Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Al-Saeed and Associates Pty Ltd atf Al-Saeed Education and Welfare Trust v Chief Commissioner of State Revenue [2014] NSWCATAP 11 Hearing dates: 13 February 2014 Decision date: 07 April 2014 Jurisdiction: Appeal Panel Before: R Seiden SC, Principal Member Block, Senior Member Bennett, General Member Decision: 1The order at [37] of the Decision is affirmed. The Deed of Trust constitutes a declaration of Trust in accordance with s 8(3) of the Duties Act. 2The order at [38] of the Decision is set aside. 3In substitution of the order at [38] of the Decision, the premium interest component is remitted. Catchwords: ADMINISTRATIVE LAW - Civil and Administrative Tribunal (NSW) - Appeal Panel DUTIES - declaration of trust over land - whether declaration of trust was over dutiable property - whether permissible to look outside declaratory provision to broader trust instrument to identify property - penalty tax - premium interest component - market rate interest component - failure of Tribunal to take submission into account - leave to extend appeal to the merits Legislation Cited: Administrative Decisions Tribunal Act 1997 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Duties Act 1997 (NSW) Stamp Duties Act 1920 (NSW) Cases Cited: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 Bilquip Pty Ltd, Illmat Pty Ltd, Holibass Pty Ltd v Chief Commissioner of State Revenue (NSW) (RD) [2013] NSWADTAP 36 Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 Building Professionals Board v Hands (GD) [2008] NSWADTAP 13 Chief Commissioner of State Revenue and Incise Technologies Pty Ltd and Incise Sales Pty Ltd [2004] NSWADTAP 19 Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240 Comcare Australia v Rowe [2002] FCA 1034 Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 DKLR Holding Company (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 Farrar v Commissioner of Stamp Duties (1975) 5 ATR 364 K & K [2000] NSWSC 1052 Lease A Leaf Property Pty Ltd v Chief Commissioner of State Revenue (RD) [2011] NSWADTAP 41 Lombard Farms Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 42 Molyneux and Vermeesch v Chief Commissioner of State Revenue (RD) (No 2) [2013] NSWADTAP 41 Tooheys Limited v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602 Tooheys Limited v Commissioner of Stamp Duties (NSW) [1960] SR (NSW) 539 Category: Principal judgment Parties: Al-Saeed and Associates Pty Ltd atf Al-Saeed Educational and Welfare Trust (Appellant) Chief Commissioner of State Revenue (Respondent) Representation: A. Rider (Appellant) M. Sealey (Respondent) Adams & Partners, Lawyers (Appellant) Crown Solicitor's Office (Respondent) File Number(s): 139027 Decision under appeal Jurisdiction: 9108 Citation: [2013] NSWADT 155 Date of Decision: 2013-07-09 00:00:00 Before: M Hole, Judicial Member File Number(s): 126102 reasons for decision 1Al-Saeed and Associates Pty Limited atf Al-Saeed Educational and Welfare Trust (the Appellant) was assessed to ad valorem duty on a declaration of trust over land at 1492 Camden Valley Way, Leppington (the Property). The Tribunal, at first instance, held that a Deed of Trust executed on 1 September 2011 (the Trust Deed) constituted a declaration of trust pursuant to s 8(3) of the Duties Act 1997 (NSW) (the Duties Act): Al-Saeed and Association (sic) Pty Ltd ATF Al-Saeed Education and Welfare Trust v Chief Commissioner of State Revenue [2013] NSWADT 155 (the Decision). The Appellant appeals on the grounds that the Tribunal erred in law and seeks leave, if necessary, to extend leave to appeal to the merits of the Tribunal's decision. The legislation 2The Duties Act creates and charges duty on a number of transactions including "a declaration of trust over dutiable property": s 3; s 8(1)(b)(ii). Section 9(1) provides, in effect, that the duty charged on a declaration of trust is to be charged as if it were a transfer of dutiable property. Pursuant to s 9(2)(c) a transfer of the property the subject of the declaration is taken to have occurred when the declaration of trust is made. Section 8(3) of the Duties Act defines, exhaustively, the expression "declaration of trust" as follows: (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. 3Dutiable property is defined in s 11 of the Duties Act. Relevantly, dutiable property includes land in New South Wales (s 11(1)(a)) but does not include money. 4Section 58 of the Duties Act charges duty on a declaration of trust over non-dutiable property or unidentified property. Of particular relevance is sub-s 58(2) which provides as follows: Duty of $500 is chargeable in respect of an instrument executed in New South Wales that declares that property, although not identified in the instrument, when vested in the person executing the instrument is to be held in trust for a person or persons or a purpose or purposes mentioned in the instrument. 5Prior to the introduction of the Duties Act the analogous provisions were found in the Stamp Duties Act 1920 (NSW) (the Stamp Act). The Second Schedule of the Stamp Act levied duty on a "Declaration of Trust" defined as follows: Any instrument declaring that any property vested or to be vested in the person executing the instrument is or shall be held in trust for the person or persons or purpose or purposes mentioned therein notwithstanding that the beneficial owner or person entitled to appoint such property may not have joined therein or assented thereto. 6Relevantly, there are two notable differences between the Stamp Act and the Duties Act. First, the Stamp Act levied duty on instruments whereas the Duties Act levies duty on transactions. Secondly, s 8(3) of the Duties Act expressly requires the property the subject of the declaration to be identified. This requirement was implied under the Stamp Act: Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240 at [20] - [21] per Campbell JA (referring to Mason J in DKLR Holding Company (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; Handley AJA at [83]. The decision of first instance 7At [29] of the Decision, the Tribunal identified the question as follows: The 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. 8The Tribunal concluded that the Deed of Trust was a declaration of trust that satisfied the statutory definition: at [36] of the Decision. In reaching this conclusion the Tribunal considered the Trust Deed as a whole. 9Clause 1 of the Trust Deed provides as follows: 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. 10Read in isolation, clause 1 does not identify any dutiable property. 11Relevantly, Recital C provides as follows: 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"). 12To the extent it is relevant, the Appellant executed the contract for the purchase of the Property on 2 September 2011. 13The Tribunal said at [35]: The 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. 14However, the Tribunal concluded that there was no warrant for excluding Recital C from the analysis and accordingly construed the Trust Deed as a whole rather than constraining the analysis to clause 1. It is apparent from [30] of the Decision that Recital C and clause 1 of the Trust Deed were read as one. The Tribunal said at [30]: An 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 (sic) 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." 15The Tribunal concluded at [36] of the Decision: The 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. 16Finally, the Tribunal rejected the then Applicant's claim that the penalty ought to have been remitted, saying at [27]: The 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. Grounds of Appeal 17The amended grounds of appeal filed 22 August 2013 provide as follows: 1. The Tribunal erred at [25] in construing the terms of the Trust Deed. Properly construed, the Trust Deed was only a "declaration of trust" within the meaning of s.8(3) of the Duties Act 1997 (Act) over non-dutiable property, being the sum of $100. The Tribunal's error led it to incorrectly: (a) find at [25] that s.58(1) of the Act did not apply to impose nominal duty on the Trust Deed; and (b) to confirm at [37] the Respondent's assessment dated 16 January 2012. 2. The Tribunal erred at [26] in misconstruing s.8(3) of the Act. That provision does not refer to a "deed of trust", but a "declaration of trust". The Tribunal's error led it to incorrectly formulate the "issue to be decided" at [26]. Properly construed, that issue was whether Recital C of the Trust Deed comprised a "declaration of trust" over the property. 3. The Tribunal erred at [27] in holding that the Applicant did not provide any reasoning to revoke the market or premium rate of interest. In fact, the Applicant provided such reasoning at [27] of its written submissions. 4. The Tribunal erred in applying its own findings at [30]. Relevantly, the Tribunal found that the "person or persons, or purpose or purposes mentioned in the declaration" were as referred to in clauses 1 and 2 of the "Operatives" of the Trust Deed. That being the case, the Tribunal should have found that: (a) only non-dutiable property comprising the sum of $100 was held in trust for "person or persons, or purpose or purposes mentioned in the declaration"; and (b) the Trust Deed was liable to nominal duty under s.58(1) of the Act. 5. The Tribunal erred at [34] to [36] as to the correct approach in construing the Trust Deed. The Tribunal should have found that the Trust Deed, whether in whole or part, was not a "declaration of trust" over the property under s.8(3). 6. The Tribunal erred in making the orders at [37] and [38]. The Tribunal should have ordered that the assessment be revoked. 18At the hearing the Appellant refined its grounds, in effect, to the following three propositions (the Grounds): (1)The Tribunal misconstrued s 8(3) of the Duties Act by looking outside the declaration (which the Appellant contends was solely contained in clause 1 of the Trust Deed) for the identification of the Property. Put another way, the Tribunal erroneously looked to the Trust Deed as a whole rather than confined its analysis to clause 1 of the Trust Deed. (2)Even if permissible to look beyond clause 1, Recital C did not identify the property the subject of the declaration. Clause 1 of the Trust Deed referred to property "given" to the Trust and it was undisputed that the property identified in Recital C was "purchased" by the Trustee. (3)Further, the Appellant contended that the Tribunal erred in failing to consider a principal submission in relation to whether interest ought to be remitted. Questions of Law 19Insofar as the Appellant contends that the Tribunal misconstrued the statute, this raises a question of law: Lombard Farms Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 42 at [5] to [23]. The Respondent accepts that the ground raises a question of law. 20Insofar as the Appellant contends that Recital C does not identify the Property the subject of the Trust, this too raises a question of law. The Appellant contends the finding was not open. This is in effect a "no evidence" ground. A finding that is merely against the weight of evidence or the product of illogical reasoning is not generally erroneous in the requisite sense. However, making a wrong finding of fact amounts to an error of law where there is no evidence to support it: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355 - 356; Australian Gaslight Co v Valuer-General (1940) 40 SR (NSW) 126 at 138. The Respondent concedes that this ground raises a question of law. 21Finally, whether the Tribunal failed to consider a principal submission of the then Applicant also raises a question of law. The Respondent properly conceded this ground raised a question of law. In Comcare Australia v Rowe [2002] FCA 1034 Merkel J said at [12]: The submission related to a matter of substance and, if accepted, was capable of affecting the outcome of the case. It is well established that the failure by the AAT to address such a submission can be an error of law: see Dennis Willcox v Federal Commissioner of Taxation (1988) 79 ALR 267 at 276-277, Repatriation Commission v Rogers [1999] FCA 489 at [13] and Repatriation Commission v Tiernan [2001] FCA 519 at [12]. 22In Brodyn Pty Ltd v Davenport (2004) 61 NSWLR 421 at [57] it was noted, in the context of a statutory regime that mandated an opportunity for submissions, that a decision reached by an adjudicator failing to receive and consider submissions would be invalid. A similar regime exists here: ss 73(2), (4)(c), Administrative Decisions Tribunal Act 1997 (NSW) (ADT Act). These provisions are still relevant notwithstanding the abolishment of the Administrative Decisions Tribunal (ADT). Schedule 1, clause 7 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) relevantly provides that unheard proceedings from the now abolished ADT are taken to have been duly commenced in the New South Wales Civil and Administrative Tribunal (NCAT). By clause 7(3)(b) of Schedule 1 of the NCAT Act, the provisions of the ADT Act that would have applied in respect of the proceedings had the NCAT Act and relevant amending Acts not been enacted, continue to apply. There are applicable because the appeal was lodge in the ADT prior to the commencement of NCAT. 23The Appellant also sought leave to extend the appeal to the merits pursuant to s 113(2)(b) of the ADT Act (this provision is relevant for the reasons expressed in the previous paragraph). In order to extend an appeal to the merits it is not necessary to establish error of law, but there must be some warrant for the grant of leave: Bilquip Pty Ltd, Illmat Pty Ltd, Holibass Pty Ltd v Chief Commissioner of State Revenue (NSW) (RD) [2013] NSWADTAP 36 at [38], [39]. At the hearing it was apparent that the Appellant sought leave to extend the appeal to the merits only so far as was necessary for the Appeal Panel to determine the matter if error was established or insofar as necessary to determine whether error had occurred. During the hearing, no separate warrant for granting leave to extend the appeal to the merits was suggested. Nevertheless, in written submissions the Appellant contended that the various errors of law, which it pointed to, demonstrated unfair or unorthodox treatment of the evidence, which would be a warrant for leave: K & K [2000] NSWSC 1052 at [10] - [15]. Further, the Appellant contended that these demonstrated the making of blatant and important errors of fact: Building Professionals Board v Hands (GD) [2008] NSWADTAP 13. Ground 1 - Submissions 24The Appellant summarised the key issue as whether dutiable property must be identified within the provision declaring the trust or whether the property may be more generally identified in the instrument containing the declaration of trust. 25The Appellant's primary submission was that in determining whether a declaration satisfies the statutory definitions one must confine the scope of enquiry to the declaration itself. The Appellant's submission was that there must be a single declaration that satisfies all of the elements required by s 8(3), in order for there to be a dutiable transaction under s 8(1)(b)(ii). The Appellant contended that one may not look outside the declaration to see whether all the elements are satisfied. 26The Appellant submitted that this construction was supported by the text of s 8(3) which referred to "any declaration" (in the singular) and which expressly referred to "identified" (and not identifiable) property. Further, the Appellant submitted that any other construction would lead to uncertainty, as one would not know where to draw the line when looking to identify the property the subject of the declaration. 27The Appellant submitted that in this case clause 1 of the Trust Deed created the Trust over the Trust Fund. The Trust Fund, at the time of the declaration comprised only the settlement sum. In other words, the Trust was created over the settlement sum in accordance with clause 1, but not over the Property. The Appellant submitted that if the Property became part of the Trust Fund (as to which see Ground 2), it became part of the Trust Fund of the pre-existing trust when it was acquired on behalf of the Trust. The Appellant emphasised that s 8(3) applies where the words in question create a trust: Farrar v Commissioner of Stamp Duties (1975) 5 ATR 364 at 370. It does not apply where the words in question subject property to an existing trust. 28At the hearing, the Appellant expressly rejected reliance upon the fact that the Property was identified in a mere Recital to the Deed and was not expressly referred to in an operative clause of the Deed of Trust. The Appellant contended that the result it sought flowed solely from the fact that the declaration was wholly contained in clause 1 and beyond that s 8(3) did not reach. No argument was addressed to whether the Recital was to take effect and could properly be construed as part of the Deed of Trust. In its written submissions, the Appellant contended that Recital C, of its own, did not amount to a declaration of trust, but the Respondent in his written submissions indicated that such a proposition was not advanced. 29The Respondent contended that the text of s 8(3) of the Duties Act supported a construction that the property need not be identified in the particular declaration. The only matters that needed to be "mentioned" in the declaration are names of the beneficiaries or purposes of the Trust. The express stipulation (in s 8(3)) that those matters be mentioned in the declaration is to be contrasted with the absence of such a specific requirement in relation to the identity of the property. 30The Respondent contends that where a declaration of trust is effected by an instrument, as it was in this case, the elements of the statutory definition may be contained in the whole of the instrument rather than in a single provision of an instrument. Where the declaration of trust is contained in an instrument, it is not necessary to have regard to individual provisions in an artificially compartmentalised manner. In other words, where a transaction is effected in writing one may look at the whole of the writing to determine whether s 8(3) is satisfied. The Respondent contended that this construction does not produce uncertainty. 31Further, the Respondent contends that none of the leading authorities in relation to declarations of trust mandate a conclusion that the property must be identified in the declaration. The Respondent highlighted that Handley AJA in Platinum Investment at [86] said that "the property to be vested must be identified when the instrument is first executed". His Honour did not refer to any requirement that such property be mentioned or identified in the declaration itself. Mason J (as his Honour then was) in DKLR (at 455) (which concerned the Stamp Act) stated that the paragraph there under consideration looks to a declaration affecting property which is "capable of identification at the time of execution of the instrument". Gibbs CJ, also in DKLR (at 439), stated "there must be property comprised in the instrument. That property must be identifiable and ascertainable." With respect to that last submission the Appellant highlighted that most of the cases deal with an earlier provision under the Stamp Act which was not in precisely the same terms as s 8(3), a matter to which we return below. 32Finally, the Respondent pointed to a hiatus in the legislation that tends against the Appellant's construction. If the Appellant's contention be accepted, many transactions would escape duty. Section 58 levies duty on declarations of trust over unidentified property. To fall within s 58 the property must be "not identified in the instrument". Declarations of trust over property identified in an instrument but not in the particular clause declaring the trust would escape duty on the Appellant's construction and this cannot have been intended. Ground 1 - Analysis 33As the Appellant correctly highlighted, all the leading cases concerning duty on declarations of trust other than Platinum Investment concerned the Stamp Act or other Acts and the provisions concerned are not identical to s 8(3) of the Duties Act. In the Stamp Act, the second Schedule concerned "any property vested or to be vested ...". There was no express requirement that the declaration relate to "any identified property vested or to be vested" as appears in s 8(3). As noted by Mason J in DKLR at 455, in order to be able to calculate the amount of the duty it was necessary to be able to identify the property that was vested or to be vested in the declarant. The requirement that the property be identified or identifiable was implied. Today, the requirement that the property be "identified" is express. The Appellant submitted that little could be gained from a close reading of the earlier authorities because of this difference. This submission gains support from Campbell JA in Platinum Investment at [2] where his Honour noted a preference not to place particular reliance upon the way in which the Stamp Act provisions were construed. His Honour said: "the additional word 'identified' has been inserted into the Act and is therefore presumed to have work to do". 34On the other hand, in Platinum Investment Handley AJA said at [63]: The relevant sections are based on corresponding provisions in the 1920 Act considered in Tooheys; DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431; and in Pendal. 35Mindful of the differences between the Stamp Act and the Duties Act we nevertheless find assistance in the earlier authorities. First, the uncertainty that the Appellant contends would make it unworkable to look beyond the words of the declaration, existed under the Stamp Act. There was no need, under the Stamp Act, to identify the property in the instrument: it sufficed if the property was identifiable (DKLR at 455). Nevertheless, as the myriad of cases decided under that Act demonstrate, the provision was not unworkable. 36Secondly, the earlier cases highlight that it may be artificial to think of a declaration of trust as being contained in one clause of an instrument such as a Deed of Trust. In Tooheys Limited v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602; Tooheys Limited v Commissioner of Stamp Duties (NSW) [1960] SR (NSW) 539 several clauses and rules made up the declaration of trust within the instrument. Clause 8 provided that the Trustees held the fund upon the trusts in the instrument and various other clauses gave the Trustees certain powers. The Rules (which were to take effect and be read with the Deed) identified the members. 37Here, clause 1 of the Trust Deed itself makes reference to the rest of the Trust Deed by stating that the Trustees must hold the Trust Fund "in accordance with the terms of this Deed". It is therefore artificial to construe clause 1 in isolation and we disagree with the Appellant that clause 1 itself contains the whole of the declaration of trust. It is therefore necessary to have regard to the whole of the Trust Deed. We are supported in our view by the decision in Platinum Investment which is the only relevant decision under the Duties Act. There the operative clause, clause 2.2(a), provided as follows: "(a) Unless otherwise agreed between the Buyer and the Sellers, all Consideration Shares will be issued to and registered in the name of the Nominee, which shall hold the Consideration Shares on behalf of the Sellers (who shall each be absolutely entitled to their respective Consideration Shares as against the Nominee)." 38One was required to look beyond clause 2.2 to the definitions (clause 1.1) and a schedule in order to be able to fully identify the dutiable property mentioned in clause 2.2 (the Consideration Shares) and the quantum of shares. 39Furthermore, contrary to ground (1)(a) of the amended grounds of appeal, s 58 would not apply, because the Property is identified in the instrument (see Ground 2 below). On the Appellant's construction of s 8(3), s 58 could not be engaged, thus exposing the gap in the legislation. 40For the foregoing reasons, where a declaration of trust is found in an instrument and it is not expressly or impliedly quarantined (as it is not here) it is permissible to look to the whole of the instrument to determine whether the elements of s 8(3) are satisfied. Accordingly, there was no error of law in the Tribunal construing clause 1 with Recital C. Ground 2 - Submissions 41The Appellant contended that Recital C does not describe any property that could or would, once vested, become part of the Trust Fund as defined in the Trust Deed. Accordingly, even if permissible to construe the declaration in clause 1 by reference to other provisions of the Trust Deed, there is nevertheless no declaration of trust that satisfies the statutory definition. This submission is based on the difference in language employed in Recital C and clause 1. Recital C refers to "acquiring" the Property (and it was agreed that the acquisition was effected by a purchase of the Property) and the declaration in clause 1 is limited to property "given" to the Trust. 42The Respondent contends that it is apparent from the Deed of Trust read as a whole, that the expression "given" in clause 1 must be read as "acquired". Unless it is read this way, the Property, which was objectively intended to be held on the express terms of the Trust Deed would not be, because the Property would not satisfy the definition of Trust Fund in clause 1. 43The Appellant replied that notwithstanding that the Property did not satisfy the definition of Trust Fund, it would nonetheless be held for the purposes referred to in the Trust Deed, having been acquired with the Trust Fund. Ground 2 - Analysis 44The conclusion of the Tribunal, that the Property would satisfy the definition of Trust Fund once vested in the Trustee was reasonably open. The fact alone that Recital C to the Trust Deed refers to the Property is capable of supporting that conclusion. 45Further, the Trust Deed gives power to the Trustee to invest monies of the Trust Fund and to change those investments: clauses 3.1 and 3.2 (extracted at [2] of the Decision). On the Appellant's case (that the Trust Fund does not extend to purchased assets) no future investment of the Trust Fund would satisfy the definition of Trust Fund. This is unlikely to have been intended. This supports a conclusion that, viewed objectively, the Property satisfied the definition of the Trust Fund. 46Accordingly, no error of law is demonstrated as there is some basis for the conclusion that Recital C identified property the subject of the declaration. Ground 3 - Submissions and Analysis 47The Appellant contends that the Tribunal ignored a substantive aspect of its case: the reasons why interest ought to have been remitted. At [27] of the then Applicant's submissions, at first instance, it was said, in relation to the remission of interest: Further, the Tribunal should revoke the Assessment to the extent that the Respondent assessed (and did not remit) interest at the combined market and premium rates, or at the very least, at the premium rate, because the Applicant: (a) lodged the Trust Deed with the Respondent on the understanding that it was exempt from duty under s.275 of the Act; and (b) has made arrangements with the Respondent to pay the unexpected duty assessed on the Trust Deed. 48Section 275 of the Duties Act refers to an exemption for charitable and benevolent bodies. 49At [27] of the Decision the Tribunal said: The 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. 50The Respondent contended that the then Applicant's submissions were not ignored, they were simply not backed up by reasons and accordingly there is no error. 51The Tribunal held that there was an absence of reasoning; and in light of the then Applicant's burden there was no basis to remit interest. Whether this constituted an error of law requires an analysis of what grounds might justify a remission of interest. 52As the Appeal Panel said in Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [36]: "an applicant must prove all matters necessary to enable a Tribunal to answer the statutory question in its favour". 53That means, in this case, that the Applicant was obliged to put on sufficient material to demonstrate that the factors said to justify remission of interest were present and that they justified the remission. 54There are two aspects to interest: premium interest and market rate interest. 55With respect to market rate interest, in Molyneux and Vermeesch v Chief Commissioner of State Revenue (RD) (No 2) [2013] NSWADTAP 41 the Appeal Panel said at [62] and [63]: [62] There is authority for the proposition that when the tax default is due to the fault of the Chief Commissioner, that may be a circumstance that warrants remission of the market rate of interest: Trust Co. of Australia v Chief Commission of State Revenue [2002] NSWADT 21 at [24] to [28]. Taking this factor into account pays due regard to the policy that the market rate component of interest reflects the use by the party of the money and the lack of use of the funds by the State during that period. [63] The Appeal Panel in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 stated at [60]: In our view the primary interest rate (the market rate component) is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from the time it was due. So a rate is set which fluctuates, and is connected to an external rate, the Reserve Bank's Accepted Bill rate. This, as we see it, is a component that could rarely, if ever, be waived as otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time. The tribunal made the observation at [50] that to justify any remission of the market rate component of interest, it would be necessary to show that in some way the Commissioner contributed to the default. We agree with this observation. 56The Appeal Panel said in Lease A Leaf Property Pty Ltd v Chief Commissioner of State Revenue (RD) [2011] NSWADTAP 41 at [33] - [35]: [33] The matter that remains is the imposition of market rate interest in the assessments issued to the Appellant by the Respondent. We agree with the Appellant's submission that in the exercise of the discretion to remit interest under s 25 of the Taxation Administration Act the Respondent "must take account of all relevant factors, and not simply treat one factor, 'Commissioner's contribution to the default' as determinative". [34] However, we note that the Appeal Panel in Incise Technologies Pty Ltd was also expressing the policy that should be taken into account in granting any remission of the market rate interest imposed in an assessment. We agree with the Appeal Panel that the market rate interest "is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from time it was due" and that "it is a component that could rarely, if ever, be waived as otherwise tax would be paid at a devalued amount thereby discriminating against taxpayers who meet their obligations on time". [35] Accordingly where an amount of interest is imposed by the application of the market rate, only exceptional circumstances would justify any remission. We think only a very narrow category of circumstances would justify any remission. These, without setting out any exhaustive list of circumstances, would in addition to cases where the 'tax default' is entirely due to a fault of the Chief Commissioner include situations completely out of the control of the taxpayer, such as postal strikes, serious illness of the taxpayer and natural disasters (bush fires, floods and earthquakes). 57No justification in accordance with the authorities we have cited was given by the Appellant for remission of the market rate interest. 58With respect to premium interest, in Chief Commissioner of State Revenue and Incise Technologies Pty Ltd and Incise Sales Pty Ltd [2004] NSWADTAP 19 the Appeal Panel said at [79]: [79] As we read the Tribunal's reasons, it accepted that the taxpayers were willing to pay the tax once the question of grouping and the inclusion of the other amounts (superannuation, fringe benefits) in the threshold was understood. If that was where the matter had ended our view would be that it is within the framework of a broad discretion of the kind given by s 25 for the Commissioner to treat that factor as a basis for partial or total waiver of the premium rate component. ... 59In accordance with what was said by the Appeal Panel in Incise at [79] there was some justification for the tax default. The then Applicant contended that the genesis of the tax default was a misapprehension as to whether the exemption on the grounds of charitable status applied and had made arrangements to pay the tax. It is to be recalled that at first instance the proceedings were determined on the papers. The Respondent, in his written submission at first instance said at [40] and [41] the following: 40. The Respondent submits that there is no basis for the remission of either the market or premium component of the interest imposed by the Assessment (or for which the Applicant is subsequently liable by virtue of time continuing to run). 41. Specifically, the Applicant has not articulated in its submissions any persuasive reason for why the discretion held by the Respondent to remit the market or premium component of the interest (pursuant to section 25 of the TAA) should have been exercised in these circumstances. 60The Respondent did not cavil with the genuineness or reasonableness of the contention by the then Applicant that the Trust Deed had been lodged as an exempt instrument on the basis that the Trustee was holding the property for a charitable body. The Respondent contended that such a factor did not justify remission. 61Consistently with Incise and since the Respondent did not take issue with the underlying assertion that the then Applicant had been operating under a genuine misapprehension, some justification existed, at first instance, for remitting the premium component of interest and accordingly error of law is demonstrated. The finding that no reasons were provided was not open. 62Having concluded that there was an error of law with respect to Ground 3, we must now decide what orders are appropriate. For the reason that a principal submission of the then Applicant was, in effect, not considered we would, if necessary, grant leave to extend the appeal to the merits. 63We now turn to consider whether the reasons given are sufficient to move the Appeal Panel to remit premium interest. On the one hand, the taxpayer had the onus of proving that the reasons proffered were sufficient justification for a remission of interest. On the other hand, there was no suggestion in the written submissions nor during the hearing before the Appeal Panel that the Appellant's explanation as to the tax default was disingenuous or not a reasonably held view. 64The Appellant is accordingly entitled to a remission of the premium interest. Conclusion 65For the reasons advanced above we are satisfied that there are no demonstrated errors of law with respect to the first two grounds. For the reason that leave to extend the appeal to the merits was granted (albeit for Ground 3) we must now decide, in respect of all grounds, what is the correct and preferable decision: Molyneux at [57]. 66The Deed of Trust was properly liable to duty under s 8(3) of the Duties Act as a declaration of trust over identified property (the Property) to be vested in the Trustee for the purposes set out in the Trust Deed. However, we find with respect to Ground 3 that there was an error of law: there was a basis for the remission of the premium component of interest, which was not taken into account by the Tribunal at first instance. Orders 67The Decision is affirmed in part: (a)The order at [37] of the Decision is affirmed. The Deed of Trust constitutes a declaration of Trust in accordance with s 8(3) of the Duties Act. (b)The order at [38] of the Decision is set aside. (c)In substitution of the order at [38] of the Decision, the premium interest component is remitted. 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 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: 07 April 2014