Set aside by Appeal : Set aside by Appeal on 3 March 2004 (Gardiner v Chief Commissioner of State Revenue

REASONS FOR DECISION 1 This is an appeal from the decision of the tribunal reported at [2003] NSWADT 80. The appeal is on a question of law. There is no dispute about the facts, which may be simply stated. 2 The respondent's father owned a house and land at St Ives, in which he lived. He had married his second wife, Margaret, in 1996, but they separated in mid-1998. 3 In early August 1998 he said to the respondent, "Margaret is acting unstable and I am scared she may attack me again. I want to make a new will leaving Margaret out, but I want to make sure that you will get my property at St Ives when I die. I will sign a transfer of the St Ives property over to you, which you can keep to protect you until my will comes into effect." 4 On 19 August 1998 the respondent's father executed a Real Property Act 1900 form of transfer, which purported to transfer the house property from his name into that of his daughter, the respondent, for a nominal consideration of $1. To avoid confusion this document is referred to in these reasons as "the instrument". 5 The respondent proceeded to have the property valued, and on 28 August 1998 she paid ad valorem stamp duty of $56,990 on the instrument. 6 There is no evidence that her father delivered to her the Certificate of Title, nor did she attempt to register the transfer. She did, however, lodge a caveat in which she claimed an equitable estate or interest in the property as transferee. 7 The property had been the respondent's childhood home. However she was not living there in 1998, nor did she live there at any time after the conversation with her father. He continued to live there until he went to hospital shortly before his death. 8 On 26 February 1999 the respondent's father executed his last will and testament leaving the St Ives property to the respondent. 9 The respondent's father died on 7 June 1999. Probate of his will was granted on 10 December 1999. 10 On 7 February 2000 nominal stamp duty of $10 was paid on a transmission application, which was then registered on 14 February 2000, transferring title in the St Ives property to the respondent. 11 On 17 October 2001 the respondent applied to the appellant for reassessment of the duty that had been paid on the Real Property Act 1900 transfer. On 13 December 2001 the respondent decided to deny a refund of the duty. 12 On 8 February 2002 the respondent objected to the appellant's decision, and on 26 April 2002 the appellant disallowed the objection. 13 On 28 June 2002 the application for review of that disallowance was filed in the tribunal. 14 On 22 April 2003 the tribunal set aside the appellant's decision and granted the application for a refund of the duty. 15 We would uphold the appeal and restore the appellant's disallowance of the respondent's objection. 16 As the tribunal noted, by contrast with the former Stamp Duties Act 1920, the present legislation imposes duty not upon instruments as such, but upon transactions. The tribunal purported to arrive at its decision in an attempt to reconcile, and to achieve symmetry between, what were called "the transaction strand" and "the document strand". We think that the proper approach is to apply the provisions of the statute as they stand. 17 The land referred to in the transfer was "dutiable property" because it was land in New South Wales: S.11(1)(a). 18 The Act charges duty on a transfer of dutiable property: S.8(1)(a). "Transfer" is not defined in the Act any further than to provide that it includes an assignment or an exchange (Dict. Sch.99), though in S.8(3) it is given an extended operation with respect to share transactions, which is not here relevant. Duty is also charged on a number of transactions that are not transfers, which are set out in S.8(1)(b), and for which provision is made in S.9. Such a transfer or transaction is referred to as a "dutiable transaction": S.8(2). (It is clear that what took place in this case did not amount to one of those latter transactions). By S.10, it is immaterial whether or not a dutiable transaction is effected by a written instrument or by any other means, including electronic means. 19 Section 288 provides (emphasis added): The Chief Commissioner must stamp an instrument in respect of which duty is chargeable under this Act, or that effects or evidences a dutiable transaction, and that has been lodged for stamping with the Chief Commissioner if the duty, and any interest or penalty tax under part 5 of the Taxation Administration Act 1996 , is paid in full. 20 When the respondent lodged the instrument for stamping with the Chief Commissioner, together with the duty payable, it obviously evidenced a dutiable transaction, and the appellant was therefore obliged to stamp it. 21 Ironically, it is the argument put forward by the respondent that demonstrates that there had been in fact no dutiable transaction, either evidenced by the instrument or by other evidence. 22 First, the execution and handing over of the instrument did not effect a transfer of the property at law. That could not happen unless and until the instrument was registered: Real Property Act 1900 S.41(1). 23 Secondly there was no transfer of an equitable interest in the property, such as may arise when a purchaser pays the whole of the purchase money under a contract of sale on settlement. There was here no contract, and no consideration passed from transferee to transferor. 24 The fact that the respondent lodged a caveat claiming an equitable estate is not to the point. Many a claim made in a caveat is found, upon analysis of the facts, to have no foundation in law. Upon proof of the facts in evidence in this case there is no doubt that this caveat would have been set aside. 25 Thirdly, there was no transfer by way of gift. The respondent's father said that he wanted her to get the property when he died, not then and there. He gave the instrument to her, not to effect any change in ownership, but in order " to protect you until my will comes into effect." He continued to use the property as his own until his death. She did not regard herself as entitled to exercise any dominion over it until after probate of the Will had been granted. The cases that were discussed at such length in the tribunal below have no bearing upon a situation where there was no expressed intention to effect a gift, nor circumstances from which such an intention could be inferred. 26 In our view, on the whole of the evidence, what took place did not amount to a "transfer of dutiable property", within the meaning of S.8(1). In truth, there was no legal requirement that the respondent should have paid any duty on the transaction at all. However, she did so, voluntarily. On the basis of what was lodged the appellant had no option but to stamp the instrument. 27 It is possible that the appellant could have made a claim for repayment of the duty as money paid by mistake, which, in Australia, no longer needs to be a mistake of fact: David Securities v CBA (1992) 175 CLR 353. Authority for repayment might be found in S.18 of the Taxation Administration Act 1996. If application for such a repayment had been made and refused, an action at law to recover it might have been brought, or a review of the decision to refuse it might have been sought in this tribunal. Different considerations might apply in each case. See Commissioner of State Revenue (Victoria) v Royal Insurance of Australia Ltd (1994) 182 CLR 51, generally and esp. per Dawson J at para 23 of his judgment. Those considerations were not adverted to by counsel in argument on the hearing of this appeal. 28 However, this Tribunal does not sit as a Court of Law to hear and determine a claim for money had and received. It has power in this case only to determine whether the decision of the Tribunal at first instance was correct in law. That Tribunal had cognisance only of the decision of the appellant to disallow the objection that the respondent had made to her application for a reassessment of the duty. That application for reassessment was based on S.293 of the Duties Act 1997. The question argued before us, and the only question of which we have cognisance, is whether that section operated on these facts to give rise to a right to a refund. 29 It is common ground that at the relevant time the Act did not contain the provisions that now appear as S.50A and Subs.293(4), which were inserted by Act No. 108 of 2002. Non-compliance with the time limits referred to in Subs. 293(2) were not relied upon. 30 Section 293 (1) provides "An instrument that fails in its intended operation and becomes useless is not chargeable with duty under this Act." 31 To become useless implies a change, by which something that at one time had some usefulness later loses that quality and can no longer be used. It is not clear in what manner the stamped instrument could have been used before registration of the Transmission Application, but there is no doubt that upon that registration it became useless. 32 The other requirement for the operation of the section is that the instrument should "fail in its intended operation". What was the "intended operation" of this instrument? 33 The respondent submitted, and the Tribunal held, "The intention in respect of the transfer appears on its face and that was the transfer of the fee simple. On this basis questions of intention (as to objectivity or subjectivity) become irrelevant. There was no intention ex facie the instrument to create an equitable estate." 34 A document does not have an intention. The people who play a part in its creation do. The document is usually the best evidence of what their intention was, but not always. In the circumstances of this case, it is clear that the so-called transferor did not in fact intend to transfer the property by his execution and delivery of the instrument, either at law or in equity. 35 In our view it would be more correct to describe the transfer of the fee simple as being the purported operation of the instrument, rather than its intended operation. 36 In the case of a voluntary transfer the intended operation of the instrument must be ascertained by reference to the intention of the transferor. 37 As it happens, in this case, the transferor and the transferee had a common intention. It was not intended by either of them that the instrument should effect a transfer of the fee simple, despite its terms. Both of them expected, and he intended, that the respondent would obtain title to the property by operation of the transferor's Will after his death. 38 The intended purpose of the instrument was, as he said, that the respondent could keep it to protect her until his Will came into effect. But that was not its operation. In fact it never did operate according to its terms. But that is not the same thing as failing in its intended operation. 39 It is not clear from the evidence how he expected the document to play its part in that purpose, nor what advice he received before he decided to protect her in that manner. Many lawyers might well have devised a different method of affording her protection. In the events that happened it was not necessary for her to use it in any way. However, it was at all times in her possession, and was available to her, so that she might make such use of it for her protection as she might be advised if any threat appeared. To that extent, the transferor's expressed purpose was fulfilled. The instrument could not therefore be said to have failed in its intended operation. It was never necessary to use it in order to effect its purported operation, but that is not the same thing as failing in its intended operation. We would allow the appeal and restore the decision of the appellant under review.

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