Webeck v Chief Commissioner of State Revenue

Chronology

1. In order to understand the Applicant's submissions it is necessary to consider two Wills of deceased family members, the events of 2011 and 2014, the 2011 Deed, the Family Deed and the 2011 and 2014 transfers.
2. The relevant family members are Eric Webeck; John and Robert Webeck (Eric's sons); Judith Webeck (Robert's wife); and George, Clinton and Tanya Webeck (Robert's children). I refer to these family members by their given names.
3. I observe that: 1. Robert's Will gave 50% of his estate to Judith and divided the remainder equally among his children; and 2. Eric's Will appointed John his executor and gave John power to distribute his estate among such eligible beneficiaries, including John, Judith, Clinton, George and Tanya as John "in his absolute discretion shall determine".
4. Ownership of the properties and relevant changes of ownership were as follows: Date Event Ownership of Newport Ownership of Turramurra Before any events Robert 50% Robert 50% John 50% Eric 50% 2 Jan 2010 Robert died. Robert's estate 50% Robert's estate 50% John 50% Eric 50% 3 Jul 2010 Eric died. Robert's estate 50% Eric's estate 50% 2 Aug 2010 John obtained probate of Eric's estate. Robert's estate 50% John as executor of Eric's estate 50% Judith 25% Judith 25% Clinton 8.33% Clinton 8.33% 15 Apr 2011 Transmission applications from Robert's estate to Judith 25%, Clinton, George and Tanya 8.33% each George 8.33% George 8.33% Tanya 8.33% Tanya 8.33% John 50% John as executor of Eric's estate 50% Judith 7.51% Transfers pursuant to "Deed of Partition": Clinton 14.163% Judith 50% 24 Jul 2011 Turramurra - Clinton, George and Tanya's shares to Judith George 14.163% John as executor of Eric's estate 50% Newport - 21/360th share from Judith to each of Clinton, George and Tanya Tanya 14.163% John 50% 12 Sep 2011 Transmission application from Eric's estate - Turramurra to John Judith 50% John 50% "Deed of family arrangement" and transfers. Judith 70% 24 Jun 2014 Turramurra - from John, 20% to Judith and 10% to each of Clinton, George and Tania Olstein (formerly Tanya Webeck) John 100% Clinton 10% Newport - the whole of Judith, Clinton, George and Tania's interests to John George 10% Tania 10%

1. In order to avoid undue complexity I will refer to Tania Olstein as 'Tanya'.

Material before the Tribunal

1. The Applicant relied on the grounds in the Administrative Review Application Form that the Chief Commissioner "should have treated the transmissions as one agreement", an Event Chronology and submissions (AS) filed 13 April 2015, final submissions filed 22 May 2015 (ASR) and a reference to Mitchell & ors v Commissioner of State Revenue (Vic) 93 ATC 2142, (1993) 26 ATR 1197.
2. The Respondent relied on the bundle of documents produced under s. 58 of the Administrative Decisions Review Act 1997 (the ADR Act) filed 10 March 2015 and written submissions filed 1 May 2015 (RS).
3. References below to documents by page number refer to pages from the s. 58 documents unless otherwise stated. References to submissions by the Respondent are to RS unless otherwise stated.

The Tribunal's jurisdiction and powers

1. The Tribunal's jurisdiction relates to reviewable administrative decisions in respect of which there has already been an internal review (s. 96 of the Taxation Administration Act 1996 (the TA Act) and sections 7 and 9 of the ADR Act. The Tribunal hearing was conducted and a decision made in relation to the Assessments rather than the Disallowance Decision.
2. On a review the Tribunal may affirm, vary, or set aside relevant assessments and decisions and make orders as to costs or otherwise. The Tribunal may also remit the matter to the Chief Commissioner for determination in accordance with its finding or decision. Section 101(1) of the TA Act and s. 63 of the ADR Act. The parties are not restricted to the grounds of the objection, s. 100(2) of the TA Act.

Onus

1. The onus in this matter lies on the Applicant (s. 100(3) of the TA Act). The onus is to be satisfied on the balance of probabilities B & L Linings Pty Ltd & anor v Chief Commissioner of State Revenue [2008] NSWCA 187 at [104].

Issues

1. The Chief Commissioner has at [1] - [5], challenged the entitlement of the Applicant to seek a review of the Turramurra assessment. Accordingly a preliminary issue for determination is whether the Applicant is entitled to seek a review by the Tribunal of that assessment.
2. The principal issue is whether the Tribunal, standing in the shoes of the Chief Commissioner, has power or discretion to make orders pursuant to s. 101 of the TA Act and s. 63 of the ADRA Act in respect of the Newport assessment and, depending on the determination in relation to the preliminary issue, the Turramurra assessment, and if so, what is the correct and preferable decision having regard to the material before it (s. 63(1) of the ADR Act).

Preliminary issue

1. The Respondent submitted at [1] - [4] that: 1. the Applicant had sought a review of the imposition of duty in respect of both Assessments. 2. The Respondent had invited the Applicant to file an amended review application form to name all of the parties to the subject transactions as parties to the application and to provide an authority to act on behalf of all those parties. 3. The Applicant had not filed and served an amended application;
2. The Respondent's submissions were prepared on the basis that the Tribunal was only reviewing the Newport assessment, RS at [5].
3. The Applicant's position was set out in ASR at [2]-[5]. In summary it is: 1. The Applicant believes that certain of the parties to the Turramurra assessment would not consent to joining in the application and/or would be unlikely to provide the required authority to act. 2. The Applicant considers himself to be the taxpayer with respect to the transactions in that: 1. pursuant to clause 3.4 of the Family Deed he is required to pay the duty payable on the deed and both transfers: and 2. he paid the full amounts of duty payable with respect to both Assessments. To the extent that either or both of the Assessments were excessive any amount refunded would be payable to him. 1. The correspondence from the Chief Commissioner informing the Applicant of the outcome of the objections shows that both Assessments were dealt with without any requirement to seek consent from other parties. 2. Both Assessments are the subject of the application to the Tribunal.
4. Section 96 of the TA Act relevantly provides: 96 Review by Civil and Administrative Tribunal (1) A taxpayer may apply to the Civil and Administrative Tribunal for an administrative review under the Administrative Decisions Review Act 1997 of a decision of the Chief Commissioner that has been the subject of an objection under Division 1 if: (a) the taxpayer is dissatisfied with the Chief Commissioner's determination of the taxpayer's objection…
5. Section 3 of the TA Act provides: 3 Definitions (1) In this Act … taxpayer means a person who has been assessed as liable to pay an amount of tax, who has paid an amount as tax or who is liable or may be liable to pay tax. …
6. Is it is uncontested that: 1. the Newport assessment was issued to John (the Applicant) and that he paid all duty / tax payable in respect of both Assessments. 2. He objected to the Assessments, the Chief Commissioner disallowed the objection and he is dissatisfied with the Chief Commissioner's determination of the objection.
7. I find that the Applicant is: 1. "a person who has been assessed as liable to pay an amount of tax" in relation to the Newport property; and 2. "…a person.. who has paid an amount as tax" in relation to the Turramurra property; accordingly he is a taxpayer pursuant to s. 3, and he 1. is "dissatisfied with the Chief Commissioner's determination of (his) objection" in relation to the Assessments.
8. I find the Applicant is entitled pursuant to s. 96 of the Act to apply to the Tribunal for an administrative review of both Assessments. Accordingly this decision is in respect of both Assessments.

Principal issue

1. The principal issue is whether section 30 of the Act can apply to the Family Deed and the 2014 transfers.
2. The relevant chronology is set out at [9] above. RS provides details of the duty charged by the Chief Commissioner on various transactions involving the properties. The Applicant agreed in ASR that these details in RS were correct. In summary they are: 1. The April 2011 transmission applications were each stamped at nominal duty of $50 pursuant to s. 63 of the Act. 2. Transfers of each property made pursuant to the Deed of Partition of July 2011 were stamped for nominal duty of $50 each pursuant to s. 30 of the Act. 3. The transmission application from Eric's estate to John in September 2011 of an interest in the Turramurra property was stamped for nominal duty of $50 pursuant to s. 63 of the Act. 4. In June 2014 the lawyers acting for parties other than the Applicant lodged with the OSR the Family Deed and the 2014 transfers and requested stamping in the sum of $8,135. 5. At [21] in RS the Chief Commissioner stated, and the Applicant agreed: Following some investigative steps undertaken by officers of the OSR17, the Commissioner advised that each transfer would be liable for ad valorem duty based on half of the dutiable value of the Turramurra Property and the Newport Property. The Commissioner advised that the transfers were not subject to the concessional duty payable and section 63 and section 30 of the Act did not apply. The total outstanding duty payable was $55,970.

The Applicant's submissions

1. The Applicant submitted: 1. In AS: the Tribunal consider whatever discretion or power might be available to allow the subject transactions to be reconsidered. The intent of the party's to the transactions was always to reach some form of agreement with respect to the subject property's that John Webeck and Judith Webeck could remain living in their current homes. It was always intended, subject to availability of funds and ability to reach satisfactory agreement, that George, Clinton and Tanya Webeck would accept as preference monetary settlement in exchange for their respective interests in NEWPORT. … Unfortunately, due principally to misunderstanding of the Parties, it would seem that we entered into several transactions that were of no benefit to achieving either the requirements of the subject Wills or the objectives of the parties generally. 1. In ASR: 7. The applicants view is that section 30 of the Act could have applied if the transactions were conducted in a manner available to the party's, that is if all dealings had occurred concurrently rather than by way of separate transactions. The unnecessary transactions provided no benefit to any party to the transactions. To proceed in a manner as would have been available to all parties to achieve an identical outcome as to ultimate interests in the subject property's (sic) would have not been in any way controversial. This is not an issue of an attempt to minimise or avoid duty. Rather the applicant is seeking to have the operation of section 30 applied as would have been available in the circumstances. 8. Section 30 should have been seen as applying to the negotiations as a whole agreement between the Parties and should have assessed by Deed of 23rd June 2014 the amount of duty being $8115.00.
2. In relation to the Deed of Partition the Applicant submitted in ASR: 15. The applicant was informed of this transaction, and was comfortable for it to proceed on the basis that it seemed a step closer to achieving the ultimate objective with respect to the agreed and desired interests of the parties in the subject property's
3. The Applicant submitted that the Turramurra property was transmitted to him as an eligible beneficiary of Eric's estate so that a further deed of partition could proceed with all parties "who for reasons unknown to (him) took it to their Lawyer who made it a "Deed of Family arrangement" (ASR at [17]).
4. At [29] in ASR the Applicant submitted: The applicant understands the Commissioner may not have the authority to disregard the effect of properly registered earlier dealings. In particular to allow a transaction to proceed in accordance with section 30 where all parties do not have registered interests in the properties subject of the proposed transaction. As were the grounds in the applicants objection, and the basis of this application for review of the objection decision, rather than ask that the earlier property dealings be disregarded the applicant is requesting that consideration be afforded to considering the intent of the party's in entering the transactions and the outcome. The intent of the party's, as may be demonstrated by the entitlements created in the wills of Eric…and Robert…and later negotiations and agreement was that the Applicant and Judith … would acquire ownership of the Newport and Turrumurra property's respectively. There were a number of property dealings between the parties that were proceeded with in error that have no effect on the ultimate outcome other than to attract the assessment of duty. The intention of the parties could have been realised by one transaction where the concessions afforded by section 30 would have applied. It is the applicants view that the intent of the parties could have been realised, and an identical outcome obtained, by a single partition transaction as an alternative to the dealings entered. In the absence of the earlier dealings the parties could have proceeded with a partition in accordance with the Deed of 23rd June 2014 where they would have been afforded the exemptions provided for in section 30. The applicant considered the facts in this matter to be similar to those in Mitchell and Ors v Commissioner of State Revenue (Vic) 1993 ATC 2142 where, in an attempting to realise interests in property in accordance with a family agreement, the parties entered into a number of dealings with the OSR in Victoria which ultimately proved unnecessary. As is the applicants position in this matter the unnecessary transactions resulted in significantly higher duty being assessed than would have been applied had the transactions been progressed in a different manner as would have been available to the applicant.

The Respondent's submissions

1. In its introduction, the Respondent submitted at [7]-[8]: The principal issue that arises for consideration in the present application for review ("the Review") is whether section 30 of the Act can apply to the transfers of the interests in the Newport Property to the Applicant made pursuant to the 2014 Deed. The difficulty for the Applicant is that in this instance, the circumstances do not support an application of section 30 of the Act.
2. At [31] - [44] the Respondent detailed the relevant legislative framework for the imposition of duty on relevant transactions, what dutiable property is, when a liability for duty arises, who is liable to pay duty, how the dutiable value of dutiable property is determined and the manner in which s. 30 operates in respect of transfers treated as a "partition". This was not contested by the Applicant and it is not necessary to traverse these submissions at this time other than to note that the Respondent submitted that s. 30 did not apply.
3. The Respondent referred at [45]-[47] and [49] to High Court authority supporting the proposition that there was no onus on the Chief Commissioner to show that assessments were correctly made nor was there any statutory requirement that the assessments should be sustained or supported by evidence.
4. In Cornish Investments Pty Limited v Chief Commissioner of State Revenue [2013] NSWADTAP 25, in the context of a claim for an exemption in an appeal against assessments of land tax by the Chief Commissioner, the Appeal Panel of the Administrative Decisions Tribunal referred at [36] - [37] to several authorities including Chief Commissioner of State Revenue v Mr Espresso Group Pty Limited [2012] NSWADTAP 1, Pharmos Nominees Pty Ltd v Commissioner of State Taxation [2012] SASC 24 and Denham Constructions Pty Ltd & Anor v Chief Commissioner of State Revenue (1998) 40 ATR 416 which supported "the proposition that an applicant must prove all matters necessary to enable a Tribunal to answer the statutory question in its favour" and in that case "the Appellant must establish all the facts on which it relies to claim the exemption".
5. Having regard to the authorities in the preceding paragraph it is not necessary to review the federal authorities to which the Respondent referred.
6. At [63] the Respondent submitted "there simply is no power or discretion available to the Respondent (and thus the Tribunal in this Review) to reverse the effect of a contractual arrangement between parties and the relevant duly registered dealings".

Reasoning

1. The Act contains several sections, in addition to s.30, which provide concessions or exemptions from duty. Those sections were not raised by the parties and are not relevant to the material before the Tribunal.
2. The Applicant effectively submitted that the transactions effected by the Deed of Partition in 2011 and the Family Deed in 2014 should be combined because part of the earlier transactions proceeded in error and the intention of the parties could have been achieved by a single transaction in relation to which the s. 30 concessions would have applied.
3. The Applicant did not refer to any statutory provision which empowered either the Chief Commissioner, or the Tribunal, to combine the 2011 and 2014 transactions or disregard the 2011 transactions. However he did refer to s. 30 of the Act.
4. Section 30 states: 30 Partitions (1) What is a partition?For the purposes of this section, a partition occurs when dutiable property comprised of land in New South Wales that is held by persons jointly (as joint tenants or tenants in common) is transferred or agreed to be transferred to one or more of those persons. (2) Single dutiable transactionFor the purposes of this section and sections 16 and 18, a partition is taken to be a single dutiable transaction. (3) Dutiable valueThe dutiable value of a partition is the greater of: (a) the sum of the amounts by which the unencumbered value of the dutiable property transferred, or agreed to be transferred, to a person by the partition exceeds the unencumbered value of the interest held by the person in the dutiable property transferred, or agreed to be transferred, to each person by the partition immediately before the partition, and (b) the sum of any consideration for the partition paid by any of the parties. (3A) (Repealed) (4) Minimum dutyThe minimum duty chargeable on a transaction that effects a partition is $50. (5) Who is liable to pay the duty?Duty charged by this section is payable by the persons making the partition or any one or more of them. (6) Anti-avoidance criteriaThis section does not apply in respect of a partition if the Chief Commissioner is satisfied that the partition is part of a scheme to avoid duty on an exchange of land that was not jointly held by the parties before the scheme was entered into.
5. Section 30 only operates "when dutiable property comprised of land in New South Wales that is held by persons jointly (as joint tenants or tenants in common) is transferred or agreed to be transferred to one or more of those persons" (my emphasis).
6. The parties have agreed that the transfers of the properties pursuant to the Deed of Partition were stamped pursuant to s. 30 because in each case the transferor(s) and the transferees held an interest in the relevant property immediately before the transaction took place. As it is not necessary to the determination of the principal issue before me I make no finding as to whether the Deed of Partition and the 2011 transfers were duly stamped pursuant to s. 30.
7. The Respondent submitted at [40] that s. 32(1) of the Act provides the general rates of duty chargeable to dutiable transactions in respect of dutiable property. These rates are applicable unless a concession or exemption is applicable to the dutiable transaction.
8. RS submitted at [42] that s. 30 of the Act "operates to treat the transfers pursuant to a 'partition' to be taken to be a single dutiable transaction." The Respondent further submitted at [52] that, having regard to the materialbefore the Tribunal: (iii) the properties that were the subject of the 2014 Deed were not held jointly by persons to whom it was agreed the properties would be transferred; and (iv) the 2014 Deed did not evince a partition
9. I observe that the wording of section 30(2) is not that transfers pursuant to a partition are taken to be a single dutiable transaction. Section 30 (2) says "For the purposes of this section and sections 16 and 18, a partition is taken to be a single dutiable transaction."
10. I also observe that the Family Deed dealt with three separate transactions. They were a transfer of the Newport property, a transfer of the Turramurra property and a partial distribution from Eric's estate. The deed also dealt with subsidiary matters in relation to which parties would pay for the costs of the deed, registration fees in relation to the transfer of the two properties, stamp duty on the deed and the transfers, and any relevant capital gains tax imposed as a result of the transactions contemplated and carried out pursuant to the deed.
11. The Respondent contended at [54] that "Each of the parties to the 2014 deed were not joint holders of the properties to which the deed related." The Respondent provided no authority to support the contention that all parties to a multi-purpose deed, two purposes of which were transfers of land, were required by s. 30 to hold all the land immediately before the relevant transactions in order for the transactions to satisfy the requirements of s. 30(1).
12. Immediately before the Family Deed and the Newport property transfer made pursuant to that deed the property was held by Judith, Clinton, George, Tanya and John. The transferors were Judith, Clinton, George and Tanya and the transferee was John. I find that this transfer satisfied the requirements of s. 30(1) as the Applicant held the property jointly with the transferors prior to the transfer. Accordingly the transfer was a partition for the purpose of section 30.
13. Immediately before the Family Deed and the Turramurra property transfer made pursuant to that deed the property was held by Judith and John. The transferor was John and the transferees were Judith, Clinton, George and Tanya. I find that this transfer did not satisfy the requirements of s. 30(1) as the transferees did not all hold the property jointly with the transferor prior to the transfer. Accordingly the transfer was not a partition for the purpose of section 30.
14. I observe that no evidence was provided to support the submissions at page 5 in AS that: The intent of the party's to the transactions was always to reach some form of agreement with respect to the subject property's that John Webeck and Judith Webeck could remain living in their current homes. It was always intended, subject to availability of funds and ability to reach satisfactory agreement, that George, Clinton and Tanya Webeck would accept as preference monetary settlement in exchange for their respective interests in NEWPORT
15. It is unclear as to whether the intent referred to above was that of the Applicant or the Applicant and Judith or the Applicant, Judith and her children. Indeed if that was the intent there is no evidence before the Tribunal to explain why the Deed of Partition and associated transfers, which were not consistent with that intent, were entered into in 2011. In any event once the transactions contemplated by the Deed had been put into effect and completed there was a delay exceeding two years before the Family Deed was entered into.
16. The onus is on the Applicant to show both that the Assessments were not correct and that the Chief Commissioner (and the Tribunal) have power to vary the calculation of duty required by the Act in respect of both Assessments.
17. While one may sympathise with the Applicant I find that he has not produced any evidence that either the Chief Commissioner or this Tribunal, have power or a discretion to disregard the transactions clearly entered into and completed in 2011 pursuant to the Deed of Partition.
18. The Applicant submitted that the facts in this matter were similar to those in Mitchell & ors v Commissioner of State Revenue (Vic) 93 ATC 2142, (1993) 26 ATR 1197 "where, in an attempting to realise interests in property in accordance with a family agreement, the parties entered into a number of dealings with the OSR in Victoria which ultimately proved unnecessary". In that case the Administrative Appeals Tribunal of Victoria found in favour of the applicants, reduced the assessments substantially and made a costs order in the applicants' favour.
19. Disregarding for the moment any substantive differences between the law in Victoria in 1993 and the provisions of the Act at the relevant time in this matter I observe that in Mitchell: 1. the relevant transfers were made by the executors of an estate pursuant to an agreement to put into effect the terms of a Will; 2. an issue was whether one of eleven transfers could relevantly be said to be a partition or division because of the alleged limited nature of the interest of the transferors who held the land as executors; and 3. there was no prior transmission of land to beneficiaries which had been stamped and completed by registration with the relevant statutory authority.
20. Accordingly Mitchell's case is substantially different on its underlying facts to the material before the Tribunal and, contrary to the Applicant's submission, the decision in Mitchell does not show that the parties there had entered into a number of dealings…which ultimately proved unnecessary".

Decision

1. Having regard to the material before me the correct and preferable decision of the Tribunal is that: 1. the Applicant has satisfied me on the balance of probability that Duties Notice of Assessment Id 1599926415 (in relation to the Newport property) should have been assessed as a partition pursuant to s. 30 of the Duties Act 1997. I set that assessment aside and remit the matter to the Chief Commissioner for determination in accordance with this decision. 2. the Applicant has satisfied me on the balance of probability that the Applicant is entitled to seek a review by the Tribunal of Duties Notice of Assessment Id 1599926456 (in relation to the Turramurra property). 3. the Applicant has not satisfied me on the balance of probability that Duties Notice of Assessment Id 1599926456 should have been assessed as a partition pursuant to s. 30 of the Act. I affirm that assessment. 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: 10 August 2015