Loading...
Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment
  • Appeal Determined (QCA)

Harrison v Commissioner of State Revenue

 

[2016] QCAT 150

CITATION:

Harrison v Commissioner of State Revenue [2016] QCAT 150

PARTIES:

Francis Lister Harrison

(Applicant)

 

v

 

Commissioner of State Revenue

(Respondent)

APPLICATION NUMBER:

GAR225-15

MATTER TYPE:

General administrative review matters

HEARING DATE:

17 March 2016

HEARD AT:

Brisbane

DECISION OF:

Member K A Barlow QC

DELIVERED ON:

28 April 2016

DELIVERED AT:

Brisbane

ORDERS MADE:

The application be dismissed.

CATCHWORDS:

Land tax – Aggregation of land – Whether owner of land a trustee – Whether the owner also a beneficiary – Whether the value of separate parcels of land must be aggregated for the purpose of assessing land tax

Acts Interpretation Act 1954 (Qld), s 4, s 14B, s 32C

Land Tax Act 2010 (Qld), s 8, s 10, s 19, s 20, Schedule 4

Succession Act 1981, s 8, s 33E

Taxation Administration Act 2001 (Qld), s 69, s 72, s 73

Commissioner of Stamp Duties (Qld) v Livingstone (1964) 112 CLR 2

Birmingham v Renfrew (1936) 57 CLR 666

Bigg v Queensland Trustees Ltd [1990] 2 QdR 11

Glenn v Federal Commissioner of Taxation (1915) 20 CLR 490

CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98

Giumelli v Giumelli (1999) 106 CLR 101

Estrada v Fedex Ground Package System, Inc 64 Cal. Rptr. 3d 327; 154 Cal.App. 4th 1 (2007)

Cadogan v Morris [1998] EWCA Civ 1671

Hubbard v Mason (unreported, Supreme Court of New South Wales Equity Division, Santow J, 9 December 1997) BC9706574

Blue Metal Industries Ltd v Dilley (1969) 117 CLR 651

APPEARANCES:

APPLICANT:

Francis Lister Harrison

RESPONDENT:

Commissioner of State Revenue

REPRESENTATIVES:

APPLICANT:

Self-represented

RESPONDENT:

Represented by Mr M. K. Conrick, Counsel

REASONS FOR DECISION

Contents

Introduction ...........................................................................................................................................................................2

Relevant facts ........................................................................................................................................................................3

Relevant law ..........................................................................................................................................................................5

The issues ..............................................................................................................................................................................6

Issue 1 – Is Mr Harrison the “owner” of the land? .............................................................................................................6

Issue 2 – Does Mr Harrison hold the properties in trust for his children? .....................................................................7

The parties’ submissions ........................................................................................................................................7

Consideration ........................................................................................................................................................10

Issue 3 – The application of LTA s 20 ................................................................................................................................12

Conclusions .........................................................................................................................................................................14

Introduction

  1. [1]
    The applicant, Mr Harrison, is the registered owner of three residential properties (apart from his own principal place of residence) in Queensland.
  2. [2]
    In August 2013 and August 2014 respectively, the Commissioner issued to Mr Harrison an assessment of land tax on the aggregate value of the three properties as at 30 June 2013 and 30 June 2014 respectively.
  3. [3]
    Mr Harrison objected to those assessments and the Commissioner disallowed the objections. In this proceeding Mr Harrison has applied for review of that decision.[1]
  4. [4]
    In my opinion, the Commissioner’s decision was correct and this application should be dismissed.

Relevant facts

  1. [5]
    Mr Harrison is married to Gailene Harrison. They have three children who, for ease of identification, I shall refer to by their commonly used forenames: Amy, Tom and Matthew.
  2. [6]
    Some time before April 2008, Mr and Mrs Harrison made an agreement with Amy and Tom, or separate agreements with each of Amy and Tom, to the following effects:
    1. Mr Harrison would buy a house near his home, in which Amy and her family would live;
    2. Tom and his wife would sell the house which they currently owned;
    3. Mr Harrison would buy a house near his home, in which Tom and his family would live;
    4. for the purpose of buying those houses, Mr Harrison would borrow funds from his bank, which would take a mortgage over each property; Mr Harrison would make the repayments on those loans;
    5. each of Amy and Tom would pay a reasonable rent for his or her house, to Mr Harrison while he lives and, if he pre-deceases Mrs Harrison, after his death to her while she lives; the purpose of the rent in each case is to defray the costs of the mortgage and then to provide a source of income for Mr and Mrs Harrison in their retirements;
    6. Mr and Mrs Harrison would make mutual wills, under which they would leave each of the houses to the survivor of them and the survivor would leave each house to Amy and Tom respectively.
  3. [7]
    A few years later, Mr and Mrs Harrison made a similar agreement with Matthew.
  4. [8]
    Pursuant to those agreements:
    1. in April 2008, Mr Harrison bought a property in Paddington, into which Amy and her family moved, where they have since lived and in respect of which Amy pays an agreed rent to Mr Harrison;
    2. in or around June 2008, Mr Harrison bought a property in Bardon, into which Tom and his family moved, where they have since lived and in respect of which Tom pays an agreed rent to Mr Harrison;
    3. at about the same time, Tom and his wife sold their former home;
    4. in about December 2011, Mr Harrison bought another property in Paddington, into which Matthew moved, where he has since lived and in respect of which Matthew pays an agreed rent to Mr Harrison;
    5. in October 2011, in anticipation of completion of the purchase of the property for Michael, Mr and Mrs Harrison made mutual wills, in which they referred to the arrangements that they had made with their children concerning the properties and they provided for the properties to be left to each of the respective children on the death of the survivor;
    6. Mr and Mrs Harrison have since made new wills, but in relevant respects they are the same.
  5. [9]
    Mr Harrison has informed the tribunal that he declares the rent from each property in his personal income tax returns and has set off the net loss on the properties, after taking into account expenses of owning them (such as borrowing costs, insurance, rates and depreciation) against his other personal income. That information was not before the Commissioner before the objections were disallowed. However, it was provided to the tribunal in response to a submission by the Commissioner that Mr Harrison had not provided the information. While ordinarily I am required to decide this application by reconsidering the evidence before the Commissioner when the decision was made, I can allow new evidence if I consider it necessary in the interests of justice.[2] The Commissioner did not object to Mr Harrison’s statement and, as it is of direct relevance to my decision, I consider that it is necessary in the interests of justice to allow it.
  6. [10]
    In their wills, Mr and Mrs Harrison also made the following statements in the course of explaining the background to the gifts of the properties to their children (quoting from Mr Harrsion’s will):

7 For their better security, and to achieve flexibility and reduce the cost, including of any applicable taxes, if any of them wanted to sell their houses and buy another, I agreed (by exchange of emails) with each of Amy and Tom, and has [sic] agreed orally with Matthew, such agreement to be confirmed by an exchange of emails, to sell them their house for the price that I paid for it, with it being understood that if such a sale were completed, that they would continue to make payments commensurate with the rent previously paid.

  1. [11]
    The Commissioner assessed Mr Harrison for land tax based on the aggregate value of the three properties, on the basis that he is the owner of all three.
  2. [12]
    Mr Harrison contends that he is the trustee of each property for his respective child and therefore he should not incur land tax on the aggregate value of the three properties. Rather, he should be liable to land tax (if any) assessed separately in respect of each property.

Relevant law

  1. [13]
    The outcome of this application depends substantially on a proper construction of the specific wording of the relevant statute, the Land Tax Act 2010 (Qld) (“LTA”) and its application to the facts before me. Although lengthy, I consider it necessary to set out the relevant provisions in full.

8 Who is liable to pay land tax

The owner of taxable land when a liability for land tax arises is liable to pay the tax.

10 Meaning of owner

(1) The owner of land includes the following—

(a) a person jointly or severally entitled to a freehold estate in the land who is in possession;

(b) a person jointly or severally entitled to receive rents and profits from the land;

(c) a person taken to be the owner of the land under this Act.

(2) The fact that a person is the owner of land under a provision of this Act does not prevent another person also being the owner of the land.

(3) This section is subject to sections 12 to 14, 22 and 23.

Part 4 Assessment of land tax

Division 1 Aggregation of land

19 General principle—taxable land is aggregated

(1) A taxpayer’s liability for land tax must be assessed on the total taxable value of all taxable land owned by the taxpayer when the liability arises.

Example—

An individual owns 2 properties that are both taxable land. The properties each have a taxable value of $500,000. The taxpayer’s liability for land tax is worked out using the total taxable value of $1,000,000.

(2) This section is subject to sections 20 and 21.

20 Separate assessment of trust land

(1) The liability for land tax of a taxpayer who is a trustee of a trust must be separately assessed on the taxable land that is subject to the trust, as if that land were the only land owned by the taxpayer as a trustee.

(2) However, subsection (1) does not apply if—

(a) the taxpayer is trustee of more than 1 trust; and

(b) the interests of the beneficiaries of 2 or more of the trusts are, when the taxpayer’s liability for land tax arises, the same.

(3) If subsection (1) does not apply, the taxpayer’s liability for land tax as trustee of the trusts mentioned in subsection (2)(b) must be assessed on the total taxable value of all taxable land that is subject to those trusts.

Schedule 4 Dictionary

beneficiary, of a trust, means a person entitled to a beneficial interest in land or income derived from land that is the subject of the trust.

trustee includes—

(a) a person appointed or constituted trustee by any of the following—

(i) act of parties;

(ii) order or declaration of a court;

(iii) operation of law; and …

  1. [14]
    Additionally, some of the provisions of the Acts Interpretation Act 1954 (Qld) (“AIA”) are relevant. I shall refer to them as necessary.

The issues

  1. [15]
    The issues that have been raised in the parties’ submissions may be summarised as follows.
    1. Is Mr Harrison the “owner” of each of the properties?
    2. Is there an existing trust over each of the properties – in particular, does Mr Harrison hold each property on a constructive trust for his respective child?
    3. If Mr Harrison does hold each property as trustee under a constructive trust, does subsection 20(2) apply to exclude subsection 20(1)? In considering this question:
    4. Is Mr Harrison a “beneficiary” of the trust?
    5. If he is, does s 20(2)(b) apply and, in that context, does “the beneficiaries” mean “all of the beneficiaries” or “any or all of the beneficiaries”?

Issue 1 – Is Mr Harrison the “owner” of the land?

  1. [16]
    The Commissioner submitted that Mr Harrison is the “owner” of the land because, in accordance with s 10, he is entitled to a freehold estate in the land (because he is the registered owner of such an estate) and he is in “possession”; the latter because “possession” is defined in the AIA as including “the receipt of income from the land”. He is also the “owner” as defined in s 10 because he is entitled to receive rents and profits from the land (as demonstrated by his agreement with his children that they will pay him rent).
  2. [17]
    I do not apprehend that Mr Harrison contests that he is the “owner” of the land, but in case I have misconstrued his position I shall consider the question.
  3. [18]
    The definition of that term in s 10 is inclusive. In the ordinary meaning of the term, as the registered owner of the freehold estate he is the owner of the land. He is also “in possession”, as defined in s 10(1)(a), because, whether or not he is “entitled to receive rents and profits from the land” (s 10(1)(b)), he is in fact in “receipt of income from the land” (AIA definition).
  4. [19]
    For these reasons, Mr Harrison is clearly the “owner” of each of the three properties.

Issue 2 – Does Mr Harrison hold the properties in trust for his children?

The parties’ submissions

  1. [20]
    Mr Harrison contends that each property is held by him on constructive trust for the relevant child, and therefore he is constituted as trustee of the land by operation of law: paragraph (a)(iii) of the definition of “trustee” in Schedule 4 of the LTA.
  2. [21]
    He submits that the constructive trust arose in each case from the circumstances in which he acquired and continues to hold the properties. The relevant circumstances are that:
    1. he promised each of his children that, if he bought and the child and his or her family moved into and lived in the relevant property and paid rent to him or Mrs Harrison while they lived, he and Mrs Harrison would leave the property to the child in their wills;
    2. he and Mrs Harrison fulfilled their obligations by him buying the properties and by both making their wills;
    3. the children and their families have arranged their affairs in reliance on those promises;
    4. the promises relate to the specific properties, rather than to the residue of the future deceased estate of the survivor of Mr and Mrs Harrison;
    5. thus, upon each child acting on the relevant promises, a constructive trust was immediately created over the property in favour of the child, so that the child could, if it were necessary, take steps to prevent Mr or Mrs Harrison resiling from those promises and dealing with the relevant property in a manner inconsistent with the promises.
  3. [22]
    The Commissioner disputes that the circumstances give rise to any immediate trust. The Commissioner accepts that the circumstances may in future give rise to a court-imposed remedial constructive trust, either upon the death of the first to die of Mr and Mrs Harrison or upon the death of the survivor, if either of them sought to change his or her will to deal with the properties inconsistently with the promises. But until that happens, there is no trust.
  4. [23]
    In this respect, the Commissioner submits first that a will is only effective from the death of the testator[3] and a beneficiary under a will obtains no beneficial interest in property left to him or her by the will during the testator’s lifetime, nor even while the will is under administration.[4] Thus, the children have no present entitlement to a beneficial interest in, nor income from, the land.
  5. [24]
    The Commissioner also relies on a line of cases concerning mutual wills, which have considered circumstances in which two or more people had agreed to make mutual wills by which each would leave certain (or all) of their property to the other and the survivor would leave the property to certain persons in agreed proportions.
  6. [25]
    In such cases, the courts have not said that a constructive trust arises immediately on the agreement to make mutual wills being made. Indeed, it is clear that such an agreement does not in fact prevent an inconsistent will being made. But, if such a will is made in circumstances where the other party to the agreement either does not know about it before his or her death, or has already organised his or her affairs in a manner consistent with the agreement, then if it is impractical or inequitable for that person simply to sue for damages for breach of the agreement to make and not to revoke the wills, a court in equity may declare the property the subject of the agreement (if it still exists and is in the possession of the testator or his or her personal representative) to be subject to a constructive trust in favour of the survivor for life and the agreed beneficiaries after that person’s death.[5]
  7. [26]
    Thus, the Commissioner submits, no constructive trust arises from mutual wills until much later in the parties’ lives, and it only arises if one party acts in a manner inconsistent with the agreement – and even then only in certain circumstances. Therefore, no constructive trust has arisen to date in favour of Mr and Mrs Harrison’s children. Accordingly, the children have no present beneficial interest in the properties, but rather each has a fixed right to an estate in possession in the future.[6]
  8. [27]
    The Commissioner also submits that a constructive trust is an equitable remedy imposed by a court to prevent an unconscionable assertion of legal title or rights. It is not a formal trust that arises simply from circumstances that may or may not have to be enforced in equity.[7]
  9. [28]
    Next, the Commissioner submits that a person cannot dispose by will of property of which the person is trustee at the time of the person’s death.[8] Mr and Mrs Harrison expressly purport to dispose of these properties by their wills, which is inconsistent with them already being subject to constructive trusts in favour of the proposed beneficiaries under the wills.
  10. [29]
    The Commissioner also submits that, by the agreements referred to in clause 7 of his will, Mr Harrison has granted each child an option to purchase the relevant house at presumably a favourable price should a child wish to buy another house. If the child had a beneficial interest in the land there would be no need for such an option.
  11. [30]
    Finally, counsel for the Commissioner submitted that the arrangements satisfy the judicially recognised “duck test” and do not satisfy the “elephant test”. Under each test, Mr Harrison is clearly the legal and beneficial owner of each parcel of land.
    1. Under the well-known “duck test”, “if it looks like a duck, walks like a duck, swims like a duck and quacks like a duck, it is a duck.”[9] The Commissioner submitted that in this case all the indications, in the way in which Mr Harrison and his children have dealt with and continue to deal with the properties, are that Mr Harrison acts, speaks, earns income and grants rights as if he were the outright owner, and therefore he is the outright owner and not trustee.
    2. Under the “elephant test”, “it is difficult to describe, but you know it when you see it.”[10] Mr Harrison’s attempt to justify a trust is difficult, but the observer will know that the arrangements in fact constitute Mr Harrison as the absolute owner of each property.
  12. [31]
    Thus, in the Commissioner’s submission, Mr Harrison is the outright owner of all three properties and is liable to be assessed on their aggregate value.
  13. [32]
    Mr Harrison submits that, even in cases dealing with mutual wills, courts allowed for circumstances in which a constructive trust may arise well before the death of the survivor, and sometimes even before the death of the first testator, if the first testator has arranged his or her affairs on the basis of the agreement to make, and not to revoke, mutual wills.[11]
  14. [33]
    Mr Harrison also seeks to distinguish the “mutual wills” line of cases. He does so principally on the basis that those cases generally concerned an agreement only between the testators, and concerned the residuary estate of the testators. The testators are always free to deal with their assets during their lifetimes. These circumstances give rise to what has been loosely called a “kind of floating trust which finally attaches to such property as [the surviving testator] leaves upon his death.”[12]
  15. [34]
    In contrast, Mr Harrison submits, the agreements in this case:
    1. involved an agreement not only between Mr and Mrs Harrison to make and not to revoke mutual wills, but also with their respective children;
    2. concerned specific property rather than the testators’ residuary estates;
    3. caused not only Mr and Mrs Harrison but also their children to act in reliance on the agreements and to arrange their affairs accordingly;
    4. therefore constitute classic cases in which a constructive trust over each property arose immediately when the parties to the agreements (but particularly the children) acted in reliance on them and so arranged their affairs by moving into their respective houses, continuing to live in them and paying Mr Harrison rent.
  16. [35]
    As to the Commissioner’s submission noted above at [28], Mr Harrison submits that the section referred to is irrelevant. If he has already disposed of the beneficial or equitable interest in the fee simple by the creation of a trust, then he cannot and does not, by his will, purport to dispose of that interest. I understand this submission to mean that the will simply provides for the transfer of the legal interest in the fee simple to the holder of the equitable interest, thus ultimately marrying the holder of the legal and equitable interests and bringing the trust to an end.
  17. [36]
    In summary, Mr Harrison submits that the factual circumstances have given rise to a constructive trust in each case: a trust that presently exists and of which the sole beneficiary is the relevant child of Mr and Mrs Harrison.

Consideration

  1. [37]
    In Giumelli v Giumelli, the plurality said the following:

[2] In submissions to this Court, the term constructive trust” was used to identify the nature of the equitable remedy granted by the Full Court. Care is required in the use of the term constructive” in this context. Professor Scott has pointed out:

“It is sometimes said that when there are sufficient grounds for imposing a constructive trust, the court ‘constructs a trust’. The expression is, of course, absurd. The word ‘constructive’ is derived from the verb ‘construe’, not from the verb ‘construct’ … The court construes the circumstances in the sense that it explains or interprets them; it does not construct them.”

[3] A constructive trust of this nature is a remedial response to the claim to equitable intervention made out by the plaintiff. It obliges the holder of the legal title to surrender the property in question, thereby bringing about a determination of the rights and titles of the parties.

  1. [38]
    In my opinion, this passage succinctly sets out the principles that apply to the circumstances of this case. If there is a trust, it arises from the circumstances under which it would be inequitable for Mr Harrison to rely on his legal ownership of the properties to deny that the children have an interest, proprietary in nature, in their respective properties. For Mr Harrison to succeed in this application, the nature of that interest must be such that a court would if necessary construe the circumstances as having given rise to a trust in each child’s favour. The interest created by that trust would be a current beneficial interest in the fee simple of the relevant property, although that interest cannot (absent express agreement between all relevant parties) be converted into a legal interest until the death of the survivor of Mr and Mrs Harrison or pursuant to the options to purchase the properties. In the meantime, each child has a contractual obligation to pay “rent” to Mr Harrison (and, if he pre-deceases her, later to Mrs Harrison).
  2. [39]
    Has a constructive trust arisen in each case? In my opinion it has not been clearly demonstrated on the evidence before me. There is clear evidence of promises to the children that they may occupy the properties as their family homes during the lives of Mr and Mrs Harrison, without having to buy them or to pay interest on the loans obtained by Mr Harrison to buy them, or to pay the usual costs of ownership such as rates; and that ultimately they will become the legal owners of the properties. There is clear evidence that each child has acted on those promises by moving into the relevant house and using it as the family home. Although there is no direct evidence, I can readily infer that each child has arranged his or her financial and family affairs on the basis of and in reliance on the promises. However, there is no evidence from the children (nor from Mr Harrison) of what they have done in this respect (other than moving in and paying rent) nor whether they have suffered any detriment as a result. Mr Harrison said in submissions that they have also paid or contributed toward costs of maintenance and repair of, and improvements to, the houses, but again there is no evidence of this.
  3. [40]
    I do not consider that the option to purchase the land that has been granted to each child necessarily negates the existence of a constructive trust. That agreement is in effect an appendage to the agreement under which, if there is a trust, the child has a beneficial interest in the land, but is only entitled to the legal interest upon the death of the survivor of Mr and Mrs Harrison. In effect, the child can bring forward legal ownership to the time that he or she wishes to acquire a different family home, but only on the basis that he or she pay for that ownership. Acquisition of legal title (temporarily) on that basis would put an end to any existing trust.
  4. [41]
    If there were sufficient evidence of the children’s respective circumstances and of detriment caused to them by their reliance on the arrangements, a court in equity may regard the circumstances as giving rise to a constructive trust in favour of each child in the relevant property. They may be difficult to describe, but the court may recognise the circumstances giving rise to a constructive trust (or elephant) when it sees them.
  5. [42]
    However, in the absence of that evidence, most of the arrangements between Mr and Mrs Harrison and their children are indications that Mr Harrison is the outright owner of the properties and simply lets them to his children with an option to purchase in certain circumstances. He is the registered owner of the fee simple of each property. He pays all the usual expenses of ownership. He receives rent for each property. He declares that rent and deducts expenses, presently making losses that, for income tax purposes, are set off against his other sources of income. He has granted each child an option to purchase the property in which that child lives. He has purported to bequeath each property under his will – to Mrs Harrison or to each child if he survives her. In all these respects, Mr Harrison’s circumstances indicate his absolute ownership of the properties and therefore pass the “duck test”.
  6. [43]
    In the course of my consideration of this case, I have vacillated between opposite conclusions. Although I have found the line difficult to draw, I have concluded that Mr Harrison has not, on this occasion, demonstrated by evidence that he holds the legal fee simple in the properties on trust for his respective children, each of whom has a beneficial interest in his or her house under a constructive trust arising from the circumstances. Therefore, Mr Harrison has not satisfied me that he is a trustee of each property by operation of law.
  7. [44]
    In saying this, I do not suggest that, on sufficient evidence, Mr Harrison could not persuade the Commissioner or the tribunal to the contrary if he were to object to any later assessments of land tax on the properties. Nor do I gainsay the possibility of a future express declaration of trust by Mr Harrison, with consequential changes to his and Mrs Harrison’s wills, which may affect his future liability to land tax on the three properties. I simply hold that, on this occasion, he has not met the onus of proving his case.[13]

Issue 3 – The application of LTA s 20

  1. [45]
    Having regard to my conclusion above, it is strictly unnecessary for me to consider the third issue. However, in case I am later held to be wrong in that conclusion and given that the parties made comprehensive (and very helpful) submissions on that issue, I propose to deal with it. In doing so, I shall make the assumption that, contrary to my conclusion, Mr Harrison is the trustee of the properties because he holds them on constructive trusts for his children.
  2. [46]
    In that case, s 20 of the LTA would apply. Unless subsection (2) applies, then under subsection (1) Mr Harrison must be separately assessed on each parcel of land as if that land were the only land owned by him as trustee.
  3. [47]
    The Commissioner contends that subsection (2) applies because:
    1. Mr Harrison is the trustee of more than one trust;
    2. Mr Harrison is a beneficiary of each trust, because he has a beneficial interest in income derived from the land that is the subject of each trust;
    3. therefore the interests of Mr Harrison as a beneficiary under each trust are the same;
    4. the words in subsection (2), “the interests of the beneficiaries” means “the interests of any or all of the beneficiaries” and therefore catch one of two beneficiaries under each trust – the beneficiaries being Mr Harrison under every trust and one of his children under each trust.
  4. [48]
    In my opinion, this submission faces a number of hurdles.
  5. [49]
    First, Mr Harrison is not entitled to a beneficial interest in the income from the land. In my view, the reference in the definition to “a beneficial interest” means such an interest under the terms of the relevant trust, and in contra-distinction to absolute ownership (constituting both legal and equitable interests). He is entitled to (and indeed has) a legal and beneficial interest in that income, but not under the terms of any trust. His entitlement to the income is purely contractual, as part of the agreement that he reached with each child.
  6. [50]
    Therefore, in my opinion Mr Harrison is not a beneficiary of any of the trusts. That being so, subsection (2) has no application, because the beneficiary under each trust is different to those under the other trusts.
  7. [51]
    Secondly, even if he were a beneficiary, I do not accept the construction of subsection (2) for which the Commissioner contends. Counsel for the Commissioner relied on s 32C(b) of the AIA, which provides that, in an Act, words in the plural include the singular. That section is, of course, subject to being displaced if a contrary intention appears in the LTA: see s 4 of the AIA.
  8. [52]
    The natural reading of “the beneficiaries” in the context of subsection (2) is as meaning “all the beneficiaries”. It would have been simple for the drafter to say “any or all of the beneficiaries” if that had been intended.
  9. [53]
    On the other hand, in several other sections of the Act, the drafter has expressly stated “all beneficiaries” or “a beneficiary” where that is intended.[14] That suggests that the drafter had s 32C(b) in mind when drafting s 20(2) of the LTA,[15] so “the beneficiaries” may be intended to mean “any one or more of the beneficiaries” or something to similar effect.
  10. [54]
    I consider that there are sufficient indications that the reference is to “all the beneficiaries”, not to the interests of only one of two or more beneficiaries, and therefore s 32C(b) of the AIA does not apply.
    1. First, paragraph (2)(b) is clearly referring to the beneficiaries of 2 or more trusts already referred to – that is, the trusts referred to in subsection (1), sharing a common trustee and where the trust property includes taxable land. That suggests that subsection (2) is referring to the beneficiaries of 2 (or more) trusts where their respective interests under both the trusts are the same.
    2. Secondly, I consider that the interpretation conveyed by the ordinary meaning of paragraph 2(b) (see [52] above) is confirmed by the Explanatory Notes that accompanied the Bill that became the Act.[16] Dealing with clause 20 of the Bill (now s 20 of the Act), the notes said:

Clause 20 sets out the rules for assessing trust land. That is, a trustee is assessed separately on land held as trustee. Also, land the subject of different trusts is not aggregated. However, where there are “cloned trusts”, these are treated as the one trust for taxing purposes. “Cloned trusts” are trusts with the same trustee and the interests of the beneficiaries is [sic] the same.

  1. [55]
    The reference to “cloned trusts” makes the intention of subsection (2) absolutely clear. To clone something is “to replicate exactly” and a clone is “an imitation; duplicate”.[17] For subsection (2) to apply, two or more trusts must have the same trustee and the same beneficiaries, and the beneficiaries must have the same interest – that is, a beneficial interest in taxable land that is subject to the trust. The intention of the subsection was clearly to overcome a multiplicity of trusts being created to hold individual parcels of taxable land, all for the same beneficiaries in the same interests, which would make the land not subject to aggregation under subsection (1) where, if the beneficiaries (or the trustee) had owned the land outright, they would be subject to aggregation for land tax purposes.
  2. [56]
    Thus, even if Mr Harrison were a beneficiary of each trust, subsection (2) would not apply because the principal beneficiary of each trust – the person or persons having the beneficial interest in the fee simple of the land – is different to those of the others.

Conclusions

  1. [57]
    Mr Harrison has not satisfied me that he holds each property on trust. Therefore, subsection 20(1) does not apply, subsection 19(1) does apply and the Commissioner was obliged to assess Mr Harrison’s liability for land tax on the total value of all three properties
  2. [58]
    I consider that the Commissioner’s decision on each objection was correct and therefore this application must be dismissed.

Footnotes

[1]  Under s 69(2)(b) of the Taxation Administration Act 2001.

[2] Taxation Administration Act 2001, s 72(3)(a).

[3] Succession Act 1981, s33E.

[4] Commissioner of Stamp Duties (Qld) v Livingstone (1964) 112 CLR 2 at 16-17.

[5]  The principal cases from which I have attempted to summarise these principles are Birmingham v Renfrew (1936) 57 CLR 666, particularly at 683, 687-688; and Bigg v Queensland Trustees Ltd [1990] 2 QdR 11, particularly at 13, 15.

[6]  In this respect, the Commissioner relied on the analysis by Griffith CJ in Glenn v Federal Commissioner of Taxation (1915) 20 CLR 490 at 497; recently applied in CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 224 CLR 98, at [25]-[26].

[7]  The Commissioner relies on statements that a constructive trust is “imposed” by the courts, such as in Giumelli v Giumelli (1999) 106 CLR 101 at [10].

[8] Succession Act, s 8(5).

[9] Estrada v Fedex Ground Package System, Inc 64 Cal. Rptr. 3d 327; 154 Cal.App. 4th 1 (2007), per Vogel J at 335.

[10] Cadogan v Morris [1998] EWCA Civ 1671, per Lord Justice Stuart-Smith at [17].

[11]  He relies, for example, on the discussion in Biggs v Queensland Trustees Ltd at 16, lines 15-39.

[12] Birmingham v Renfrew at 675; also at 689; Hubbard v Mason (unreported, Supreme Court of New South Wales Equity Division, Santow J, 9 December 1997) BC9706574 at 30-31.

[13]  The onus is placed on him by s 73 of the Taxation Administration Act.

[14]  “All beneficiaries” in sections 26, 35, 41, 42 and 53; “a beneficiary” in sections 23, 26, 43 and 53.

[15]  Prima facie, a tribunal considering the meaning of a section should assume this, but in considering whether the plural includes the singular it is appropriate to consider the section in its setting in the Act and to consider the substance and tenor of the Act as a whole: Blue Metal Industries Ltd v Dilley (1969) 117 CLR 651, at 656.

[16]  Land Tax Bill 2010 Explanatory Notes. I am entitled to refer to those notes under s 14B of the AIA.

[17]  Macquarie Dictionary Online definition of “clone”.

Close

Editorial Notes

  • Published Case Name:

    Harrison v Commissioner of State Revenue

  • Shortened Case Name:

    Harrison v Commissioner of State Revenue

  • MNC:

    [2016] QCAT 150

  • Court:

    QCAT

  • Judge(s):

    Member K A Barlow QC

  • Date:

    28 Apr 2016

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2016] QCAT 15028 Apr 2016Application for review of determination of Commissioner of State of Revenue to disallow Mr Harrison's objections to land tax payable on three blocks of land due to the Commissioner assessing land tax based on the aggregate value of the land; application dismissed: Member Barlow QC.
Primary Judgment[2018] QCATA 7501 Jun 2018Appeal allowed; Commissioner's assessments set aside; matter remitted to Commissioner for any assessment of land tax which might be made: Sheridan DCJ and Member Roney QC.
Notice of Appeal FiledFile Number: Appeal 6980/1828 Jun 2018-
Appeal Determined (QCA)[2019] QCA 5026 Mar 2019Leave to appeal refused: Philippides JJA and Davis J (Morrison JA dissenting).

Appeal Status

Appeal Determined (QCA)
Help

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.