Sayden Pty Limited v Chief Commissioner of State Revenue [2011] NSWADT 288

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Sayden Pty Limited v Chief Commissioner of State Revenue [2011] NSWADT 288 Hearing dates: 4 October 2011 Decision date: 07 December 2011 Jurisdiction: Revenue Division Before: J.Block, judicial member Decision: The decision under review is set aside; there is no order as to costs Catchwords: Conversion of special trust to fixed trust - use of the relevant statutory language - construction of the word "admits" Legislation Cited: Land Tax Management Act 1956 Cases Cited: See generally the cases cited in the extract from Jacobs' Law of Trusts contained in the body of the decision Texts Cited: Jacobs "Law of Trusts" 7th edition Category: Principal judgment Parties: Sayden Pty Ltd as trustee of the Griffin Property Trust (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: J Kelly SC and K Munro for the Applicant G. Kennett SC and T.L.Wong for the Respondent Munro Lawyers for the Applicant Crown Solicitor's Office for the Respondent File Number(s): 116042

REasons for decision

Part A; Preliminary and Background 1The Applicant in its capacity as the trustee of the Griffin Property Unit Trust "(the Trust") seeks, in this application the review of a land tax assessment ("the assessment") issued by the Respondent (who is sometimes referred to as the "Chief Commissioner") on 7 January 2011, in respect of the 2011 land tax year ("the relevant year"). In a covering letter to the assessment the Chief Commissioner stated that he regarded the Trust as a special trust pursuant to section 3A of the Land Tax Management Act 1956 ("LTMA" or "the Act") and so that and in consequence the Applicant was not entitled, in respect of the relevant year, to the benefit of the tax threshold in respect of land owned by it. (Section 3AL(2)(b) of and Schedule 2 to the Land Tax Act 1956) 2The Applicant contends that the Trust was not in respect of the relevant year a special trust because it satisfied the relevant criteria for a fixed trust set out in section 3A (3B) of the Act and in particular in consequence of an amendment to the Trust Deed (as defined hereafter) pursuant to which a new clause 2 (c) was inserted in the Trust Deed. The Deed of Amendment pursuant to which such clause 2(c) was inserted is referred to more fully later in these reasons. 3The Tribunal had before it the documents lodged in terms of section 58 of the Administrative Decisions Tribunal Act 1997. At the hearing of this matter on 4 October 2011 the Tribunal had before it submissions by the parties and in particular the Applicant's submissions dated 8 August 2011 ("AS") the Respondent's submissions dated 8 September 2011 ("RS") and the Applicant's submissions in reply dated 22 September 2011 ("AS2") 4At the hearing of this application the Tribunal heard argument by counsel for each of the parties; at the conclusion of the hearing the Tribunal by consent directed that the Applicant should file final submissions within one month and that the Respondent should file final submissions within one month of receipt of the submissions by the Applicant. Final submissions were duly received; the term "AFS" relates to the Applicant's Further Submissions dated in October 2011 while "RFS" relates to the Respondent's final submissions dated 23 November 2011. The Tribunal has drawn on the submissions for the purposes of these reasons. 5The Tribunal was also furnished with box files of authorities; all in all the volume of paper produced in this matter is substantial. The Tribunal considers that the main or substantive issue to be determined by it turns on the question of whether the amendment to the Trust Deed made in December 2010 did or did not have the effect that the Trust was a fixed trust in respect of the relevant year; it is in this context that the wording of the new clause 2 (c) of the Trust Deed and in particular the words "the Trustee hereby admits" which appear in the first line are of particular relevance. 6I commence as a matter of convenience by including the content of AS under the head of "Facts" and contained in clauses 1 to 17 as follows: 1. The land under question is at 13 Cunningham Street, Moorebank, New South Wales comprised of Lot 10 in Deposited Plan 262283 (' Land '). 2. The Griffin Property Unit Trust was established by deed dated 17 May 2005 with Ichiban Pty Ltd as trustee (' Trust Deed '). 3. On 17 May 2005 Ichiban Pty Ltd resigned as trustee for the Griffin Property Unit Trust and Sayden Pty Ltd was appointed as trustee in its stead. 4. Sayden Pty Ltd is also the trustee for the Griffin Family Trust. 5. The Griffin Family Trust is a so-called 'special trust' for the purposes of the Land Tax Management Act 1956 (NSW) (' LTMA '). 6. The Griffin Family Trust was until 23 November 2010 the registered owner of the freehold estate of the Land. 7. On 23 November 2010 Sayden Pty Ltd as trustee for the Griffin Family Trust granted to Sayden as trustee for the Griffin Property Unit Trust a life estate in the Land based on the lives of Michael Francis Griffin and Keiko Ichida Griffin. 8. On 11 December 2010, the Trust Deed of the Griffin Property Unit Trust was amended pursuant to the power to amend contained in clause 20 of the Trust Deed, by Deed of Amendment between Sayden Pty Limited as the Trustee and Mike Griffin and Keiko Ichida-Griffin as trustees for the Griffin Super Fund as the Registered Holder, by the inclusion into the provisions of the Deed of Trust of the Griffin Property Unit Trust a new clause 2(c) (' Deed of Amendment '). 9. At all relevant times there have been no Special Units (as defined in the Trust Deed) issued in relation to the Griffin Property Unit Trust. Terms of the Trust Deed and Deed of Amendment 10. The term "Registered Holder" is defined in the Trust Deed of the Griffin Property Unit Trust in clause 1 (f) as follows: "Registered Holder" means the person for the time being registered under the provisions of this Deed as the holder of a Unit and includes persons jointly so registered." 11. "Unit" is defined in clause 1(i) of the Trust Deed as follows: "Unit" means an undivided part or share in the Trust Fund as described in clause 5 hereof. 12. "Special Unit" is defined in clause 1(g) of the Trust Deed as follows: "Special Unit" means any unit issued by the Trustee in accordance with Clause 6 hereof and, except where the context does not so allow, a Unit shall include a Special Unit." 13. Clause 2 of the Trust Deed establishes the trust fund and provides that the Trustee hereby admits and declares that it will henceforth hold all moneys and property forming part of the Trust Fund upon the trusts herein declared. 14. Clause 3 of the Trust Deed provides that the Trustee is to hold the capital and income of the Trust Fund upon trust for the Registered Holders in proportion to the number of Units held by them. Subclause (c) provides that the Registered Holder shall be entitled as herein provided to a beneficial interest as a Registered Holder in the Trust Fund but the Registered Holder shall not be entitled other than as herein provided to interfere with or to question the exercise or non-exercise by the Trustee of its rights and powers in dealing with the Trust Fund or any part thereof, to exercise any rights powers or privileges in respect of any investment forming part of the Trust Fund or to require the transfer to him of any of the assets or property which from time to time constitute the Trust Fund. 15. Clause 5 of the Trust Deed contains a provision relating to the Units, and subclause (a) provides that the beneficial interest in the Fund shall be divided into Units. Subclause (b) provides that every Unit shall confer an interest in the Fund in accordance with the provisions of clause 3 but shall not confer any interest in any particular part of the Fund or of any investment but only such interest in the Fund as is conferred on a Registered Holder under the provisions of the Deed. 16. Clause 6 of the Trust Deed contains a provision relating to Special Units as follows: "Special Units Notwithstanding the provisions of clause 5 hereof the Trustee shall be entitled to issue units and classes of units pursuant to this Clause 6 at the Trustee's discretion ("Special Units"). The rights which will be attributable to Special Units will be those which will be set out in the certificate which issues in respect of the particular Special Units. If there is any inconsistency between the provisions set out in the certificate and those contained in this Deed then the provisions of the certificate shall prevail. Any certificate issued in respect of Special Units shall be signed by the Trustee. If there is no certificate issued for Special Units or if the certificate does not contain any terms or rights in respect of that Special Unit then the provisions of the Deed shall apply. Without limiting the generality hereof it is acknowledged that classes of units may be issued which will be referable to specific property only and notwithstanding the provisions of Clause 5 may confer specific interests in respect of specific property." 17. On 11 December 2010 by Deed of Amendment a new clause 2(c) was inserted as follows: "2(c) Notwithstanding any other provision of this Deed, the Trustee hereby admits that the Registered Holders: are presently entitled to a fixed proportion of any distribution of income or capital of the trust, made by the Trustee, based on the proportion of income or capital units which each person owned in the Trust; and are presently entitled to all of the income and capital of the Trust, subject to the payment of the expenses properly incurred by the Trustee in the authorized administration of the Trust; and may require the Trustee to wind up the Trust and distribute either the land or the net proceeds of the sale of the land; and the Trustee shall not remove, restrict or otherwise affect by the exercise of any discretion, or by a failure to exercise any discretion, paragraphs (i), (ii) and (iii) of this sub-clause." 7The term "Amending Deed" refers to the Deed of Amendment set out in clause 17 of AS; unless the context requires otherwise defined terms in AS and quoted in the preceding clause have the same meanings.