Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Cymtow Pty Ltd as trustee for Stanavacs Trust; Lanlex No 127 Pty Ltd as trustee for TBH Family Trust; Cybir Pty Ltd v Chief Commissioner of State Revenue [2022] NSWCATAD 314 Hearing dates: 4 May 2022 Date of orders: 26 September 2022 Decision date: 26 September 2022 Jurisdiction: Administrative and Equal Opportunity Division Before: AR Boxall, Senior Member Decision: The Decisions under review are confirmed. Catchwords: TAXES AND DUTIES — Land tax — Surcharge land tax — Foreign person Legislation Cited: Administrative Decisions Review Act 1997 (NSW) Corporations Act 2001 (Cth) Duties Act 1997 Foreign Acquisitions and Takeovers Act 1975 (Cth) Land Tax Act 1956 Land Tax Management Act 1956, State Revenue Legislation Amendment (Budget Measures) Act 2016 State Revenue Legislation Amendment (Surcharge) Act 2017 State Revenue Legislation Further Amendment Act 2020 Taxation Administration Act 1996 Cases Cited: Attorney-General (NSW) v Quin (190) 170 CLR 1 B&L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481 BBLT Pty Ltd v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003 Brataniec v Chief Commissioner of State Revenue [2013] NSWADT 65 Commissioner of State Taxation v Ryan (2000) 201 CLR 109 Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218 Levitch Design Associates Pty Ltd atf Levco Unit Trust v Chief Commissioner of State Revenue [2014] NSWCATAD 215 Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361, at 369 Monisse v Chief Commissioner of State Revenue [2022] NSWCATAD 276 Texts Cited: Diccon Loxton, "Not Worth the Paper They're Written on? Executing Documents (Including Deeds) Under Electronic Documentation Platforms: Part B" (2017) 91 ALJ 205 Category: Principal judgment Parties: Cymtow Pty Ltd as trustee for Stanavacs Trust (Applicant) Lanlex No 127 Pty Ltd as trustee for TBH Family Trust (Applicant) Cybir Pty Ltd (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: Ms H Morgan (Respondent) Solicitors: Dr Matthew Leighton-Daly (Agent)(Applicants) Crown Solicitor (Respondent) File Number(s): 2021/00353198 2021/00353212 2022/00023287 Publication restriction: None REASONS FOR DECISION Introduction 1. These reasons for decision concern three Applications for Administrative Review respectively filed by the Applicants 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 Land Tax Act Management Act 1956 (the LTMA) in relation to surcharge land tax imposed under the Land Tax Act 1956 (the LTA) as follows: Tribunal Application Number Applicant Date lodged Decision in respect of which review is sought 2021/00353198 Cymtow Pty Ltd (Cymtow) as trustee for the Stanavacs [1] Trust 13 December 2021 The Chief Commissioner's disallowance on 15 October 2021 of an objection by the Applicant to a decision that the Applicant, as trustee of the Stanavacs Trust, was liable to surcharge land tax for each of the 2017, 2018, 2019, 2020 and 2021 land tax years. 2021/00353212 Lanlex No 127 Pty Ltd (Lanlex) as trustee for the TBH Family Trust 13 December 2021 The Chief Commissioner's disallowance on 15 October 2021 of an objection by the Applicant to a decision that the Applicant, as trustee for the TBH Family Trust, was liable to surcharge land tax for each of the 2017, 2018, 2019, 2020 and 2021 land tax years. 2022/00023287 Cybir Pty Ltd 25 January 2022 The Chief Commissioner's disallowance on 26 November 2021 of an objection by the Applicant to a decision that the Applicant, as trustee of the Hardin Hunters Hill Trust (also known as the Cybir Trust [2] ), was liable to surcharge land tax for each of the 2017, 2018, 2019, 2020 and 2021 land tax years. (Cybir) 1. The decisions identified in Column 4 are referred to in these reasons as the Decisions. 2. Under orders made by the Tribunal on 1 and 15 March 2022, all three matters were heard together. 3. References to: 1. the Cymtow 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 22 December 2021 in matter number 2021/353198, and reference to a particular numbered tab or page of the Cymtow Section 58 Documents is to the document identified under that tab number or at that page number in the Cymtow Section 58 Documents; 2. the Lanlex Section 58 Documents are to the volume of documents filed with the Tribunal under section 58 of the ADRA on 2 December 2021 in matter number 2021/353212-001, and reference to a particular numbered tab or page of the Lanlex Section 58 Documents is to the document identified under that tab number or at that page number in the Lanlex Section 58 Documents; and 3. the Cybir Section 58 Documents are to the volume of documents filed with the Tribunal under section 58 of the ADRA on 24 February 2022 in matter number 2022/00023287, and reference to a particular numbered tab or page of the Cybir Section 58 Documents is to the document identified under that tab number or at that page number in the Cybir 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 Applicants appear to express their review applications as being in relation to the disallowance of their objections, rather than the original decisions. 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. Section 99 requires that applications for review be lodged within 60 days after the determination of the relevant objection. The applications all comply with this requirement. 3. 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 written evidence and submissions, to which (along with their representatives' respective oral submissions) the Tribunal has had regard. These are referred to below as relevant. Legislative background 1. On 28 June 2016, the State Revenue Legislation Amendment (Budget Measures) Act 2016 received Royal assent. This act established special regimes under the Duties Act 1997 (the Duties Act) and the LTA for the taxation of, respectively, dutiable transactions in respect of, and the ownership of, residential land in New South Wales involving foreign persons, a term which is discussed below. It did so by imposing surcharge purchaser duty in the case of dutiable transactions [3] , and surcharge land tax in that of ownership [4] . 2. Central to the operation of this regime is the concept of a foreign person, which is defined in section 104J of the Duties Act. This definition is imported into the LTA, and since the commencement of the State Revenue Legislation Amendment (Surcharge) Act 2017 on 5 March 2018 [5] has been adopted by section 2A of the LTA. 3. The definition of foreign person adopts, subject to modifications, the corresponding definition in section 4 of the Foreign Acquisitions and Takeovers Act 1975 (Cwth) which is as follows: foreign person means: (a) an individual not ordinarily resident in Australia; or (b) a corporation in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; or (c) a corporation in which 2 or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; or (d) the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; or (e) the trustee of a trust in which 2 or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; or (f) a foreign government; or (g) any other person, or any other person that meets the conditions, prescribed by the regulations. 1. That section defines the expression substantial interest, which is used in the definition of foreign person: substantial interest: a person holds a substantial interest in an entity, trust or unincorporated limited partnership if: (a) for an entity or unincorporated limited partnership—the person holds an interest of at least 20% in the entity or partnership; or (b) for a trust (including a unit trust)—the person, together with any one or more associates, holds a beneficial interest in at least 20% of the income or property of the trust. 1. Section 18 of that Act sets out certain rules for determining percentages of interests in entities, and relevantly sets out in section 18(3) the rule applicable in the case of discretionary trusts: Discretionary trusts (3) For the purposes of this Act, if, under the terms of a trust, a trustee has a power or discretion to distribute the income or property of the trust to one or more beneficiaries, each beneficiary is taken to hold a beneficial interest in the maximum percentage of income or property of the trust that the trustee may distribute to that beneficiary. 1. Section 104J(2) of the Duties Act modifies the definition of foreign person imported from the Foreign Acquisitions and Takeovers Act 1975 (Cwth) as follows: (2) The definition of foreign person in the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth is modified as follows— (a) an Australian citizen is taken to be ordinarily resident in Australia, whether or not the person is ordinarily resident in Australia under that definition, (b) a New Zealand citizen who holds a special category visa, within the meaning of section 32 of the Migration Act 1958 of the Commonwealth, at any particular time is taken at that time to be an individual whose continued presence in Australia is not subject to any limitation as to time imposed by law. 1. Under the State Revenue Legislation Further Amendment Act 2020, a new section 5D was incorporated into the LTA, which provides relevantly as follows: 5D Surcharge land tax—discretionary trusts (1) The trustee of a discretionary trust is taken to be a foreign person in that capacity for the purposes of section 5A if the trust does not prevent a foreign person from being a beneficiary of the trust. (2) If a discretionary trust prevents a foreign person from being a beneficiary of the trust, the trustee is not in that capacity a foreign person for the purposes of section 5A. (3) A discretionary trust is considered to prevent a foreign person from being a beneficiary of the trust if (and only if) both of the following requirements are satisfied— (a) no potential beneficiary of the trust is a foreign person (the no foreign beneficiary requirement), (b) the terms of the trust are not capable of amendment in a manner that would result in there being a potential beneficiary of the trust who is a foreign person (the no amendment requirement). Note— Under the transitional arrangements for this section in Schedule 2 to the Principal Act, the no amendment requirement does not apply to a trust that satisfies the no foreign beneficiary requirement immediately before the commencement of this section. (4) A person is a potential beneficiary of a discretionary trust if the exercise or failure to exercise a discretion under the terms of the trust can result in any property of the trust being distributed to or applied for the benefit of the person. Note— A potential beneficiary is not limited to persons named in the trust instrument and extends to the members of any class of persons to whom or for whose benefit trust property can be distributed or applied pursuant to the discretions of the trust. (5) For the removal of doubt, a person is not a potential beneficiary of a discretionary trust if the terms of the trust prevent any property of the trust from being distributed to or applied for the benefit of the person. (6) In this section, property includes money, and a reference to the distribution or application of property includes a reference to the payment of money. 1. The transitional provisions for the State Revenue Legislation Further Amendment Act 2020 are found in Clause 66 of Part 34 of Schedule 2 to the LTMA, and provide relevantly as follows: Amendments relating to discretionary trusts (1) Section 5D of the Land Tax Act 1956 applies to the assessment of land tax liability in respect of the 2017 land tax year and subsequent land tax years. (2) If the trustee of a discretionary trust is liable in that capacity as a foreign person for surcharge land tax in respect of the 2017, 2018, 2019 or 2020 land tax year— (a) the trustee is exempt from that land tax if the terms of the trust have been amended, before payment of the land tax is due and before midnight on 31 December 2020, so that the trust prevents a foreign person from being a beneficiary, or (b) if that land tax has been paid, the trustee is entitled to a refund of that land tax if the terms of the trust have been amended, before midnight on 31 December 2020, so that the trust prevents a foreign person from being a beneficiary. (3) A trust that satisfies the no foreign beneficiary requirement under section 5D of the Land Tax Act 1956 immediately before the commencement of that section is considered for the purposes of that section to prevent a foreign person from being a beneficiary of the trust (without having to satisfy the no amendment requirement under that section). (4) Despite section 5D of the Land Tax Act 1956, the trustee of an Australian testamentary trust is not in that capacity a foreign person for the purposes of the application of section 5A of that Act to residential land owned by a foreign person if— (a) liability for land tax is required (under clause 9 of Schedule 1A to this Act) to be assessed as if the deceased had not died and had continued to use and occupy the land as his or her principal place of residence, or (b) any of the following apply (even if the trust does not prevent a foreign person from being a beneficiary of the trust)— (i) for a trust arising from a will or codicil—the will or codicil was executed on or before 31 December 2020, (ii) for a trust arising from the administration of an intestate estate—the deceased died before, or within 2 years after, the commencement of section 5D of the Land Tax Act 1956, (iii) for a trust resulting from an order of a court varying the application of the provisions of a will or codicil or of the rules governing the distribution of an intestate estate—the order was made on or before 31 December 2020. (5) The Chief Commissioner may in a particular case extend the date by which payment of surcharge land tax by a trustee is due so that the trustee qualifies for exemption from that surcharge land tax under this clause if the terms of the trust have been amended before midnight on 31 December 2020 (but after the date by which payment would otherwise be due) so that the trust prevents a foreign person from being a beneficiary. 1. Section 2 of the State Revenue Legislation Further Amendment Act 2020 provides that it commences on the date of assent to that Act. This occurred on 24 June 2020 [6] . Background 1. The decisions under review are all concerned with the Respondent's assessment of the Applicants for surcharge land tax under section 5A of the LTA. 2. There is no dispute that in respect of all relevant land tax years each Applicant: 1. owned (within the meaning of section 3 of the LTMA), 2. land which was residential land (within the meaning of section 2A of the LTA), and 3. did so, in the case of Cymtow Pty Ltd, as trustee for the Stanavacs Trust; in that of Lanlex No 127 Pty Ltd, as trustee for the TBH Family Trust; and in that of Cybir Pty Ltd, as trustee for the Hardin Hunters Hill Trust , the name of which was changed on 8 June 2017 to the Cybir Trust [7] . 1. There was, equally, no debate that each of the three trusts was at all material times a discretionary trust for purposes of section 5D of the LTA. The correctness of this consensus is apparent from: 1. Clauses 3 and 4 of the Deed of Settlement dated 3 December 1999 for the Stanavacs Trust [8] (the Stanavacs Trust Deed), which confer of the trustee of that trust the discretion to distribute respectively income or capital of the trust to one or members from time to time of a very widely defined group of beneficiaries; 2. Clauses 2 and 5 of the deed of settlement dated 19 March 1997 for the TBH Family Trust [9] (the TBH Trust Deed), which confer of the trustee of that trust the discretion to distribute respectively income or capital of the trust to one or members from time to time of a very widely defined group of beneficiaries; and 3. Clauses 3 and 4 of the Discretionary Trust Deed dated 15 September 2005 for the Hardin Hunters Hill (now Cybir) Trust [10] , (the Cybir Trust Deed), which confer of the trustee of that trust the discretion to distribute respectively capital or income of the trust to one or members from time to time of a very widely defined group of beneficiaries. 1. It was common ground that: 1. Each beneficiary of each of the trusts had a substantial interest in the relevant trust, because of the operation of the definition of foreign person (and its associated interpretative rules) imported into the LTA via the Duties Act from the Foreign Acquisition and Takeovers Act 1975 (Cwth); and 2. If the pool of beneficiaries of the trusts were limited so as to exclude persons who were not Australian citizens then, subject to compliance with the transitional provisions set out in clause 66 of Schedule 2 to the LTMA, the effect of section 104J(2)(a) would be to ensure that none of the trustees were foreign persons for purposes of surcharge land tax. 1. Nor was there any debate that consequent upon the execution by the relevant trustee and Mr Bruce Hardin, as appointor, on 14 January 2021 of Deeds of variation of each of the Stanavacs Trust Deed, the TBH Trust Deed and the Cybir Trust Deed, each of those instruments was varied in a way which was sufficient to ensure that none of the three trustees was thereafter to be taken under section 5D of the LTA to be a foreign person for purposes of section 5A of that Act, which imposes surcharge land tax in respect of residential land owned by foreign persons. 2. Rather, the dispute goes to whether: 1. Certain instruments, dated 4 February 2020 and signed by two persons who happened to be directors of the trustee company concerned (each, a 4 February 2020 instrument), that were expressed to exclude with immediate effect persons who were not Australian citizens from being beneficiaries of, respectively, the Stanavacs Trust [11] , the TBH Trust [12] and the Cybir Trust [13] , were sufficient to ensure that none of the three trustees was thereafter to be taken under section 5D of the LTA to be a foreign person for purposes of section 5A of that Act; and 2. Certain dealings in December 2019 between a representative of the Applicants and the Respondent were such as to modify or limit the rights of the Respondent to assess the Applicants with surcharge land tax in respect of the 2017, 2018, 2019, 2020 and 2021 land tax years. 1. In considering these contending propositions, the Tribunal has had regard to: 1. The Applicants' various administrative review application forms; 2. The Cymtow Section 58 Documents, the Lanlex Section 58 Documents and the Cybir Section 58 Documents; 3. The Statutory Declaration of Mr Christian Hardin concerning Cymtow and Lanlex dated 15 March 2022 and the annexures to it (the First Hardin Declaration); 4. The Statutory Declaration of Mr Christian Hardin concerning Cybir dated 12 April 2022 and the annexures to it (the Second Hardin Declaration); 5. The Statutory Declaration of Mr Bijay Upadhyay concerning Cymtow and Lanlex dated 9 March 2022 and the annexures to it (the Upadhyay Declaration); 6. The Respondent's Tender Bundle in Applications 2021/00353198 and 2021/00353212; 7. The various written submissions made by the Applicant and the Respondent, and the Applicant's written submissions in reply; and 8. The oral submissions made on behalf Applicant and the Respondent, and the Applicant's oral submissions in reply. The Tribunal's analysis: the effect of the 4 February 2020 instruments 1. The importance of the 4 February 2020 instruments lies in clause 66(3) of the transitional provisions for the State Revenue Legislation Further Amendment Act 2020 [14] . If it can be demonstrated that the effect of those instruments was to amend any of the Stanavacs Trust Deed, the TBH Trust Deed or the Cybir Trust Deed ensure that no person who was not an Australian citizen was or could have been a beneficiary of the relevant trust immediately before the commencement of the State Revenue Legislation Further Amendment Act 2020 on 24 June 2020 [15] , then that trust would fall within the safe harbour of clause 66(3). It would do so solely by satisfying what is described in section 5D(3)(a) of the LTA as the no foreign beneficiary requirement, that "no potential beneficiary of the trust is a foreign person". 2. The First Hardin Declaration establishes that: 1. In February 2020 a communication in the following terms was executed by Mr Hardin and Ms Carolyn Bain: 04 February 2020 To Whom it may concern. This letter is to notify that the trust deed Stanavacs Trust is amended to exclude beneficiaries who are not Australian citizens effective immediately. [Signature] Signed Carolyn Bain [Signature] Signed Christian Hardin; 1. In February 2020 a communication in the following terms was executed by Mr Hardin and Ms Carolyn Bain: 04 February 2020 To Whom it may concern. This letter is to notify that the trust deed TBH Trust is amended to exclude beneficiaries who are not Australian citizens effective immediately. [Signature] Signed Carolyn Bain [Signature] Signed Christian Hardin; and 1. In February 2020, Mr Hardin and Ms Bain were both directors of Cymtow and Lanlex. 1. The Second Hardin Declaration establishes that: 1. In February 2020 a communication in the following terms was executed by Mr Hardin and Ms Carolyn Bain: 4th of February 2020 To Whom it may concern. This letter is to notify that the trust deed Cybir Trust is amended to exclude beneficiaries who are not Australian citizens effective immediately. [Signature] Signed Carolyn Bain [Signature] Signed Christian Hardin; and 1. In February 2020, Mr Hardin and Ms Bain were both directors of Cybir. 1. Clause 32(1) of the Stanavacs Trust Deed [16] provides that ".. the Trustees for the time being may at any time and from time to time by deeds revocable or irrevocable revoke add to or vary all or any of the Trusts herein contained ...", subject to certain conditions. 2. Clause 14 of the TBH Trust Deed [17] provides that "The Trustee may at any time and from time to time by written or oral resolution or Deed revoke add to or vary all or any of the provisions contained in this Deed ...", subject again to certain conditions. These conditions are that no such variation: 1. ... may be in favour of or for the benefit of the Ineligible Beneficiaries or result in any benefit to the Ineligible Beneficiaries; or 2. ... shall affect the beneficial entitlement to any amount set aside for any Beneficiary prior to the date of the variation alteration or addition. The Ineligible Beneficiaries are defined in clause 1 of the TBH Trust Deed [18] as being the Settlor (a Mr Michael Higgins), the Trustee and any undischarged bankrupt. 1. Clause 16 of the Cybir Trust Deed [19] provides: 1. In clause 16.1, that "With the consent of the Appointor, the Trustee may amend this Deed ... in any way except: 1. It may not amend clause 2.5, clause 2.6(a), 5.3(a)(ii) or clause 16.1; 2. It may not change the entitlement of any person to any capital or income appointed, paid or applied for the benefit of that person"; and 1. In clause 16.2, that "An amendment to this deed may be made in whatever manner and form the Trustee and Appointor consider appropriate (including a resolution of the Trustee) and need not use writing or a deed unless so required by law". 1. The amendment regimes thus fall into two categories, at least so far as the form of amendment is concerned. On the one hand, amendments to the TBH and Cybir Trust Deeds need not take the form of deeds and may, for example, be in the form of written resolutions of the relevant trustee. On the other, amendments to the Stanavacs Trust Deed must take the form of a deed. 2. In the Tribunal's view, the 4 February 2020 instrument for the Stanavacs Trust is clearly not in the form of a deed for the reasons set out below. It cannot therefore operate as an effective amendment to the Stanavacs Trust Deed because it fails to comply with the relevant formal requirements of Clause 32(1) of the Stanavacs Trust Deed. It is not a deed for the following reasons: 1. A deed is an instrument that is given particular legal status by satisfying certain technical legal formalities [20] , being traditionally that the deed be in writing on paper, vellum or parchment, sealed and delivered. 2. These requirements have evolved, as one recent commentator notes: "And the common law requirements, while longstanding, have not remained immutable. In particular, over time delivery and sealing have changed from a physical action and a physical seal to requirements that can be satisfied respectively by intention and by the writing of a symbol or words. Under statute, different requirements apply in different jurisdictions when deeds are executed by individuals, by companies and by foreign corporations". [21] 1. One particular area of evolution has been in relation to the execution of deeds by Australian incorporated companies, such as Cymtow. Section 127(3) of the Corporations Act 2001 provides that: A company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2). 1. Sections 127(1) and (2) allow for the execution of documents by a company either by the signatures of the company's directors or a director and secretary, or by the affixation of its common seal witnessed by the company's directors or a director and secretary. 2. The difficulty with Cymtow's execution of its 4 February 2020 instrument is that while the instrument may well have been signed by two directors, there is neither: 1. compliance with the legal formalities traditionally required as a matter of general law in order to create a deed, even in the attenuated form in which they may now operate; signature of the instrument by two directors may amount to execution in accordance with section 127(1) of the Corporations Act), but it falls short of the modern general law requirements for a deed – there is no reference to either sealing or delivery in a manner sufficient to indicate that the instrument is executed so as to take effect as a deed; 2. compliance with the requirements of section 127(3) of the Corporations Act , that the instrument be expressed to be a deed; the instrument is entirely silent on this point, and in consequence must fall outside the safe harbour for the execution of deeds by Australian incorporated companies provided by section 127(3); nor 3. any discernible intention that it be executed or operate as a deed. 1. In consequence, the 4 February 2020 instrument for the Stanavacs Trust cannot because of its formal deficiencies be effective to amend the Stanavacs Trust Deed so as to exclude foreign persons, within the meaning of section 5D of the LTA, from being beneficiaries of that Trust. 2. The 4 February 2020 instruments for the TBH Trust and the Cybir Trust do not suffer from that formal deficiency. Their respective trust deeds both allow amendment by means of written resolutions of the trustee, and although the instruments do not describe themselves as resolutions, nonetheless in the Tribunal's views they are readily so characterizable. This is because: 1. they have been apparently signed consistently with section 127(1) of the Corporations Act 2001, and it may thus be assumed in accordance with section 129(5) of that Act that they have been duly executed by Lanlex or Cybir, as the case may be; and 2. they record unambiguously a determination by the relevant trustee company that the beneficiaries of the trust are henceforth not to include persons who are not Australian citizens. That, however, is not the end of matters. 1. Clause 16 of the Cybir Trust Deed requires that in making an amendment to the trust deed the trustee must only do so with the consent of the Appointor. According to clause 1 of, and the Schedule to, the Cybir Trust Deed [22] , the Appointor is Mr Bruce Hardin. That gentleman has not endorsed his consent on the 4 February instrument, nor is there any evidence as to whether he provided his consent in any other way. The Second Hardin Declaration refers to certain discussions in early 2020 between the directors of Cybir (of whom Mr B Hardin was one) but does not provide any evidence as to whether Mr B Hardin so consented. Cybir's failure to demonstrate that Mr B Hardin consented (as required by the Cybir Trust Deed) to the amendment purportedly effected by the 4 February instrument means that it has not discharged the burden of proof imposed on it under section 100(3) of the TAA, to demonstrate that Cybir's 4 February 2020 instrument was effective to exclude non-Australian citizens from participation as beneficiaries in the Cybir Trust. 2. As noted above, each of the TBH and Cybir Trust Deeds condition the trustee's power of amendment on the amendment having no effect on the entitlement of a beneficiary to any amount "set aside for" that beneficiary (TBH Trust) or "appointed, paid or applied for the benefit of " that beneficiary (Cybir Trust). There was no evidence provided as to whether (and if so how) these conditions were satisfied in relation to TBH's and Cybir's respective 4 February 2020 instruments. There thus remain two unanswered questions: 1. Were there in fact any such beneficiaries who were not Australian citizens? 2. If so, what was the effect of their existence on the amendment purported to be made by the relevant 4 February 2020 instrument? At least two possible answers can be proposed to the second question: first, that the amendment was entirely ineffective, because it failed to protect their position as required by the relevant condition, or alternatively that the amendment was effective generally, but not in relation to that limited class of non-citizens. In each case, however, non-citizen beneficiaries of the relevant kind would remain as beneficiaries. 1. In neither case was there any evidence as to how these questions were to be answered. The result is that the Tribunal has no factual basis on which to conclude that the effect of the two 4 February 2020 instruments was unimpaired by reason of a failure to satisfy these conditions to their effectiveness. The Applicants' failure to provide this evidence means that they have not discharged the burden of proof imposed on them, to demonstrate that their respective 4 February 2020 instruments were on the balance of probabilities effective to exclude non-Australian citizens from participation as beneficiaries in the TBH and Cybir Trusts. The Tribunal's analysis: whether certain dealings in December 2019 between a representative of the Applicants and the Respondent were such as to modify or limit the rights of the Respondent to assess the Applicants with surcharge land tax in respect of the 2017, 2018, 2019, 2020 and 2021 land tax years 1. There are two essential elements to this aspect of matters: 1. The first is that in oral communications on 16 December 2020 between the Applicants' accountant and bookkeeper, Mr Upadhyay, the Applicant agreed to extend the deadline for amending the trust deeds for the Trusts so as to comply with the requirements of section 5D of the LTA from 31 December 2020 to 15 January 2021; and 2. The second is that the Respondent's conduct in communicating with Mr Upadhyay on 16 December 20920 was such that it should now extend the time for making the relevant amendments or remit the surcharge tax assessed or write off the Applicants' liabilities for the tax so assessed. 1. The Applicants' agent, Dr Leighton-Daly, articulated the second strand in a more subtle and sophisticated way, to which these reasons will return below. 2. The starting point is the legislation. As noted above, the transitional provisions are found in in Clause 66 of Part 34 of Schedule 2 to the LTMA, and provide relevantly in paragraph (2)(a) of that Clause that: (2) If the trustee of a discretionary trust is liable in that capacity as a foreign person for surcharge land tax in respect of the 2017, 2018, 2019 or 2020 land tax year— (a) the trustee is exempt from that land tax if the terms of the trust have been amended, before payment of the land tax is due and before midnight on 31 December 2020, so that the trust prevents a foreign person from being a beneficiary. 1. The legislation requires the relevant amendments to have been made "before midnight on 31 December 2020". This is a precise cut-off time, and the legislation does not provide any discretion to the Respondent or any of its officers to extend or otherwise vary that date on a case-by-case basis. Hence, even if the Respondent's officers had agreed to such an extension, they had no legislative basis for doing so and any such purported extension would have had no legal effect. 2. In any event, the evidence provided does not support the proposition that the Respondent's officers agreed to an extension: 1. In the Upadhyay Declaration, Mr Upadhyay recounts his conversation on 16 December 2019 with an officer of the Respondent as follows: I said words to the effect: "I am the accountant/bookkeeper for Cymtow Pty Ltd and Lanlex No 127 Pty Ltd I would like to apply for an extension until 15th of January 2021 to lodge the foreign beneficiary amendments to the trust deeds for Cymtow Pty Ltd and Lanlex No 127 Pty Ltd." The male officer said: "What is the reason for the extension?" I said, "Our lawyer is not available to draft the amendments as he is on holiday" The male officer said: "Okay. I approve the extension to 15 January 2021. The documents will have to be prepared and lodged by then otherwise land tax will be payable". 1. Mr Upadhyay then observes that from this conversation he drew the conclusion that "...Revenue granted an extension to prepare and lodge the amendments to the trust deeds on or before 15 January 2022". 2. The Respondent's Client Notes for the Stanavacs Trust and the TBH Trust [23] each include a file note made on 22 December 2020 by an officer of the Respondent, which records a conversation as follows with Mr Upadhyay: "VIJAY (accountant) Phone ********** req extension for upload of TRUST DEED/AMENDMENT to 15.01.2020 (Code:flext01)". 1. The Cybir Section 58 Documents include at Tab 12 the Respondent's Client Notes in relation to Cybir, but do not record a similar conversation. This is consistent with the Upadhyay Statement, which refers only to a conversation about the Stanavacs and TBH Trusts. 2. Mr Upadhyay's account of his request and the corresponding Client Notes are consistent, in that all that was requested was an extension until 15 January 2021 to lodge the amendment documents. 3. Where they differ is in relation to the response provided by the Respondent's officer. The Client Notes indicate that the response was limited to the time by which the relevant amendments could be lodged with the Respondent by uploading them; the Upadhyay Declaration suggests that it was couched in terms which encompassed not only the lodgement of the relevant amendments, but also their making. 1. The Tribunal notes the document which appears at Tab 2 of the Respondent's Tender Bundle in Applications 2021/00353198 and 2021/00353212. This is an email dated 29 March 2022 from the Applicants' agent in response to a request dated 28 March 2022 to Mr Upadhyay from the Respondent for copies of file notes, memoranda, correspondence and emails concerning Mr Upadhyay's conversations in December 2020 with the Respondent's officers about Lanlex and/or Cymtow. The email discloses that Mr Upadhyay wished to comply with the request, but that he ".. has no documents to produce". 2. The Client Notes are a contemporaneous record of the conversation between the Respondent's officer and Mr Upadhyay, whereas the Upadhyay Declaration was made some 16 months later, by which stage recollections are likely to have faded and may have been inadvertently coloured by subsequent events, including the very dispute to which they relate. There is, as noted in [41] above, no other contemporaneous record of discussions. As the only such record, the Tribunal places more reliance on the Client Notes than on the Upadhyay Declaration. This is not to suggest that the Tribunal doubts Mr Upadhyay's frankness or honesty; rather the issue is simply that later recollections are for the reasons suggested above inherently less reliable than contemporaneous records. 3. Moreover, even if one accepts Mr Upadhyay's recollection that he was told that the amendments had to be "prepared and lodged" by 15 January 2021 in preference to the Client Notes, it does not follow that the Respondent's officer purported to grant an extension to the 31 December deadline which he had no authority to grant. Mr Upadhyay may, in the nuanced light of hindsight, interpret the expression in this way, but that is not what those words necessarily communicate, especially since small variations in stress, pause, emphasis and rhythm can produce quite different meanings. For example, "You must prepare the amendments, and lodge them by 15 January" carries quite a different meaning from "You must prepare the amendments and lodge them by 15 January". Mr Upadhyay did not provide oral evidence, so there was no opportunity for either the Respondent or the Tribunal to ask him further about the context and course of his conversation. 4. The Tribunal is not therefore satisfied that the Respondent's officer purported in his conversation with Mr Upadhyay to extend the deadline for making the relevant amendments (as distinct from merely lodging with the Respondent the amendments so made). 5. In any event: 1. There is no statutory power under the transitional provisions in Part 34 of Schedule 2 to the LTMA for the Respondent or any of his officers to extend on a case-by-case basis the 31 December 2020 deadline; it should be noted here that although under Clause 66(5) of Schedule 2 to the LTMA the Respondent has a discretion to extend the date for payment of surcharge land tax by a trustee, this discretion is only enlivened "if the terms of the trust have been amended before midnight on 31 December 2020", which is not the case here; 2. Neither the Respondent nor any of his officers has any discretion in administering the relevant legislation, in the absence of a clear statutory provision affording such a discretion [24] ; and 3. Neither the Respondent nor any of his officers is bound by any extension which he or they may have purportedly granted [25] . 1. Dr Leighton-Daly indicated in his submissions in reply and his oral submissions that the Applicant did not assert that the Respondent was estopped from making the assessments under review because of its alleged representation that an extension of the 31 December 2020 deadline had been granted. Rather, in reliance on the observation of Mason CJ in Attorney-General (NSW) v Quin (190) 170 CLR 1, at 22-23, that: In the cases in this Court in which a legitimate expectation has been held entitled to protection, protection has taken the form of procedural protection, by insisting that the decision-maker apply the rules of natural justice. In none of the cases was the individual held to be entitled to substantive protection in the form of an order requiring the decision-maker to exercise his or her discretion in a particular way, he said, to quote the Applicant's submissions in reply, that "... the applicant's case is not that the respondent is estopped but rather that the applicant is entitled to procedural fairness". 1. If one accepts the Applicant's position as to the tenor and effect of the conversations between Mr Upadhyay and the Respondent's officer (which the Tribunal does not), it must follow that the combined effect of the review applications and today's hearings is to afford to the Applicants precisely the entitlement claimed by Dr Leighton-Daly. This is because the Tribunal's function under Section 63(1) of the ADRA is "to decide what the correct and preferable decision is having regard to the material then before it", and in doing so to "… exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision"; that is to say, to review the merits of the original decisions under review in the rigorous context of a review application made under the TAA. 2. A further issue was raised by Cybir, which was that it had been particularly disadvantaged as compared to the other Applicants because the Respondent had not classified it in its records as the trustee of a discretionary trust. The consequence was that Cybir had not received on or about 15 October 2020 a letter from the Respondent, reminding Cybir of the deadline for making the relevant amendments. 3. The Tribunal is unconvinced that Cybir was relevantly disadvantaged, for several reasons: 1. As the various 4 February 2020 instruments demonstrate, Cybir's directors were aware of the legislative process that was then in prospect which would eventually result in the relevant amendments to the LTA and the consequent desire for Cybir to amend its trust deed; 2. As is apparent from Mr Upadhyay's declaration [26] , he was the accountant not only for Cybir but for the other Applicants, and received from the Respondent reminder letters concerning the impending deadline for amending their trust deeds; in view of his familiarity with all three trusts and their respective businesses, it is inherently implausible that neither Mr Upadhyay nor the directors of the Applicants (from whom, he states [27] , he receives instructions), having learnt of what was in store for the other Applicants, would not have realised that Cybir was in an identical situation; and 3. In any event, under section 12(1C) of the LTMA responsibility to furnish information concerning the trust status of land lies on the trustee when lodging its annual land tax return, not on the Respondent to seek it out: If land is the subject of a trust, the land tax return must also— (a) set out, or be accompanied by, such information in relation to the trust and the beneficiaries of the trust as may be required to complete the return, and (b) state the trustee's opinion as to whether the trust is a special trust. Conclusion 1. The Tribunal does not for these reasons 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. Orders 1. The Tribunal makes the following order: 1. The Decisions under review are confirmed. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar Endnotes 1. The trust is variously referred to in correspondence as the "Stanavac Trust" or the "Stanavacs Trust". The name adopted for it in Clause 40 and Item (15) of its Deed of Settlement [Cymtow Section 58 Documents, pages 34 and 37 respectively] is the Stanavacs Trust and it is this name which these reasons use. 2. See note 3 below. 3. Duties Act, section 104G 4. LTA, section 5A 5. See https://legislation.nsw.gov.au/view/html/inforce/current/act-1956-027/lh 6. https://legislation.nsw.gov.au/view/html/inforce/current/act-1956-027/lh 7. Annexed to Mr Christian Hardin's statutory declaration dated 12 April 2022 in application 2022/00023287. 8. Cymtow s85 Documents, pages . 9. Lanlex s85 Documents, pages 10. Cybir s85 Documents, pages 11. Attached to Mr Christian Hardin's statutory declaration dated 15 March 2022 in matters 2021/00353198 and 2021/00353212. 12. See the preceding note. 13. Annexed to Mr C Hardin's statutory declaration of 12 April 2022 in application 2022/00023287 14. Clause 66(3) of Part 34 of Schedule 2 to the LTMA 15. See [15] above. 16. Cymtow Section 58 Documents, page 29 17. Lanlex Section 58 Documents, page 16 18. Lanlex Section 58 Documents, page 4 19. Cybir Section 58 Documents, page 30 20. Manton v Parabolic Pty Ltd (1985) 2 NSWLR 361, at 369 21. Diccon Loxton, "Not Worth the Paper They're Written on? Executing Documents (Including Deeds) Under Electronic Documentation Platforms: Part B" (2017) 91 ALJ 205 22. Cybir Section 58 Documents, pages 2 and 31 23. Cymtow Section 58 Documents, page 86; Lanlex Section 58 Documents, page 73; 24. Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218; Brataniec v Chief Commissioner of State Revenue [2013] NSWADT 65; Monisse v Chief Commissioner of State Revenue [2022] NSWCATAD 276, and the cases referred to in those decisions; 25. See Commissioner of State Taxation v Ryan (2000) 201 CLR 109 at 124; BBLT Pty Ltd v Chief Commissioner of the Office of State Revenue [2003] NSWSC 1003 at [111]; Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218; and Monisse v Chief Commissioner of State Revenue [2022] NSWCATAD 276. 26. Upadhyay Declaration, paragraphs 1 and 4 27. Upadhyay Declaration, paragraph 3 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: 26 September 2022