Macedo v Chief Commissioner of State Revenue

Evidence

1. At the hearing of the present matter, the Tribunal had the documents provided by the Chief Commissioner as required by s 58 of the Administrative Decisions Review Act 1997.
2. The Applicant relied on the following - 1. affidavit of Raymond Ross sworn on 15 March 2009; 2. report of Mark Bryant dated December 2009; 3. affidavit of Marie Ross sworn on 14 January 2010; 4. affidavit of Deirdre Macedo sworn on 26 July 2013 (but not produced or filed) and 5. another affidavit of Raymond Ross sworn on 20 May 2015.
3. In addition, both parties supplied submissions in writing and made further viva voce submissions at the hearing.

Submissions

1. The Applicant's case was that the Tribunal should, from the various matters produced by the Applicant by way of evidence, make the proper inference that Mr Ross paid the purchase price of the Property pursuant to loans from family members. It was also the Applicant's case that there was no resulting trust in favour of any of the members of Mr Ross' family because the funds provided by members of his family were provided by way of loan.
2. Mr Ross in his written submission described the assessment as … an arbitrary ad valorem stamp duty assessment on one altered photocopy of a 'number of superseded and/ or altered photocopies' of a declaration of trust 'never tendered for assessment' by the applicant. Instead the photocopy was removed by the respondent from a bundle of some 15 year old photocopies of randomly selected documents collectively tendered in around 2008 in relation to the acquisition of the subject property in around 1997 and in order to demonstrate the intentions of the parties at the time.
3. It was submitted that the applicant in Ross v Chief Commissioner of State Revenue (No 2) "was not allowed by the respondent to rely upon the unstamped document", the document which is the subject of these proceedings and that - Following the finalisation of those proceedings the respondent promptly 'collected' ad valorem stamp duty (instead of the applicable $10 concessional duty) by garnishing the applicant's bank account. Thereby bringing into existence an instrument which is clearly at odds with that earlier judgment. Furthermore the respondent went on to deny the parties the rights expressly created by this instrument. In all of the circumstances the conduct of the respondent is disingenuous.
4. It was also submitted that the outcome in that case was largely due to a finding that the Naremburn property was purchased by "Raymond Ross in trust for Amanda N. Ross" and that - Crucially over the past 18 years there has been no claim or assertion from this non-existent person Amanda N. Ross or any other person with similar sounding name suggesting that there was an intention for the property to be held in trust for her or it.
5. The applicant also submitted that - 3.4 Due to impending family law proceedings the parties had agreed to register the property in the applicant's name. At the same time the Applicant and her brother at least evinced an intention to establish a trust whereby she held the property on trust for Mr Ross and that the purchase price for the property was to be paid and ultimately paid by Mr Ross and not by the Applicant. 3.5 This trust subsequently was considered to be unnecessary in order to establish a resulting trust and therefore never tendered for stamping.
6. Finally, it was submitted that the Declaration did "not involve a separate dutiable transaction" and should only be subject to a nominal duty under the Second Schedule of the Stamp Duties Act as an "instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase money therefor".
7. Mr Rider, counsel for the Chief Commissioner, in his written submissions first noted that under s 100(3) of the Administration Act the applicant bore the onus of proving her case.
8. Mr Rider also by way of introduction noted that in view of the decision in Paspaley "it is the Assessment which the Tribunal is empowered to review".
9. Mr Rider submitted that s 73D of the Stamp Duties Act "empowered" the Chief Commissioner "to assess duty on and stamp a copy of the Trust Deed".
10. Section 73D of the Stamp Duties Act provided: 73D Certain copies of instruments to be dutiable 1. A copy of an original instruments chargeable with duty if the original instrument was executed on or after 20th October 1982, and such a copy is so chargeable as if it had been executed in the same way as the original instrument and had been first executed at the same time as the original instrument unless the chief Commissioner is satisfied: 1. that the original instrument has been duly stamped, or 2. that a copy of the original instrument has been duly stamped in accordance with this subsection. 1. Where a copy of an original instrument is duly stamped in accordance with subsection, the original instrument shall be deemed to have been duly stamped. 2. …
11. Reliance was also placed on the Second Schedule (Stamp duties and exemptions) to the Stamp Duties Act, in particular liability to duty of "any instrument declaring that any property vested or to be vested in the person executing the instrument is or shall be held in trust for the person or persons or purpose or purposes mentioned therein notwithstanding that the beneficial owner or person entitled to appoint that property may not have joined therein or assented thereto".
12. Under the Second Schedule the duty payable at the relevant time was "$200.00 or the same duty as would be chargeable if the instrument were a conveyance of the property comprised therein, whichever was greater". The Second Schedule also sets out the person primarily liable for the duty and relevantly provided that the person liable was the person declaring the trust or the person directing the declaration of the trust.
13. Mr Rider advanced several grounds to support the Chief Commissioner's ad valorem duty assessment.
14. Firstly, he submitted that the original Trust Deed "was liable to ad valorem duty under para.2(a) of the heading "Declaration of Trust' in the Second Schedule of the Act as an instrument declaring that any property vested or to be vested in the person executing the instrument is or shall be held in trust for the person mentioned therein". In this matter, he submitted "the Trust Deed was an 'instrument' (i.e. a written document), which clearly identified the person declaring it (i.e. the Applicant) and the relevant property (i.e. the Property) and person (i.e. Mr. Ross) the subject of the declaration".
15. Some reliance was also placed by Mr Rider on the decision of the High Court in Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1988-1989) 167 CLR 1 to submit that the "to be vested" requirement was satisfied by the Recital B of the Trust Deed which provided that the Applicant "will be the registered proprietor of the Property".
16. Secondly, he submitted that, the Applicant was the person liable to pay ad valorem stamp duty on the executed original Trust and was required by s 25 of the Act to lodge it with the Chief Commissioner and cause it to be duly stamped within six months of it being first executed. But the Applicant has failed to do so.
17. Thirdly, it was submitted that the copy of the Trust Deed evidenced the signatures of the Applicant and Mr Ross on the original Trust Deed and the Chief Commissioner was satisfied that the matter contained in the original executed Trust Deed was wholly or substantially reproduced in the instrument". And on that basis, the photocopy of the Trust Deed provided to the Chief Commissioner was a "copy", as defined in s 73C of the Act, of the original executed Trust Deed.
18. Fourthly, it was submitted that because the original Trust Deed or a copy had not been previously duly stamped, "the 'copy' of the Trust Deed was chargeable under s 73D(1) of the Act with the same ad valorem conveyance duty as the original executed Trust Deed".
19. Fifthly, Mr Rider submitted that "the application of s.73D(1) to the 'copy' of the Trust Deed did not depend on how it came to be in the Respondent's possession, nor whether it was a copy of another copy of the original executed Trust Deed".
20. Mr Rider's sixth ground was that - … regardless of whether multiple versions of the Trust Deed were executed at different times, such other versions were liable to ad valorem stamp duty in their own right. Further, unless and until they had been duly stamped with ad valorem duty under the Act (of which there is no evidence), they did not affect the liability to duty of the original or 'copy' of the Trust Deed dated 21 March 1997.
21. Finally, it was submitted that "the Respondent issued the Assessment in accordance with s.73D and assessed ad valorem stamp duty on the 'copy' of the executed original Trust Deed based on the purchase price for the Property of $372,000 under the Contract for sale executed by Mr. Ross and the vendors on or around 7 February 1997".

Consideration

1. Essentially, the issue before the Tribunal was whether the Chief Commissioner was entitled to assess stamp duty on merely sighting a copy of the Trust Deed under the Stamp Duties Act 1920 ("the Stamp Duties Act").
2. But a careful perusal of the relevant documents produced by the Chief Commissioner as required by s 58 of the Review Act raises a fairly difficult conundrum as to the core issue relating to the Applicant's liability to ad valorem duty in respect of the assessment issued by the Chief Commissioner.
3. The s 58 documents reveal that the assessment, the subject of this review, issued on 28 July 2008 by the Chief Commissioner was an assessment issued to "Raymond Ross".
4. Mr Ross lodged an objection against the assessment that was received by the Chief Commissioner on 27 August 2008. In the objection, Mr Ross also drew the attention of the Chief Commissioner to the then related matter that was before the Administrative Decisions Tribunal. The Chief Commissioner disallowed the objection and the decision was conveyed to Mr Ross in a letter dated 12 November 2008. Mr Ross took no further action in relation to the assessment.
5. At the hearing of the related matter, Ross v Chief Commissioner of State Revenue (No 2) [2010] NSWADT 51 (affirmed by the Appeal Panel), the applicant sought to rely on an unstamped copy of the Declaration of Trust but on objection by the Chief Commissioner the document was not allowed to be admitted. Neither the applicant nor the Chief Commissioner revealed to the Tribunal that a copy of the Trust Deed had been assessed to ad valorem duty. In a sense, the Applicant is correct in claiming that the decision in that matter is somewhat at odds with the decision made by the Chief Commissioner to accept the copy as a Declaration of Trust and impose an ad valorem duty.
6. As the facts now reveal, the Chief Commissioner, sometime in December 2013, acted to have the assessment satisfied by monies garnisheed from the Applicant's bank account. This action led the Applicant to make inquiries as to the basis of the liability and was informed of an outstanding assessment. The Applicant then sought to object to the assessment, giving rise to the current proceedings. But the assessment that the Chief Commissioner relied upon was not against the Applicant. The assessment dated 28 July 2008 was directed to "Raymond Ross" and his name was also in the notice noted as the "Client name". No assessment has been issued to the Applicant, giving rise to any liability under the Stamp Duties Act or the Duties Act.
7. The Chief Commissioner's Objection Determination Report dated 14 August 2014, included in his s 58 documents, discloses why the assessment was made against Mr Ross - However in this matter the Declaration of Trust was lodged with OSR by Mr Ross and it is OSR's practice to issue notice of assessment to the lodging party instead of the person primarily liable.
8. The Chief Commissioner's powers to issue assessments are found in Part 3 of the Administration Act. The Chief Commissioner's general power to make an assessment is found in s 8, which allows the Chief Commissioner to make an assessment of the tax liability of a taxpayer. Section 14 gives the Chief Commissioner authority to issue a notice of assessment showing the amount of the assessment "in a form approved by the Chief Commissioner". I think an assessment is required to be made against the party liable to the duty and the process is only complete if the notice is served on that party.
9. It is not clear on what basis the Chief Commissioner was able to garnish the Applicant's bank account to obtain funds to stamp the Declaration of Trust. The s 58 documents indicate that the Chief Commissioner exercised his powers under s 46 of the Administration Act, which allows the Chief Commissioner to collect any outstanding tax from third parties, including banks holding monies due to a taxpayer. But the section can only be enlivened if there is a pre-existing tax liability, which remains unpaid.
10. The conundrum in this matter concerns the absence on the facts of any liability on the part of the Applicant under the assessment issued to Mr Ross. Although the Applicant was a party to the Trust Deed, no assessment has been issued to her.
11. As correctly pointed out by Mr Rider for the Chief Commissioner, "it is the Assessment which the Tribunal is empowered to review".
12. The Tribunal is thus not empowered, pursuant to this application, to determine whether there is any independent liability to duty on the part of the Applicant in respect of the Trust Deed.
13. Under the Second Schedule of the Stamp Duties Act, the liability to pay the duty on a Declaration of Trust is on - "The person declaring the trust or the person directing the declaration of the trust". And under s 13 of the Duties Act, the duty charged is payable by the transferee.
14. I also note that under s 4 of the Duties Act a duty charged under the Duties Act, is "when a liability to pay the duty is created a debt due to the State of New South Wales".
15. In all circumstances of this matter, I think the proper course for the Tribunal to take is to remit this matter pursuant to s 65 of the Review Act back to the Chief Commissioner to reconsider his position. The Chief Commissioner needs to consider whether in the absence of an assessment against the Applicant, the Applicant is nevertheless liable to pay the duty imposed on the Trust Deed.
16. Alternatively, the Chief Commissioner needs to consider whether the duty imposed under the assessment is a debt due from Mr Ross.
17. This reconsideration I think ought to be done against the factual background of the outcome in Ross, in particular the Chief Commissioner's position taken on the facts in that matter.
18. The Applicant's agent must bear some responsibility for this outcome. Mr Ross did not register the original transfer for a number of years to avoid disclosure of ownership of the property to his former wife in the then divorce proceedings, made changes to the transfer instrument without proper process and failed to inform the Tribunal and the Appeal Panel in his own matter that an ad valorem duty assessment had been issued to him in respect of the Declaration of Trust.
19. Mr Ross has also not been truthful as far as the facts are concerned. In 2007, he informed the Chief Commissioner that the name on the contract document was "variously" and included "Natalie Amanda Ross (daughter 9 years old at the time)". He now describes her as the "non-existent person Amanda N. Ross or any other person with similar sounding name".
20. The matter is remitted to the Chief Commissioner for reconsideration as advised. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 November 2015