Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Wilkins v Chief Commissioner of State Revenue [2014] NSWCATAD 70 Hearing dates: 19 March 2014 Decision date: 26 May 2014 Jurisdiction: Administrative and Equal Opportunity Division Before: A Verick, Senior Member Decision: The Tribunal sets aside the assessment under review and the matter is remitted to the Chief Commissioner to assess the duty payable as directed. Catchwords: Taxes and Duties - Transfers in conformity with contract - Nominal Duty payable - purchase of property by trustee of superannuation fund-Duties Act 1997, s 18. Legislation Cited: Duties Act 1997 Acts Interpretation Act 1901(Cth) Interpretation Act 1987 (NSW) Stamp Duties Act 1920-1949 (NSW) Superannuation Industry (Supervision) Act 1993 Administrative Decisions Tribunal Act 1997 Administrative Decisions Review Act 1997 Civil and Administrative Tribunal Act 2013 Taxation Administration Act 1996 Cases Cited: Lake Victoria Ltd v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262 Vickery v Woods (1951) 85 CLR 336 Sharpe v Chief Commissioner of State Revenue [2002] NSWADT 6 Category: Principal judgment Parties: Brian Burleton Wilkins and Jenifer Anne Wilkins (Applicants) The Chief Commissioner of State Revenue (Respondent) Representation: Counsel J C Kelly SC (Applicants) J Mitchell Counsel (Respondent) Munro Lawyers (Applicants) Crown Solicitor (Respondent) File Number(s): 136066 reasons for decision 1The questions at issue in this matter are whether the applicants, Mr and Mrs Wilkins are only liable to a nominal duty of $10 under s 18 of the Duties Act 1997 ("the Act") in respect of the transfer of two lots situated at Mollymook to them by Davocsh Pty Ltd, a company with receivers and managers appointed. Essentially, the main issue in this matter is the correct interpretation of s 18 in particular s 18(2) and s 18(3)(d)(ii) of the Act. 2This application was instituted in the Revenue Division of the Administrative Decisions Tribunal ('the ADT') pursuant to the Administrative Decisions Tribunal Act 1997 ('the ADT Act'). On 1 January 2014, the ADT, with a number of other Tribunals in New South Wales, were abolished and their jurisdiction and functions integrated into the Civil and Administrative Tribunal of New South Wales ('the NCAT') established under the Civil and Administrative Tribunal Act 2013 ('the NCAT Act'). Because the proceedings in this matter were 'unheard proceedings' on 1 January 2014 as defined in clause 6(1) of Schedule 1 to the NCAT Act, they 'are taken to have duly commenced in NCAT and heard and determined instead by NCAT' (Clause 7(1)). This decision is accordingly a decision of NCAT. Factual Background 3On 30 November 2012, Teamcard Pty Ltd, as trustee for the Teamcard Superannuation Fund, executed a single Contract for Sale as purchaser with Davocsh Pty Ltd to purchase 8 lots of land situated at Mollymook for a total consideration of $1,750,000. Teamcard Pty Ltd paid a deposit of $175,000 to Davocsh Pty Ltd upon execution of the contract. 4The eight lots of land were: Lot 2 in Deposited Plan 211355 * Lot 192 and Lot 193 in Deposited Plan 30301 * Lot 3 and Lot 4 in Deposited Plan 536479 * Lot 7 in Deposited Plan 403469 * Lot A in Deposited Plan 406319 * Lot 1 in Deposited Plan 24022 5The contract was presented for stamping and Teamcard Pty Ltd paid an ad valorem duty of $81,740 to the respondent. 6The applicants are the only members of the Teamcard Super Fund and the only directors of Teamcard Pty Ltd. 7Settlement occurred on 10 January 2013. However, on settlement there were two transfers. In respect of Lot 3 and Lot 4 Deposited Plan 536479, a transfer was executed with the applicants as transferees. In respect of the other six Lots, a transfer was executed with Teamcard Pty Ltd as transferee. 8Subsequent to the original contract with Dacocsh Pty Ltd, the applicants claim there were certain developments, which are set out in the applicants' written submissions as follows: 7. Subsequent to the date of the Contract the Applicants were advised by the accountant for the Teamcard Super Fund that the latter should preferably avoid using all its cash resources to fund the purchase. Namely, the Applicants were advised to lend personally to the Teamcard Super Fund a part of the purchase price. 8. As the Teamcard Super Fund would be borrowing only part of the total purchase price for the Davosch Land, it was decided that the borrowing would only relate to two of the lots of the Davocsh Land. Namely, the purchase price relating to Lot 3 of Deposited Plan 536479 ("Lot3") and Lot 4 of Deposited Plan 536479 ("Lot 4") would be funded by a loan from the Applicants. The other six lots of land ("the Teamcard Land") would be purchased by the Teamcard Super Fund using its cash resources. 9. Pursuant to the provisions of the Superannuation Industry (Supervision) Act 1993 ("SIS Act"), a complying superannuation fund (inclusive of self managed superannuation fund) is prohibited from borrowing or charging its assets unless the arrangement satisfies the borrowing exception with section 67A. For this purpose, section 67A of the SIS Act required that Lot 3 and Lot 4 were to be acquired and held on a bare trust so that Teamcard as trustee for the Teamcard Super Fund did not hold the legal title but instead held an absolute beneficial interest in Lot 3 and Lot 4. Namely, to satisfy the provision, another person or entity ('Custodian') other than the trustee of the Teamcard Super Fund must acquire the Lot 3 and Lot 4 on behalf of the Super Fund under a bare trust structure. 10. The Applicants agreed to act as the Custodian of the bare trust for the purpose of acquiring Lot 3 and Lot 4. 9The applicants' solicitors sought to have both transfers stamped with concessional duty under s 18 of the Act. Section 18, relevantly, provides as follows: 18 No double duty (1) If a dutiable transaction is effected by more than one instrument, one instrument is to be stamped with the duty payable on the dutiable transaction and each other instrument is chargeable with duty of $50. Note. Instrument includes a written statement. (2)The duty chargeable in respect of a transfer of dutiable property made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if the duty chargeable in respect of the agreement has been paid. (3) The duty chargeable in respect of a transfer of dutiable property that is not made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if: (a) the duty chargeable in respect of the agreement has been paid, and (b) the transfer would be in conformity with the agreement if the transferee was the purchaser under the agreement, and (c) the transfer occurs at the same time as, or proximately with the completion or settlement of the agreement, and (d) at the time the agreement was entered into, and at the completion or settlement of the agreement: (i) the purchaser under the agreement and the transferee under the transfer are related persons, except as provided by subparagraph (ii), or (ii) if the purchaser purchased as a trustee, the transferee and the beneficiary are related persons. 10In a letter dated 10 May 2013, the respondent took the view that the transfer to Teamcard Pty Ltd was not inconformity under section 18(2) of the Act as the property the subject of the transfer was not the same as the property agreed to be sold or transferred. In relation to the transfer to the applicants, the respondent advised that the transfer to the applicants did not satisfy the provisions of s 18(3)(b) of the Act. 11The solicitors, on 22 May 2013, made further representations to the Chief Commissioner, in particular, 'drawing his attention to various matters concerning the Teamcard Transfer and the Wilkins Transfer'. 12The respondent in a letter dated 31 May 2013, agreed with the solicitors that the 'transfer between Davocsh Pty Ltd as transferor and Teamcard Pty Ltd as transferee will be stamped to duty of $10.00 in accordance with Section 18(2) Duties Act'. But the respondent maintained the view that in relation to the transfer to the applicants, s 18(3) did not apply. The respondent also issued an assessment to the applicants for the ad valorem duty payable including interest. 13On 19 June 2013, the solicitors on behalf of the applicants lodged an objection against the respondent's decision to assess the applicants to ad valorem on the transfer to them of Lot 3 and Lot 4. 14On 22 July 2013, the respondent disallowed the objection. The applicants seek a review of the respondent's decision to assess the applicants to ad valorem duty on the transfer. 15Essentially, the matter concerns the correct interpretation of the provisions found in s 18 of the Act, in particular the provisions found in s 18(2) and s 18(3)(d)(ii). 16The scheme of s 18 operates to avoid double duty in relation to a dutiable transaction. Section 18(1) provides that, if a dutiable transaction is effected by more than one instrument, only one instrument is to be stamped with the full duty payable. 17Section 18(2) further provides that the duty chargeable in respect of a transfer made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if the duty in respect of the agreement has been paid. In accordance with s 8 of the Act contracts and transfers are dutiable transactions. A transfer is subject to ad valorem duty unless it is made in conformity with the contract. 18The concession is available even if the transfer of dutiable property is not made in conformity with the agreement for the sale or transfer of the dutiable property provided the conditions set out in s 18(3) are satisfied. 19Counsel for the Chief Commissioner correctly conceded that the applicants satisfied the requirement of s 18(3)(a), (b) and (c) but submitted that the applicants were not entitled to the concession under s 18(3) because the applicants failed to satisfy the requirement of s 18(3)(d)(ii). The Tribunal decision in Sharpe 20The provisions in s 18(3)(d)(ii), only on one previous occasion, have been considered fully by the Tribunal in Sharpe v Chief Commissioner of State Revenue [2002] NSWADT 6. The applicants have submitted that the Tribunal in Sharpe correctly confined the operation of s 18(3)(d)(ii) to resulting trusts. The Chief Commissioner, however, challenges the correctness of that decision. 21In Sharpe, two companies entered into a contract to purchase a property as tenants in common in equal shares. The contract was stamped with ad valorem transfer duty under the Act. One of the companies was a trustee of a family discretionary trust, which included Mr Sharpe as a beneficiary. On settlement, a transfer was executed with the vendor transferring one half share of the property to Mr Sharpe, which was the trustee's original share in the contract. Mr Sharpe was assessed to ad valorem duty on his share on the grounds that the provisions of s 18(3) were not met. In particular, s 18(3)(b), because only one half of the original property was being transferred and s 18(3)(d), the transferee, Mr Sharpe, was not related to the purchasers as described in the agreement, being the two companies. 22The Tribunal's decision only in relation to s 18(3)(d) is relevant. 23The Tribunal first made the following observation - 42 To ascertain the criterion to be satisfied under paragraph (d) of s 18(3), it is firstly necessary to ascertain the meaning of the expression "except as provided by subparagraph (i) of s 18(3)(d). In context, where appearing at the end of subparagraph (i) of s 18(3)(d), the ordinary meaning of the expression would appear to mean that where the purchaser purchased as a trustee within the meaning of the first part of subparagraph (ii) of s 18(3)(d), subparagraph (i) of s 18(3)(d) does not apply, irrespective of whether or not the second part of subparagraph (ii) is satisfied. This is because the legislature chose to use the expression "except as provided by subparagraph (ii)" and not the expression "except if the purchaser purchased as a trustee and the transferee and the beneficiary were related persons" at the end of subparagraph (i) of s 18(3)(d). 24The Tribunal then referred to s 34(1)(a) and s 34(1)(b) of the Interpretation Act which are in the following terms - 34 Use of extrinsic material in the interpretation of Acts and statutory rules (1) In the interpretation of a provision of an Act or statutory rule, if any material not forming part of the Act or statutory rule is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material: (a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule and, in the case of a statutory rule, the purpose or object underlying the Act under which the rule was made), or (b) to determine the meaning of the provision: (i) if the provision is ambiguous or obscure, or (ii) if the ordinary meaning conveyed by the text of the provision (taking into account its context in the Act or statutory rule and the purpose or object underlying the Act or statutory rule, the purpose or object underlying the Act under which the rule was made) leads to a result that is manifestly absurd or is unreasonable. 25The Tribunal went on to state that under s 34(2)(e) of the Interpretation Act, 'the explanatory note to the Bill is expressly included as material permitted for consideration in these contexts' and proceeded as follows: 44 The explanatory note relating to the Bill for the SRLFA Act which amended s 18(3) of the Duties Act included the following: "A purchaser under an agreement for sale can elect to have the property transferred from the vendor to a person who is "related" (as defined in the Act) to the purchaser without paying ad valorem duty on the transfer. This concession is capable of being abused by a person who stamps the transfer after settlement of the contract but before registration of the transfer at the Land Titles Office. Schedule 1[1] limits the concession in two ways. First, it provides that the transfer must occur contemporaneously with the completion or settlement of the agreement. Secondly, if a purchaser buys on trust for the "real" purchaser who has provided the money for the purchase, the concession for a transfer to a related person can only apply to a transfer from the vendor to a person who is related to the "real" purchaser (and not a person who is related to the "apparent" purchaser)". 26On the basis of the above statement in the explanatory note, the Tribunal reached the following conclusions: 45 This explanatory note confirms the ordinary meaning of the exception at the end of subparagraph (i) of s 18(3)(d) aforementioned and further clarifies to some degree, the meaning of s 18(3)(d). The explanatory memorandum makes it clear that in order to ascertain whether or not subparagraph (i) or (ii) of s 18(3)(d) is relevant and available to be satisfied in any particular matter, it must first be ascertained whether, on the facts of the matter, the purchaser purchased as a trustee within the meaning of subparagraph (ii) of s 18(3)(d). If the purchaser purchased as a trustee within the meaning of s 18(3)(d)(ii), then, only if the transferee and the beneficiary of the subject trust were related persons (as defined) at the time the agreement was entered into, will the subject transfer satisfy s 18(3)(d) of the Duties Act. If the purchaser did not purchase as a trustee within the meaning of s 18(3)(d)(ii), then, only if the transferee and the purchaser were related persons (as defined) at the time the agreement was entered into (as referred to in s 18(3)(d)(i)), will the subject transfer satisfy s 18(3)(d) of the Duties Act. 46 The explanatory note makes it clear that where a purchaser purchased as an apparent purchaser, the transferee must be related to the beneficiary of the trust namely, the "real" purchaser, and not to the "apparent" purchaser in order to satisfy s 18(3)(d). The explanatory note could be read as explaining that the circumstances in which subparagraph (ii) of s 18(3)(d) are intended to apply are limited to the circumstances where an "apparent" purchaser has purchased on trust for the "real" purchaser who has provided the consideration for the purchase. In Truskett v Commissioner of Stamp Duties (1976) 6 ATR 1 at 5, Rath J held that the expression "apparent purchaser" where used in paragraph (1) under the Declaration of Trust head of charge in the Second Schedule of the Stamp Duties Act was confined to the resulting trust situation arising where property is purchased in the name of a stranger to the real party to the purchase. Relying on this authority, the explanatory note could be interpreted as explaining that the circumstances in which subparagraph (ii) of s 18(3)(d) are intended to apply are limited to the circumstances of a resulting trust situation. 47 This view of the explanatory note would give a meaning to s 18(3)(d) that only where a purchaser purchased as an apparent purchaser on resulting trust for a real purchaser would subparagraph (ii) (and not subparagraph (i)) of s 18(3)(d) be required to be satisfied. In such circumstances, where a purchaser has purchased on resulting trust as an apparent purchaser for the real purchaser, the explanatory note makes it clear that: (a) if the transferee was not related person (as defined in the Dictionary to the Duties Act) of the beneficiary of the resulting trust, namely, the "real" purchaser, at the time the agreement was entered into, then s 18(3)(d) is not satisfied; and (b) the fact that the transferee was related person (as defined) of the apparent purchaser at the time the agreement was entered into is not sufficient to satisfy s 18(3)(d) because of the exclusion at the end of subparagraph (i) of s 18(3)(d). 27The Tribunal went on to state that there 'is an ordinary interpretation of subparagraph (ii) of s 18(3)(d) that supports the view of the explanatory memorandum that subparagraph (ii) of s 18(3)(d) is intended to apply only in the circumstances of a resulting trust situation where an apparent purchaser has purchased on trust for the real purchaser who has provided the consideration for the purchase'. This was on the following basis: 53 Subparagraph (ii) of s 18(3)(d) uses the expression "the purchaser purchased as a trustee". It does not use the expression "the purchaser entered into the agreement as a trustee". Given the use of the expression "at the time the agreement was entered into" at the beginning of s 18(3)(d), had the legislature intended that a purchaser that has entered into an agreement as a trustee be within subparagraph (ii) of s 18(3)(d), it would reasonably be expected that the legislature would have used the expression "purchased" as a trustee can therefore reasonably be interpreted as indicating that the expression is used in contradistinction to a purchaser having entered into the agreement as a trustee. Also, the fact that the legislature chose the expression "purchased as a trustee" and not "purchased as trustee" supports the interpretation of subparagraph (ii) of s 18(3)(d) as only applying to the situation of a trust arising at the time of the purchase. On this interpretation, subparagraph (ii) of s 18(3)(d) does not apply to the situation of a purchaser purchasing as a trustee of an existing trust. 28The Tribunal also took the view that the Minister's speech, when introducing the relevant provisions, supported the construction suggested because it 'would promote the purpose or object underlying s 18(3) as described in this speech as required by s 33 of the Interpretation Act'. The Minister's statement was - The next proposal for change relates to the closing of a loophole. Under the current legislation, a purchaser under an agreement for sale can elect to have the property transferred from the vendor to a person who is "related" to the purchaser without paying ad valorem duty on the transfer. This concession is intended to apply to situations where either the purchaser is unable to identify who will ultimately be the owner such as another family member or a family trust, or there is a change of mind prior to settlement. Submissions - s18 (3)(d)(ii) and Sharpe issue 29By way of summary, the applicants set out their principal contentions as follows: (1)That subparagraph 18(3)(d)(ii) is only required to be satisfied where the purchaser is purchasing as an "apparent purchaser" for a "real purchaser" pursuant to a resultant trust. Namely the decision of Sharpe v Chief Commissioner of State Revenue [2002] NSWADT 6 is to be followed. (2)That the facts in this matter are identical in all important ways to the facts in Sharpe, and accordingly only subparagraph 18(3)(d)(i) is required to be satisfied. (3)In the alternative, that the correct interpretation of the phrase "except as provided by subparagraph 18(3)(d)(i) is that, where subparagraph (ii) is applicable, it operates as an additional condition that may be satisfied as an alternative to subparagraph (i), rather than as a condition that must be satisfied to the exclusion of subparagraph (i). Namely, that paragraph 18(3)(d) is satisfied if either subparagraph (i) or (ii) is satisfied. (4)In the alternative, that the correct interpretation of subparagraph (ii) is that in relation to the Wilkins Transfer there are various beneficiaries of the Teamcard Super Fund such that each of the Applicants is a related person to one or more of such beneficiaries, and accordingly subparagraph 18(3)(d)(ii) is satisfied. 30The respondent's case was that the applicants, as transferees of Lot 3 and Lot 4, were different from Teamcard Pty Ltd, the purchaser named in the contract and accordingly 'the transfer is not in conformity with the contract and s 18(2) does not apply. 31The respondent 'conceded that subsections 18(3)(a) to (c) are satisfied' but that the applicants fail to satisfy s 18(3)(d)(ii). In this regard it was submitted that, contrary to what was decided in Sharpe, this provision is not confined to resulting trusts. It would, it was submitted, apply to all cases where the purchaser purchased the dutiable property as a trustee. 32The respondent submitted that reasoning adopted by the Tribunal in Sharpe 'was plainly erroneous' and the 'error in the reasoning is fivefold' - 3.14 First, the Tribunal in Sharpe preferred the intention expressed in the explanatory note for the bill that introduced s 18(3)(d) to the plain meaning of the words of the subsection. In order to do so it had to find that the provision was ambiguous or obscure or otherwise affected by absurdity or unreasonableness: s 34(1) Interpretation Act; Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 421 per McHugh JA; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 per McHugh, Gummow, Kirby and Hayne JJ. There is no basis in the words of s 18(3)(d)(ii) for confining the exception to resulting trusts. The meaning of the words in the subsection is plain and therefore there is no basis upon which to have resort to the extrinsic material to impose a confined application of the subsection that was not justified by the plain meaning of the words. It is notable in that context that the Tribunal did not make a finding in Sharpe that the words in s 18(3)(d)(ii) were ambiguous or obscure or led to a result that was manifestly absurd or unreasonable: s 34(1) Interpretation Act. 3.15 Second, the Tribunal inferred that because the explanatory note referred to real and apparent purchaser that the provision referred to resulting trusts only and not other trusts. This reasoning, in effect read expressions not found in the provision into the provision. That was plainly not permissible. Had that been the intention of the legislature it would have referred to the language of s 55 of the Duties Act that provided specific relief from ad valorem duty, in respect of resulting trusts. The amendments to s 18(3) made by the State Revenue Legislation Further Amendment Act 2000 do not adopt the language of s 55 where it refers to "real purchaser" and "apparent purchaser". Had the legislature's intention been to limit s 18(3) to trustees of resulting trusts the language of "apparent purchaser" and "real purchaser", used in s 55, could have been used. Instead the word "trustee" was used. This indicates that the provision was to have a wider application to trusts and not just resulting trusts. 3.16 Third, the Tribunal misapplied Truskett v Commissioner of Stamp Duties (1976) 6 ATR 1. In Truskett, the meaning of the following phrase was considered: (1) Any instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase-money therefor. 3.17 Unsurprisingly, Rath J held that this phrase applied to the situation where property is purchased in the name of a stranger, and a resulting trust is presumed in favour of the person who paid the purchase money: Truskett at 4-5. 3.18 This phrase bears no relation to the phrase in s 18(3)(d)(ii) which provides: if the purchaser purchased as a trustee, the transferee and the beneficiary are related persons. 3.19 Nevertheless the Tribunal in Sharpe relied on this authority for interpreting the explanatory note for the bill that introduced s 18(3)(d)(ii) and, having interpolated that the explanatory memorandum and the reference to "apparent purchaser" formed part of s 18(3)(d)(ii), thereby reasoned that because the explanatory memorandum and Truskett applied to resulting trusts s 18(3)(d)(ii) was restricted to resulting trusts and not express trusts. This reasoning was entirely misplaced and mistaken as Truskett was concerned with an entirely different phrase to that which appeared in s 18(3)(d)(ii). 3.20 Fourth, the Tribunal failed to have regard to the other provisions of the Duties Act in interpreting s 118(3)(d)(ii). If the Tribunal had considered the remaining provisions of the Duties Act it would have considered that s 55 of the Act provides an exemption from ad valorem duty for resulting trusts and uses the phrases "apparent purchaser" and "real purchaser" for that purpose. Those phrases are not used in s 18(3)(d)(ii). Had the legislature intended to confine s 18(3)(d)(ii) to resulting trusts it would have used those phrases. As those words were not used in s 18 it plainly was not intended that the provision was confined to resulting trusts. That further suggests that the ordinary meaning of the of the words in s 18(3)(d)(ii) was intended and not a meaning constrained by the concept of a resulting trust that is not expressed in the subsection itself. 3.21 Fifth, the Tribunal has previously found that the terms of s 18(3)(d) are clear and unambiguous and therefore it is neither permissible not necessary to seek assistance from explanatory material: see Warner at [17]. The Tribunal made these findings in the context of its consideration of the reasoning in Sharpe. The Tribunal considered whether s 18(3)(d)(ii) applied where one of the purchasers was a trustee of a discretionary trust. It found that s 18(3)(d)(ii) did not apply because only one of the three purchasers purchased as a trustee and so it could not be said that the purchasers purchased as a trustees, remembering that where the plural of "the purchaser" and "the transferee" is used in the context of s 18(3) it means "the purchasers" and "the transferees" and not some of the purchasers or some of the transferees: see Warner at [10]-[12]; Kuo at [30]; Zhuang at [36]. The Tribunal did not follow or apply the reasoning in Sharpe by confining s 18(3)(d)ii) to resulting trusts. 33The applicants responded in reply to the submissions made by the Chief Commissioner. 34In relation to the submission that the Tribunal in Sharpe erred in relying on the explanatory note, the applicants submitted that was not what was ultimately decided in Sharpe because - 17. In paragraphs 49 to 56 of Sharpe, the Tribunal engages in lengthy consideration of the meaning of subsection 18(3)(d) that does not make any reference to any extrinsic materials and relies only on the meaning conveyed by the text of the provision, taking into account its context in the Act. The essence of the Tribunal's interpretation of the meaning of subsection 18(3)(d) is found in paragraph: The fact that the legislature chose to use the expression "purchased as a trustee" can therefore reasonably be interpreted as indicating that the expression is used in contradistinction to a purchaser having entered into the agreement as a trustee. Also, the fact that the legislature chose the expression "purchased as a trustee" and not "purchased as trustee" supports the interpretation of subparagraph (ii) of s 18(3)(d) as only applying to the situation of a trust arising at the time of the purchase. On this interpretation, subparagraph (ii) of s 18(3)(d) does not apply to the situation of a purchaser purchasing as a trustee of an existing trust. 18.The Tribunal found that this ordinary interpretation of subsection 18(3)(d) was in accord with the explanatory memorandum (at paragraphs [44] to [47]) and the second reading speech for the provision (at paragraphs [58] to [60], clearly using that extrinsic material merely to confirm the ordinary meaning that the Tribunal found was conveyed by the text. 35It was further submitted in reply that 'the decision of the Tribunal in Warner clearly states that if the only party executing the contract as purchaser is the trustee of a trust, and all of the transferees are beneficiaries of that trust, then the exempting provision (namely section 18(3)) applies'. It was submitted that this was 'consistent with the decision in Sharpe, and is completely inconsistent with the interpretation of section 18(3)(d) advanced by the Respondent'. 36Finally, it was submitted that the Tribunal in Sharpe did not misapply Truskett v Commissioner of Stamp Duties because the respondent's submission 'ignores the reasoning of the Tribunal in paragraphs [49] to [53], in which the Tribunal, with no reference to Truskett, determines that the ordinary interpretation of section 18(3)(d) must mean that the reference to "the purchaser purchased as trustee" can only apply to a trust arising at the time of purchase (ie a resulting trust). Consideration - s 18(3)(d)(ii) and Sharpe issue 37The first issue that arises is whether the Tribunal in Sharpe had a proper basis to pursue the "purposive construction" of the relevant words in s 18(3)(d) of the Act. In short, did the Tribunal attempt in the first instance to give the relevant provisions a grammatical meaning as directed by s 33 of the Interpretation Act and confirmed by the courts? 38I think the Tribunal proceeded without such a proper consideration. The Tribunal referred to both s 34(1)(a) and s 34(1)(b) of the Interpretation Act but, clearly, the latter did not apply as there was no suggestion that the provisions were 'ambiguous or obscure'. Mention is made of seeking the ordinary meaning, whereas s 34(1)(a) merely allows looking at extrinsic material to confirm the ordinary grammatical meaning ascertained from the actual words of the legislation. 39Where the terms of the legislation are plain, as was the case with the provisions of s 18(3)(d), the Tribunal ought to have given them their grammatical meaning unless it was necessary to confirm that meaning or the meaning was 'ambiguous or obscure'. 40The Full Court of the Supreme Court in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423 per McHugh JA (as his Honour then was) helpfully, cautioned that - In most cases the grammatical meaning of a provision will give effect to the purpose of the legislation. A search for the grammatical meaning still constitutes the starting point. But if the grammatical meaning of a provision does not give effect to the purpose of the legislation, the grammatical meaning cannot prevail. It must give way to the construction which will promote the purpose or object of the Act. The Acts Interpretation Act 1901 (Cth), s 15AA, and the Interpretation Act 1987 (NSW), s 33, both require this approach to statutory construction. 41His Honour also went on to warn that - But first and last function of the court remains one of construction and not legislation. As Lord Diplock has pointed out "the task on which a court of justice is engaged remains one of construction; even where this involves reading into the Act words which are not expressly included in it": Jones v Wrotham Park Estates Ltd (at 105). 42I think the Tribunal ignored the warning given by courts that the 'first and last function of the court remains one of construction and not legislation'. Resort was made to rely on the Explanatory Note to the Bill that introduced the provision. But that was unnecessary and not authorised by the Interpretation Act as the Tribunal's initial role was to construe the provisions by giving them their grammatical meaning. No such attempt was really made. On such a construction, the Tribunal was entitled to either confirm the ordinary meaning of the relevant provision, if it had any difficulty with that meaning to pursue with a purposive construction of the terms of the legislation if it had found the terms 'ambiguous or obscure'. Failure to find the grammatical meaning, lead the Tribunal to make an unauthorised journey to find the purposive construction of the relevant provisions. 43The Tribunal also, in my opinion, read too much into what was said in the Explanatory Note. It merely states that, where a purchaser buys on trust for the real purchaser, the concession for a transfer to a related person can only apply to a transfer from the vendor to a person related to the real purchaser. There is no suggestion in the short statement that the concession is confined to resulting trusts. 44In Warner, Block JM, made a similar observation - 17. It is also relevant to note that the Tribunal in Sharpe had regard to explanatory material for the purpose of its decision. It is my view that apart from the fact that Sharpe does not apply in this case, it is not necessary to seek assistance from the explanatory material because the legislation is clear and unambiguous and so there is no basis for a finding which does not accord with it. It is not permissible for the Tribunal to depart from the language of the statutory provision under consideration, Amalgamated Society of Engineers v Adelaide Steamship Company (1920) 28 C.L.R 129. In any event I do not think that the relevant explanatory note (and it is not necessary to quote it in these reasons) supports an alternative construction. 45The Tribunal in Sharpe also expressed the view that the Minister's second reading speech supported the purposive construction suggested because 'it would promote the purpose of or object underlying s 18(3) as described in this speech as required by s 33 of the Interpretation Act'. The Minister's speech only emphasised that the provision was being introduced to close the loophole that allowed the concession to 'separate transfers and unrelated to the original contract to purchase'. I do not think the Minister was suggesting a narrow operation of s 18(3)(d)(ii) to apply only to resulting trusts, when highlighting the need to stop the 'abuse' of the concession. A narrow construction would not promote the intended object and purpose of the provision and would be contrary to the direction given in s 33 of the Interpretation Act. 46The Tribunal also sought to place some reliance on the decision of Rath J in Truskett in taking the view that s 18(3(d)(ii) is confined to resulting trusts. I agree with the submission made by Mr Mitchell, counsel for the respondent, that his Honour Rath J considered a phrase which bears no relation to the phrase in s 18(3)(d)(ii)'. 47No mention was made by the Tribunal in Sharpe to the provisions of s 55 of the Act which provide, as submitted by the respondent, 'specific relief from ad valorem duty, in respect to resulting trusts'. I agree with the submission made by the respondent that the term 'trustee' used in s 18(3)(d)(ii) has a much 'wider application to trusts and not just resulting trusts'. 48The Tribunal also relied on the ordinary meaning of the words in s 18(3)(d)(ii) to support the narrow construction given to provision. It was suggested that the expression "the purchaser purchased as a trustee" used in the provision in contrast to the expression "the purchaser entered into the agreement as a trustee" gave support to the narrower construction. I am unable to distil such a meaning of the plain words used on the basis of the alternative expression suggested by the Tribunal. 49The wider interpretation suggested by the respondent is, in my opinion, correct. Consideration - Alternative issue 1: even if Sharpe was wrongly decided, the applicants satisfy s 18(3)(d)(ii) 50In the event the Tribunal came to the conclusion that Sharpe incorrectly interpreted s 18(3)(d)(ii), the applicants submitted that they should still succeed on two further alternative bases. It was submitted that, in any case, the applicants satisfied the requirements of s 18(3)(d)(ii) or alternatively, the transfer was made in conformity with the agreement and the concessional rate was available under s 18(2) of the Act. 51The applicants submitted that if s 18(3)(d)(ii) is the only basis upon which double duty may be avoided if a purchaser is a trustee, s 18(3)(d)(ii) does apply in this case because - (a). Teamcard Pty Ltd is the purchaser who purchased Lots 3 and 4 as trustee; (b) The applicants are the transferees of one half share each as tenants in common because they purchased the Lots as joint tenants and s 14 of the Act requires then to be taken to have purchased the dutiable land as tenants in common in equal shares; (c) The applicants are each beneficiaries of the trust referred to in s 18(3)(b)(ii) (namely, the Teamcard Superannuation Fund); and (d).The applicants are "related persons" because they are husband and wife. 52The Dictionary to the Act, relevantly, defines a "related person' as follows: related person means a person who is related to another person in accordance with any of the following provisions: (a) natural persons are related if: (i) one is the spouse or de facto partner of the other, or (ii) one is the parent, brother or sister of the other, or (iii) one is the spouse, or de facto partner, of a parent, child, brother or sister of the other. (b) companies are related persons if they are related bodies corporate, (c) a natural person and a private company are related persons if the natural person is a majority shareholder or director of the company or of another private company that is a related body corporate, (d) a natural person and a trustee are related persons if the natural person is a beneficiary of the trust (not being a public unit trust scheme) of which the trustee is a trustee, (e) a private company and a trustee are related persons if the company, or majority shareholder or director of the company, is a beneficiary of the trust (not being a public unit trust scheme) of which the trustee is a trustee. 53Essentially, the applicants' case on this ground was advanced by Mr Kelly SC in his written submissions filed after the hearing as follows - ... the definition looks at the relationship at the point of transfer, qua transfer, not qua any interest impressed immediately upon transfer (be it a trust or mortgage, or any other legal or equitable right title or interest). No lacuna is involved. No novelty arises. The incontrovertible facts are (1) the transferees are natural persons and it is their relationship with the beneficiaries under the trust for which the purchaser purchased the subject property which the Legislature has chosen to make relevant to concessional duty, not any analysis of the legal rights or duties attaching to the transferees upon completion of the transfer; and (2) no trust can arise unless and until legal title to trust property is taken by the putative trustee, as D.K.L.R makes absolutely clear. 54The D.K.L.R point (D.K.L.R Holding Co (No. 2) Proprietary Limited v The Commissioner of Stamp Duties (New South Wales) (1982) 149 CLR 431) was explained by Mr Kelly SC in his written submissions. It was submitted 'the relationship between transferee and beneficiary for the purpose of s 18(3)(d)(ii) should be determined at the moment of the transfer, not the moment after transfer at which the property made the subject of the transfer was impressed with a trust'. The submission was made on the basis of the reasoning of Gibbs CJ in D.K.L.R at 443, namely, - It (is) only when the (anterior) declaration of trust took effect, which is of course after the transfer, that there was a severance of the legal and equitable interests. 55In response, the respondent submitted that - 3.27 Paragraph (a) of the definition of "related persons" does not apply in the present case because, in respect to Transfer B, the Applicants, as transferees, acquired the estates in fee simple in Lots 3 and 4 Deposited Plan 536479 as bare trustees pursuant to the terms of the Custodian Deeds. The estates in fee simple in the Applicants' hands were impressed with trusts and in consequence of the registration of Transfer B, equitable interests in the estates in fee simple vested in Teamcard as beneficiary of the trust constituted by the Custodian Deed: see D.K.L.R. Holding Co (No.2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 at 443 per Gibbs CJ; 463-4 per Aickin J and 474 per Brennan J. Therefore paragraph (d) applied and (a) did not. 56In response to Mr Kelly SC's D.K.L.R point submission, Mr Mitchell made the further submission that - 4.1 The Applicant fixes upon the words "after the transfer" in Chief Justice Gibb's judgment at page 443 of DKLR (HCA). The Applicant overlooks the earlier statement of Gibbs CJ which was as follows: The question which must then be considered is whether the memorandum of transfer was liable to ad valorem duty. The first submission on behalf of the appellant was that the property conveyed by the transfer was valueless. The submission was that before the memorandum of transfer was executed, 29 Maquarie had the full rights of a beneficial owner of the land, and after the execution of the transfer, when the declaration of trust took effect, it had some beneficial rights. This is a variant of an argument which I have already rejected. I have pointed out that 29 Macquarie had the whole right of property in the land and transferred it to D.K.L.R. The fact that on the very instant when the transfer took effect the declaration of trust became effective does not mean that the real effect of the transfer was any different from its apparent effect. The transfer did what it purported to do, i.e., to transfer the whole property in the land to D.K.L.R. Before the transfer there had been no severance of the legal and equitable interests in the land. It was only when the declaration of trust took effect, which of course was immediately after the transfer, that there was a severance of the legal and equitable interests. (emphasis added) 4.2 Justice Gibbs use of the words after the transfer, read in context, mean after the acts of the vendor that give the transfer instrument its effect. At the instant the transfer has effect the declaration of trust becomes effective. 57I agree with Mr Mitchell's reading of the reasoning advanced by his Honour Gibbs CJ. The transferees, Mr and Mrs Wilkins did not hold the estate in fee simple in Lots 3 and 4 in Plan 536479 except as trustees. They were trustees for the purpose of s 18(3)(d)(ii). Consideration - Alternative Issue 2: the transfer was in conformity with the agreement and s 18(2) applies 58The second alternative argument advanced by the applicants was that, in any case, the transfer to the applicants as trustees was in conformity with the agreement for sale and the applicants should, accordingly, be entitled to the concessionary duty under s 18(2) of the Act. 59Section 18(2) provides that 'duty chargeable in respect of a transfer of dutiable property made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if the duty chargeable in respect of the agreement has been paid'. The critical part of this provision is the expression 'in conformity with an agreement'. A similar test was also used in s 41 of the old Stamp Duties Act that was replaced by the current Act. 60The Full Supreme Court of New South Wales (Jordan CJ, Street and Maxwell JJ) in Lake Victoria Ltd v Commissioner of Stamp Duties (1949) 49 SR (NSW) 262 considered the test in the old law in a case stated to the court. The facts were brief and as follows. The vendor under an agreement sold certain lands and other property to a Mr Smith or his nominee or nominees, all of who were included in the designation 'the purchaser'. Ad valorem duty was paid on this agreement. Mr Smith nominated three newly incorporated companies as purchasers of parts of the lands and the vendor conveyed the said parts to the three companies as tenants in common. The Commissioner assessed the three companies as liable to ad valorem duty on the conveyance. The principal question submitted to the Full Court was whether the transfers to the three companies were respectively made in conformity with the purchase agreement within the meaning of s 41(4) of the Stamp Duties Act 1920-1940. Section 41(4)(a) was in the following terms: Where duty has been duly paid in conformity with the foregoing provision, the conveyance made in conformity with the agreement or agreements shall not be chargeable with ad valorem duty but shall be chargeable with a duty of one shilling. 61Jordan CJ delivered the judgment of the court. His Honour at p 265 explained the circumstances when the concessionary duty was available under the provision - If the vendor conveys by direction to any person other than the original purchaser the conveyance must set forth the consideration for any agreement leading to conveyance and shall be liable to additional duty equal to the ad valorem duty on the conveyance. It is only when duty has been paid "in conformity with the foregoing provision" by the purchaser or person to whom the property is agreed to be conveyed that a conveyance made in conformity with the agreement is not chargeable with ad valorem duty. Thus, if the contract provides for a conveyance to the purchaser, or not to the purchaser but to some other person, and ad valorem duty is paid, a conveyance to the purchaser or the person is not chargeable with ad valorem duty. But there is nothing in s. 41 (4) (a) to exempt from full ad valorem duty an agreement for sale to a sub-purchaser or an agreement between the purchaser and a third party leading to a conveyance by the vendor to the third party at the purchaser's direction. A conveyance is not made in conformity with the agreement, unless it is made to the purchaser, or if the agreement provides that it is to be made not to the purchaser but some other person, to that other person. Section 41 (4) (a) is a general provision, and must be read subject to any special provisions of the Act. 62His Honour went on, importantly, to make the following further observation: The present is not a case of an agent contracting to buy on behalf of an undisclosed principal who wishes to conceal the fact that he is in the market lest it should lead to a demand for an exorbitant price. It is unnecessary; therefore, to consider what the position would be if, in such a case, the Commissioner sought to obtain ad valorem duty not only on the contract with the agent, but also on the conveyance to his principal. In the present case, it is clear that Smith did not by the agreement of 4th March 1947, contract either as agent or as trustee for the companies which he intended to incorporate, for they then had no existence. 63The decision of the Full Court in Lake Victoria was considered by the High Court (Dixon, Williams, Webb, Fullagar and Kitto JJ) in Vickery v Woods (1951-1952) 85 CLR 336. The short facts in this case were set out in the headnote as follows. Mr Vickery sued Mr Woods, the Commissioner of Stamp Duties (NSW), to recover money paid as stamp duty on a contract executed by Mr Vickery to purchase a station property. At the time when the contract was made, Mr Vickery purported to act as agent for a company which had not been incorporated and which did not come into existence until two months later. After the company was incorporated, the transfer to effect the conveyance of the land to the company was executed and the balance of the purchase money was paid by the company. Mr Woods claimed that ad valorem duty was payable on both the original contract and the transfer and the duty was paid. Mr Vickery then claimed under s 41(7) of the Stamp Duties Act 1920-1949 (NSW), a return of the duty paid upon the contract on the ground that, after payment of duty and before completion by conveyance, the contract entered into had been rescinded. The Commissioner refused to refund the duty that had been paid on the contract. 64Section 41(7) provided that in 'case the agreement is afterwards rescinded or annulled the ad valorem duty paid thereon shall be refunded by the Commissioner to the party to the agreement'. The court held that the evidence did not establish a rescission of the original contract and consequently Mr Vickery was not entitled to the refund. 65In considering Mr Vickery's claim, the High Court also, by way of obiter dicta, made known their views as to the operation of s 41(4)(a). In particular, Dixon J expressed the view that the transfer to the company, which was not an issue before the High Court, should not have been liable to ad valorem duty. I think his Honour's view was that the court in Lake Victoria did not go far enough to extend the concession where the purchaser was merely named as a 'nominee' - But for purposes of s. 41 (4) (a) of the Stamp Duties Act 1920-1949 (N.S.W.) there may be a difference between such a transfer and a transfer to a person named in the contract as the intended transferee, even when that person is a company to be incorporated. In Lake Victoria Ltd. V. Commissioner of Stamp Duties ((1949) 49 S.R. (N.S.W.) 262, at p. 265; 66 W.N. 119, at 121,122) Jordan C.J. distinguishes, for the purpose of the application of s. 41 (4) (a), the case where the conveyance to a third party is made at the purchaser's direction from a case of a contract which provides for a conveyance to the purchaser or, not to the purchaser, but some other person. In the latter case I understand his Honour regarded the conveyance as made in conformity with the contract, within the meaning of s. 41 (4) (a), and therefore as not chargeable with ad valorem duty. "A conveyance is not made in conformity with the agreement, unless it is made to the purchaser, or if the agreement provides that it is to be made not to the purchaser but to some other person, to that person". Clearly enough Jordan C.J. was here speaking of a person identified in the contract as opposed to any nominee, but I am not inclined to think that it makes any difference if the identifiable person is a contemplated company yet to be clothed with legal personality. As at present advised therefore I do not see why the transfer to the company should be regarded as otherwise than in conformity with the contract. The Commissioner of Stamp Duties, however, thought otherwise and determined that the transfers to the company were liable to ad valorem duty under s. 42 (5), that is, as conveyances by direction of purchaser to some one else. 66The other members of the High Court, with the exception of Williams and Webb JJ, agreed with the views expressed by Dixon J that in Vickery the conveyance was 'made in conformity with the agreement' within the meaning of s. 41 (4) of the Stamp Duties Act 1920-1949 (N.S.W.) but as expressed by Fullagar J, that view, however, could not avail the appellant in the proceedings before the High Court. 67Williams J expressed no view because he said the court was not concerned whether Lake Victoria 'was or was not rightly decided or, if it was rightly decided, whether it applied to the facts of the present case'. Webb J, however, took the view that the conveyance could not have been in conformity with a contract to which the company was not a party. 68The respondent accepts that the transfer to Teamcard Pty Ltd of the 6 lots of land was made in conformity with the agreement entered into by Teamcard Pty Ltd with Davocsh Pty Ltd to purchase the eight lots of land. 69The respondent also accepts that transferees of Lots 3 and 4 Deposited Plan 536479 were the applicants as bare trustees. They held the properties as trustees/custodians for the Teamcard Superannuation Fund because under the provisions of the Superannuation Industry Supervision Act, 1993 any property used as security under a limited recourse borrowing arrangement must be held in trust for the Superannuation Fund by a custodian until the loan is repaid in full. Two custodian deeds were executed by the Teamcard Superannuation Fund and the applicants with the Teamcard Superannuation Fund retaining a full beneficial interest in the two lots, the security properties. 70Against that background, it is difficult to ignore that the purchaser at all relevant times was the Teamcard Superannuation Fund. Because it lacks a legal personality it had to rely on trustees to act on its behalf in relevant transactions. The only 'change' that occurred was when the applicants had to take on the role of trustees in respect of the two lots of land instead of Teamcard Pty Ltd as the sole trustee. 71I think the observations made by Dixon J in Vickery clearly suggest that a much wider approach ought to be taken when considering the concession under this provision. Any rigid approach only leads to fairly harsh and unwarranted outcomes, especially in cases where the full ad valorem duty has been paid and where there is no suggestion of any abuse or use of a loophole in the law. 72His Honour Jordan CJ, in Lake Victoria, also sought to distinguish the facts in that case from a purchaser acting as agent or trustee when entering into a contract to purchase property. I think this matter can be distinguished and treated differently where the ultimate owner was and is the applicants' superannuation fund. No stranger has acquired any beneficial interest in any of the lots contracted to be purchased by the fund. 73The purpose of s 18(2) of the Act is essentially to ensure no double duty is paid on a transfer of dutiable property made in conformity with an agreement for sale or transfer of the dutiable property, if the duty chargeable in respect of the agreement has been paid. I think the expression 'made in conformity with an agreement' simply means that the transfer must be made in accordance with the agreed arrangements between the parties to the contract. If the purchaser and transferee are as intended then I think the transfer is to be regarded as made in conformity with the contract for sale. I think that accords with what was said, in obiter dicta, by Dixon J in Vickery: the purchaser could be 'some other person' if the agreement provides for the ultimate owner other than the person in the contract. Ultimately, this will depend on whether the person or persons who acquire the beneficial ownership under the contract are also the beneficial owner or owners at the end of the day when the transfer is executed. If the transfer is in accord with the purchase arrangement, then the transfer must be regarded as being in conformity with the agreement. I do not think Lake Victoria is authority for the conclusive view that if x entered into a contract to purchase, x has to be the transferee to avail the concession under s 18(2) of the Act. 74In the present matter, the applicants have given an explanation as to why they had to act as trustees/custodians to their Superannuation Fund. There is no suggestion that the transactions have been driven by any other consideration. Proper ad valorem was paid on the Contract for Sale and there has been no revenue leakage as such. 75Having regard to all the facts and the relevant legal principles, I accept that the transfer of Lots 3 and 4 to the applicants as trustees/custodians of the Land team Superannuation Fund was in conformity with the Contract for Sale as purchaser executed by Teamcard Pty Ltd on 30 November 2012 as trustee for the Teamcard Superannuation Fund. Costs 76The applicants in their written submissions also seek costs in this matter. Under s 60(1) of the NCAT Act 'each party to proceedings in the Tribunal is to pay the party's own costs'. However, the Tribunal is given power under s 60(2) to 'award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs'. In determining whether there are special circumstances, the Tribunal under s 60(3) can have regard to a number of matters. Unfortunately, having regard to the relevant matters I do not think this is an appropriate case where the Tribunal should make a cost order. In particular, I have taken into account that the respondent's position on two of the three issues has been affirmed. Order 77The Tribunal sets aside the assessment under review and pursuant to s 101 of the Taxation Administration Act 1996 this matter is remitted to the Chief Commissioner of State Revenue to assess the appropriate duty payable in accordance with s 18(2) of the Act. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 May 2014