Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Noble v Chief Commissioner of State Revenue [2021] NSWCATAD 159 Hearing dates: 21 July 2020; last submissions received 11 February 2021 Date of orders: 7 June 2021 Decision date: 07 June 2021 Jurisdiction: Administrative and Equal Opportunity Division Before: S Goodman SC, Senior Member Decision: The Duties Notice of Assessment No. 9632419-001, dated 23 August 2019 is set aside. Catchwords: TAXES AND DUTIES – stamp duty concession – real and apparent purchaser – whether real purchaser "provided the money for the purchase of the dutiable property" Legislation Cited: Administrative Decisions Review Act 1997, s 63 Civil and Administrative Tribunal Act 2013, s 28 Duties Act 1997, ss 8,55 Taxation Administration Act 1996, ss 96,100 Cases Cited: Al Haddad v Chief Commissioner of State Revenue [2018] NSWCATAD 91 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126 Gleeson v Commissioner of State Revenue [2009] VSC 464; (2009) 28 VR 607 Re Landfall Pty Ltd and Chief Commissioner of State Revenue Secretary, New South Wales Ministry of Health v W [2020] NSWCA 212 Triantafilis v Commissioner of Stamp Duties for New South Wales (1998) 98 ATC 4484; (1998) 39 ATR 56 Zhang v Metcalf [2020] NSWCA 228 Texts Cited: Nil Category: Principal judgment Parties: Alan David Noble (First Applicant) Kim Narelle Noble (Second Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: S Richardson (Respondent) Solicitors: Lomax Law (Applicant) Crown Solicitor (Respondent) File Number(s): 2020/00045479 Publication restriction: Nil REASONS FOR DECISION Introduction 1. By Notice of Assessment dated 23 August 2019, the respondent assessed the applicants as liable to duty on a Declaration of Trust executed by them and dated 31 January 2019 ("Declaration of Trust") concerning land at Banora Point ("Property") on the basis that the concession provided for by s 55 of the Duties Act 1997 ("Duties Act") was not applicable. 2. The applicants seek review of the decision to issue the Notice of Assessment. At issue is whether s 55 of the Duties Act applies. This in turn depends upon whether the applicants' son, as the "real purchaser", provided the money for the purchase of the Property. 3. For the reasons set out below, the Notice of Assessment is set aside. Jurisdiction and applicable law 1. As the decision to issue the Notice of Assessment has been the subject of an objection and the applicants are dissatisfied with the respondent's determination of their objection, the Tribunal has jurisdiction to review the decision, pursuant to s 96 of the Taxation Administration Act 1996 ("TA Act"), s 9 of the Administrative Decisions Review Act 1997 ("ADR Act") and s 28 of the Civil and Administrative Tribunal Act 2013. In conducting that review the Tribunal is required to determine the correct and preferable decision having regard to the materials before it and the applicable law: s 63 of the ADR Act. The applicants have the onus of proving their case: s 100(3) of the TA Act. Background and Findings of Fact 1. Set out below is a chronological account of the facts as I find them. These facts are mostly uncontroversial and are drawn from the documentary evidence before the Tribunal, the first applicant's affidavit, the applicants' son's statutory declaration and the cross examination of the first applicant and the applicants' son. 2. The starting point is that in late 2018 the applicants' son was unable to obtain bank finance to assist him in the purchase of real estate. 3. At about that time, the applicants and their son reached an agreement that the applicants would purchase a property in their name for their son; and that their son would pay to the applicants all amounts they incurred for doing so. This agreement is referred to in the first applicant's affidavit and the applicants' son's statutory declaration and its existence was reiterated by each of them in cross examination. Counsel for the respondent indicated (appropriately) that no submission was made that this evidence ought not be believed. 4. Following the making of this agreement and on 7 November 2018, the first applicant contacted Lomax Law Solicitors ("Lomax Law") and Lomax Law was retained by the applicants. 5. In early January 2019, the applicants made an offer on the Property, which the applicants' son was at that time looking to purchase. That offer was accepted by the vendor of the Property and on 6 January 2019 Harcourts, Real Estate Agents, sent an email to Lomax Law providing a 'sales advice' which set out details of a proposed sale of the Property to the applicants at a purchase price of $545,000 and a 5% deposit of $27,250. 6. On 14 January 2019, at a time when a representative of National Australia Bank ("NAB") had told the first applicant that NAB would provide finance for the purchase of the Property, a payment of $1,000 was made from a NAB account in the names of the applicants, ending in the numbers 246 ("Line of Credit Account"). The description for that payment is "Hold Deposit Noble" and it was paid as a holding deposit on the purchase of the Property. 7. The Line of Credit Account was an existing line of credit, which had been increased by NAB to allow the payment of the deposit for the purchase of the Property. 8. By letter dated 16 January 2019, NAB informed the applicants that their application for a home loan facility had been approved, and made a loan offer to the applicants with a limit of $550,000. 9. On 16 and 17 January 2019, the applicants each signed the Contract for Sale and Purchase of the Property ("Contract") and a Purchaser/Transferee Declaration. 10. On 22 January 2019: 1. the applicants accepted the 16 January 2019 loan offer made by NAB; and 2. payments totalling $26,250 were made from the Line of Credit Account to Harcourts. The amount of $26,250, together with the $1,000 holding deposit transferred on 14 January 2019, totalled $27,250, which corresponds to the amount of the deposit in Harcourt's "sales advice" of January 2019. 1. On 25 January 2019, Harcourts provided to Lomax Law an amended sales advice indicating that the purchase price had been reduced to $540,000. The amended sales advice did not include any amendment of the amount of the deposit but did note relevantly to the deposit: "$27,250.00 – already paid by buyer & held in Harcourt's BMG Trust" 1. On 27 January 2019, the applicants and their son each signed an untitled document in the following form ("27 January 2019 Document"): "Allan David Noble and Kim Narelle Noble, confirm Joel Noble is responsible for and is paying the full mortgage repayment and deposit for [the Property]" 1. On 31 January 2019: 1. Contracts for the Sale and Purchase of the Property were exchanged. The purchase price was $540,000; and 2. the applicants (as Trustees) and the applicants' son (as Beneficiary) signed the Declaration of Trust. The Declaration of Trust contains an acknowledgement that the applicants had purchased the Property in their names for the purposes of convenience and a promise that they will, when requested by their son, take necessary steps to have him recorded as the owner of the Property. Clause 3 of the Declaration of Trust provides: "The Beneficiary agrees to indemnity the Trustees for all losses, expenses, duties, taxes, costs or damages which the Trustees have incurred or may incur by purchasing the Property in their names" 1. On 1 March 2019, two NAB accounts were opened in the names of the applicants: 1. a NAB Home Loan Account with a facility limit of $550,000 ("NAB Home Loan Account"); and 2. a NAB account with numbers ending in 485 ("NAB 485 Account"). 1. On 4 March 2019, settlement of the sale and purchase of the Property occurred. At settlement, the sum paid by the applicants was $562,970.57, being the total of the following amounts: Purchase price $540,000.00 Council rates $ 656.19 Stamp Duty $ 19,810.00 Solicitors fees $ 2,211.70 Government registration $ 141.60 Government transfer $ 141.60 Title search $ 9.48 __________ $562,970.57 1. That sum was paid using the following sources of funds: NAB Home Loan Account $535,720.57 Line of Credit Account $ 27,250.00 __________ $562,970.57 1. Also on 4 March 2019, all of the $550,000 available under the NAB Home Loan Account was drawn down. However, only $535,720.57 of the $550,000 was used in the purchase of the Property and the remaining $14,279.43 was transferred to the Line of Credit Account on 4 March 2019. 2. The evidence of the first applicant included a spreadsheet which "detailed the breakdown of the purchase price and associated costs according to my records". That spreadsheet included all of the costs set out at paragraph 19 above, together with an entry: "House Insurance: $1,137.38". 3. Since 15 March 2019, the applicants' son has made weekly payments to the applicants, into their NAB 485 Account, from which the applicants have made weekly payments to the Home Loan Account. The amounts paid by the applicants' son into NAB 485 Account have exceeded the amounts of the instalments due from that account to the NAB Home Loan Account ($665). Between 15 June 2019 and the end of March 2020, the applicants' son made average payments of approximately $851 across 44 payments. 4. On 23 July 2019, Lomax Law sent to the respondent: 1. the original executed Declaration of Trust; 2. the stamped Contract; 3. the Purchaser/Transferee Declaration; and 4. a joint statutory declaration of the applicants. 1. The joint statutory declaration, dated 22 July 2019, contained a declaration that in so far as is presently relevant included: "1 We are the trustees in a Declaration of Trust deed dated 31 January 2019 made between ourselves and our son, Joel ... relating to the purchase of the [Property] ... 2 Whilst the deposit was paid by us and the loan from National Australia Bank taken out in our name for the purchase, the loan repayments are being made to our bank account ... as evidenced by the repayments made by Joel." 1. On 23 August 2019, the respondent issued the Notice of Assessment. On 9 October 2019, the applicants lodged an objection and on 17 January 2020 the respondent disallowed the objection. By application dated 30 January 2020 the applicants commenced these proceedings. Consideration 1. Section 55 of the Duties Act provides in so far as is presently relevant: (1) Duty of $50.00 is chargeable in respect of: (a) a declaration of trust made by an apparent purchaser in respect of identified dutiable property— (i) vested in the apparent purchaser upon trust for the real purchaser who provided the money for the purchase of the dutiable property, or (ii) to be vested in the apparent purchaser upon trust for the real purchaser, if the Chief Commissioner is satisfied that the money for the purchase of the dutiable property has been or will be provided by the real purchaser, or (b) a transfer of dutiable property from an apparent purchaser to the real purchaser if: (i) the dutiable property is property, or part of property, vested in the apparent purchaser upon trust for the real purchaser, and (ii) the real purchaser provided the money for the purchase of the dutiable property and for any improvements made to the dutiable property after the purchase. (1A) For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser. … 1. The respondent accepted that the Declaration of Trust was a "declaration of trust" within the meaning of s 8(3) of the Duties Act, by the applicants as apparent purchasers of the Property in favour of the applicants' son. The respondent identified the only issue as being whether the applicants' son as the real purchaser provided all of the money for the purchase of the Property. 2. Thus consideration of the application of s 55(1)(a) in the present case requires: 1. identification of the "money for the purchase of the [Property]"; 2. consideration to whether that money was or will be provided by the applicants' son as the real purchaser. 1. These matters are considered in turn below. The money for the purchase of the Property 1. The starting point is to identify the "money for the purchase of the [Property]". In Zhang v Metcalf [2020] NSWCA 228 Gleeson JA (with whom Payne and White JJA agreed) said at [49]: The purchase money is taken to include the incidental expenses of buying the property, that is, "the totality of the money which the purchasers have in truth outlaid to obtain the property": Ryan v Dries [2002] NSWCA 3; (2002) 10 BPR 19497 at [53] (Hodgson JA); Black Uhlans Incorporated v Crime Commission (NSW) [2002] NSWSC 1060 at [144] (Campbell J); Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [103] (Ward CJ in Eq). (It appears that there has been a typographical error and that the paragraph reference in Amit Laundry Pty Ltd v Jain should be [167], rather than [103]). 1. The respondent has submitted that the moneys for purchase of the Property comprise the amounts described in paragraph [19] above together with the amount paid for house insurance (see paragraph [22] above). 2. I do not accept that submission. The amount paid for house insurance is not money for the purchase of the Property. It has not been outlaid to obtain the Property and was more likely outlaid to protect the applicants' investment in the Property. 3. Thus: 1. the money for the purchase of the Property was $562,970.57; 2. that money was provided by the applicants, using moneys borrowed by them from NAB via the Line of Credit Account and the NAB Home Loan Account. Did the applicants' son, as "real purchaser" provide the money for the purchase of the Property? 1. Section 55 contemplates that a real purchaser may provide the money for the purchase of the Property either in fact or by way of the deeming provision in s 55(1A). This is a requirement that the real purchaser has provided all of that money: see Triantafilis v Commissioner of Stamp Duties for New South Wales (1998) 98 ATC 4484; (1998) 39 ATR 56, per Priestley JA (Mason P and Powell JA agreeing); Al Haddad v Chief Commissioner of State Revenue [2018] NSWCATAD 91 at [32]-[33]. This is an all or nothing question. There is no basis for apportionment: see Gleeson v Commissioner of State Revenue [2009] VSC 464; (2009) 28 VR 607 at [32]. There is no discretion to be exercised. 2. It is common ground that the applicants' son did not in fact provide any money for the purchase of the Property. The issue is whether he is deemed to have provided all of the money for the purchase of the Property, by the operation of s 55(1A), which provides: (1A) For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan and has been or will be repaid by the real purchaser. 1. Thus, it is necessary to consider: 1. was the money for the purchase of the Property provided by a person other than the real purchaser?; 2. if so, was that money provided as a loan or loans?; and 3. if so, have any such loans been repaid, or will they be repaid by the real purchaser? 1. These questions are considered in turn below. Was the money for the purchase of the Property provided by a person other than the real purchaser? 1. As noted above, it is common ground that the applicant's son did not provide any of the money for the purchase of the Property. That money was provided by the applicants who had borrowed it from NAB. It follows that the money for the purchase of the Property was provided by a person other than the real purchase. Was that money provided as a loan? 1. All of the money for the purchase of the Property was provided as a loan by NAB to the applicants via the Line of Credit Account or the NAB Home Loan Account. Thus, prima facie, this requirement is satisfied. 2. However, the respondent has submitted that s 55(1A) requires that the loan have been made to the real purchaser, because: 1. the purpose of s 55 is to provide a concession from ad valorem duty if the real purchaser paid for the property; 2. s 55(1A) must be interpreted with that purpose in mind; 3. this purpose requires that the real purchaser be the borrower on the loan and thus liable to repay it; and 4. this is confirmed by the use of the word "repaid" in s 55(1A), rather than "paid" because the borrower "repays" their loan but a third party who makes payments against the borrower's loan merely "pays" rather than "repays". 1. I do not accept that submission, for the following reasons. 2. First, in construing s 55(1A), the start and end point is its text considered in its context (including the Duties Act as a whole, its legislative history and any extrinsic materials) and purpose: see Chief Commissioner of State Revenue v Downer EDI Engineering Pty Ltd [2020] NSWCA 126 at [112]; Secretary, New South Wales Ministry of Health v W [2020] NSWCA 212 at [63] and the authorities there cited. 3. Secondly, the text of s 55(1A) does not support the respondent's construction. The limitation suggested by the respondent does not appear in the text. Rather, as the respondent acknowledged in submissions, the construction contended for involves adding into s 55(1A) the words "to the real purchaser" so that it reads: For the purposes of subsection (1), money provided by a person other than the real purchaser is taken to have been provided by the real purchaser if the Chief Commissioner is satisfied that the money was provided as a loan to the real purchaser and has been or will be repaid by the real purchaser 1. Thirdly, the use of the word "repaid" rather than "paid" is not of such significance as to require a different conclusion. The respondent cited no authority in support of the submission that "repaid" is limited in the manner suggested. 2. Fourthly, the limitation suggested by the respondent does not appear to be required by the remaining text of s 55(1A) or the remainder of the Duties Act. The respondent did not contend otherwise. 3. Fifthly, the purpose of s 55 apparent from its text is to remove the obligation to pay a second amount of ad valorem duty upon the declaration of trust in favour of the real purchaser, or the transfer of property to the real purchaser, where the real purchaser has provided the money for the purchase of the Property. In Re Landfall Pty Ltd and Chief Commissioner of State Revenue [2012] NSWADT 270; (2012) 91 ATR 613, Judicial Member Block stated at [17]: The Tribunal agrees with the Chief Commissioner's submission that Section 55 is not a true remedial provision. It is designed to ensure that where, put in simple terms, property is purchased by an apparent purchaser with money provided by the real purchaser (and where in the normal course duty would have been paid on the transfer to the apparent purchaser) there is no second levy of duty when the property is transferred by the apparent purchaser to the real purchaser. The section does not in its terms provide that it applies only where the first transfer attracted duty although that, at least on a prima facie basis, is its apparent intention. 1. In the present case, the respondent submitted that the s 55 is designed to protect against ad valorem duty being charged on the making of a declaration of trust and on a subsequent transfer of dutiable property from an apparent purchaser to a real purchaser if the latter provided the purchase money for the dutiable property or is deemed by s 55(1A) to have so provided. 2. A scenario in which an apparent purchaser borrows the moneys used to pay for the property and the real purchaser pays off the loan is consistent with the purpose of s 55 as described above. The statutory purpose is achieved if the real purchaser bears all of the costs of the purchase regardless of whether the real purchaser is the borrower. It is not necessary to read in the additional words suggested by the respondent. 3. It may be noted that, as the respondent submitted, the second reading speeches and the Explanatory Note for the State Revenue Legislation Amendment Bill 2006, by which s 55(1A) was added to s 55, do not provide any assistance. Have the loans been repaid, or will the loans be repaid, by the real purchaser? 1. As at 31 January 2019, being the date on which the Declaration of Trust was made over the Property, there was an agreement in place between the applicants and their son that he would make all payments in connection with the purchase of the Property. That agreement was made in late 2018. It is also reflected in the 27 January 2019 Document and in the Declaration of Trust. The existence of such an agreement is also consistent with the post contractual conduct of the parties described at paragraph [23] above, which may be taken into account on the question of whether such an agreement was formed: see, e.g., Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [25]. 2. This is sufficient to satisfy the requirement that the loans would be repaid by the applicants' son. Conclusions and Order 1. For the reasons set out above: 1. the money for the purchase of the Property was $562,970.57; 2. all of that money was (deemed to be) provided by the applicant's son because: 1. all of it was provided by the applicants, by way of loans from NAB; 2. the applicant's son had agreed to repay those loans; and 1. thus s 55 is satisfied. 1. It follows that the Notice of Assessment should be set aside. 2. The order of the Tribunal is: 1. The Duties Notice of Assessment No. 9632419-001, dated 23 August 2019 is set aside. ********** 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: 07 June 2021