is a natural person who is entitled under the trust deed to an annual distribution of the trust income; and

(iii) at least one of the beneficiaries, or a relative of at least one of the beneficiaries, is normally engaged in a substantially full-time capacity in the business of primary production of the type carried on on the land.

(3) For the purposes of subsection (2)(b)(ii), the principal business of a proprietary company is not primary production of the type carried on on the land unless -

(a) the main undertaking of the company is primary production of that type; and

(i) dividends distributed during the relevant period were made to all the holders of the issued share capital of the company in proportion to their respective paid up shareholdings and 60% of those dividends were paid to persons normally engaged in a substantially full-time capacity in the business of primary production; or

(ii) if no dividends were declared during the relevant period, ordinary shares representing more than 60% of the paid up capital of the company (excluding shares entitled to a fixed rate of dividend) have been beneficially owned for the relevant period by persons normally engaged in a substantially full-time capacity in the business of primary production.

(a) a reference to the issued share capital of a company does not include a reference to any part of it that carries no right to participate beyond a specified amount in a distribution of either profits or capital;

(b) a reference to an owner of land does not include a reference to a beneficiary of a trust or a unitholder in a unit trust scheme to which the land is subject.

1. S.10 of the LTA defines an owner as a person entitled to land for freehold estate in possession - s.10(1)(a). S.10(1)(e) refers to the fact that a person is an owner if deemed by the Act to be an owner of the land.
2. S.18 of the LTA makes it clear that, "the holders of beneficial interests in certain trusts are deemed to be owners of the land by the Division 2A of Part 3.
3. The deeming provisions as to ownership, are contained in Part 3 Division 2A and 2B. S.46A of the LTAA charges a land tax surcharge in respect of the trusts therein referred to. S.46B(4) deems a beneficiary to be the owner of the land. This deeming provision is what is referred to in s.10(1)(e). It makes a provision for there to be two owners of land the trustee and the beneficiary although the trustee has right of reimbursement from the beneficiary. S.46L reads as follows:

(1) A person who is the owner of land as trustee of an implied or constructive trust is liable for land tax on the land at the general rate set out in Part 1 of Schedule 1.

(2) The trustee is to be assessed for land tax on the whole of the land subject to the implied or constructive trust as if the land were the only land owned by the trustee.

(3) Despite subsection (2), if the trustee holds land as trustee of more than one implied or constructive trust for the same beneficiary or beneficiaries, the trustee is to be assessed for land tax on the whole of the land subject to those implied or constructive trusts as if that land were the only land owned by the trustee.

1. This section, where there is an implied or constructive trust, allows the Commissioner to assess the trustee of the land as if that trustee was the owner of the land. For this purpose, implied trust is similar to a resulting trust.
2. S.46M gives the trustee of an implied or constructive trust who pays land tax, the entitlement to recoup the amount of the tax from any trust property that is the subject of the tax.
3. Trust is defined in S.3 of the LTA as follows:

(b) does not include an implied or constructive trust, except where expressly provide din this Act."

1. It is noted, that implied or constructive trusts are not recognised in the Act except for s.46L and 46M.
2. Mr Kotros said that even if Annacott could be recognised as an owner of the land in addition to Konann, then both owners would have to satisfy the terms of s.67(2) unless excepted by ss.67(4) or (5) and neither of those exceptions are satisfied.
3. It should be noted at this point that the applicant conceded that Konann did not come within the meaning of s.67(2)(b) as primary production was not the principal type of business which it conducted.
4. The applicant submitted, that Annacott was a proprietary company, "the principal business of which is primary production of the type carried on in the land". See s.67(2)(b). Mr Horan said s.67(2)(b)(i) was satisfied in the sense that the shares of Annacott were owned by a natural person namely Mr Peter White. He also said subsection (b) of s.67(2) was also satisfied because Annacott was in the business of primary production.
5. Mr Horan said that it did not matter that s.67(6) excluded trusts from the meaning of "owner" as, the definition of trusts within s.3 of the Act excluded implied or resulting trusts.
6. He further said that the primary production activities of Mr White can be inferred to Annacott, as he owns all the shares in that company. He noted that there was no challenge to the evidence that Mr White spent approximately 30 hours per week on working on the property in primary production. Mr White also gave evidence that he lives on the property and can attend on matters of necessity "24/7", for example, where cows are calving or fences need repairing.
7. Mr Horan said that because of s.67(6), Annacott, being either an implied or constructive beneficiary of the trust, remained the owner of the land within s.10 and s.67(1)(b) and s.67(2)(b).
8. Mr Kotros submitted:

"To 'recognise' the beneficiary of an implied or constructive trust of land as 'the owner of the land' for the purpose of s.67, whether in place of or in addition to the registered proprietor, would be to undermine: (1) the non-recognition of the statute of implied and constructive trusts other than by ss.46L and 46M (which, as stated, provide that the trustee is to be assessed as owner, in stark contrast to the provisions dealing with other trusts); and (2) the exemption itself, which: (i) makes clear that the provisions that deem certain beneficiaries of land held on trust to be owners do not operate for the purposes of the exemption (s.67(6)(b)); (ii) does not recognise implied or constructive trusts; (iii) should be read, as a coherent whole, and asking firstly whether the registered proprietor is a natural person, proprietary company or a trust, and then as imposing different requirements depending on which is the case."

1. I agree with the analysis that Mr Kotros has made above. It is clear, that apart from 46 L and 46M, the statute makes no recognition of implied or constructive trusts. I agree with the submission of Mr Kotros.
2. Given that circumstance, in my view, in this particular instance it is the registered owner of the trust that should be examined to see whether the exemption in s.67 applies. As I have stated previously, it was conceded by Mr Horan, that Konann did not come within the s.67 exemption. It was not a primary producer.
3. Therefore, for the purposes of the LTA, in my view it would be quite wrong to categorise Annacott as the owner. Therefore, the land tax is to be levied against Konann.
4. The Act must be read as a whole. It is clear form the Act that the registered owners of land are liable for ladn tax at the normal rate, unless they are exempt by the Act. In this particular instance Konann is not exempted by the Act. Also looking at the Act as a whole, Annacott is not the owner pursuant to the Act. Konann is the registered owner. Annacott's interest is not recognised in the Act therefore it cannot be exempt as it does not meet the requirements of the Act.
5. Given those circumstances, I will affirm the decisions in Z64/2014 and Z67/2014.

1. During the course of argument, Mr Horan asked regardless of what decision I come to that I should make a finding as to whether Annacott at the present time is the beneficial owner of the land. Having dealt with all the issues that I am required to decide, it is clear that I am not required to make a finding as to Annacott's position in regard to being a beneficiary of the land and I do not believe it is appropriate for me to make such finding. However it is clear that Annacott paid the purchase price of the land. It is further clear that Annacott has paid for improvements of the land. The accounts of Annacott show that it has conducted business on the land and that business is farming.

1. In relation to the Duties Act matter, I find, that the transfer from P and G White to Konann dated the 7 July 2006 is dutiable in the full amount of the duty that is payable. In relation to the question of value of the land, that question will be adjourned for further hearing.

The penalty imposed by the respondent shall be varied by reducing the same from 60% to 40% of the dutiable amount. In relation to the two decisions pursuant to the LTA, those decisions will be affirmed.