Perizon Nominees Pty Ltd v Chief Commissioner of State Revenue

Applicable legislation

1. Under the Duties Act s 8, both a transfer of dutiable property and an agreement for the sale or transfer of dutiable property are transactions giving rise to duty, each being called a "dutiable transaction". Duty charged on a dutiable transaction referred to in s 8(1)(b) (that is to say, an agreement for the sale or transfer of dutiable property) is to be charged as if that dutiable transaction were a transfer of dutiable property: s 9(1). In relation to an agreement to transfer dutiable property, the dutiable property in question is the property that is agreed to be transferred, the transferee is the purchaser or transferor and the transfer occurs when the agreement for the sale or transfer is entered into: s 9(2)(c).
2. The respondent's position is that there were two dutiable transactions on the present facts, the contract of 26 April 2012 and the transfer dated 17 August 2012. On that basis there would be two dutiable transactions, each independently giving rise to a liability for duty: s 12(1).
3. Section 18 of the Act is intended to prevent double duty being charged in certain circumstances. That provision relevantly provides as follows: (1) If a dutiable transaction is effected by more than one instrument, one instrument is to be stamped with the duty payable on the dutiable transaction and each other instrument is chargeable with duty of $50. Note. Instrument includes a written statement. (2) The duty chargeable in respect of a transfer of dutiable property made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if the duty chargeable in respect of the agreement has been paid. (3) The duty chargeable in respect of a transfer of dutiable property that is not made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if: (a) the duty chargeable in respect of the agreement has been paid, and (b) the transfer would be in conformity with the agreement if the transferee was the purchaser under the agreement, and (c) the transfer occurs at the same time as, or proximately with, the completion or settlement of the agreement, and (d) at the time the agreement was entered into, and at the completion or settlement of the agreement: (i) the purchaser under the agreement and the transferee under the transfer are related persons, except as provided by subparagraph (ii), or (ii) if the purchaser purchased as a trustee, the transferee and the beneficiary are related persons.
4. The issue in this matter is whether, assuming that the application is amended so as to seek review of the assessment rather than the objection decision, s 18 applies so as to render the transfer of the property liable only to the nominal duty of $10.
5. The respondent relied on the s 58 documents and on an affidavit of Michael Wixted sworn on 21 March 2016 containing copies of correspondence between the applicant, Mr Perry and the respondent.

Applicant's submissions

1. The applicant did not file any evidence or submissions other than an email sent on 4 October 2013 from Mr Marwan Kojok of Baybridge Lawyers, the corporate solicitors for the Perrys, to Mr Dean McKenzie of Versace McKenzie Lawyers, the solicitors for Mrs Perry. It deals with matters of professional indemnity insurance and has no relevance to the present issue.
2. Some comments by Mr Perry in an email to the respondent filed on 1 March 2016 should also be taken into account. Mr Perry said that after the 26 April 2012, Mrs Perry discovered, on the basis of legal and business advice she received at the time, that the purchase could not be completed in her own name and that the purchase would need to be performed through a separate entity, being the Perry Family Trust No. 2, with Perizon Nominees Pty Ltd as trustee. The purchaser's solicitors at the time wrote to the vendor's solicitors on 6 July 2012 to request that the contract for sale reflect the new purchaser's name, but were advised that the transfer could be completed into the name of the new purchaser with only nominal duty payable. Consequently, the property was transferred into the name of the applicant as trustee for the trust, pursuant to the transfer and contract between that entity and the vendors, but duty was paid on the original contract between the vendors and Mrs Perry, despite that sale never having been completed.
3. The applicant contended that the Perrys' situation fell within the exceptions applicable to double duty situations. There was no doubt that only one transfer on sale occurred in the matter, that is, from the vendors to the applicant. It therefore followed that the original contract between the vendors and Mrs Perry was null and void, having been rescinded by subsequent arrangements and never carried through to completion.

Consideration

1. As the sequence of events is crucial in the determination of this application, it is necessary to set out a chronology: 1. 26 April 2012: Angela Jane Perry as purchaser and Simon Horauf and Lisa Dabschek as vendors enter into a contract of sale of the Vaucluse property, with a completion date of 8 August 2012. 2. 13 June 2012: Perizon Nominees Pty Ltd is registered, with Alexander Perry as director-secretary and Perizon Group Pty Limited as shareholder. 3. 4 July 2012 Angela Perry becomes director and secretary of the applicant. 4. 6 July 2012: Versace McKenzie, lawyers for Mrs Perry, request that the vendors amend the purchaser named on the contract of sale. 5. 9 July 2012: Marque Lawyers, representing the vendors, agree to change the name of the purchaser, subject to certain conditions, and note that Mr and Mrs Perry remain liable under the contract of sale. 6. 23 July 2012: Perry Family Trust No. 2 is created, with Perizon Nominees Pty Ltd as trustee, Anthony Bell as settlor, Angela Perry as appointor and Angela Perry and Alexander Perry as beneficiaries. Angela Perry makes a statutory declaration regarding amendment of the purchasing entity to Perizon Nominees as trustee for the trust. 7. 24 July 2012: the contract of sale is stamped and $112,540 in duty is charged. 8. 26 July 2012: Versace McKenzie provides Marque Lawyers with updated purchaser details and confirms that Mr and Mrs Perry agree to the terms for the change of purchaser. 9. 8 August 2012: email from Marque Lawyers to Versace McKenzie permitting the purchaser to move in before completion pursuant to clause 18 of the contract for sale. 10. 17 August 2012: settlement takes place. 11. 5 September 2012 transfer registered and $10 duty paid in purported pursuance of s 18(3). 12. 27 June 2013: the notice of assessment issued for $121,102.23 duty in relation to the transfer. 13. 16 April 2014: Perizon Group Pty Ltd shareholding in Perizon changed to Mrs Perry. 14. 10 February 2015: objection to the notice of assessment lodged. 15. 13 May 2015: objection rejected by CCSR. 16. 27 August 2015: present proceedings commenced.
2. On an application for review, the applicant's and the Chief Commissioner's cases are not limited to the grounds that were before the respondent in relation to the objection decision: TA Act s 100(2). The applicant has the onus of proving its case in an application for review: s 100(3). The applicant is thus required to prove on the balance (preponderance) of probabilities all facts necessary to enable the tribunal to find in favour of the applicant and all the facts on which the applicant relies to claim any exemption. The legislation places no onus on the respondent to show that the assessments were correctly made, nor is there any statutory requirement that the assessments should be supported by evidence.

Proceeding ex parte

1. When a party does not appear at the time and on the date fixed for hearing, the tribunal may dismiss the proceedings under s 55(1)(c). The proceedings may later be reinstated for cause shown under s 55(2). The respondent did not favour that course of action, however, as the matter would not necessarily achieve finality. The question then arose as to whether the tribunal could continue with the hearing in the absence of the applicant or its representative on an ex parte basis.
2. While the CAT Act s 38(1) confers on the tribunal the power to determine its own procedure, it is also required by s 38(5) and (6) and by the general law to accord procedural fairness to all parties. The applicant's representative attended the directions hearing at which the hearing date was fixed and must be taken to have been aware of it, but nevertheless failed to appear. It could be argued that the applicant has been given every opportunity to present its case, even if it has not chosen fully to make use of them. On the other hand, it could also be argued that giving the respondent the opportunity to make oral submissions when the applicant did not have the same opportunity, even if as a result of its own actions, could be viewed as less than even-handed.
3. The CAT Act and Rules appear to contain no provision empowering the tribunal to hear a matter ex parte if one party or the other fails to appear (except under NCAT Rule 35 in relation to the Consumer and Commercial Division), and counsel was unaware of any decided authority on the point. By way of contrast, the Victorian Civil and Administrative Tribunal Act 1998 (Vic), which corresponds with the CAT Act, provides in s 99(2) that VCAT may conduct a hearing in the absence of a person who has failed to attend after having been given notice of the hearing in accordance with the rules. See, for example, Cerebos Pty Ltd v City of Port Phillip [1998] VCAT 143. A further provision compels the tribunal to confirm the decision under review if an applicant does not appear, either personally or by a representative, at the hearing of a proceeding for review: s 51(5) and see Pizer's Annotated VCAT Act, 4th edn. 2012, pp 458-459.
4. It therefore seems more prudent to assume that there is no such power and therefore not to proceed ex parte but to decide the matter on the papers.

Availability of the s 18(3) Concession

1. As was noted above, both an agreement for the sale or transfer of dutiable property, and a transfer of dutiable property are transactions giving rise to a liability to duty, each being a dutiable transaction. Liability for duty arises when a transfer of dutiable property occurs or, in the case of a transfer effected by a written instrument, when that instrument is first executed: Duties Act 1997 s 12(1) and (2). Consequently, in the present case there were two dutiable transactions, the contract dated 26 April 2012 and the transfer on or after 17 August 2012. That being so, each transaction independently gave rise to liability for duty under s 12(1). In relation to the contract, that duty has already been paid. Duty has not been paid in relation to the transfer, which is the subject of the notice of assessment.
2. The respondent accepts that s 18(3)(a), (b) and (c) are satisfied. As the requirements of s 18(3) are cumulative, however, either paragraph (d)(i) or (d)(ii) must also be satisfied, the relevant subparagraph in this case being (ii). That subparagraph refers to two points of time, "at the time the agreement was entered into, and at the completion or settlement of the agreement". The relevant parties must be related at both those points of time and it is insufficient for them to be related at only one of those points of time. At the time the agreement was entered into on 26 April 2012, the purchaser named in the contract, Mrs Perry, and the transferee under the transfer (the applicant) could not possibly be related persons as the applicant did not then exist, being incorporated only on 13 June 2012.
3. Even if the applicant had been incorporated before the contract was entered into, the purchaser and the transferee were not related persons at the time of the agreement. "Related persons" are relevantly defined in the dictionary section of the Duties Act as follows: (c) a natural person and a private company are related persons if the natural person is a majority shareholder or director of the company or of another private company that is a related body corporate, (d) a natural person and a trustee are related persons if the natural person is a beneficiary of the trust… of which the trustee is a trustee.
4. Mrs Perry's statutory declaration of 23 July 2012 and Ms Daniel's email of 6 July 2012 are not free of ambiguity, but it does appear as if the applicant was intended to be the transferee of the property on trust for the Perry Family Trust No. 2, in which case the earliest that Mrs Perry as purchaser and the applicant as trustee of the trust as transferee could have been related persons was on 23 July 2012, as the trust did not exist before that date. If the applicant was intended to be the transferee in its own right, then the earliest that Mrs Perry as purchaser and the applicant as transferee could have been related persons was 4 July 2012, because before that date the sole director and secretary of the applicant was Mr Perry, and Mrs Perry was not a shareholder in the applicant until 2014. Both of those dates are subsequent to 26 April 2012, the date on which the contract was entered into.
5. There is no evidence to suggest that the contract was ever cancelled or rescinded as the applicant contended. On the contrary, the correspondence indicates that it remained on foot. Mr and Mrs Perry were permitted to take possession of the property before completion, "in accordance with clause 18 of the contract". After it was suggested that the transfer be made to the applicant rather than to Mrs Perry, the vendor's solicitor noted that "we do not need to amend the contract…. I confirm that both Angela Perry and Alex Perry will remain liable under the contract". Again, Mrs Perry's solicitor when referring to the settlement date under the contract stated that, "This matter is scheduled to take place next Wednesday 8 August. I have attached the draft settlement figures…."
6. It therefore follows that, as the s 18(3) concession cannot apply, both the contract and the transfer are dutiable transactions giving rise to liability for duty. That is a rather onerous result for the applicant, but as the tribunal pointed out in Zhuang v Chief Commissioner of State Revenue [2013] NSWADT 103, [49], considerations of harshness or unfairness have little role to play in construing revenue statutory provisions: "All taxpayers are subject to the legislation which provides exemptions and concessions should certain circumstances apply. It is not unfair or unjust for the Applicant to be subject to the same statutory imposts as other taxpayers". The correspondence suggests that the applicant believes it may have a claim in relation to erroneous legal advice, but that does not alter the fact that the respondent is exercising a statutory responsibility in relation to revenue collection in accordance with the Duties Act.
7. As was indicated at the outset, the above discussion is premised on the assumption that the applicant would apply to amend the application so as to identify the original notice of assessment rather than the objection decision as the decision under review. That is necessary because Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184, [28] holds that the decision that is reviewable under s 96 of the TA Act is the original decision whereby an assessment was issued to a taxpayer, not a decision in response to an objection to the original assessment. In the event, however, the applicant did not appear at the hearing and no application to amend has been made. Quite apart from s 18, therefore, the decision under review must be affirmed on that ground alone.
8. The decision under review is therefore affirmed. 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: 05 May 2016