Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Kamareddin v Chief Commissioner Of State Revenue [2016] NSWCATAD 21 Hearing dates: 14 December 2015 Date of orders: 05 February 2016 Decision date: 05 February 2016 Jurisdiction: Administrative and Equal Opportunity Division Before: N S Isenberg, Senior Member Decision: (1) The reassessment of duty pursuant to Duties Notice of Assessment Id 1560466243 issued 18 April 2012 is revoked. (2) The Chief Commissioner shall issue a Duties Notice of Assessment in its place which will have regard to the entitlement of the Applicant to the exemption from duty provided by paragraph 68(1)(b)(iia) of the Duties Act in accordance with the reasons for this decision. Catchwords: REVENUE LAW – Duties Act – exemption – irretrievable breakdown of marriage – religious divorce Legislation Cited: Administrative Decisions Review Act 1997 Civil and Administrative Tribunal Act 2013 Duties Act 1997 Family Law Act 1975 (Cth) Taxation Administration Act 1996 Cases Cited: Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187, (2008) 74 NSWLR 481 Gauci v Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81 Stature PO Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271 Category: Principal judgment Parties: Khaldie Kamareddin (Applicant) Chief Commissioner of State Revenue (Respondent)) Representation: Counsel: I Sethie (Respondent) Solicitors: K Kamareddin (Applicant in Person) Crown Solicitor's Office (Respondent File Number(s): 1510143 Reasons for decision Background 1. In this matter the Applicant seeks a review by the Tribunal of a decision by the Respondent (sometimes called the Chief Commissioner in these reasons) to issue Duties Notice of Assessment ID 1560466243 on 18 April 2012 in the sum of $17,523.34 in respect of a transfer of residential land situated at Greenacre (the Property) to the Applicant from Mr Omar Hussein. 2. The Respondent asserts that the central issue that arises for consideration is whether the exemption in section 68 of the Duties Act 1997 (the Duties Act) (the Exemption) applies to the relevant agreement to sell or transfer the Property. 3. In written submissions (RS) at [4] the Respondent says: The primary factual issue is whether or not at the time of the relevant dutiable transaction, the marriage between the Applicant and Mr Hussein had irretrievably broken down. The respondent asserts that the facts do not support that it had, and therefore the Exemption is unavailable to the Applicant. 1. On the other hand, the Applicant asserts that as at 4 November 2011, the date on the front page of the relevant contract for sale of land (the Contract), her marriage to Mr Hussein had broken down irretrievably and she was entitled to the Exemption. Evidence before the Tribunal 1. The written evidence comprised two bundles of unsorted documents from the Applicant, one of 22 pages the other of 93 pages; documents filed by the Respondent pursuant to section 58 of the Administrative Decisions Review Act 1997 (the ADR Act); a chronology prepared by the Respondent; and SAI Global LPI title and historical searches of the Property, together with a copy of a stamped and registered transfer, and a registered mortgage. 2. The Applicant gave sworn evidence and was cross-examined. She also made oral submissions. The Respondent relied on RS and a bundle of cases and Ms Sethi made oral submissions. The Respondent's case 1. The Respondent's case and a summary of relevant law appears under the heading Respondent's Contentions in RS, excerpts from which are: Prima facie obligation to duty 50. Duty is charged by the Act on a transfer of dutiable property (section 8(1)(a)), and an agreement for the sale or transfer of dutiable property (section 8(1)(b)(i)). In the present matter, the agreement for the sale or transfer was the Contract for Sale. 51. The 'dutiable property' includes land in New South Wales (section 11(1)(a)). There is no dispute that the Property is the relevant dutiable property. Pursuant to section 12(2) of the Act, the liability to duty arises at the time the written instrument is first executed. In this case, the Contract for Sale was first executed on 4 November 2011. The liability is payable by the transferee pursuant to section 13 of the Act. The transferee is the Applicant'''. The dutiable value of the Property is determined in accordance with section 21(1)(a) of the Act as the consideration for the dutiable transaction, which is $480,000. 52. Accordingly, the Applicant is prima facie liable from 4 November 2011 to duty on the amount of $480,000 in respect of her purchase of the Property. Exemption 53. The respondent says that the circumstances of the present matter do not satisfy the necessary requirements contained within section 68 of the Act and so the Exemption therein is not available to the Applicant for the following two main reasons. Section 68(1)(a) 54. Relevantly, section 68(1)(a) requires property to be transferred, or agreed to be sold or transferred, to the parties to a marriage that is dissolved or annulled, or in the opinion of the Chief Commissioner has broken down irretrievably, or to either of them. 55. There is no dispute that the Property is matrimonial property for the purposes of section 68(5) of the Act. There is no dispute that the marriage has not been annulled, or dissolved. The issue is whether at the time of the agreement to sell or transfer, in the opinion of the Chief Commissioner (and now the Tribunal in this Review) the marriage had broken down irretrievably. 56. The respondent says that the Exemption is not available since the necessary criteria in section 68(1)(a) of the Act was not met. Specifically, in the Chief Commissioner's opinion, the marriage between the Applicant and Mr Hussein had not broken down irretrievably on 3 November 2011. The Chief Commissioner relies on the evidence contained within the section 58 documents. … Section 68 (1)(b) 62. The respondent contends that even if the Tribunal does not find that the Applicant cannot establish an irretrievable break down of the marriage before the dutiable transaction, the Applicant remains disentitled to the Exemption with respect to her purchase of the Property because the requirement in section 68(1)(b) of the Act is not satisfied. 63. NOT IMPLEMENTED: support for w:pict - without v:imagedata Relevantly, section 68(1)(b)(i ) requires the transfer or agreement to be effected by or in accordance with a financial agreement made under section 90B, 90C or 90D of the Family Law Act 1975 (Cth) . 64. Section 68(1)(b)(iia) requires the transfer or agreement to be effected by or in accordance with an agreement that the Chief Commissioner is satisfied has been made for the purposes of dividing property as a consequence of the dissolution, annulment or breakdown of the marriage. 65. The Applicant relies on a Financial Agreement between her and Mr Hussein made pursuant to section 90C of the Family Law Act 1975 (Cth) on 4 May 2012. Whereas, the Contract for Sale of the Property was executed on 4 November 2011 and therefore could not possibly have been (to use the language of the provision) 'effected by or in accordance with' the [later executed] Financial Agreement on 4 May 2012. … 68. In this instance, the Financial Agreement post-dates the date of the dutiable transaction in relation to the Property, and so does not assist the Applicant to demonstrate that the agreement to sell or transfer the Property was in accordance with the Agreement. 69. Also, the evidence does not satisfy the Chief Commissioner (and now the Tribunal in this Review) that there was an agreement made before 4 November 2011 for the purpose of dividing property as a consequence of the dissolution, annulment or breakdown of the marriage between the Applicant and Mr Hussein 70. The Applicant says that she and Mr Hussein entered into an oral matrimonial property settlement agreement on 3 November 2011 further to which on 4 November 2011, the Property was transferred. 71. However, an oral agreement cannot be taken to satisfy the requirement in section 68(1)(b)(i) of the Act. This is because the Family Law Act 1975 (Cth) requires (relevantly) at section 90C(1)(a) and section 90D(1)(a) that a financial agreement be made in writing. 72. Further, the Tribunal will be dissatisfied that the marriage between the Applicant and Mr Hussein 'broke down' and so section 68(1)(b)(iia) is not relevant to consider at all. 73. However, if the Tribunal finds that it is relevant to consider, the Applicant does not provide any evidence (such as for example, independent corroborative evidence by any third parties) which would allow her to prove to the required standard of proof that there was in fact such an oral agreement made on 3 November 2011 for the purposes of dividing property on 4 November 2011 as a consequence of the dissolution, annulment or breakdown of the marriage. So the requirement in section 68(1)(b)(iia) of the Act is not established. 74. Nor is there any evidence as to the terms of the purported oral agreement. Without any evidence as to what those terms were, the s. 68(1)(b) requirement that the agreement (the Contract for Sale) must be "effected by or in accordance with" the oral agreement, cannot be established. If the terms of the purported oral agreement were the same terms as in the later Financial Agreement, the Contract for Sale was not "effected by or in accordance with" such terms as those terms did not provide for the sale of the Property to the Applicant for a sum of $480,000. Fairness 75. The Applicant says that the decision of the Chief Commissioner with respect to the state of her marriage is 'unfair'. To this the respondent contends that the Commissioner (and the Tribunal on this Review) cannot be estopped from administering the law in accordance with its terms'. 1. All references in these reasons to the Respondent's submissions by paragraph number are to paragraphs in RS unless otherwise stated. Consideration Powers of Tribunal on review 1. On a review the Tribunal may confirm or revoke the decision of the Chief Commissioner and make orders as to costs or otherwise as it thinks fit, s101(1) of the Taxation Administration Act 1996 (the TA Act). Onus 1. The Applicant has the onus of proving her case in a review by the Tribunal, s 100(3) of the TA Act. The requisite standard of proof in such a review is the "balance of probabilities" Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [31] and B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187, (2008) 74 NSWLR 481 at [104]. Events and documents 1. There is no dispute between the parties that, as stated by the Respondent at [48]: the Applicant and Mr Hussein married in 2003; the Property was owned by Mr Hussein; the Property was dutiable property; the Property was matrimonial property; on 4 November 2011, the Property was sold by Mr Hussein to the Applicant; the dutiable value of the Property was determined by reference to its sale price; the agreement for sale or transfer of the Property was a dutiable transaction; the Applicant was the transferee, and therefore liable to pay the duty; 1. The Respondent substantially relied on documents, including some documents signed by the Applicant. The Applicant, who was not represented and required the services of an interpreter throughout much of the hearing, relied substantially on her oral evidence and informed the Tribunal that she did not have much understanding of the documents in evidence including those she had signed. 2. I have considered the Respondent's written and oral submissions and all of the s 58 documents referred to in the Respondent's submissions. It seems to me that the evidence before the Tribunal includes numerous discrepancies as to matters of fact, several of which are referred to below. 3. The table below provides a chronology of certain events and sets out the supporting evidence. References to statutory declarations are to the declarations by the Applicant and Mr Hussein referred to in the paragraph immediately following the table. All references to "oral evidence" are to evidence given by the Applicant during the hearing. Date Event Evidence Sep 11 Separation of the Applicant from Mr Hussein Letter dated 8 May 12 from Kheir Lawyers (acting for the Applicant) to the Office of State Revenue (OSR) Sep 11 Mr Hussein left the family home for one or two weeks and then returned Oral evidence 3 Nov 11 Date of separation and irretrievable breakdown of marriage 1 - Duties Act Application for Exemption or Refund - Breakup of a Marriage signed by the Applicant on 4 May 12. 2 - statutory declarations. 3 or 4 Nov 11 The Applicant and Mr Hussein were divorced in accordance with Muslim religious law. No witnesses were present. They agreed that the Property and its contents (other than personal effects of Mr Hussein) would be transferred to the Applicant, the car the Applicant drove would be transferred to her and the truck Mr Hussein drove would be transferred to him. Mr Hussein would pay child support for the children of the marriage. Oral evidence 4 Nov 11 The Applicant attended the office of Kheir Lawyers and gave Mr Kheir instructions to prepare a contract to transfer the Property to her. Oral evidence 4 Nov 11 Execution of Sale Contract. Contract front page and statutory declarations 4 Nov 11 Kheir Lawyers acted for both vendor and purchaser on the transfer of the Property. Contract front page. 4 Nov 11 The Applicant did not have a spouse / partner at the commencement of the Property transaction. FHOG Application 9 Nov 11 Execution by the Applicant of mortgage to Westpac Registered mortgage 9 Nov 11 Value of the Property at $480,000 Valuation by unrestricted registered valuer having regard to inspection on 9 Nov 11 Nov 11 Mr Hussein moved to Melbourne Letter from Kheir Lawyers to OSR dated 10 Feb 15 1 Dec 11 Settlement of transfer of the Property to the Applicant Notice of Sale Between 1 Dec and 5 Dec 2011 Contract and transfer made pursuant to the Contract marked 'exempt' by OSR Contract front page, Notice of sale/transfer report, and Transfer. 5 Dec 11 Registration of transfer of the Property SAI Historical LPI search Between 4 Nov 11 and Feb 2012 Mr Hussein moved to Victoria Memorandum by the Applicant enclosed with the Applicant's lawyer's letter of 10 Feb 15. 9 Dec 11 Settlement of purchase of the Property FHOG Application dated 1 Feb 12 1 Feb 12 FHOG application Signed FHOG application form Feb 12 Mr Hussein returned to Sydney briefly to see his children Oral evidence Approximately Feb 12 The Applicant became aware of her pregnancy after Mr Hussein returned to Melbourne Undated note by the Applicant 29 Feb 12 OSR rejected FHOG application Internal OSR email dated 29 Feb 12 18 Apr 12 Reassessment of duty Notice of Assessment 19 April 12 Notice to the Applicant of reversal of first home plus duty exemption Letter from OSR to the Applicant enclosing Notice of Assessment 26 Apr 12 The Applicant and Mr Hussein were separated under one roof Letter dated 6 February 2015 from Centrelink to OSR. (Centrelink's letter states that it encloses a letter of application with the relevant information. However no application is in evidence.) 4 May 12 Mr Hussein's address was at Merrylands NSW Section 90C Financial Agreement 4 May 12 Objection to assessment of 18 Apr 12 Objection form 4 May 12 Financial agreement made including transfer of the Property from Mr Hussein to the Applicant Financial agreement stated to be under s 90C of the Family Law Act 1975 (Cth) (the Family Law Act) between Mr Hussein and the Applicant Matrimonial property situated at… Greenacre. - Agreed estimated value $600,000 Annexure A to the agreement Late 2011 to early 2012 Mr Hussein moved to Victoria Memorandum by the Applicant enclosed with the applicant's lawyer's letter of 10 Feb 15 states "when Omar Hussein moved to Victoria was roughly a few months after our separation on 4/11/2011.." Jun - Jul 12 The Applicant and Mr Hussein were remarried in accordance with Muslim religious law in Melbourne in the presence of Sheik Abdul Azim Oral evidence 17 Sep 12 The Applicant resides at the Property. Mr Hussein resides at Tarneit in Victoria Statutory declarations by Mr Hussein dated 13 Sep 12 and by the Applicant dated 17 Sep 12. Sep 12 The Applicant moved to Melbourne Letter from Kheir Lawyers to OSR dated 10 Feb 15 19 Nov 12 Birth of child Birth certificate 1. On 13 and 17 September 2012 respectively Mr Hussein and the Applicant made statutory declarations. Those declarations, which had been prepared by the applicant's lawyers, were provided by those lawyers to the OSR on 20 September 2012 in support of an objection to the Assessment. Some extracts from the Applicant's statutory declaration are set out below, each clause is mirrored in the declaration by Mr Hussein. 2. I separated from my former husband Mr Omar Hussein on 3 November 2011 and the marriage broke down irretrievably on that date. 3 The Contract for sale of land was exchanged on 4 November 2011 on the basis that there had been an irretrievable breakdown of the marriage and that my former husband and I wanted to reconcile the former matrimonial assets 4 At the time I purchased the property from my former husband Mr Omar Hussein on 9 December 2011 it was always intended that this transfer would be pursuant to a matrimonial property settlement between me and my former husband, and my former husband and I entered into this oral agreement on 3 November 2011 which was made for the purpose of dividing matrimonial property as a consequence of the breakdown of the marriage. 5 I reside at… (the Property) 6 My former husband Mr Omar Hussein resides at…Tarneit VIC Issues 1. There is no dispute that the primary issues for determination by the Tribunal are whether or not on 4 November 2011, the date of exchange of the Contract for sale: 1. in the opinion of the Tribunal the marriage of the Applicant and Mr Hussein had broken down irretrievably, and 2. the agreement to transfer the Property from Mr Hussein to the Applicant was effected by or in accordance with an agreement that the Tribunal is satisfied was made for the purpose of dividing matrimonial property as a consequence of the breakdown of the marriage. Claims by the Applicant 1. In the course of communications with the OSR the Applicant has claimed a first home owner grant pursuant to the First Home Owner Grant Act 2000 and an exemption from duty, initially on the basis that she was entitled to under the First Home Plus provisions of the then Duties Act as a first home owner and subsequently on the basis that the transfer of the Property was pursuant to or in accordance with a financial agreement pursuant to s 90C of the Family Law Act. 2. In her application for review by the Tribunal the Applicant submitted that the OSR decision (in relation to the Assessment) was incorrect and unfair. 3. I deal below with each of these claims and the provisions of s 68 of the Duties Act. Application as a first home owner 1. In addition to evidencing that the property purchased was his or her first home a successful applicant must satisfy other conditions, ss 8 to 12 of the First Home Owners Grant Act 2000 (FHOG and FHOG Act) in relation to a FHOG and ss 70 to 78B of the Duties Act in relation to the then concession or exemption from duty under the first Home Plus provisions of the Duties Act. Relevantly s 10 of the FHOG Act and s 71(2) (b) of the Duties Act respectively provided: an applicant for a first home owner grant is ineligible for the grant if: (a) the applicant or the applicant's spouse has been a party to an earlier application under this Act or a corresponding law, and (b) a grant was paid on the application; and. A first home owner is an individual: … (b) whose spouse (if any) has not at any time owned residential property in Australia (either solely or with someone else) and has not previously been a party to an application under the scheme that was approved by the Chief Commissioner. 1. The Applicant did not dispute that Mr Hussein was the beneficiary of an earlier grant and successful application for stamp duty exemption at the time of his purchase of the Property. She did however initially submit that, on 4 November 2011, Mr Hussein was not her spouse. Subsequently the Applicant conceded that as at 4 November 2011 she and Mr Hussein had not divorced. 2. Accordingly, I find that the Applicant was entitled to neither a concession nor exemption from duty under the First Home Plus provisions nor to a FHOG. Application for exemption having regard to a financial agreement made under s 90C of the Family Law Act that is binding on the parties to the agreement 1. The objection dated 4 May 2012 was submitted to the OSR by the Applicant's solicitors. The grounds for the objection were stated to be "Section 90 Family Law Separation Agreement" and the covering letter enclosed a section 90C financial agreement. 2. Section 68 of the Duties Act provides as follows: (1) Break-up of marriage No duty is chargeable under this Chapter on a transfer, or an agreement for the sale or transfer, of matrimonial property if: (a) the property is transferred, or agreed to be sold or transferred, to the parties to a marriage that is dissolved or annulled, or in the opinion of the Chief Commissioner has broken down irretrievably, or to either of them, or to a child or children of either of them or a trustee of such a child or children, and (b) the transfer or agreement is effected by or in accordance with: (i) a financial agreement made under section 90B, 90C or 90D of the Family Law Act 1975 of the Commonwealth that, under that Act, is binding on the parties to the agreement, or (ii) an order of a court under that Act, or (iia) an agreement that the Chief Commissioner is satisfied has been made for the purpose of dividing matrimonial property as a consequence of the dissolution, annulment or breakdown of the marriage, or (iii) a purchase at public auction of property that, immediately before the auction, was matrimonial property where the public auction is held to comply with any such agreement or order. 1. Section 68(b) requires the relevant property transaction to have been effected by or in accordance with: (i) a financial agreement made under section 90B, 90C or 90D of the Family Law Act 1975 of the Commonwealth that, under that Act, is binding on the parties to the agreement, or… 1. Section 90B relates to financial agreements made before a marriage occurs and s 90D relates to financial agreements made subsequent to a divorce order. There is no dispute that neither of these sections apply to the present dispute. There is also no dispute that there has been no relevant order of a court, and the purchase of the Property did not occur at a public auction. Accordingly, paragraphs (1)(b) (ii) and (iii) do not apply. 2. The Financial Agreement submitted with the objection states that it was made under section 90C. The Commissioner submitted at [58](e) that the Agreement: post-dates the relevant dutiable transaction and so cannot be said to be the basis on which the relevant dutiable transaction took place. Secondly, it merely describes the sale of the Property at full market value by Mr Hussein to the Applicant, and clarifies that all chattels, assets and monies are to be retained by their original owner. This is unusual in the case of a bona fide Financial Agreement, the purpose of which is usually to provide a compromise in favour of the person who is to take up primary custody of the children of the marriage. 1. I accept the submission in the first sentence and find that the transaction evidence by the Contract dated 4 November 2011 was not a transaction "effected by" the Financial Agreement made six months later, on 4 May 2012. 2. Clause 3 of the Financial Agreement provides. a) Omar shall transfer all his rights and interests in the property situate at…Greenacre… to Khaldie. Contemporaneously with the transfer: (i) Khaldie shall assume all liability for and indemnify Omar against all payments for the mortgage debt secured over the property; and (ii) Khaldie shall assume all liability for and indemnify Omar against all apportionable rates, taxes and outgoings of or with respect to the property of whatsoever nature and kind. 1. Annexure A to the Agreement lists assets and liabilities and states an agreed estimated value of the Property is $600,000. The Agreement does not state whether that value applies at the date of the Contract, the date of the Agreement, or some other date. The Annexure also provides for an agreed estimated value of $320,000 in respect of the Commonwealth Bank mortgage secured over the Property and provides for the liability of a personal loan from CBA to Omar of $6,500. 2. Without any other relevant provision, it seems that the Agreement intends that the Applicant shall receive the Property, apparently worth $600,000, and in consideration is required to assume liability for the relevant mortgage debt together with apportionable rates taxes and outgoings. There is no indication as to whether the personal loan was secured by the relevant mortgage. Accordingly, and subject to any other related transactions, it would appear that pursuant to the Financial Agreement the Property shall be transferred for monetary consideration of either $320,000 or $326,500. 3. The submission in the second sentence of RS at [58] (e) does not accurately represent the relevant provisions in the Agreement and is rejected. The submission in the last sentence of [58] (f), which was supported neither by evidence nor authority, is also rejected. 4. Even if the Financial Agreement did not "effect" the transfer of the Property s 68 (1)(b)(i) also provides that no relevant duty is chargeable if the Property was transferred or agreed to be sold or transferred "in accordance with" a financial agreement made under section 90C of the Family Law Act". (My emphasis.) 5. The documentary evidence of the conditions in the Contract consists solely of the front page of the Contract. That page provides that the Property is transferred to the Applicant for a price of $480,000 and refers to a deposit of $45,000 with a balance of $452,000. The Applicant's oral evidence was that she could not recall whether she signed the Contract on 4 November when she attended the office of her lawyers or on some other day. She thought the Contract only consisted of one page but was not sure. 6. The settlement sheet for the Contract, prepared by the lawyers acting for both purchaser and vendor presumably on instructions, but contrary to the oral evidence of the Applicant, provided for a payment of $62,183.96 to Mr Hussein. The Financial Agreement makes no provision for such a payment. 7. In the circumstances and having regard to clause 3 and Annexure A of the Agreement, I am not satisfied on the balance of probability that the Contract was "in accordance with" the Financial Agreement. 8. Accordingly, I find that the Applicant is not entitled to the exemption in paragraph 68 (1) (b) (i) of the Duties Act. Whether the Assessment was unfair 1. The Applicant's stated grounds for a review by the Tribunal were her belief that the Assessment was "incorrect and unfair in making assumptions as to my marital status and separation which I have declared under oath and advised on government bodies of." (sic) I observe that these were not the grounds stated in the Applicant's unsuccessful objection to the Assessment. However, the Applicant's and Respondent's cases on an application for review are not limited to the grounds of the objection, s 100(2) of the TA Act. 2. The Respondent's written submission in response to the claim of unfairness is found at [75] to [78]. In summary the Respondent submitted: the Chief Commissioner (and the Tribunal on this Review) cannot be estopped from administering the law in accordance with its terms 1. The Respondent relied on various authorities including Stature PO Ltd v Chief Commissioner of State Revenue [2002] NSWADT 271 in which Verick JM said at [10]: It is fairly basic to say that "moral and ethical grounds" have very little role in construing revenue statutory provisions…" 1. To the extent that it is relevant I respectfully agree with the Respondent's submissions in relation to fairness and estoppel. However, having regard to my findings in respect of the application of paragraph 68 (1) (b) (iia) to the evidence before me it is not necessary for me to make a finding in relation to the unfairness claim. Application of paragraph 68 (1) (b) (iia) 1. Set out below is an extract from section 68(1) which relevantly includes the effect of the above paragraph: No duty is chargeable under this Chapter on a transfer, or an agreement for the sale or transfer, of matrimonial property if: (a) the property is transferred, or agreed to be sold or transferred, to the parties to a marriage that … in the opinion of the Chief Commissioner has broken down irretrievably, or to either of them… and (b) the transfer or agreement is effected by or in accordance with: (i) … or (ii) … or (iia) an agreement that the Chief Commissioner is satisfied has been made for the purpose of dividing matrimonial property as a consequence of the … breakdown of the marriage, … Oral evidence of the Applicant 1. The Applicant gave oral evidence to the effect that on 3 or 4 November 2011 she was divorced from Mr Hussein in accordance with their Muslim religious beliefs. As a result of the religious divorce, as far as she was concerned, her marriage had ended. The Applicant and Mr Hussein agreed orally as to the disposition of the major family assets and as to Mr Hussein's ongoing obligations to financially maintain the children of their marriage. On 4 November 2011 the Applicant attended the offices of her lawyers and instructed them to prepare a contract whereby, in accordance with her oral agreement with Mr Hussein, the Property would be transferred to her. 2. Several months later, in the course of a visit by Mr Hussein to see his children, the Applicant fell pregnant. After she became aware of the pregnancy and in order to ensure that her new child would be born in the course of a marriage, the Applicant moved to Melbourne and remarried Mr Hussein in accordance with their religious practices in the presence of Sheik Abdul Azim. 3. The Applicant impressed me as a witness of truth to the extent that she recalled and could understand relevant events. I also accept that she was at all relevant times including during the hearing, a person with limited understanding of spoken English and very limited understanding of written English. The Applicant gave evidence concerning her personal life which it seems to me was embarrassing to her, but she did so in a forthright and open manner. 4. The Respondent submitted and the Applicant conceded that at no relevant time had she been divorced from Mr Hussein in accordance with Australian law. Notwithstanding this legal position the Applicant was adamant that as far as she was concerned her marriage had ended by the date of the Contract. Discrepancies in the evidence 1. The Respondent submitted that there was no objective documentary evidence of a concluded binding agreement made between the Applicant and Mr Hussein in relation to all of the matrimonial property which appropriately linked the Property transaction evidenced by the Contract with the Financial Agreement. The Respondent also submitted that certain of the oral evidence concerning the religious divorce and remarriage was contrary to or inconsistent with the documentary evidence before me. I accept these submissions. 2. However, I observe that the documentary evidence, as is noted below, including documents prepared or submitted by the Applicant's lawyers and documents signed by the Applicant, contained several material inconsistencies both as between documents and with the Applicant's sworn evidence. 3. The Applicant's oral evidence was that on 4 November the Applicant attended the office of Mr Kheir, solicitor and instructed him to prepare a contract to transfer the Property to her. The contract was not prepared on the spot. She was not sure if she signed the contract that day or another day. She thought the contract was only one page but she was not certain. 4. The settlement instructions for the Property transfer, prepared by Kheir Lawyers, at page 140 in the s 58 documents provide for payment of $62,183.96 to Mr Hussein. The Applicant said that no payment was agreed to be made to Mr Hussein, neither $62,000 nor any other amount. She said this was a matter of disagreement between her and Mr Hussein. I made a note at the time that the Applicant was giving this evidence that she appeared to be a witness of truth. 5. The Applicant's evidence was that Mr Hussein paid the agreed child-support for the period that he and the Applicant were separated and she moved to Melbourne in about July so as to remarry before her baby was born. 6. The objection dated 4 May 2012 and signed by the Applicant, which was enclosed with the letter of 8 May 2012 from the Applicant's lawyers to the OSR, states that attached to the Objection are: 1 Section 90C Financial Agreement, and 2 Statutory Declaration by Kheir Lawyers 1. The other enclosures with the letter are a Financial Agreement under s 90C and the Duties Act Application for Exemption or Refund dated 4 May 2012 which is verified by a statutory declaration by the Applicant. There is no statutory declaration by Kheir Lawyers in evidence. 2. A letter dated 8 May 2012 from the Applicant's lawyers to the OSR refers to the reassessment of First Home Plus duty exemption or concession and seeks an objection to the reassessment. The letter states in part: We have obtained our clients instructions and it appears to have been an oversight by our office that when the conveyance was conducted the Conveyancer (…) was not aware that the parties had been separated since September 2011. 1. I observe that the letter was signed by the solicitor who certified on 8 May, the date of the letter, that an enclosure with the letter, was a true and correct copy of the original Financial Agreement under section 90C. That agreement stated at recital E "Khaldie and Omar separated on 03/11/2011". This was two months after the date of separation in the covering letter. 2. When referred in cross-examination to the Financial Agreement, the Applicant said that no one had read the agreement in detail to her or had explained it to her. Prima facie this conflicts with the certificate by Majed Kheir of Kheir Lawyers dated 4 May 2012 to the effect that he provided the Applicant with independent legal advice before she entered into the agreement as to the effect of the agreement on the rights of the parties and the advantages and disadvantages to her of making the agreement. 3. The Financial Agreement provides at [3] for the transfer of the Property. That clause includes the following: Contemporaneously with the transfer: (i) Khaldie shall assume all liability for and indemnify Omar against all payments for the mortgage debt secured over the property; and (ii) Khaldie shall assume all liability for and indemnify Omar against all apportionable rates, taxes and outgoings of or with respect to the property of whatsoever nature and kind. 1. Notwithstanding the certificate by Mr Kheir, the Applicant said that she was not sure what her obligations were nor was she sure of the details of the mortgage debt. 2. The Contract dated 4 November 2011 is for a consideration of $480,000, the same amount as the valuation of 9 November 2011. The Financial Agreement made 4 May 2012 provides that the parties have agreed that the estimated value of the Property is $600,000. There is no indication in the Agreement as to whether the estimated value is as at the date of separation, the date of the Contract, the date of the Agreement or any other date and no evidence has been provided as to how the estimated value was calculated, six months after the valuation by a registered valuer, notwithstanding the 25% increase in value. 3. The Applicant's lawyers lodged with Land and Property Information NSW (LPI) a notice of sale stating that settlement of the transfer of the Property took place on 1 December 2011. Those lawyers sent a letter to the OSR dated 10 February 2015 which refers to "the time of settlement on the 19 December 2011" and encloses various documents. The documents include a letter from the lawyers to Westpac Banking Corporation dated 30 November 2011 which states "in settlement of the above matter (the transfer of the Property) is scheduled to take place at 3 PM on 19 December 2011…" The attached settlement instructions from the lawyers refer to settlement at 3 PM on Friday, 9 December 2011. I observe that the LPI historical search in evidence indicates that the change of ownership to the Applicant was registered with LPI on 5 December 2011, presumably after settlement. 4. The Applicant's lawyers sent a letter dated 19 September 2012 to the OSR. The letter states that they are instructed to seek an objection in relation to the assessment "due to an agreement made for the purpose of dividing matrimonial property as a consequence of the breakdown of the marriage pursuant to s68(1)(b)(iia) of the Duties Act 1997." 5. The letter also states that it encloses completed and executed statutory declarations by Mr Hussein and the Applicant respectively dated 13 and 17 September 2012 and "we are awaiting receipt of certified copies of Ms Kamareddin's and Mr Hussein's driver's (sic) licences. We will forward same as soon as they are to hand." The statutory declarations both contain at clause 7 the wording "Annexed and marked "A" is a true copy of my driver's licence." Nothing was annexed to either declaration. 6. By letter dated 30 January 2013 the Applicant's lawyers forwarded to the OSR documents stated to be a copy of the Applicant's driver's licence and a "Statutory Declaration of Omar Hussein dated 26 November 2012." The section 58 documents show that the enclosures were: 1. a copy of the Applicant's driver's licence, without any certification or other notation; and 2. a copy of a document headed STATUTORY DECLARATION on Victoria Police letterhead made by a person who did not provide their name or address and witnessed on 26 November 2012 by a person who is identified by surname and the notation "C/38018". The document gives a police station at Tarneit as the address of the witness. The substance of the document is a declaration which states: Mr Omar Hussein lives at… Tarniet (sic) Vic 3029 and does not carry a drivers lic. for the next 2 months." 1. It may be that the "statutory declaration" dated 26 November 2012 was made by Mr Hussein. However, there is no evidence that he held a driver's licence on 13 September 2012, the date of his statutory declaration which referred to a copy of his licence as an annexure. A description of the identification document relied on to confirm Mr Hussein's identity was handwritten on the 13 September declaration but its description is illegible on the copy which forms part of the s 58 documents and is so faint that there may have been an attempt to delete it from the document. I make no finding in that regard. 2. The letter dated 10 February 2015 from the applicant's lawyers referred to above provided certain information and documents to the OSR. One of the documents enclosed with the letter was a typed memorandum from the Applicant which stated in part: When Omar Hussein moved to Victoria was roughly a few months after our separation on 4/11/2011… Notwithstanding the enclosed memorandum, the letter, amongst other matters stated: ..We have obtained our clients (sic) further instructions…Mr Omar (sic) moved down to Melbourne around about November 2011". 1. It appears that the expression "a marriage that … has broken down irretrievably" in the context of s 68 (1) (a) of the Duties Act has not been defined by the legislature. My research has not indicated that the issue has been previously dealt with by a relevant court or tribunal nor did Counsel for the Respondent refer to any relevant decision. I have not located any decision which provides guidance as to whether the meaning of the expression "broken down irretrievably" is to be considered objectively or subjectively. I have given the words in the expression their ordinary meaning in the context of the Duties Act. 2. In Gauci v Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81 Barwick CJ said at [12]: In evaluating the evidence of the appellants, his Honour acted upon a dictum of Fullagar J. in Pascoe v. Commissioner of Taxation (1956) 30 ALJ 402, at p 404; 6 AITR 315, at pp 320-321 that, whilst a person's sworn testimony may be the best evidence of his purpose, object or state of mind in entering into a transaction, such evidence should be tested most closely and received with the greatest caution. Of course, the recollection of a person as to a past state of mind is apt consciously or unconsciously to be distorted and at times unreliable. Thus, to test such evidence closely before accepting it is proper. But care must be taken not to treat the evidence of a citizen in a contest with the Revenue as prima facie unacceptable. I am quite sure neither Fullagar J. nor my brother Gibbs in Jacob v. Commissioner of Taxation (1971) 45 ALJR 568 intended to encourage any such attitude. 1. For the reasons given above, to the extent that the oral evidence of the Applicant conflicts with the contents of documents in evidence, where those documents have been prepared or supplied to the OSR by the lawyers then acting for the Applicant and where there is no independent corroboration of the accuracy of those contents, I prefer the oral evidence of the Applicant. Similarly, I accept the evidence of the Applicant that she did not have a complete or even an adequate understanding of all of the documents she signed. I do not, to paraphrase Barwick CJ, treat the Applicant's evidence in this contest with the Chief Commissioner as prima facie unacceptable. 2. I observe that the Applicant's evidence that she remarried Mr Hussein in order that her baby would be born in the course of a marriage, is entirely consistent with her evidence that as at 4 November 2011 she held the belief that the marriage between her and Mr Hussein had ended as they had been divorced. There is no evidence of any other reason for the remarriage to have taken place. 3. Having regard to the evidence before me I am satisfied on the balance of probability that on 4 November 2011, the Applicant believed that her marriage to Mr Hussein had irretrievably broken down and that the marriage had ended in accordance with a divorce carried out pursuant to her religious beliefs. Accordingly, it is my opinion that, for the purpose of s 68(1)(a) of the Duties Act, as at 4 November 2011, the marriage had broken down irretrievably. I am also satisfied for the purpose of s 68(1)(b)(iia) that the Contract pursuant to which the Applicant acquired the Property formed part of an agreement made between the Applicant and Mr Hussein on or about 3 or 4 November 2011 for the purpose of dividing their matrimonial property as a consequence of the breakdown of their marriage. Decision 1. Having regard to the above findings on the material before me, the correct and preferable decision of the Tribunal is: 1. the Applicant is not entitled to the First Home Plus duty exemption or concession originally granted by the Chief Commissioner. 2. the Applicant is entitled to the exemption from duty provided by paragraph 68(1)(b)(iia) of the Duties Act. 1. Accordingly, I revoke the reassessment of duty under the Duties Act pursuant to the Duties Notice of Assessment Id 1560466243 issued 18 April 2012 and direct the Chief Commissioner to issue a Duties Notice of Assessment in its place which will have regard to the entitlement of the Applicant to the exemption from duty provided by paragraph 68(1)(b)(iia) of the Duties 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: 05 February 2016