Eljon Pty Limited v The Chief Commissioner of State Revenue [1999] NSWSC 266

New South Wales Supreme Court CITATION : Eljon Pty Limited v The Chief Commissioner of State Revenue [1999] NSWSC 266 CURRENT JURISDICTION : Civil FILE NUMBER(S) : 30065/98 HEARING DATE(S) : 24 March 1999 JUDGMENT DATE : 1 April 1999

PARTIES : Eljon Pty Limited The Chief Commissioner of State Revenue JUDGMENT OF : Newman J

COUNSEL : B R Pape (Plaintiff) Dr H R Sorensen (Defendant) SOLICITORS : Matthews Dooley & Gibson (Plaintiff) Crown Solicitor (Defendant) CATCHWORDS : Stamp duties; liability; rate payable; deed; declaration of trust; deed in escrow; Stamp Duties Act 1920 ACTS CITED : Income Tax Assessment Act 1936 Taxation Administration Act 1996 Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1988-89) 167 CLR 1 at 16 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 Alan Estates Ltd v W G Stores Ltd [1982] Ch 511 at 520 CASES CITED : Ansett Transport Industries (Operations) Pty Ltd v Comptroller of Stamps [1985] VR 70 at 79 Tooheys Limited & Ors v Commissioner of Stamp Duties (1961) 105 CLR 602 at 609 Toohey's Limited & ors v Commissioner of Stamp Duties [1960] SR (NSW) 539 at 545 Szajntop v Federal Commissioner of Taxation (1993) 42 FCR 318 at 327.9 DECISION : Judgment for Defendant

THE SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION

NEWMAN J

THURSDAY, 1 APRIL 1999

30065/98 - ELJON PTY LIMITED v THE CHIEF COMMISSIONER OF STATE REVENUE

JUDGMENT

1 HIS HONOUR: This is an appeal against an assessment of stamp duty brought pursuant to s 124A of the Stamp Duties Act 1920 as amended (hereinafter referred to as the Act). 2 By its Notice of Objection the plaintiff claims that the defendant Commissioner erred: (a) in failing to understand that no property was settled by a putative "Trust Deed" of 27 October 1997; and (b) in finding that the properties were acquired under the terms of a putative Trust. 3 A preliminary point was taken by the defendant Commissioner that the principal ground of appeal urged on behalf of the plaintiff was not available to it because its subject matter was not raised by the plaintiff in its Notice of Objection. 4 In this regard the defendant argued that the issue raised in the ground of appeal was not the subject of any ground of the Notice of Objection. Accordingly it was put the appeal to this Court being limited by s 124A to the grounds of the original objection the matter was not capable of being raised in these proceedings. I shall return to this point later in these reasons. 5 The matter arises out of a joint venture in which three parties proposed to purchase three adjoining properties in Edward Street, Baulkham Hills, demolish them and build nine town houses for sale. The parties concerned were a Mr John McCabe (who is a director of the plaintiff company), a Mr Tony Macri and a company called Blairgrove Pty Limited. 6 As part of the process of managing the joint venture the three parties and the plaintiff company entered into an agreement which was entitled "Deed of Trust". The document so entitled bears the date 27 October 1997. It nominates the plaintiff company as the trustee and Messrs McCabe, Macri and Blairgrove Pty Limited as the first, second and third beneficiaries respectively. 7 The Deed is in the following terms: "DEED OF TRUST THIS DEED made the 27th day of October 1997 BETWEEN: ELJON PTY LIMITED CAN 060 690 717 of 5 Lisbon Court, Castle Hill in the State of New South Wales (hereinafter called 'the Trustee') on the first part AND JOHN MCCABE of 5 Lisbon Court, Castle Hill in the said State (hereinafter called 'the First Beneficiary') of the second part AND TONY MACRI of 2 Stephen Street, Hornsby in the said State (hereinafter called 'the Second Beneficiary') of the third part AND BLAIRGROVE PTY LIMITED CAN 073 374 437 of 128 Great North Road, Five Dock in the said State (hereinafter called 'the Third Beneficiary') of the fourth part WHEREAS A. The Trustee has purchased the whole of the properties contained in Folio 6E/406520, 5/23686 and 4/23686 situate at 32-36 Edward Street, Baulkham Hills (hereinafter called 'the property'); and B. The First, Second and Third Beneficiaries have paid all of the purchase price of the property together with all costs and disbursements relating to the purchase thereof; and C. The beneficial owner of the property at the time of the purchase was the First, Second and Third Beneficiaries as tenants in common in equal shares. NOW THIS DEED WITNESSES AS FOLLOWS:- 1. The Trustee hereby declares that it holds the property on Trust for the First, Second and Third Beneficiaries as tenants in common in equal shares. 2. The First, Second and Third Beneficiaries jointly and severally indemnify the Trustee in respect of all suits, claims and demands in respect of the Trustee's purchase, ownership and sale of the property excepting only the Trustee's liability to each of the beneficiaries as a Trustee. IN WITNESS WHEREOF the parties hereto have hereunto set their hands and affixed their seals on the day and year first hereinbefore written." 8 The document then contains the common seals of Eljon Pty Limited and Blairgrove Holdings Pty Limited which are duly affixed and the witness signatures of Messrs McCabe and Macri. 9 As of 27 October 1997 no purchase of the properties nominated in the document entitled "Deed of Trust" had been completed. Nor indeed had the first, second and third beneficiaries paid any part of the purchase price or any costs and disbursements relating to those purchases. It thus follows (and about this there was no issue) that the first, second and third beneficiaries were not beneficial owners as at 27 October 1997. 10 The fact was that on 27 October 1997 a contract for the purchase of the premises known as 32 Edward Street were exchanged. The evidence does not reveal whether or not that exchange happened before the document entitled "Deed of Trust" was sealed and signed by the parties to it. Contracts for the purchase of 34 and 36 Edward Street were not exchanged until 5 November 1997. 11 The purchase of 32 Edward Street was completed on 8 January 1998. The purchase of 36 Edward Street on 6 April 1998 and that of 34 Edward Street on 8 May 1998. 12 For the purposes of this appeal the defendant Commissioner conceded that all monies payable by the beneficiaries for the purchase of the subject properties were in fact paid by 8 May 1998. The concession was made only for the purposes of this appeal, it being made plain that should this in fact not be so the defendant Commissioner would not be estopped from dealing with the matter otherwise should the need arise. 13 The Commissioner assessed duty on the document entitled "Trust Deed" under para (2)(a) under the heading "Declaration of Trust" found in the Second Schedule to the Act. The duty levied under this paragraph amounted to $26,315. 14 It was the plaintiff's contention that in fact duty should have been levied under para (1) under that heading in the Second Schedule which would have resulted in the amount of duty payable being $10.00. 15 Paragraph (2)(a) is in the following terms: Nature of Instrument Amount of Duty Persons primarily liable