Civil and Administrative Tribunal New South Wales Medium Neutral Citation: CPD#001 Pty Limited as trustee for the Eagle View Holdings Unit Trust v Chief Commissioner of State Revenue [2022] NSWCATAD 273 Hearing dates: 2 and 3 March 2022 Date of orders: 17 August 2022 Decision date: 17 August 2022 Jurisdiction: Administrative and Equal Opportunity Division Before: A R Boxall, Senior Member Decision: The Decisions under review are confirmed. Catchwords: TAXES AND DUTIES — Dutiable transactions — Exemptions — Duties Act 1997 section 163A(1)(g) - Duties Act 1997 section 273D - Corporate consolidation transactions - Duties Act 1997 section 163H – discretion to grant exemption or concession Legislation Cited: Administrative Decisions Review Act 1997 ss 58, 63 Duties Act 1997, Chapter 4, Chapter 11, Dictionary, ss 32, 146, 152, 157, 163A, 163H, 273A, 273B, 273D, 273E Taxation Administration Act 1996 ss 3, 4, 19, 21, 22, 25, 26, 27, 86, 89, 93, 94, 96, 100, 103, 104, 105 Cases Cited: B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481 Gu v Chief Commissioner of State Revenue [2010] NSWCATAD 75 Halloran v Minister administering National Parks and Wildlife Act 1974 229 CLR 545 Kauter v Hilton (1953) 90 CLR 86 Kelly v Mina [2014] NSWCA 9 Levitch Design Associates Pty Ltd atf Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215 Milstern Nominees Pty Ltd v Chief Commissioner of State Revenue 89 NSWLR 43 Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Limited [2017] NSWCA 184 Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773 Winston-Smith v Chief Commissioner of State Revenue [2019] NSWCA 7, Texts Cited: D'Angelo, N, Transacting with Trusts and Trustees, LexisNexis Australia, 2020 Heydon JD and Leeming MJ, Jacobs' Law of Trusts in Australia, 8th edition, LexisNexis Australia, 2016 Category: Principal judgment Parties: CPD#001 Pty Limited as trustee for the Eagle View Holdings Unit Trust (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: P Bruckner (Applicant) A H Rider (Respondent) Solicitors: MGS Private Pty Ltd (Applicant) Crown Solicitor (Respondent) File Number(s): 2021/00130038; 2021/00276473; 2022/00035771 Publication restriction: None REASONS FOR DECISION Introduction 1. These reasons for decision concern three Applications for Administrative Review filed by the Applicant under section 96 of the Taxation Administration Act 1996 (TAA). The Applications request the Tribunal to review decisions made by the Respondent (who is also referred to as the Chief Commissioner) under the Duties Act 1997 (the Duties Act) as follows: Column 1 Column 2 Column 3 Tribunal Application Number Date lodged Decision in respect of which review is sought 2021/00130038 10 May 2021 The Chief Commissioner's disallowance on 12 March 2021 of an objection by the Applicant to a decision (1) refusing corporate consolidation relief under section 273B of the Duties Act to an acquisition by the Applicant, in the form of certain transfers of units in a unit trust to the Applicant, and (2) deciding that the relevant acquisition was not exempt under section 163A of the Duties Act 2021/276473 28 September 2021 The Chief Commissioner's refusal to exercise his discretion under section 163H of the Duties Act 2021/00035771 7 February 2022 The Chief Commissioner's disallowance on 2 February 2022 of an objection by the Applicant to a decision that the relevant acquisition was not exempt under section 163A of the Duties Act The decisions identified in Column 3 are referred to in these reasons as the Decisions. 1. Under orders made by the Tribunal on 15 February 2022, all three matters are to be heard together. 2. References to: 1. the Section 58 Documents are to the volume of documents filed with the Tribunal under section 58 of the Administrative Decisions Review Act 1997 (ADRA) on 10 September 2021 in matter number 2021/130038, and reference to a particular numbered tab or page of the Section 58 Documents is to the document identified under that tab number or at that page number in the Section 58 Documents; 2. the Further Section 58 Documents are to the volume of documents filed with the Tribunal under section 58 of the ADRA on 1 November 2021 in matter number 2021/276473, and reference to a particular numbered tab or page of the Further Section 58 Documents is to the document identified under that tab number or at that page number in the Further Section 58 Documents; and 3. the Supplementary Section 58 Documents are to the supplementary volume of documents filed with the Tribunal under section 58 of the ADRA on 28 February 2022 in matter number 2022/35771, and reference to a particular numbered tab or page of the Supplementary Section 58 Documents is to the document identified under that tab number or at that page number in the Supplementary Section 58 Documents. 1. This review is conducted under the TAA. Several points should be made at the outset: 1. Section 96 provides for a taxpayer to seek the review of the Chief Commissioner's initial decision if dissatisfied with the outcome of an objection against that decision. In this case, the Applicant appears to express its review application as being in relation to the disallowance of its objection, rather than the original decision. Since the Respondent has not pressed any objection on this point, and in any event the parties have addressed their arguments to the initial decision, nothing appears to turn on this distinction. 2. Importantly, the provisions of section 100 of the TAA apply. Notably: 1. Sub-section 100(2) of that Act provides that neither the Applicant nor the Respondent are limited in the present application to the grounds of the objection; and 2. sub-section 100(3) of that Act provides that the Applicant "… has the onus of proving the applicant's case in an application for review", an onus which is discharged by reference to the ordinary civil standard: B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481. 1. The significance of sub-section 100(3) is that the Respondent's decision must stand unless the Applicant can demonstrate, on the balance of probabilities, the deficiencies in it which the Applicant alleges. A differently constituted tribunal's reasons in Levitch Design Associates Pty Ltd atf Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215, at [27], outline a method of approach to this exercise, and these reasons respectfully adopt the methodology which they propose. 1. Section 63(1) of the ADRA requires the Tribunal "to decide what the correct and preferable decision is having regard to the material then before it", and section 63(2) provides that the Tribunal "… may exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision". 2. The parties have provided voluminous evidence and submissions, to which (along with counsels' respective oral submissions) the Tribunal has had regard. These are referred to below as relevant. Background 1. The decisions under review are all concerned with the Respondent's assessment of duty under Chapter 4 of the Duties Act in respect of the Applicant's acquisition (the Acquisition) on 23 April 2020 of 100% of the issued units (the Units) in a unit trust known as the Eagle View Ryde Unit Trust, of which the trustee (also CPD#001 Pty Limited) at the relevant time was the registered proprietor in that capacity of certain land in Ryde NSW (the Land). 2. Conceptual precision in discussing transactions which involve trustees is not at all times assisted by the tacit assumption which underlies the legislation – for example, in section 146 of the Duties Act - that corporate entities and unit trusts can and should conveniently be equated for purposes of Chapter 4 of the Duties Act. While this may well promote consistency of treatment between the formally divergent transactions to which the legislation applies, it risks encouraging what Leeming JA described in Kelly v Mina [2014] NSWCA 9 at [103]: "... The incorrect but prevalent notion that a trust is a legal person ....". As Dr N D'Angelo observes [1] in his work on commercial dealings with trustees: "... while a corporatized trust may legitimately be described as an economic or accounting entity, it is not a legal person. It is an unincorporated business association that has no existence separate from its participants, the trustee and beneficiaries, and so cannot own property, incur debts, enter into contracts or sue or be sued in its own name .... Somewhat surprisingly, these fundamental facts are not universally understood". 1. Bearing these strictures in mind, the following defined terms will be used in these reasons in relation to certain trusts and corporate entities: Defined term Meaning CPD The company known as CPD#001 Pty Limited EVHUT Eagle View Holdings Unit Trust CPD EVHUT CPD in its capacity as trustee of the Eagle View Holdings Unit Trust EVRUT Eagle View Ryde Unit Trust CPD EVRUT CPD in its capacity as trustee of the Eagle View Ryde Unit Trust 748PL The company known as 748 Victoria Road Pty Limited 748VRUT 748 Victoria Road Unit Trust 748PL 748VRUT 748PL in its capacity as trustee of the 748 Victoria Road Unit Trust AJH The company known as AJ Harb Holdings Pty Limited AJHFT AJ Harb Family Trust AJH AJHFT AJH in its capacity as trustee of the AJ Harb Family Trust HA The company known as Harb (Aust) Pty Limited HFT Harb Family Trust HA HFT HA in its capacity as trustee of the Harb Family Trust Family Trust AJH AJHFT or HA HFT 1. The directors of the Applicant, Messrs Anwar Harb and James Harb, have provided the witness statements described in Column 1 below, which will be referred to in these reasons by the corresponding abbreviations in Column 2 below: Column 1 Column 2 Description of witness statement Abbreviation Witness statement of Anwar Harb dated 17 January 2022 A Harb Statement 1 Witness statement of Anwar Harb dated 26 February 2022 A Harb Statement 2 Witness statement of James Harb dated 13 January 2022 J Harb Statement 1 A Harb Statement 1 and J Harb Statement 2 are accompanied by a paginated bundle of 54 common exhibits, of which each exhibit referred to in these reasons is identified as "CE" followed by a number. This number refers to the page number or numbers of that exhibit in the Index to Exhibits filed with A Harb Statement 1 and J Harb Statement 1. A Harb Statement 2 has attached to it a paginated bundle of exhibits collectively identified as "Exhibit AH2" in the witness statement. Any particular exhibit contained in that bundle which is referred to in these reasons is identified as "AH2" followed by a number or numbers, which refer to the corresponding pagination of Exhibit AH2. 1. There is no dispute that: 1. At all relevant times CPD EVRUT owned the Land; 2. its interest in the Land was a landholding within the meaning of Chapter 4 of the Duties Act; 3. the value of that landholding was such as to make CPD EVRUT a landholder within the meaning of that Chapter; 4. CPD EVRUT was a private landholder within the meaning of section 146(2) of the Duties Act; 5. the interest in EVRUT acquired by the Applicant by means of the Acquisition was a significant interest in EVRUT within the meaning of that Chapter; and 6. absent an applicable exemption under the Duties Act, duty under Chapter 4 was payable in respect of the Acquisition by reason of section 155 of the Duties Act, which establishes a regime for the reporting of, and the calculation and payment of duty on, acquisitions of significant interests in private landholders; this duty is calculated at the ad valorem rates set out in section 32 of the Duties Act, which are imported into Chapter 4 by section 157 of the Duties Act. 1. Rather, the dispute goes to three questions: 1. Whether the Acquisition was an exempt acquisition under section 163A(1)(g) of the Duties Act, in which case there was no controversy that section 155(7) of the Duties Act would exclude the Acquisition from liability to duty under Chapter 4. 2. Whether the Acquisition was a corporate consolidation transaction within the meaning of section 273D of the Duties Act, in which case - if the Chief Commissioner was so satisfied - under section 273B(2) of the Duties Act duty would not be chargeable on the Acquisition. 3. Whether, if the Acquisition was neither: 1. exempted under section 163A(1)(g), nor 2. treated as not chargeable by reason of section 273B(2), it was nonetheless a transaction in respect of which the Chief Commissioner should exercise his discretion under section 163H of the Duties Act to exempt the Acquisition from duty. The relevant statutory provisions are set out below when these reasons turn to consider each question. 1. It should be noted here that amongst the Respondent's arguments is one to the effect that EVHUT was not properly constituted as a trust at the relevant time, and accordingly that CPD undertook the Acquisition not as trustee of that trust but rather in its personal capacity. The consequence of this would be that the congruence between: 1. The direct ownership of EVRUT, immediately before the Acquisition occurred, and 2. The indirect ownership of EVRUT immediately after the Acquisition that section 273D(3) requires in order for the Acquisition to be a corporate consolidation transaction could not be established. The Respondent qualifies all his references to the Applicant accordingly. The Tribunal notes this qualification, and references in these reasons to the Applicant without reference to this qualification are for brevity and convenience only and should not be read as pre-determining the Respondent's position on this issue. 1. The order in paragraph [12] is that in which these reasons will address the questions. Before proceeding to do so, however, it will be helpful to summarise both the commercial context of the Acquisition, and some detailed history of relevant events. Commercial context and history 1. The ownership and activities of EVRUT and CPD in early 2019 can be relevantly summarised as follows: 1. CPD was the trustee of EVRUT [2] . 2. It owned in that capacity the Land, which was divided into several lots [3] . According to evidence provided by Mr Anwar Harb at paragraph 12 of A Harb Statement 1, some of the lots were residential and commercial property, and at least one of them (located at 748 Victoria Road, Ryde) housed a carwash. 3. The units in EVRUT were held in equal proportions by two companies as trustees of two unit trusts [4] : 1. AJ Harb Holdings Pty Limited as trustee of the AJ Harb Family Trust, representing the family interests of or associated with Mr Anwar Harb; and 2. Harb (Aust) Pty Limited, as trustee of the Harb Family Trust, representing the family interests of or associated with Mr James Harb. 1. The shares in AJH were held by Mr A Harb [5] . 2. The shares in HA were held by Mr J Harb and Ms Leila Harb [6] . 1. During 2019, a proposal was devised to reorganise this structure in a way which was intended to maintain the Family Trusts' ultimate indirect ownership of the Land and any developments on it [7] , by means of two separate but related transactions: 1. The first proposed transaction was: 1. The insertion between EVRUT and the Family Trusts of a new trust, EVHUT, of which CPD would be the trustee; and 2. The transfer by the Family Trusts to CPD EVHUT of their units in EVRUT, in exchange for units in EVHUT in the same proportions as their pre-transfer unit holdings in EVRUT; and 1. The second proposed transaction was: 1. The creation of a new trust, 748VRUT, of which 748PL, a different company from CPD, was to be the trustee and in which all of the units were to be owned by CPD EVHUT; and 2. The transfer of some but not all of the lots (being those referrable to the carwash) comprised in the Land to 748PL 748VRUT. 1. This proposal is outlined at paragraphs 11 to 14 of A Harb Statement 1, and at paragraphs 10 to 13 of J Harb Statement 1, although both gentlemen indicate in those paragraphs that they did not fully understand the underlying reason for the proposed restructure. According to the initial application made to the Chief Commissioner, its purpose was to facilitate the separate financing of the holding or redevelopment of the land held by EVHUT and the land held by 748UT [8] . 2. On 2 September 2019, a firm of accountants (the Accountants) instructed by or on behalf of the Harb family interests wrote to the Respondent setting out in some detail the proposals summarised above and seeking pre-approval for their implementation on the basis that they would be exempt under section 273B from duty generally imposed on such transactions under Chapter 4 of the Duties Act [9] . 3. On 23 October 2019, the Respondent replied in writing to the Accountants: 1. Providing confirmation that the first proposed transaction would qualify for corporate consolidation relief under section 273B(2) of the Duties Act, ".. subject to confirmation that the requirements under section 273D of the Act are satisfied as at the date of the relevant transaction .." [10] ; and 2. Similarly, providing confirmation that the second proposed transaction would qualify for corporate reconstruction relief under section 273B(1) of the Duties Act, ".. subject to confirmation that the requirements under section 273E of the Act are satisfied as at the date of the relevant transaction .." [11] . 1. From then onwards, various steps appear to have been taken with the general objective of implementing the two transactions. It is uncontroversial to observe that the process of implementation: 1. fell somewhat short of the degree of precision which was required for the transactions to qualify unquestionably for exemption under section 273B, and 2. in doing so illustrated the concerns of Leeming JA and Dr D'Angelo referred to earlier. 1. The following sequence of events is established from the Section 58 Documents, A Harb Statement 1 and J Harb Statement 1, and the various annexures or exhibits to them. 2. On 13 November 2019: 1. 748PL was incorporated [12] , and 2. an unexecuted trust deed for 748VRUT was sent by their solicitors to Messrs J and A Harb. [13] 1. The unexecuted trust deed for 748VRUT referred to the initial unitholders as the trustees of the Family Trusts in those capacities and contemplated at various points the creation of the 748VRUT on 13 November 2019 [14] . 2. By 18 November 2019: 1. the draft trust deed for the 748VRUT had been varied so as to include CPD EVHUT as the sole initial unitholder; 2. it had been executed by Messrs A and J Harb as directors of 748PL and by Mr A Harb, purportedly as sole director of the initial unit holder, CPD EVHUT [15] ; and 3. it had been stamped [16] . 1. The stamped trust instrument for 748VRUT [17] indicates that it is dated 13 November 2019. It clearly provides that the initial unitholder was CPD EVHUT, even though no application for units in 748VRUT had been made and no subscription moneys had been paid for the issue of such units. 2. On 21 November 2019 [18] : 1. Each of CPD and the trustees of each Family Trust executed a trust deed for EVHUT [19] ; 2. the trustee of each Family Trust executed an application for 50 units in EVHUT, with the 50 units applied for by them to be held for their respective Family Trusts [20] ; 3. CPD EVHUT issued to each trustee a certificate recording its holding of 50 units in EVHUT for its respective Family Trust [21] ; 4. The Register of Unit Holders of EVHUT recorded the trustee of each Family Trust as the holder of 50 units in EVHUT as trustee for its respective Family Trust [22] ; and 5. There occurred a meeting of CPD EVHUT and the Messrs Harb, representing their respective Family Trusts, which recorded: 1. the establishment of EVHUT, 2. the appointment of CPD as trustee of EVHUT, 3. the intention of the Family Trusts to subscribe for units in EVHUT and 4. the intention of CPD as trustee to open a bank account for CPD EVHUT and deposit the moneys subscribed by the Family Trusts into that account [23] . 1. The trust deed for EVHUT was stamped on or before 22 November 2019 [24] . 2. Between 22 November 2019 and 23 April 2020, the documentary record goes quiet. 3. Consistently with this apparent inactivity, according to the Messrs Harb [25] : 1. EVHUT was dormant and had no business until 23 April 2020; and 2. 748VRUT was dormant until 23 April 2020 and had no business until then. 1. On 23 April 2020, the following resolutions were passed by CPD EVRUT [26] . Each was signed by Messrs J and A Harb as directors of CPD: 1. A resolution [27] : 1. Noting receipt of notice from HA HFT that it intends to transfer all of its units in EVRUT to CPD EVHUT for $1 per unit; 2. Noting that an offer had been made by HA HFT to AJH AJHFT in accordance with the pre-emptive provisions in the EVRUT trust deed to transfer the units to AJH AJHFT on the same terms; 3. Noting that AJH AJHFT had declined that offer; and 4. Approving the transfer to CPD EVHUT of all HA HFT's units in EVRUT. 1. A resolution [28] : 1. Noting receipt of notice from AJH AJHFT that it intends to transfer all of its units in EVRUT to CPD EVHUT for $1 per unit; 2. Noting that an offer had been made by AJH AJHFT to HA HFT in accordance with the pre-emptive provisions in the EVRUT trust deed to transfer the units to HA HFT on the same terms; 3. Noting that HA HFT had declined that offer; and 4. Approving the transfer to CPD EVHUT of all AJH AJHFT's units in EVRUT. 1. On 23 April 2020, a resolution was passed by AJH AJHFT as follows, signed by Mr AJ Harb as sole director [29] : 1. Noting that AJH AJHFT had agreed to transfer all its units in EVRUT to CPD EVHUT for $1 per unit; 2. Noting that AJH AJHFT had complied with its pre-emptive obligations on the EVRUT unit trust deed, to offer those units on the same terms to the other unit holder; and 3. Approving the transfer of those units by AJH AJHFT to CPD EVHUT. 1. On 23 April 2020, a resolution was passed by HA HFT as follows, signed by Mr J Harb as sole director [30] : 1. Noting that AJH AJHFT wishes to transfer all its units in EVRUT to CPD EVHUT for $1 per unit; 2. Noting that AJH AJHFT had complied with its pre-emptive obligations on the EVRUT unit trust deed, to offer those units on the same terms to HA HFT; and 3. Declining that offer. 1. On 23 April 2020: 1. AJH AJHFT executed a transfer of its 50 units in EVRUT to CPD EVHUT for a consideration of $1 per unit [31] ; and 2. HA HFT executed a transfer of its 50 units in EVRUT to CPD EVHUT for a consideration of $1 per unit [32] . 1. Each such transfer was accepted on that date by the transferee. 2. On 23 April 2020, according to the Purchaser/Transferee Declaration – Non-individual (corporation or Government) referred to in [38] below, 748PL 748VRUT contracted for the purchase of an interest in certain land located at 748 Victoria Road, Ryde (the "748 Land"), having a dutiable value of $3,000,000. That agreement could only have been with CPD EVRUT as the owner of the 748 Land [33] . 3. On (or at some time after) that date, Mr AJ Harb as a director of CPD signed an Exempt Acquisition Statement: Acquisition of an Interest in a Landholder which disclosed to the Respondent the acquisition by CPD EVHUT of an interest in CPD EVRUT, by means of its acquisition of all of the units in EVRUT respectively held by AJH AJHFT and HA HFT. This statement was undated but was witnessed by a prescribed witness on 15 May 2020. [34] According to the Index to the Section 58 Documents, this was submitted to the Respondent on 15 June 2020 [35] . 4. On 8 September 2020: 1. acting on the advice and at the request of the Accountants [36] , Mr J Harb signed electronically a unit certificate indicating that CPD EVHUT was the holder of 100 units in 748VRUT [37] ; and 2. the Accountants sent this certificate, along with a copy of the Register of Unit Holders indicating that as at 13 (or, at the latest, 21) November 2019 CPD EVHUT was the holder of those units, to the Respondent [38] . 1. On 9 October 2020, Mr J Harb as a director of 748PL signed a Purchaser/Transferee Declaration – Non-individual (corporation or Government) which disclosed to the Respondent 748PL 748VRUT's acquisition of the 748 Land: 1. Having a dutiable value of $3,000,000; and 2. Under an agreement for sale of transfer made on 23 April 2020 [39] . 1. On 15 October 2020, the Respondent wrote to the Applicant's then solicitors [40] , stating that: 1. He accepted that the transfer of the 748 Land by CDP EVRUT to 748PL 748VRUT was a corporate reconstruction transaction which qualified for relief from duty under section 273B(1) of the Duties Act; but 2. He was not satisfied that the transfer of units in EVRUT to CPD EVHUT did not qualify as a corporate consolidation transaction to which relief from duty under section 273B(2) of the Duties Act applied. 1. On 24 October 2020, the Applicant objected to that assessment [41] . There then followed the succession of decisions by the Respondent, further objections by the Applicant and applications for review which are recorded at the beginning of these reasons. 2. Two further documents must be noted. These are two deeds each dated 14 February 2022, each of which is entitled "Deed of Rectfication" (each, a Deed): 1. One Deed is between AJH AJHFT and CPD EVHUT, in which the parties: 1. Record that the transfer dated 23 April 2020 by AJH AJHFT to CPD EVHUT of its 50 units in EVRUT incorrectly expressed the consideration for the transfer to be $50, and 2. Seek to amend that transfer by deleting the words, symbols and figures "Fifty dollars ($50.00)" and replacing them with the word "Nil"; and 1. The other Deed is between HA HFT and CPD EVHUT, in which the parties: 1. Record that the transfer dated 23 April 2020 by HA HFT to CPD EVHUT of its units in EVRUT incorrectly expressed the consideration for the transfer to be $50, and 2. Seek to amend that transfer by deleting the words, symbols and figures "Fifty dollars ($50.00)" and replacing them with the word "Nil". 1. These reasons now turn to the three questions outlined above. The first question: Was the Acquisition an exempt acquisition under section 163A(1)(g) of the Duties Act? 1. Section 163A(1)(g) of the Duties Act provides relevantly as follows: 163A General exemptions An acquisition by a person of an interest in a landholder is an exempt acquisition— (a) if the interest was acquired in the person's capacity as— (i) a receiver or trustee in bankruptcy, or (ii) a liquidator, or (iii) an executor or administrator of the estate of a deceased person, or (b) if the interest was acquired solely as the result of the making of a compromise or arrangement with creditors under Part 5.1 of the Corporations Act 2001 of the Commonwealth that has been approved by a court, or (c) if the interest concerned is acquired solely from a pro rata increase or decrease in the interests of all unit holders or shareholders, or (d) if the interest was acquired solely as the result of the distribution of the estate of a deceased person, whether effected in the ordinary course of execution of a will or codicil or administration of an intestate estate or as the result of the order of a court, made under Chapter 3 of the Succession Act 2006 or otherwise, varying the application of the provisions of a will or codicil or varying the application of the rules governing the distribution of the property of an intestate estate, or (e) if the land holding of the landholder comprises land used for primary production and the Chief Commissioner is satisfied that, had the landholder transferred the land to the person acquiring an interest as a result of the acquisition immediately before that acquisition, the transfer of the land would not be chargeable with duty under this Act because of the application of section 274, or (f) if the acquisition of an interest in a landholder would be chargeable with duty of $50 under section 54 or 54A if the property being acquired were land in New South Wales and the Chief Commissioner is satisfied that the acquisition is not part of a scheme to avoid duty under this Chapter, or (g) if the interest concerned was acquired before the landholder held land in New South Wales, or (h) if the interest concerned is an interest in a private unit trust scheme acquired before 10 June 1987, or (i) if the interest concerned is an interest in a private company acquired before 21 November 1986, or (j) if the interest concerned is an interest in a private landholder acquired before 1 July 2009 and, at the time of its acquisition, the private landholder was not a land rich landholder within the meaning of Chapter 4A (as in force before its repeal by the State Revenue Legislation Further Amendment Act 2009), or (k) if the interest concerned is an interest in a public landholder acquired before 1 July 2009. 1. If the Acquisition was an exempt acquisition, then in accordance with section 155(7) of the Duties Act (which applies to EVRUT because as noted at [11](4) above it is a private landholder) it would be excluded from liability to duty under Chapter 4 of that Act. If, however, it was not an exempt acquisition then it would not necessarily be so excluded. 2. The Applicant says that: 1. The relevant landholder for purposes of section 163A(1)(g) is CPD EVRUT. 2. The interest which forms the subject of the Acquisition, namely the two Family Trusts' respective unit holdings in EVRUT, was acquired by them before EVHUT held land in New South Wales. 3. That interest is thus one whose subsequent acquisition can necessarily only be an exempt acquisition under section 163A(1)(g). 4. It should therefore be excluded from liability to duty in accordance with section 155(7) of the Duties Act. 1. The Respondent, however, says that: 1. The word "acquired" in paragraph 163A(1)(g) refers to the acquisition identified in the introductory words of section 163A(1); 2. This is the acquisition whose liability to duty is under consideration, and in the present case it is therefore the acquisition by CPD EVHUT of the Family Companies' unitholdings in EVRUT; 3. Whether it is exempt or not is logically determined by reference to whether the landholder holds land in New South Wales at the time of that acquisition, since that is the acquisition whose liability to duty is under consideration; and 4. Accordingly, that one or more previous acquisitions of the relevant interest may have occurred before the landholder held land in New South Wales is of no relevance in determining the liability to duty of the acquisition under consideration. 1. The use of the passive voice in paragraph 163A(1)(g) is, perhaps, unfortunate and when combined with the paragraph's economy of drafting may allow into the paragraph a hint of ambiguity. 2. That being said, however, the linguistically most logical construction of section 163A(1) is that the "acquisition" referred to in the opening words of section 163A(1), which is the candidate for exemption under that section, necessarily defines the universe of possible acquisitions to which the word "acquisition" or its cognates refer when used in paragraphs (a) to (k) of section 163A(1). In doing so, it limits the acquisitions whose characteristics are to be tested against the criteria set out in those paragraphs to that single acquisition whose liability to duty is under consideration. The liability to duty falls upon a particular acquisition, and as a matter of construction it is to the circumstances and characteristics of that particular acquisition that the exempting provisions of section 163A(1) must look, rather than (in the absence of any clear statutory direction to the contrary) to those of any other acquisition. Hence, in determining whether paragraph 163A(1)(g) exempts the Acquisition, the question is not whether the units in EVRUT were initially acquired by the Family Trusts before CPD EVRUT held land in New South Wales, but rather whether, when CPD EVHUT acquired those units, CPD EVRUT had such a landholding. The evidence establishes clearly [42] that on 23 April 2020, CPD EVRUT did hold land in New South Wales, namely the Land, and that accordingly the Acquisition could not fall within the exemption provided for in section 163A(1)(g). 3. One further issue needs to be considered. At a superficial level, the very existence of section 163A(1)(g) itself appears curious, and in doing so may encourage the notion that paragraph (g) is not entirely free from ambiguity. This in summary is this: 1. the effect of Chapter 4 is to impose a liability to duty in relation to acquisitions of interests in landholders; 2. an entity cannot be a landholder within the meaning of section 146 of the Duties Act, unless it has landholdings in New South Wales: 146 Meaning of "landholder" (1) For the purposes of this Chapter, a"landholder" is a unit trust scheme, a private company or a listed company that has land holdings in New South Wales with an unencumbered value of $2,000,000 or more.; and 1. It is thus not intuitively evident what purpose section 163A(1)(g) serves, by excluding from liability to duty acquisitions which occurred before the entity in which an interest is acquired first became a landholder under section 146(1). 1. The significance of section 163A(1)(g) becomes clearer, however, in the context of the regime established under sections 152 and 155 of the Duties Act in relation to acquisition statements: 1. Although the liability to duty under Chapter 4 is triggered by the acquisition of an interest in a landholder – that is to say, an entity which has land in New South Wales – duty is calculated under section 155(1) by reference not to the unencumbered value of that landholder's land in New South Wales alone, but rather to the unencumbered value of "all landholdings and goods [emphasis added] of the landholder in New South Wales". 2. The person who makes a relevant acquisition – which under section 149 is the acquisition of an interest in a landholder – is required to prepare and lodge with the Chief Commissioner an acquisition statement that under section 152(3) must disclose: the unencumbered value of all land holdings and goods in New South Wales of the landholder as at the date of the relevant acquisition and, if the landholder is a private landholder, as at the date of acquisition of each interest acquired in the landholder during the statement period . Section 152(5) provides that the "statement period" is the period of 3 years preceding the date of the relevant acquisition. 1. It is entirely possible that at some time during that 3-year period; 1. The person lodging the acquisition statement acquired an interest in the landholder; 2. The landholder was not then a landholder, because at that time it had no landholdings in New South Wales; but 3. The landholder had goods in New South Wales at that time. 1. The result would be that: 1. the person lodging the acquisition statement would have to include in it details of the landholder's goods in New South Wales held at a time during the statement period when the landholder was not yet a landholder but at which the person acquired an interest in it; 2. because of the operation of section 155(3), that interest would be aggregated for duty purposes with the interest whose acquisition triggered the obligation to lodge the acquisition statement; and 3. in consequence, section 155(1) would include for purposes of calculating duty on the acquisition described in the acquisition statement the value of the landholder's goods in New South Wales at the time of the earlier acquisition, when the landholder did not in fact have a landholding in New South Wales. 1. Section 152(4) addresses this anomaly by providing that the information required under section 153(3) ".. is not required in relation to any exempt acquisition." By providing that acquisitions made by a landholder before it held land in New South Wales are exempt acquisitions, Section 163A(1)(g) allows section 152(4) to operate so as to relieve the person who lodges the acquisition statement from providing information concerning the landholder's goods in New South Wales held during the 3 year statement period but before the landholder in fact became a landholder. By doing so, it excludes the value of such goods from the base amount by reference to which duty is calculated under section 155. 2. The detailed operation of sections 152, 155 and 163A of the Duties Act is beyond the scope of these reasons. The important point to note for present purposes is that section 163A(1)(g) unambiguously has work to do within the complex scheme of those sections without needing recourse to the interpretation proposed by the Applicant. 3. The first question must therefore be answered in the negative. The second question: Was the Acquisition a corporate consolidation transaction within the meaning of section 273D of the Duties Act? 1. Section 273B(2) of the Duties Act provides as follows: (2) Duty under this Act is not chargeable on a transaction if the Chief Commissioner is satisfied, on application by a party to the transaction, that the transaction is a corporate consolidation transaction. 1. Section 273A of the Duties Act relevantly defines: 1. corporate consolidation transaction by reference to section 273D of the Duties Act; and 2. corporation to include a unit trust scheme. 1. It is uncontroversial that each of EVRUT, EVHUT and 748VRUT are unit trust schemes as defined in the Dictionary to the Duties Act: unit trust scheme means any arrangements made for the purpose, or having the effect, of providing, for persons having funds available for investment, facilities for the participation by them, as beneficiaries under a trust, in any profits, income or distribution of assets arising from the acquisition, holding, management or disposal of any property whatever pursuant to the trust. 1. Section 273D specifies the elements of a corporate consolidation transaction as follows: 273D Corporate consolidation transaction (1) For the purposes of this Part, a corporate consolidation transaction means a transfer, or an acquisition of an interest in a landholder (within the meaning of Chapter 4), that— (a) is made to interpose a corporation (the head corporation) between another corporation (the affected corporation) and the holders of the affected corporation's securities, and (b) is any of the following— (i) a transfer of securities of the affected corporation to, or an acquisition of those securities by, the head corporation for which the only consideration given by the head corporation is the issue or transfer of its securities to the person from whom the affected corporation's securities were transferred or acquired, (ii) a transfer of securities of the head corporation to, or an acquisition of those securities by, a holder of securities of the affected corporation. (2) A transfer, or an acquisition of an interest in a landholder, is not a corporate consolidation transaction if, immediately before the transfer or acquisition occurred, the head corporation held dutiable property or a vehicle or an interest in a corporation. (3) A transfer, or an acquisition of an interest in a landholder, is not a corporate consolidation transaction unless, immediately after the issue or transfer of the head corporation's securities— (a) each person who holds those securities (a security holder) is a person who held securities of the affected corporation immediately before the securities of the affected corporation were transferred to or acquired by the head corporation, and (b) the proportion of those securities held by each security holder is the same as proportion of the securities of the affected corporation held by each security holder before the issue or transfer. 1. In his letter of 15 October 2020, the Respondent refused the Applicant's request for exemption of the transfer to CDP EVHUT of the Family Trusts' unitholdings in CDP EVRUT as a corporate consolidation transaction because: 1. The register of unitholders of 748RUT indicates that CPD EVHUT became a unitholder in that trust on 13 November 2019; 2. From that date, therefore, EPD EVHUT held an interest in a corporation (as defined in section s273A(1) of the Duties Act, being the unit trust scheme known as 748VRUT; 3. The consequence was that the transfer of units in EVRUT to it at any time thereafter could not be a corporate consolidation transaction, because of section 273D(2) of the Duties Act, which as noted above, provides that: A transfer, or an acquisition of an interest in a landholder, is not a corporate consolidation transaction if, immediately before the transfer or acquisition occurred, the head corporation held dutiable property or a vehicle or an interest in a corporation. 1. The entry of AJH AJHFT and HA AFT as unitholders in EVHUT's register of unitholders took place on 21 November 2019, and the transfer of units in EVRUT by HA HFT and AJH AJHFT occurred on 23 April 2020. Both dates fell after 13 November 2019, so that both transactions took place after CPD EVHUT became a unitholder in 748RUT and were thus disentitled from constituting a corporate consolidation transaction by section 273D(2). 1. In its objection dated 24 November 2020 to the Respondent's decision, the Applicant argued in summary that: 1. 748VRUT was not fully constituted as a trust on 13 November 2019 or indeed until on or after 23 April 2020. This was despite the execution of the trust instrument, 748PL's acceptance of its appointment as trustee, the nomination in the trust instrument of EVHUT as the initial unitholder, and the entries made in its register of unitholders because: 1. there was no trust property held subject to the trusts of the 748VRUT until on or after 23 April 2020, and 2. EVHUT itself was not fully constituted as a trust until 23 April 2020. 1. CDP EVHUT could not therefore have held an interest in 748VRUT until then, because there simply was no 748VRUT for it to hold an interest in, and thus no scope for it to fall within the exclusionary provision set out in section 273D(2). 2. Similarly, in the case of EVHUT, although the trust instrument had been executed, CPD had accepted its appointment as trustee and AJH AJHFT and HA HFT had been recorded as unitholders in EVHUT's register of unitholders, it was not until 23 April 2020, when EVHUT first acquired trust property by means of the Acquisition, that EVHUT first came into existence. 1. In his response dismissing the objection, the Respondent reaffirmed his initial assessment and dismissed this analysis, saying in summary that: 1. The terms of the trust instrument creating EVHUT record in clause 5 that the initial unit holders listed in schedule 1 to that instrument, namely HA HFT and AJH AJHFT, "have paid" the initial subscription moneys for their units, to be held on trust for the unit holders; 2. Clause 6 of the trust instrument provides that it commenced on the date of its execution, which was 21 November 2019; 3. This indicates that EVHUT came into existence on 21 November 2019, and there is no evidence to the contrary; 4. At that time, CPD EVHUT became the sole unit holder in 748VRUT, concerning which there is no evidence to indicate that it was anything other than a validly constituted trust at that time; 5. CPD EVHUT therefore held, on or before the units in EVRUT were transferred to it on 23 April 2020, an "interest in a corporation" within the meaning of section 273D(2) of the Duties Act, namely units in 748VRUT; and 6. Accordingly, the relevant transfers of units in EVRUT to CPD EVHUT were excluded under section 273D(2) of the Duties Act from being a corporate consolidation transaction. 1. In its submissions for this review, the Applicant argued as follows: 1. The documents giving rise to EVHUT's interest in 748VRUT were executed in anticipation of becoming enforceable upon the occurrence of a later event, namely the transfer of units in EVRUT to EVHUT. It cannot therefore be concluded that CPD EVHUT held those units at the time it acquired the units in EVRUT. 2. 748VRUT did not exist prior to 23 April 2020 because it had no trust property and no beneficiary. 3. CPD EVHUT did not hold an interest in property in NSW prior to 23 April 2020, because the 748 VRUT trust deed was not executed by its putative unitholder and was executed when its putative beneficiary did not exist, because no money was paid for units, no unit certificate was issued and no unit register was created before 23 April 2020 and because EVHUT did not exist until it held trust property. 4. Alternatively, units in 748 VRUT were issued to CPD in its corporate capacity (and not as trustee of VHUT) prior to 23 April 2020. 5. EVHUT did not exist until it held trust property. 1. In his submissions for this review, the Respondent argued as follows: 1. The units in EVRUT were transferred to CPD EVHUT for valuable consideration comprising either: 1. Consideration of $1 per unit, or 2. Alternatively, a promise to pay consideration of $1 per unit, either of which is sufficient to disentitle the transaction to relief under section 273D, since section 273D(1)(b)(ii) requires that the only consideration given for the transfer to CPD EVHUT of the units in EVRUT is the issue of units in EVHUT. 1. The execution of the Deeds has no effect on this, since: 1. There was no mutual mistake between the parties sufficient to support rectification; and 2. In any event, the amendment effected by the Deeds cannot retrospectively alter the revenue consequences of the relevant transactions. 1. There was no trust fund initially provided by the purported unitholders in EVHUT, with the consequence that EVHUT was not fully constituted as a trust when the relevant unit transfers were made to CPD. Since CPD could not be acting as the trustee of a non-existent trust, it must have acquired the units in EVRUT in its corporate capacity, and not as trustee for the Family Trusts. The consequence is that the transaction failed the test in section 273D(3), that the respective ownership interests of the Family Trusts in EVRUT immediately before the Transaction and in EVHUT consequent upon it be congruent. It was not therefore a corporate consolidation transaction. 2. CPD held dutiable property immediately before the Transaction occurred, being: 1. Land in New South Wales, and 2. units in EVRUT from 25 March 2020, when it was registered as the holder of 100 units in EVRUT, and the effect of this was to disentitle the Transaction from qualifying as a corporate consolidation transaction, because of the disentitling effect of section 273D(2). 1. In further submissions, made in response to the Respondent's argument summarised in paragraph [62] above, the Applicant says that CPD EVHUT did not pay AJH AJHFT or HA HFT any monetary consideration for the transfer to it of the units in EVRUT, and that the unit transfer was rectified by the deeds of rectification dated 14 February 2022 and respectively entered into between AJH AJHFT and CPD EVHUT, and HA HFT and CPD EVHUT. The Tribunal's analysis 1. In the Tribunal's assessment, the following conclusions can be drawn from the evidence. 2. At 00:01 am on 23 April 2020, the trust deed for EVHUT had been executed and stamped, AJH AJHFT and HA HFT had signed application forms for units in EVHUT, and they had been recorded in the register of unitholders of EVHUT. They had not, however, paid the relevant subscription moneys for units, so that CPD EVHUT held nothing by way of identifiable trust property for EVHUT. EVHUT was not therefore properly constituted as a trust. 3. At that time too, the trust deed for 748VRUT had been executed and stamped, and CPD EVHUT had been recorded as the initial unitholder. No subscription moneys had been paid, so that 748PL 748VRUT held nothing by way of identifiable trust property for 748VRUT. 748VRUT was not therefore properly constituted as a trust. 4. There appeared to be no disagreement between the parties that for an intending unitholder in either unit trust merely to sign and deliver an application form for the issue to it units in the trust, in which it indicated an intention to pay certain subscription moneys for the issue of those units, did not confer on the intended trustee of the trust rights sufficient to amount to trust property. The Tribunal agrees, because of both the inherent circularity of the contrary proposition and the provisions of clause 5 of both trust instruments, which clearly contemplate the payment of funds in order initially to establish the relevant trust. 5. During 23 April 2020, AJH AJHFT and HA HFT each executed and delivered a transfer to CPD EVHUT of the units respectively held by them in EVRUT. Even if the initial subscription moneys for units in EVHUT had not been paid: 1. The existence and delivery of these transfers, and 2. The underlying agreement for the transfer of the units in EVHUT, as manifested by the interlocking resolutions of EVHUT, AJH AAJHFT, HA HAFT and EVRUT summarised in paragraphs [30], [31] and [32] above, together demonstrate that there then existed property, at the very least in the form of AJH AAJHFT and HA HAFT's agreements to transfer their respective EVRUT units to CPD EVHUT, sufficient to constitute EVHUT as a trust. The trust instrument for EVHUT [43] provides in clause 7 that CPD as trustee holds the trust fund on the trusts set out in that instrument, and in clause 2 defines the "trust fund" as including "moneys, investments and property paid to or transferred to and accepted by or acquired by the trustee .." , all of which is sufficient in its terms to include the units in EVRUT so transferred to CPD EVHUT. 1. Equally, during 23 April 2020, there appears to have come into existence an agreement between CPD EVRUT and 748PL 748VRUT for the sale or transfer by the former to the latter of the 748 Land. This follows from the Purchaser/Transferee Declaration – Non-individual (corporation or Government) described in paragraph [38] above signed by Mr J Harb on 9 October 2020, which states on page 3 of the declaration [44] as follows: "Date of agreement for sale or transfer 23/04/2020 Dutiable value $3,000,000" 1. The existence of such an agreement would have two consequences: 1. Firstly, to give rise to trust property, in the form of 748PL 748VRUT's right under it as against CPD EVRUT to acquire the 748 Land, sufficient to constitute the 748VRUT, and 2. Secondly, in doing so automatically to give rise to trust property for EVHUT, in the form of its interest in the newly constituted 748VRUT as initial unit holder described in the trust deed for 748VRUT referred to in [25] above. 1. As with the EVHUT trust instrument, the trust instrument for 748VRUT [45] provides in clause 7 that 748PL as trustee holds the trust fund on the trusts set out in that instrument, and in clause 2 defines the "trust fund" as including "moneys, investments and property paid to or transferred to and accepted by or acquired by the trustee .." . This again is sufficient to include as trust property the rights of 748PL 748VRUT as against CPD EVRUT to acquire the 748 Land under the agreement disclosed by Mr J Harb. 2. It is a basic principle of trust law ".. that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries" [46] . The need for trust property is central: ".. There can be no trust without property; that is fundamental. Consequently, if there is no trust property upon which a trust can take effect, or if it is so described by the settlor that it cannot be identified, there can be no trust" [47] . The corollary of that principle is that, again in the words of the authors of Jacobs' Law of Trusts in Australia: "When a trust has been declared but the settlor has not been divested of the trust property, the trust is said to be incompletely constituted and operates merely as an agreement to create a trust. .... An agreement to create a trust is not a trust but a contract." [48] Since the evidence establishes [49] that at the beginning of 23 April 2020 both the intention to establish EVHUT and 748VRUT as trusts and the identity of the intended beneficiaries of those trusts [50] were clear, the only barrier to the constitution of EVHUT and 748VRUT as trusts was the absence at that time of any trust property. The injection of trust property into the trust structures was, therefore, all that was required to bring both trusts into existence. 1. The order in which the events by means of which the two trusts obtained trust property actually occurred is significant, since: 1. If EVHUT was initially constituted by reason of (and simultaneously with obtaining) the rights which it obtained from either or both of AJH AJHFT and HA HFT to their unit holdings in EVRUT as described in [68] above, then at that point it did not hold an interest in a corporation within the meaning of section 273A (namely 748VRUT) that under section 273D(2) would disentitle the Transaction from being a corporate consolidation transaction. 2. If, however, EVHUT was initially constituted as the consequence of the constitution of 748VRUT as described in [69] above, then at the time at which it obtained its right in EVRUT under the Transaction it did already hold an interest in a corporation (namely 748VRUT) sufficient to engage the disentitling effect of section 273D(2). 1. Both the possibility this dichotomy and its potential significance is recognised in the letter dated 24 November 2020 from Applicant's solicitors to the Respondent, in support of the Applicant's objection [51] : " 52. what does appear to have happened on or after the 13 November 2019 and on or after the 21 November 2019 is that mere signatures were placed on documents, labelled as trust deeds and probably more accurately described as agreements to create a trust. 53. The next transactions were the Transfers [which is a defined term in paragraph 2 of the letter, referring to the transfers of units in EVRUT to CPD EVHUT dated 23 April 2020] and the execution of the RPA transfer of the Property [which is a defined term in paragraph 10 of the letter, referring to the 748 Land]. 748VRUT AND EVHUT COMING INTO EXISTENCE 54. I think on a careful analysis of the facts it is the case that 748VRUT came into existence immediately following the Transfers to EVHUT. 55. The RPA transfer of the Property means that 748VRUT had assets to hold on trust but it wasn't until after the EVHUT came into existence that the 748VRUT was established. At this point there were assets of the trust and a beneficiary. 56. It is thought that this occurred on or after 23 April 2020. 57. All the four trust elements were available on this date as there is no evidence that either the trust property or beneficiaries existed before this date. 58. The EVHUT that was the subject of an agreement to create a trust dated 21 November 2019 was established at the time the transfers occurred. 59. The Transfers would need to occur before the RPA transfer of the Property as the 748VRUT did not come into existence until such time as the initial unit holder, EVHUT, came into existence. 60. Following the Transfer to EVHUT, the EVHUT came into existence. This occurred on 23 April 2020. 61. The EVHUT was not a unit holder in the 748VRUT before it came into existence and therefore the 748VRUT was established immediately following the establishment of the EVHUT which only came into existence following the Transfers. 62. It follows that before the Transfers the EVHUT did not exist and therefore it did not hold an interest in a Corporation pursuant to section 273D of the Duties Act 1997." 1. This analysis: 1. accepts that for 748PL 748VRUT to acquire trust property in the form of some kind of interest in the 748 Land, was sufficient to constitute 748VRUT, but 2. assumes, without evidence or explanation, that the constitution of that trust was not of itself sufficient to give rise to trust property (in the form of the units in 748VRUT of which CPD EVHUT was the initial unitholder) sufficient to satisfy the last precondition to the constitution of EVHUT, namely the existence of trust property for EVHUT. The Tribunal can see no convincing basis for this assumption. 1. The dilemma which the Tribunal faces is that there is no evidence to indicate in which order the events actually occurred: 1. In J Harb Statement 1, Mr J Harb: 1. States, at paragraph 11, that "I did not fully understand the need for the restructure, except that the intended outcome was to move from having several properties owned by one unit trust (in which the Family Trusts were ultimate owners) to distinct properties being held in their own unit trust (of which the Family Trusts were ultimate owners)"; 2. refers at paragraph 17 to the "Prevailing Intention" of the overall restructure arrangement, of which these transactions form part, as being that ".. the proposed restructure (including the creation of entities) be carried into effect in accordance with what had been set out by the Accountants, as preapproved by Revenue NSW that the restructure satisfied the requirements for the exemptions the Accountants had sought (Prevailing Intention). I relied on advisers to tell me when and where I needed to sign, in order to carry that intention into effect"'; 3. sets out in paragraph 52 his recollection of the execution on 23 April 2020 of various trustee documents and a unit transfer relating to the transfer of the units in EVRUT to CPD EVHUT and the execution of the Exempt Acquisition Statement: Acquisition of an Interest in a Landholder referred to in [36] above; and 4. states as follows at paragraphs 53 to 55 concerning the transfer of the 748 Land from CPD EVRUT to 748 PL 748VRUT: "53. A Real Property Act transfer for the intended transfer 748 [sic] Victoria Road from CPD PL (as trustee of Eagle View Ryde UT) has been executed by the solicitor for 748 Victoria Road PL. 54. On or about 1 May 2020, the executed documents prepared by the Accountants were sent to the Accountants. 55. On 15 May 2020, an Exempt Acquisition Statement was executed by my brother". 1. In A Harb Statement 1, Mr A Harb states: 1. At paragraph 11, in similar terms to Mr J Harb at paragraph 11 of J Harb Statement 1; 2. At paragraph 25, in similar terms to Mr J Harb at paragraph 25 of J Harb Statement 1; 3. At paragraphs 77 and 78, in similar terms to Mr J Harb at paragraph 52 of J Harb Statement 1; and 4. At paragraphs 79 to 81, in similar terms to Mr J Harb at paragraphs 53 to 55 of J Harb Statement 1, save that the reference to the execution of an Exempt Acquisition Statement by my brother is to the statement's execution by Mr A Harb himself. 1. Nothing in A Harb Statement 2 refers to the transfer of the 748 Land to 748PL, or to any agreement or arrangements made or documents executed preliminary to, consequent upon or otherwise for the purposes of, that transfer. 2. Nothing in the evidence of either Mr Harb provides any additional information as to either: 1. the terms of the agreement for sale or transfer referred to by Mr A Harb in the Purchaser/Transferee Declaration – Non-individual (Corporation or Government) described in paragraph [38] above, or 2. when, in the sequence of events on 23 April 2020, that agreement was entered into. 1. The consequence of all this is that the Applicant has not provided the Tribunal with evidence which allows it to determine which of the two scenarios in paragraph [73], as to the means by which EVRUT was finally constituted by the injection into it of trust property, is the correct one. It in turn follows that the Applicant has not discharged the onus of proof imposed on it under section 100(3) of the TAA, to demonstrate on the balance of probabilities that the order in which EVHUT and 748VRUT were respectively constituted was that described in paragraph [73](1) rather than that described in paragraph [73](2). 2. The Applicant made various submissions, none of which referenced the agreement for sale or transfer of the 748 Land referred to in the Purchaser/Transferee Declaration – Non-individual (Corporation or Government) described in paragraph [38] above, to the effect that the suite of documents executed over an extended period which comprised: 1. trust and corporate documents for the issue of units in 748VRUT, or 2. the undated transfer of the 748 Land certified as correct by 748PL's solicitor, Ms K Tannous) [52] , were created, and where relevant executed, in anticipation of becoming enforceable upon a later event, namely the eventual transfer of the 748 Land to 748PL 748VRUT. 1. In its submissions dated 30 December 2021, the Applicant observes at paragraph 127 that "Even after 23 April 2020, execution of the transfer of 748 Victoria Road was withheld pending approval by Revenue NSW that the corporate consolidation exemption applies". That may well be the case, as the undated transfer of the 748 Land included in the Section 58 Documents suggests [53] . That does not however explain or address the consequences of the agreement for sale or transfer referred to by Mr A Harb in the Purchaser/Transferee Declaration – Non-individual (corporation or Government). 2. The Tribunal accepts that conditionality of this kind is entirely possible, and that instruments may be executed in anticipation of subsequent events with their effectiveness either suspended – for example, in the case of deeds by their not being delivered – or expressly conditioned on subsequent events, by means of a condition precedent included in the instrument itself or some form of overarching agreement that establishes contractually the necessary element of conditionality. In the present case arrangements of this kind could readily have been established. 3. However, there was little to support the proposition that the implementing steps in the reconstruction arrangements occurred in an order which satisfied the requirements of section 273D, other than an inference, that since the "Prevailing Intention" of the Applicant and its directors (to adopt the expression used in the Messrs Harbs' witness statements) was to implement a corporate consolidation transaction and a corporate reconstruction transaction which complied with, and qualified for relief under, section 273B of the Duties Act, the various subordinate transactions and documents which together were directed at implementing that Prevailing Intention should, whatever their actual order, be taken as a whole to operate in a way which is consistent with and conducive of that intention. 4. There was no clear evidence, such as an agreement between the relevant parties which sets out the order of events in the reconstruction and contains appropriate suspensory provisions or conditions precedent, which could support the existence of such conditionality. 5. This absence is significant, since section 273D(2) quite expressly looks to the exact timing with which events occur in a corporate consolidation transaction. The words "immediately before the transfer or acquisition occurred" in section 273D(2) make it clear that precision in timing and order is essential to ensure compliance with the requirements for exemption. This requirement, and that in section 273D(3) as to the congruence of interests pre- and post-reconstruction, are not mere arbitrary rules: they clearly have an underlying purpose, being to ensure that reconstruction transactions cannot be used as vehicles to effect substantive changes to property interests. 6. The requirements of section 273D(2) as to order and timing can be satisfied either: 1. physically, though the order in which documents are executed (or where relevant delivered) and the steps in the transaction consummated, or 2. contractually, through the kind of overarching agreement referred to above. They cannot, however, be satisfied – except by chance - through the uncoordinated execution of documents and the implementation of subordinate transactions without regard to the words of the section, in the expectation that good intentions and the context of Part 1 of Chapter 11 of the Duties Act will be sufficient to impose order on chaos. This conclusion is, in the Tribunal's view, not inconsistent with the High Court's decision in Halloran v Minister administering National Parks and Wildlife Act 1974 229 CLR 545, to which the Applicant referred, since by using the words "immediately before" section 273D clearly requires exact timing and order. 1. As will be apparent from the above, the Tribunal was not convinced by the Respondent's proposition that the units in EVRUT transferred to CPD EVHUT were held by it in its personal capacity, thus failing the identity and proportionality of ownership test in section 273D(3). Since, in the Tribunal's view EVHUT was properly constituted either: 1. by reason of the transfer of the EVRUT units to it, or 2. by virtue of the constitution of 48VRUT in which it was expressed to be a unitholder, whichever was the earlier, there was no apparent circumstance in which CPD held the units in EVRUT in its personal (as distinct from trustee) capacity. 1. The Tribunal now turns to the Respondent's argument, that the units in EVRUT were transferred to CPD EVHUT for valuable consideration comprising either: 1. Consideration of $1 per unit, or 2. Alternatively, a promise to pay consideration of $1 per unit, either of which is sufficient to disentitle the transaction from relief because of the operation of section 273D(1). 1. In A Harb Statement 2, Mr A Harb says at paragraphs 9 and 10 that: 1. no money was paid by CPD EVHUT to the Family Trusts for the transfer to CPD EVHUT of the units in EVRUT; and 2. no money was payable, and in this respect he refers to the financial statements of EVHUT, AJHFT and HFT for the year ended 30 June 2021 [54] , none of which identify a debt owing by EVHUT to either Family Trust which is expressly referrable to the acquisition for $50 each of their respective unitholdings in EVRUT. The financial statements do however each include (as assets of the Family Trusts, or liabilities of EVHUT) significant loan balances owing by EVHUT to the Family Trusts, and it cannot be excluded that the $50 payable by EVHUT to each Family Trust has been subsumed within these loan balances. 1. The Deeds referred to above purport to rectify the relevant unit transfers in favour of CPD EVHUT, by removing from them the reference to consideration of $50. These documents attracted considerable controversy during the parties' respective oral submissions, concerning their proper legal effect. On balance, however, the Tribunal did not consider them to be particularly significant, in view of the suite of trustee and corporate resolutions described in paragraphs [30] to [32] above. 2. Whatever the overall Prevailing Intention of the Family Trusts and their respective directors, those resolutions demonstrate both: 1. An objective intention that consideration of $1 per unit be paid by EVHUT to the Family Trusts for their units in EVRUT; and 2. The implementation by the Family Trusts and EVRUT of the pre-emptive process prescribed in clause 24 of the EVRUT trust instrument in relation to proposed transfers of units in EVRUT, by reference to a consideration of $1 per unit. 1. The Tribunal's view is that the arrangements between CPD EVHUT, CPD EVRUT and the Family Trusts evidenced by those resolutions were such as to demonstrate objectively the existence of an agreement by CPD EVHUT to pay $1 per EVRUT unit to each Family Trust in consideration of the transfer to it of the units in EVRUT. This consideration may not have been paid, it may not figure in the respective financial statements of EVHUT or the Family Trusts, it may have been minimal – indeed, petty – in the overall context of the proposed reconstruction, and reference to it may have been excised by the Deeds of Rectification from the relevant unit transfers. However, the documentary record establishes that: 1. its payment (or at least an agreement by CPD EVHUT to pay it) formed part of the overall restructuring transaction; and 2. EVRUT and the Family Trusts undertook steps specifically directed at allowing that consideration to be provided. 1. This makes it difficult to argue convincingly that the effect of the Deeds is to rectify the instruments of transfer of the EVRUT units, so as to reflect the absence of any agreement for the payment of monetary consideration for the transfers. Rather, in the Tribunal's view, their effect is to amend the transfers retrospectively, and they thus run into Leeming JA's observation in Chief Commissioner of State Revenue v Smeaton Grange Holdings Pty Limited [2017] NSWCA 184 at [6], to the effect that the parties to private arrangements "... cannot alter with retrospective effect their relations with a third party". 2. This agreement to pay monetary consideration is in the Tribunal's view sufficient to prevent the transaction meeting the requirements of section 273D because section 273D(2)(b) specifies that the acquisition of the relevant securities in the landholder be one "... for which the only consideration given by the head corporation [relevantly, EVHUT] is the issue or transfer to its securities to the person [relevantly, the Family Trusts] from whom the affected corporation's [relevantly, EVRUT] securities were transferred or acquired". The existence of CPD EVHUT's commitment to pay $1 per unit consideration to the Family Trusts makes it impossible to conclude that the only consideration for the Transaction was the issue of units in EVHUT to the Family Trusts. 3. Accordingly, in the Tribunal's assessment the answer to the second question must be in the negative. The third question: If the answers to the first and second questions are "no", is the Acquisition nonetheless one in respect of which the Chief Commissioner should exercise his discretion under section 163H of the Duties Act to exempt the Acquisition from duty? 1. Section 163H provides as follows: 163H Discretion to grant exemption or concession (1) The Chief Commissioner may, if satisfied that the application of this Chapter to an acquisition in a particular case would not be just and reasonable— (a) grant a full exemption in respect of the acquisition, or (b) grant a partial exemption in respect of the acquisition. (2) If the Chief Commissioner grants a full exemption in respect of the acquisition, the acquisition is an exempt acquisition. (3) If the Chief Commissioner grants a partial exemption in respect of the acquisition, the Chief Commissioner may make any reduction in the duty chargeable in respect of the acquisition that the Chief Commissioner considers just and reasonable in the circumstances. 1. Section 63(1) and (2) of the ADRA, referred to in paragraph [5] above, authorise the Tribunal, standing in the place of the Respondent, to exercise this discretion in undertaking this review. 2. The Applicant submits that: 1. The transactions entered into did not result in any change in the beneficial or economic ownership of EVRUT or the Land: at the outset of the reconstruction, say on 1 January 2019, the ultimate beneficial and economic owners of EVRUT and the Land were AJH AJHFT and HA HFT and on, say, 31 December 2020: 1. the ultimate economic and beneficial owners of EVRUT were still AJH AJHFT and HA HFT, albeit through the interposition of EVHUT, and 2. the ultimate economic and beneficial owners of the Land were still AJH AJHFT and HA HFT, albeit through the interposition of EVHUT and, in relation to the 748 Land, 748PL 748VRUT; 1. there was no duty avoidance; 2. none of the corporate or trust entities involved in the transactions was at any time used for any purpose which was not consistent with the Respondent's in principle approvals of the transactions; 3. the transactions represented a genuine attempt to engage the corporate consolidation exemption provided for in section 273B, which was frustrated by "a minor error by advisers, which had no effect of any substance whatsoever to the end-result of the transaction" [55] ; this was put more bluntly by the Applicant in the letter supporting its objection dated 24 November 2020, as certain of its advisers having "... made some incredibly significant blunders in relation to the various trust establishments and transactions" [56] ; 4. these considerations, the Applicant submitted, mean that: 1. the approach accepted by White J (as His Honour then was) in Milstern Nominees Pty Ltd v Chief Commissioner of State Revenue 89 NSWLR 43, at [31] and [32] provides appropriate guidance to the Tribunal, that to adapt His Honour's formulation, ".. the dispensing power in s163H should be exercised where there was no intent to avoid duty and where the relevant acquisition ... would have no practical consequence to the way in which the ... [Land] ... held on the trusts ... would be appointed or enjoyed"..; and 2. that adopted by Emmett AJA in Winston-Smith v Chief Commissioner of State Revenue [2018] NSWSC 773 and approved by the Court of Appeal in the appeal from that decision, Winston-Smith v Chief Commissioner of State Revenue [2019] NSWCA 75, can be distinguished since in that case – unlike here - the transaction under consideration caused a material change in the taxpayer's ".. underlying practical and economic interest in the relevant land" [57] and ".. changed the appellant's economic interest in [the relevant land which] ... [i]n my view it is precisely this sort of case that the legislation is intended to catch" [58] ; and 1. the anti-avoidance provisions embodied in Chapter 4 of the Duties Act are not avoided where the transaction is pre-approved, ends in the pre-approved position and involves an economically irrelevant mistake at some point in the middle, consistently with the observations of White J at paragraph [52] of Milstern Nominees. 1. The Respondent took a different view in its submissions, which in summary were as follows: 1. The absence of an intention to avoid duty is not determinative in the exercise of the discretion: Gu v Chief Commissioner of State Revenue [2020] NSWCATAD 75, at [111]; 2. The focus of the landholder duty provisions is on the acquisition of interests, not on control of the landholder or the economic or beneficial ownership of the landholder's property; hence, the simple fact that there is no such change in economic or beneficial ownership as the result of a transaction directed at changing only the structure through which such ownership is held does not of itself support the exercise of the discretion under section 163H(1); 3. The Duties Act recognises the desirability of allowing such restructuring transactions to occur in the circumstances and subject to the conditions specified in section 273B; that a taxpayer attempts to undertake such a restructuring under section 273B but fails to do so "... due to multiple, manifest and fundamental execution errors that were wholly within the parties' control" [59] is not a circumstance which justifies the exercise in its favour of the discretion under section 163H(1); and 4. In determining whether it would be just and reasonable to provide an exemption under section 163H(1), the interests of the other taxpayers of NSW should be considered, in the form of the loss of revenue to the State that would ensue. 1. The Respondent also submitted that because of the parties' errors in implementing the restructuring transaction, there was in fact a change in the ultimate beneficial ownership and control of EVRUT. The Tribunal, as noted above, was unconvinced by the underlying premise. Accordingly, it does not consider this submission any further. 2. The submissions summarised above encapsulate the competing considerations which the Tribunal weighed in deciding this question. Finally, however, one consideration tipped the balance. 3. The Tribunal recognises that: 1. The outcome of the transaction did not alter the ultimate beneficial or economic ownership of the Land; 2. There was no intention on the Applicant's part to avoid duty; and 3. The nature of some at least of the non-compliances with the requirements of section 273D identified by the Respondent were in monetary or commercial terms minor, if not petty. 1. The Tribunal further recognises that: 1. the Applicant's objective was merely to avail itself of the statutory provisions which facilitate corporate consolidation transactions; 2. that its failure to achieve this objective was the consequence of errors of implementation; and 3. these may well have been errors on the part of its advisors rather than of the Applicant itself or the Messrs Harb themselves. 1. Ultimately, however, the Duties Act provides in Part 1 of Chapter 11 a clear and readily accessible route for corporate consolidation transactions to be exempted from duty under Chapter 4, which the Applicant could not demonstrate to the necessary standard that it had followed. This was not the result of some unpredictable or arbitrary operation of the Duties Act in relation to the circumstances of the transaction, or of the Respondent exercising unpredictably a discretion vested in him. Rather, it was the direct consequence of the Applicant's failure to ensure that the transactions by means of which the restructuring took place complied with the requirements of section 273D. 2. For this reason, the present case is in the Tribunal's view distinguishable from the circumstances in Milstern Nominees Pty Ltd v Chief Commissioner of State Revenue 89 NSWLR 43, and for that matter in Winston-Smith v Chief Commissioner of State Revenue [2019] NSWCA 75. This is because the immediate reason for the Applicant's duty liability was its failure to secure exemption through compliance with the requirements of Part 1 of Chapter 11. The Tribunal cannot conclude that it is just and reasonable, in terms of section 163H(1), for it to grant an exemption under that section in these circumstances. 3. It was the Applicant and its principals who had ultimate control of the implementation of the restructuring, and it is neither unjust nor unreasonable for them to bear, at least as against the Respondent, the consequences of their failure to ensure that it conformed to the statutory regime for exemption. To do otherwise would be to transfer to the Respondent (and ultimately the taxpayers of New South Wales) financial consequences whose incidence is perhaps more appropriately the subject of discussion as between the Applicant and its advisers. Conclusion 1. The Tribunal does not consider that the Applicant has demonstrated to the standard required that the Decisions are incorrect, and consequently it must conclude that the Decisions are the correct and preferable ones. 2. The Tribunal notes without comment that the Respondent reserves his position on costs. Orders 1. The Tribunal makes the following order: 1. The Decisions under review are confirmed. ********** Endnotes 1. Nuncio D'Angelo, Transacting with Trusts and Trustees, LexisNexis Australia, 2020, at [1.14]. 2. A Harb Statement 1, paragraphs 5 and 6; J Harb Statement 1, paragraphs 5 and 6. 3. A Harb Statement 1, paragraph 8; J Harb Statement 1, paragraph 9. 4. J Harb Statement 1, paragraphs 6 to 8; A Harb Statement 1, paragraphs 7 to 9. 5. Further Section 58 Document, p198. 6. Further Section 58 Document, p196. 7. J Harb Statement 1, paragraphs 9 to 13; A Harb Statement 1, paragraphs 10 to 14. 8. Section 58 Documents, pages 12 to 14. 9. Section 58 Documents, pages 9 to 108. 10. Section 58 Documents, page 255. 11. Section 58 Documents, page 256. 12. J Harb Statement 1, paragraph 24; A Harb Statement 1, paragraph 33, CE 12 13. J Harb Statement 1, paragraph 26; A Harb Statement 1, paragraph 35. 14. CE 40 15. In fact, as both gentlemen note in their statements this was incorrect, as they were both directors of CPD. 16. J Harb Statement 1, pages 29-30 and 38; A Harb Statement 1, pages 38 to 39, and 47 to 48; CE 243 to 271. 17. CE 243 to 271. 18. J Harb Statement 1, paragraph 43; A Harb Statement 1, paragraph 53. 19. CE pages 51-82. 20. CE pages 77-78. 21. CE pages 80 to 81 22. CE page 83. 23. CE pages 84 to 86. 24. J Harb Statement 1, paragraph 48; A Harb Statement 1, paragraph 57; CE 55. 25. J Harb Statement 1, paragraph 50; A Harb Statement 1, paragraph 75 26. J Harb Statement 1, paragraph 52; A Harb Statement 1, paragraph 77 27. Section 58 Documents, page 326 28. Section 58 Documents, page 261 29. Section 58 Documents, pages 258 and 328 30. Section 58 Documents, page 260 31. Section 58 Documents, page 262 32. Section 58 Documents, page 325 33. See paragraph [15] above, and Section 58 Documents, page 312. 34. Section 58 Documents, pages 264-273. 35. Index to the Section 58 Documents, page 3 36. J Harb Statement 1, paragraphs 71 to 75 37. Section 58 Documents, page 330. Peculiarly, this certificate was expressed to be signed by him as a director of CPD, rather than as a director of 748PL. 38. J Harb Statement 1, paragraphs 75 to 78. 39. Section 58 Documents, pages 334 to 337. 40. Section 58 Documents, pages 341 to 345 41. Section 58 Documents, pages 355 to 357. 42. Section 58 Documents, Tab 6; J Harb Statement 1, Paragraph 8; A Harb Statement 1, Paragraph 8. 43. Further Section 58 Documents, Tab 5(f) 44. Section 58 Documents, page 336 45. Further Section 58 Documents, Tab 5(k) 46. Kauter v Hilton (1953) 90 CLR 86, at 97. 47. JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia, 8th edition, LexisNexis Sydney, 2016, paragraph [5-24]. 48. Jacobs' Law of Trusts in Australia, 8th edition, paragraph [6-25]. 49. See paragraphs [65] and [66] above. 50. Respectively, the Family Trusts and CPD EVHUT 51. Section 58 Documents page 369 52. Section 58 documents, page 312 53. Section 58 documents, page 312 54. See AH2 pages 28-64. 55. Applicant's submissions dated 30 December 2021, paragraph [130] 56. Section 58 Documents, page 373 57. Winston-Smith v Chief Commissioner of State Revenue [2019] NSWCA 75, per Meagher JA at [6] 58. Winston-Smith v Chief Commissioner of State Revenue [2019] NSWCA 75, per Sackville AJA at [52]. 59. Respondent's Outline of Submissions dated 18 February 2022, paragraph [45] 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: 17 August 2022