Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Al-Saeed and Association Pty Ltd ATF Al-Saeed Education and Welfare Trust v Chief Commissioner of State Revenue [2013] NSWADT 155 Hearing dates: 16 January 2013, decided on papers Decision date: 09 July 2013 Jurisdiction: Revenue Division Before: M Hole, Judicial Member Decision: The assessment of the Respondent dated 6 January 2012 is confirmed. The interest components imposed by the Respondent are confirmed. Catchwords: 'declaration of trust' as defined in s8(3) Legislation Cited: Duties Act 1997 Cases Cited: Chief Commissioner of State Revenue v Platinum Investment (2011) 80 NSWLR 240 DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1 Category: Principal judgment Parties: Al-Saeed & Associates Pty Ltd atf Al-Saeed Educational and Welfare Trust (Applicant) Chief Commissioner of State Revenue (Respondent) Representation: Adam & Partners Lawyers (Applicant) Crown Solicitor's Office (Respondent) File Number(s): 126102 REasons for decision 1The Applicant has made this application in respect of the assessment by the Respondent dated 6 January 2012. Duty on a "Deed of Trust" ("Trust Deed") was assessed at ad valorem transfer duty plus interest. The Trust Deed was executed by the Applicant on 1 December 2011. Facts 2The Trust Deed provided (amongst other things) the following details: the Applicant was referred to as the Trustee; a Recital that the Settlor (an individual) wished to establish a fund with the advancement of public educational and welfare purposes; a Recital that the Settlor paid a settlement sum of $100.00 to the Trustee; a Recital that the Trustee wished to acquire a specified property "on behalf of the Trust"; a declaration that: "The Settlor and the Trustee declare that the Trustee shall hold the settlement sum and all monies and property both real and personal which may hereafter be given to the Trust for the general purpose of the Trust (all which sums are included below in the expression "The Trust Fund") UPON TRUST to apply them in establishing and maintaining in perpetuity, in accordance with the terms of this Deed for promoting the study of education and for the welfare of the general public and all matters relating thereto."; a description of the title of the Trust Fund as "The AL-Saeed Educational and Welfare Trust"; powers given to the Trustee being: "3.1Invest monies of the Trust Fund in the way permitted for investment of such trust funds under the Laws of Australia and of any state or territory of Australia. 3.2Change and investment or vary the terms and conditions on which an investment is held. 3.3Sell or otherwise dispose of the whole or any part of the investments or the property of the Trust Fund. 3.4Borrow or raise or secure the payment of money and secure the repayment of any debt, liability, contract, guarantee, or other engagement in any way and in particular by mortgage, charge, lien, encumbrance, debenture or other security fixed or floating over any present or future asset of any kind and wheresoever situated. 3.5Take and act on the opinion of a solicitor and/or barrister practising for no less than ten (10) years in Australia in relation to the interpretational affect of this Deed or any of the trusts or powers of this Deed without responsibility for any loss or error resulting from doing so but this provision does not stop the Trustee from applying to a Court of competent jurisdiction. 3.6Take any action for the adequate protection or insurance of any part of the Trust Fund. 3.7Purchase, draw, make, accept, endorse, discount, execute, and issue bills of exchange and other negotiable and transferrable instruments of any kind. 3.8Subject to the provisions of this Deed namely: i)perform any administrative act and; ii)pay or deduct all costs charges, commissions, stamp duties, impost, outgoings, and expenses of or incidental to the Trust Fund or its management (whether or not the Trustee is under any legal obligation to make the payment), or in connection with the preparation, execution and stamping of this Deed, as though the Trustee were the absolute owner of the Trust Fund and the income of the Trust Fund. iii)Attract and encourage donations, gifts (by will or otherwise), endowments, trust distributions and other forms of financial assistance to or for the benefit of the Trust. iv)Employ and pay or provide any benefit for any employee without being responsible for the default of the employee or for the loss occasioned by the employment. v)Engage and pay any agent, contractor or professional person without being responsible for the default of the agent, contractor or employee or for any loss occasioned by the engagement. vi)Sponsor, organise and undertake fundraising activities and arrange for the issue of appeals to the public for donations. vii)Accept as part of the Trust Fund any gifts (by will or otherwise) donations, settlements, or other dispositions of money, monies worth, or property to or in favour of the Trust Fund and either retain them in their original form without selling or converting them into money, or invest, apply or deal with them in any way that the trustee may invest, apply or deal with the Trust Fund under this Deed. viii)Carry on any qualifying trade or business either alone or in partnership. A qualifying trade or business means a trade or business the profits of which would qualify for any income tax exemption given to charities. ix)May take out insurance which protects and indemnifies the Trustee against the risk of personal liability arising from: breach of trust by the Trustees; the cost of a successful defence to a criminal prosecution brought against a Trustee in his capacity as Trustee of the Trust." the Settlor has the power to appoint Trustees during his lifetime or the party nominated pursuant to his will; an exclusion of settlors and non-charitable purposes so that trust property or its income not be permitted "to become payable to or applicable for the benefit of the Settlor or be applied for any purpose that is non-charitable. a right of indemnity in favour of the Trustee regarding reimbursement for expenses and liabilities incurred in execution of the Trustee's trusts or powers; that if the Trust Fund is wound up then all monies be paid and all property be transferred to "an eligible charity as the Trustee decides". 3The property specified in the Trust Deed was acquired by the Applicant by way of contract entered into on 2 September 2011. The purchaser was described as "Al-Saeed & Associates Pty Ltd atf Al-Saeed Educational and Welfare Trust". 4An application for exemption was received by the Respondent from the solicitor acting for the Applicant on 5 December 2011 seeking exemption pursuant to s275(3)(a) Duties Act 1997 ("Duties Act") in respect of the Trust. This application was considered by an officer of the Respondent and not approved on 23 December 2011. The officer noting that the Recital stating that the Trustee wished to acquire a specified property was not within the guidelines concerning s275(3)(b) of the Duties Act. 5By letter dated 6 January 2012 the Respondent advised the Applicant that the application received by the Respondent on 5 December 2011 was refused, that the dutiable value relied on for assessment of duty was that as shown on the contract for sale on which duty was paid on 1 December 2011 and provided with that letter a Duties Notice of Assessment. 6The representative of the Applicant requested the Respondent to review the decision by letter dated 17 January 2012. This letter canvassed the issues concerning the request for exemption pursuant to s275 of the Duties Act. 7An "Objection to an Assessment or Decision" ("Objection") was received by the Respondent on 28 February 2012. This specified the reason for objection as "exemption Charitable Trust". This objection seems to have been accompanied by a letter dated 27 February 2012 from the solicitor acting for the Trust referring to the exemption available pursuant to s275 Duties Act, a statutory declaration by the Settlor dated 24 February 2012 and an "Application for Exemption - Charitable and Benevolent Bodies" by the Settlor claiming exemption for the Trust pursuant to s275(3)(a) Duties Act. 8A further letter dated 27 February 2012 was forwarded to the Review Branch of the Respondent by the solicitor acting for the Trust Fund providing further reasons why the exemption should be applied and seeking an extension of time regarding the application for review. Paragraph 8(c) of Revenue Ruling No DUT 31 is also referred to in this letter. 9The parties agreed that the application could be considered on the papers. The Applicant and Respondent provided comprehensive written submissions and further submissions in reply. 10The parties agreed that the application is for a review of the Respondent's Notice of Assessment dated 6 January 2012 which assessed ad valorem transfer duty plus interest on a trust deed executed by the Applicant on 1 September 2011 establishing The Al-Saeed Educational and Welfare Trust. 11The Applicant bears the onus of proving the Applicant's case. Legislation Duties Act 1997 Section 8(1) and (3) "8 Imposition of duty on certain transactions concerning dutiable property (1) This Chapter charges duty on: (a) a transfer of dutiable property, and (b) the following transactions: (i) an agreement for the sale or transfer of dutiable property, (ii) a declaration of trust over dutiable property, (iii) a surrender of an interest in land in New South Wales, (iv) a foreclosure of a mortgage over dutiable property, (v) a vesting of dutiable property by or as a consequence of an order of a court of this or another jurisdiction, whether inside or outside Australia, (vi) the enlargement of a term in land into a fee simple under section 134 of the Conveyancing Act 1919 , (vii) a vesting of land in New South Wales by, or expressly authorised by, statute law of this or another jurisdiction, whether inside or outside Australia, (viii) a lease in respect of which a premium is paid or agreed to be paid, and (c) a transfer of a partnership interest that is taken to occur under section 9A when a change in partnership arrangements occurs. Note: Partnership interest is defined in section 11 (1) (i). Note: See also Part 2 of Chapter 3, which treats a transfer or assignment of an option to purchase dutiable property as a transfer of the dutiable property in certain circumstances. ... (3) In this Chapter: "declaration of trust" means any declaration (other than by a will or testamentary instrument) that any identified property vested or to be vested in the person making the declaration is or is to be held in trust for the person or persons, or the purpose or purposes, mentioned in the declaration although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration. "lease" means a lease of land in New South Wales or an agreement for a lease of land in New South Wales. "premium" , in respect of a lease entered into pursuant to an option, includes an amount paid or payable for the grant of the option. "transfer" includes an assignment, an exchange and a buy-back of shares in accordance with Division 2 of Part 2J.1 of the Corporations Act 2001 of the Commonwealth." Section 11 "11 What is "dutiable property"? This section sets out a description of dutiable property. "Cash" is not one of the items described. Section 58(1) "58 Establishment of a trust relating to unidentified property and non-dutiable property (1) Duty of $500 is chargeable in respect of an instrument executed in New South Wales that declares a trust over New South Wales property none of which is dutiable property. ..." Applicant's submissions 12An initial submission was made that as the assessment was mathematically incorrect in that the ad valorem duty on $850,000, being the (deemed) value would be $20.00 less than assessed that therefore the assessment should be revoked. 13The Trust Deed is not liable to ad valorem transfer duty as a declaration of trust over the identified property. It is only liable to a nominal duty as a Deed of Trust plus the $100.00 cash, that is the settlement sum as cash is not "dutiable property" under s11 of the Duties Act. 14The Applicant made the following submissions: -"As an initial matter, Recital C does not satisfy the "any identified property ... is or is to be held in trust" part of the definition of "declaration of trust" in s.8(3). Rather, what Recital C says, is that the Applicant "wishes to acquire a property on behalf of the Trust" (emphasis added). The critical distinction between the lack of the word "held" and the use of the words "on behalf of" in Recital C is more than semantic and underlies the operation of cl.1 and the proper construction of Recital C of the Trust Deed. In this regard, the effect of cl.1 (see further below) is that the Property only becomes part of the Trust Fund of the Trust when it is "given to the Trust". Critically, this requires that the Trust first exists (which is why Recital C refers to the (pre-existing) "Trust" - see further below) before the Applicant acquires the Property. Importantly, Recital C does not declare that the Property is to be held in trust and nor does it need to. Rather, cl.1 does the work of creating the Trust and the mechanism by which the Property will become part of the Trust Fund. Properly understood, Recital C does nothing more than recite that the Applicant wishes to acquire the Property on behalf of the existing Trust. For this reason, Recital C does not satisfy the definition of "declaration of trust" in s.8(3)." -"Further, for the following reasons, Recital C does not satisfy the remaining part of the definition, namely, that the Property is to be held in trust "for the person or persons, or the purpose or purposes, mentioned in the declaration." -"First, properly construed, the definition of "declaration of trust" in s.8(3) of the Act applies to a situation where a trust is created, as opposed to a situation where dutiable property is subjected to the terms of an existing trust. Typically, it should be obvious on the face of an instrument whether it creates a trust over property or subjects the property to the terms of an existing trust. For example, an instrument which declares that the trustee holds Blackacre for "John Smith" or for the "charitable purposes set out in this deed" will create a trust over that property for that named person or for those specified purposes. Such an instrument would fall under the definition of "declaration of trust" in s.8(3). Further, an instrument which declares that the trustee will acquire Blackacre to hold on trust for "John Smith" or for the "charitable purposes set out in this deed" will also satisfy the definition of "declaration of trust" in s.8(3) under the "to be vested" limb." -"In respect of this latter point, to fall with the definition of "declaration of trust", the relevant declaration must specifically mention the "purpose or purposes". That is, it is not sufficient, nor does it satisfy the definition, for the relevant declaration to refer to an existing charitable trust, because such "purpose or purposes" are not mentioned, but merely inferred, by such a reference. Further, a declaration in favour of an existing trust should not be construed as a declaration that mentions a "purpose or purposes" (i.e. that holding property for an existing trust is for a "purpose or purposes"), because properly understood, the meaning of "purpose or purposes" is, in the context of creating a trust, to "charitable purposes." -"For completeness, these conclusions apply equally to a declaration in respect of an existing named trust for a person, such as the "John Smith Trust". In these circumstances, while it may be inferred that John Smith is a beneficiary of the "John Smith Trust", a declaration that "I hold Blackacre for the John Smith Trust", is not a declaration that mentions a "person or persons" (or a "purpose or purposes")." -"Second, in order to understand Recital C, it is necessary to properly construe the terms of the Trust Deed. As an initial matter, it is clear that recitals A and B refer to the creation of the Trust, specifically, that the trust is to be for specified charitable purposes and established with a settlement sum of $100. However, of themselves, these Recitals do not create the Trust. Rather, cl.1 of the Trust Deed is the operative provision which creates the charitable trust. Importantly, cl.1 is also the relevant provision of the Trust Deed which defines the term "Trust". In this context, cl.1 is clear that the "Trust" is only created over the settlement sum and that the Trust Fund of the (now existing) Trust will comprise such monies and property (including real property) which "hereafter" (i.e. in the future) will be given to the Trust. In this regard, the existence of the Trust did not depend upon settlement of the purchase of the Property occurring, because the Trust already existed prior to the date of the Contract. Further, to purchase the Property, money came back from the trust bank account after creating the Trust and opening the bank account, all of which occurred before the Contract was executed. Thus, it is clear that the Trust was not created over the Property, but rather, over the settlement sum in accordance with cl.1". -"From a stamp duty perspective, cl.1 is the relevant provision of the Trust Deed that satisfies the definition of "declaration of trust" under s.8(3), because it (alone) mentions the relevant charitable "purposes". However, the Trust Deed is only liable to $500 nominal duty under s.58(1) of the Act, because the trust is declared over the settlement sum ($100), which is not dutiable property under s.11 of the Act." -"It is against this context that Recital C needs to be properly construed. As stated above, cl.1 of the Trust Deed is the relevant provision which creates (and defines) the "Trust". Second, as a matter of construction, the reference to the "Trust" in Recital C is a reference to the "Trust" created over the settlement sum under cl.1, that is, an existing trust. That is so, even though Recital C and cl.1 are contained in the same instrument and Recital C first appears in the Trust Deed. Put another way, Recital C would have no context, nor make any sense, unless the "Trust" referred to in Recital C was the same as the "Trust" created under cl.1. Third, this conclusion is reinforced by the fact that the "Trust" is created over the settlement sum and the Trust Fund comprises this sum and all monies and property "hereafter" given to the Trust. Fourth, in terms of timing and effect, neither Recital C nor cl.1 creates the "Trust" over the Property. Rather, the Property becomes part of the Trust Fund of the pre-existing Trust under cl.1 because it will be acquired by the Trustee "on behalf of the Trust" and "hereafter be given to the Trust". Sixth, the front page of the Contract evidences that the Applicant acquired the Property for the pre-existing "Trust" created under cl.1, as the "Purchaser" of the Property is describes as "Al-Saeed & Associates Pty Ltd atf Al-Saeed Educational and Welfare Trust"." -"In summary, Recital C refers to subjecting the Property to the existing named "Trust", not creating a new trust over the Property. Relevantly, this type of situation is covered in para.8(c) of Revenue Ruling No. DUT 31, which provides that the Respondent does not consider a liability to duty as a "declaration of trust" to arise where the relevant instrument refers to a named trust. While this ruling is not binding on the Tribunal, there is considerable force in its logic that a "declaration of trust" refers to the creation of a trust, not subjecting property to the terms of an existing trust. Importantly, in accordance with this logic, the Respondent did not assess the Contract to duty as a "declaration of trust" over the Property, because the description of the "Purchaser" of the Property as "Al-Saeed & Associates Pty Ltd atf Al-Saeed Education and Welfare Trust" was a reference to a named trust, i.e. the Trust created under cl.1 (and named under cl.2) of the Trust Deed." Respondent's submissions 15The Respondent submitted that the question to be determined is: "Does the Trust Deed contain (in its terms) a declaration that satisfies the statutory definition of 'declaration of trust' in the Act." That the answer to this question is "yes". Further that the Applicant bears the onus of proving its case. 16"The key issue or question for determination by the Tribunal in these proceedings is whether the Trust Deed, in its terms and properly construed, contains a 'declaration of trust' (as defined in the section 8(3) of the Act) over the Property for the purposes of section 8(1)(b)(ii) of the Act (the Question)." 17"The subsidiary issue or question which the Tribunal must determine in answering this question is whether, for these purposes, the Property is 'identified property' that is 'to be vested' in the 'person making the declaration' (being the Applicant)." 18For completeness, the Respondent submitted that: The analogy drawn by the Applicant between the current circumstances and Revenue Ruling DUT 31 is wholly misplaced for three reasons: (a)first, such an analogy relies (and is predicated) on an analysis of the terms of Recital C in isolation from the Trust Deed as a whole (which, for the reasons outlined above in paragraphs 10 to 12 is an incorrect approach); (b)secondly, the question of whether a purchaser, purchasing property under a contract for sale in its capacity as trustee for a named trust (which is the situation addressed by DUT 31) is wholly distinguishable on the facts from the question of whether a trust instrument itself effects a dutiable transaction having regard to its terms; and (c)thirdly, (contrary to the Applicant's submissions) there is no relevant 'logic' in DUT 31 that suggests that a 'declaration of trust' refers to the 'creation of a trust' - on the contrary - for the reasons outlined at paragraphs 13 to 15 above, that consideration is not relevant to the question of whether a trust deed (including the Trust Deed) contains (in its terms) a declaration that satisfies the statutory definition of 'declaration of trust' in the Act. 19The Respondent submitted further that: -"By contrast, the Respondent does not rely solely on Recital C (or submit that Recital C in and of itself comprises a 'declaration of trust') but rather submits that the Trust Deed, in its terms and properly construed, contains a 'declaration of trust' (as defined in the Act) over the Property." -"It follows that: (a)the issue between the parties is as set out in the Question; and (b)an examination of the precise syntax, text and import of Recital C in isolation from the rest of the Trust Deed (which is the basis for much of the Applicant's submissions) is both beside the point and apt to distract the Tribunal from the task at hand, which is to determine the answer to the Question." -"Secondly, as has been repeatedly recognised in the authorities, it is settled law that the relevant question is not whether a particular trust deed (such as the Trust Deed) is, in the ordinary sense of the term, a declaration of trust, but rather, whether it satisfies the statutory definition of 'declaration of trust' in the Act. This is so (in part) because the statutory definition extends to encompass cases where no trust presently operative is declared (i.e., where no trust is presently created by the declaration)." -"It follows that the Applicant's submission that, properly construed, the definition of 'declaration of trust' in the Act 'applies to a situation where a trust is created ...' is incorrect and against weight of authority." -"Furthermore, for this reason, the Applicant's repeated focus on whether a trust is or was created at law in the current circumstances and the time at which such a putative trust may have been created is misplaced and apt to distract, as that consideration is not relevant to the question of whether the Trust Deed contained (in its terms) a declaration that satisfies the statutory definition of 'declaration of trust' in the Act (i.e., the Question)." 20That the definition of declaration of trust refers to the identified property being required to be "... held in trust for the person or persons, or the purpose or purposes mentioned in the declaration". "Accordingly, there is an explicitly stated requirement that the 'person or persons, or the purpose or purposes' must be mentioned in the 'declaration' as opposed to merely mentioned in the relevant 'instrument' which contains the 'declaration'. In contradistinction to this, the restricting words 'mentioned in the declaration' do not appear after the words 'any identified property' in the text of the section 8(3) definition." Thus "this supports an interpretation of the text of the definition of 'declaration of trust' which holds that it is sufficient that the 'identified property' referred to therein is 'mentioned' or identified in the 'instrument' which contains the 'declaration' (as opposed to being required to be 'identified' or 'mentioned' in the declaration itself). Supported by comments of Handley AJA in Chief Commissioner of State Revenue v Platinum Investment (2011) 80 NSWLR 240 ("Platinum") at [86] where his Honour stated that '... The property to be vested must be identified when the instrument is first executed ..." (while not referring to any requirement that such property be mentioned or identified in the declaration itself). See also the remarks of Mason J (as he then was) in DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 ("DKLR") at 455 where his Honour stated that '... This indicates that the paragraph looks to a declaration affecting property which is capable of identification at the time of execution of the instrument so that it is then possible to compute the duty which would be payable on the conveyance of that property ...' and Gibbs CJ, also in DKLR at 439 where his Honour stated that '... there must be property comprised in the instrument. That property must be identifiable and ascertainable...'. 21Further that "another aspect of the definition of 'declaration of trust' in the Act, it is uncontroversial that the requirement that the relevantly 'identified property' is 'to be vested' requires no more that a 'mere futurity'. That this is the position to be applied in respect of the Act was settled by Handley AJA in Platinum at [77] - [80] where his Honour referred with approval to the earlier authorities of Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1 ("Pendal") and DKLR on this point and stated that 'this Court' should follow those views." 22The Respondent made further submissions that: -"each of the elements of the statutory definition of 'declaration of trust' and the manner in which each element is satisfied by the terms of the Trust Deed in respect of the Property". -"Firstly, the requirement that there be a 'declaration' is satisfied by the text of clause 1: "The Settlor and the Trustee declare ..."." -"Secondly, the requirement that the Property is 'identified property' for the purposes of that declaration (and that the declaration is therefore 'over' the Property) is satisfied for the following reasons: (a)the Property is specifically and comprehensively identified in the Trust Deed itself (i.e., in the instrument) in Recital C in the following terms: 'The trustee wishes to acquire a property on behalf of the Trust located at 1492 Camden Valley Way, Leppington NSW Auto Consol 10781/149 ("the property")'; (b)... (i)the identification of the Property in the Trust Deed instrument (in Recital C) is sufficient to mean that the Property is 'identified property' for the purposes of the statutory definition of 'declaration of trust' and for the purposes of the declaration in clause 1 of the Trust Deed; and (ii)it is not necessary, for these purposes, that the Property be 'mentioned' in clause 1 of the Trust Deed itself; and (c)furthermore, in relation to the recitals in the Trust Deed more generally: (i)when the Recitals are considered in the context of the Trust Deed as a whole, it is clear that they form part of the 'machinery' of the Trust Deed itself, at least insofar as: 1.the term 'the property' (lower case) is only defined in Recital C; and 2.the 'settlement sum' is only identified in Recital B; and (ii)as Campbell JA (with whom Allsop P and Giles JA agreed) stated in Franklins v Metcash (2009) 76 NSWLR 603 at [388] "[T]he recitals in a deed can be looked at as part of the surrounding circumstances of the contract without a need to find ambiguity in the operative provisions of the contract ...", it therefore follows that, further and in the alternative to the submissions made above that it is sufficient that the Property is identified in the instrument, Recital C may be looked at as part of the surrounding circumstances when interpreting clause 1 of the Trust Deed for the purposes of identifying the 'property' which is 'to be vested' in the Trustee." "Thirdly, the requirement that the Property is '... to be vested' is satisfied by the text of clause 1: '... the trustee shall hold ... all property both real and personal which may hereafter be given to the Trust ...' noting that all that is required in respect of this element is 'mere futurity'." "Fourth, the requirement that the Property is to be vested 'in the person making the declaration' is satisfied by the text of clause 1: '... the trustee shall hold ... the property ...'." -"Fifth, the requirement that the Property 'ir or is to be held in trust' is satisfied by the text of clause 1: 'the Trustee shall hold the ... a property ... which may hereafter be given to the Trust for the general purpose of the Trust ...'." -"Sixth, the requirement that the Property is to be held 'for the ... purpose or purposes, mentioned in the declaration ...' is satisfied by the text of clause 1: ' ... for promoting the study of education and for the welfare of the general public and all matters relating thereto ...'." -"It follows that for the above reasons: (a)each of the elements of the definition of 'declaration of trust' (as defined in the section 8(3) of the Act) is satisfied in respect of the Property (including that the Property is 'identified property'); and (b)the Trust Deed, in its terms and properly construed, contains a 'declaration of trust' (as defined in the Act) over the Property for the purposes of section 8(1)(b)(ii) of the Act - to reiterate, and in summary, the effect of clause 1 in conjunction with Recital C is that the declaration in clause 1 over 'property' which may 'hereafter be given to the Trust' is over identified property to be vested in the Trustee which includes the Property identified in Recital C." Reasons 23The provisions of Revenue Ruling DUT 031 are not relevant as that Revenue Ruling refers to declarations contained in agreements for sale. This proposition was included in a letter from the Respondent to the Applicant's solicitor dated 29 June 2012 and referred to therein as follows: "Regarding the question of whether the Deed is dutiable as a declaration of trust, the definition in s.8(3) of the Duties Act is satisfied in that clause 1 under the heading "Operatives" and paragraph C under the heading "Recites" together constitute a declaration that identified property to be vested in the Trustee is to be held in trust for the purposes mentioned in clause 1. Revenue Ruling DUT 031 is not relevant, as it refers to declarations in agreements for sale (and in any event, the Trust is established and named by the Deed and is not an existing names trust)." 24The Applicant's submission that there was a mathematical error in the assessment of $20.00 that the whole of the assessment should be revoked. This submission is not accepted as the Respondent could have been advised of this error following assessment and then the Respondent could have adjusted the assessment if that had been the correct assessment. 25As the Trust Deed is a Declaration of Trust within the definition of s8(3) of the Duties Act, the suggestion that duty only be paid on the $100 cash cannot be supported. S58(1) of the Duties Act would operate to require only nominal duty in the event that the Trust Deed could not be construed as a Declaration of Trust over the identified property. 26The issue to be decided is does Recital C establish a "deed of trust" over the property within the meaning of s8(3) Duties Act. 27The Applicant has not provided any reasoning to revoke the market component of interest, nor any reasoning to revoke the premium rate of interest. Accordingly as the Applicant bears this onus which has not been discharged, the imposition of the interest components are confirmed. 28Bearing in mind the submissions made by both parties it is necessary to apply the provisions of s 8(3) of the Duties Act to the Trust Deed specifically the definition of "Declaration of Trust", and the manner in which this has been defined by reference to the various cases referred to. 29The question then to be answered is whether the Trust Deed is a declaration of trust satisfying the statutory definition of "declaration of trust" in the Act. 30An analysis of the definition may be considered as follows: Section 8(3)The Trust Deed - any declaration (other than by a Will or Testamentary instrument) - the trust deed includes a declaration in Clause 1 of the "Operatives" - that any identified property - a property is identified in Clause C of the Recitals - vested - the trust deed pre-dates the vesting of the identifiable property - or to be vested - the trust deed declares that "the property both real and personal which may hereafter be given to the Trust" - in the person making the declaration - the trust deed identifies the Settlor and Trustee as the persons making the declaration - is or is to be held in trust - is refers to the identified property to be acquired by the Trustee - for the person or persons, or the purpose or purposes mentioned in the declaration - refers to the person or persons, or the purpose or purposes for whom or which the identified property is to be held being the Trust as referred to in Clause 1 of the "Operatives" and as described in Clause 2 of the "Operatives" - the purpose or purposes - refers to the purposes as set out in Clause 1 of the Operatives - although the beneficial owner of the property, or the person entitled to appoint the property, may not have joined in or assented to the declaration - refers to the lack of necessarily for the beneficial owner or the person entitled to appoint the property to have joined in or assented Thus the Trust Deed may be interpreted as follows: "Trust Deed dated 1 September 2011 declares that 1492 Camden Valley Way vested or to be vested in Al-Saeed & Associates is to be held in trust for The Al-Saeed Educational and Welfare Trust for the purposes of promoting the study of education and for the welfare of the general public and all matters relating thereto." 31The Respondent submitted that the issue between the parties is whether Recital C of the Trust Deed comprises a "declaration of trust" over the Property within the meaning of s8(3) of the Duties Act. 32The question is narrowed to whether Recital C of the Trust Deed is to be considered when the deed is construed. Recital C expresses a wish by 'the Trustee' to acquire 1492 on behalf of the Trust. Prior to the contract whereby the identified property was acquired the Trust Deed came into operation. If the contract had not referred to "atf Al-Saeed Educational and Welfare Trust" then ad valorum duty would have been payable on the contract by the purchaser being Al-Saeed & Associates Pty Ltd. As the Trust Deed came into operation prior to the contract and the Trustee had expressed a wish in that deed to acquire the property for the Trust then the description of the purchaser was as shown. 33Revenue Ruling No DUT 31 sets out the provisions relating to a Declaration of Trust in an Agreement for Sale. Examples are given at Ruling paragraph 6 where a contract for sale will be liable to duty as a declaration of trust, in addition to, the duty payable as an agreement for sale where the purchaser is described: (a)as trustee (b)as trustee for the estate of a named person (c)as trustee for a named trust (d)as trustee for a named superannuation fund (e)as trustee for a company to be formed or incorporated. This discloses that the Agreement for Sale will not be considered to be liable to duty as a declaration of trust in this instance as there is a declaration of trust being the Deed dated 1 September 2011. The trust is established by the Deed and it is not an existing named trust. 34The difficulty that arises is the way in which Clause C has been shown in the Trust Deed. To enable the proper construction of the Trust Deed, the whole of the Trust Deed must be examined. The Trust Deed describes the parties, recites the intentions of the parties and payment of a settlement sum, describes the "Operatives" of the Deed and is executed as a Deed. Is it then possible to exclude Recital C as put by the Applicant. 35The omission of the reference in Recital C from the construction of the deed would lead to the deed not being construed as a declaration of trust pursuant to the Act. 36The statutory definition does not restrict the reference to the identified property being placed in any particular titled section of the Deed. The general construction of a Deed requires that all parts of the deed be considered. In this instance the definition of "declaration of trust" as set out in s8(3) and as considered by the various cases leads to the conclusion that it is a declaration of trust for the purposes of the Duties Act. Orders 37The assessment of the Respondent dated 6 January 2012 is confirmed. 38The interest components imposed by the Respondent are confirmed. ********** 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: 09 July 2013