John Harris & Associates (Aust) Pty Ltd v Commissioner of Stamp Duties
[1999] QCA 478
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- John Harris & Associates (Aust) Pty Ltd v Commissioner of Stamp Duties[1999] QCA 478
- Add to List
John Harris & Associates (Aust) Pty Ltd v Commissioner of Stamp Duties[1999] QCA 478
Reported at [2001] 1 Qd R 254
John Harris & Associates (Aust) Pty Ltd v Commissioner of Stamp Duties[1999] QCA 478
Reported at [2001] 1 Qd R 254
SUPREME COURT OF QUEENSLAND
CITATION: | John Harris & Assoc (Aust) P/L v Mouthpiece Holdings P/L v CSD [1999] QCA 478
|
PARTIES: | JOHN HARRIS & ASSOCIATES (AUST) PTY LTD and MOUTHPIECE HOLDINGS PTY LIMITED (Appellants) v COMMISSIONER OF STAMP DUTIES (Respondent) |
FILE NO/S: | Appeal No 11969 of 1998 Appeal No 11972 of 1998 |
DIVISION: | Court of Appeal |
PROCEEDING: | Case stated by the Commissioner of Stamp Duties pursuant to s 24(1) of the Stamp Act 1894 |
DELIVERED ON: | 16 November 1999 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 19 October 1999 |
JUDGES: | McMurdo P, Davies and Thomas JJA |
ORDER: | Answer to questions submitted for the Court's determination pursuant to s 24(1) of the Stamp Act 1894. In Appeal No 11969 of 1998:
In Appeal No 11972 of 1998:
|
CATCHWORDS: | TAXES AND DUTIES – STAMP DUTIES – WHAT TRANSACTIONS OR INSTRUMENTS ARE LIABLE – APPEAL, CASE STATED, ETC – QUEENSLAND – Appeals against default assessments made under s 54AB of the Stamp Act 1894 – whether the appellants obtained an estate or interest in real property in Queensland as a result of a transaction or acquisition not effected or evidenced by an instrument chargeable with ad valorem stamp duty – at what point was an equitable interest in real property obtained. Stamp Act 1894 (Qld), s 54AB |
COUNSEL: | Mr R W Gotterson QC for the appellants Mr K D Dorney QC for the respondent |
SOLICITORS: | Bell Miller for the appellants Crown Solicitor for the respondent |
- THE COURT: These are two appeals against default assessments each issued on 4 August 1997. Those assessments were made under s 54AB of the Stamp Act 1894 on the basis that each appellant, on 27 April 1989, obtained an estate or interest in real property in Queensland namely 53 McCarthy Road, Salisbury, Brisbane ("the property") as a result of a transaction or acquisition not effected or evidenced by an instrument chargeable with ad valorem stamp duty. As the questions are identical in each appeal it is sufficient to discuss them in terms of the appeal by John Harris & Associates (Aust) Pty Ltd. It is common ground that these appeals must be decided on s 54AB in the form in which it existed prior to the 1991 amendment to the Stamp Act.
- The facts relevant to the assessment and appeal may be summarised as follows:
- prior to 3 January 1989 the appellant and other named joint venturers who executed a joint venture agreement on that day had negotiated for the sale by the then owner of the property to a company to be nominated by the joint venturers;
- on 3 January 1989 53 McCarthy Road Pty Ltd ("McCarthy Road"),[1] the company nominated by the joint venturers, entered into a contract ("the contract") to purchase the property for $6.1M. The deposit payable under the contract was paid by the joint venturers;
- on the same day the joint venturers, including the appellant, executed a joint venture agreement reciting that McCarthy Road as trustee had agreed to purchase the property as nominee for the joint venturers and that the joint venturers would procure the trustee to complete the purchase. The joint venturers also undertook to provide the balance of the purchase price;
- on 10 February 1989, the purchase was completed, the joint venturers paying or causing to be paid to the vendor the balance of the purchase price under the contract;
- on 27 April 1989 the transfer of the property pursuant to that contract was registered.
- Section 54AB relevantly provided:
"(1) This section applies to –
- a transaction or acquisition ... which results in a person obtaining an estate or interest in any real property in Queensland ...
...
(1A)For the purposes of subsection (1), a person is deemed to have obtained an estate or interest in property of the kind specified in subsection (1) where –
- that person acquires an estate or interest, vested or contingent, in a trust the trustee of which owns an estate or interest, vested or contingent, in that property; or
- the trustee of a trust in which that person has an estate or interest, vested or contingent, acquires an estate or interest, vested or contingent, in that property.
...
- Where a person ... is a person who has obtained an estate or interest in property of the kind specified in subsection (1) and that transaction or acquisition is not effected or evidenced by an instrument which is chargeable –
- in the case of a transaction or acquisition of the kind specified in paragraph (a) of subsection (1), with duty under paragraph (4) under the heading 'CONVEYANCE OR TRANSFER' in the First Schedule;
...
that person shall, where he would have been liable to pay that duty had the transaction or acquisition been effected or evidenced by an instrument chargeable with duty and had that instrument been executed, or where he is a person who has obtained an estate or interest in property of the kind specified in subsection (1), prepare and lodge with the Commissioner, within one month of entering into that transaction or acquisition a statement in the prescribed form containing the prescribed information."
- The section then went on to provide that the statement should be deemed to be an instrument of conveyance.
- It is common ground that, at least by 27 April 1989 the appellant had obtained an equitable interest in real property in Queensland namely a one-twelfth equitable interest in the property. The question for the Commissioner and this Court was and is whether it obtained that interest as a result of a transaction or acquisition effected or evidenced by an instrument chargeable with ad valorem conveyance or transfer duty within the meaning of s 54AB(1) and s 54AB(2).
- The appellant contends that an affirmative answer should be given to that question, the transaction being the transaction of purchase by McCarthy Road effected by the contract.
- Upon the execution of the contract, which was unconditional, McCarthy Road acquired an equitable interest against the vendor, capable of protection by injunction and specific performance. That equitable interest was an interest in the property although it was something less than full beneficial ownership of the property.[2]
- At the same time the appellant acquired an equitable interest in the property co-extensive with that of McCarthy Road.[3] That is because the joint venturers, including the appellant, had negotiated for the purchase of the property by a nominee for them, had nominated McCarthy Road for that purpose, had undertaken to pay the purchase price under the contract and, upon execution of the contract, paid the deposit thereunder.[4]
- It is beyond argument that a purchaser under an unconditional contract of sale of land becomes on payment of the whole of the purchase price, the equitable owner of that land. Consequently on 10 February 1989 McCarthy Road acquired equitable ownership of the land. But it also follows from what has already been said that it acquired that equitable ownership in trust for the joint venturers. At no time did it have any beneficial interest in the land.
- When on 27 April 1989, the date relied on by the Commissioner, McCarthy Road became the registered proprietor of the land the appellant acquired no proprietary interest. It was already a part owner in equity of the land, since 10 February 1989. All that happened on that date is that McCarthy Road's interest became a legal one.
- We return to the central question in this appeal. On the facts and law as stated, did the interest of the appellant in the property result from a transaction or acquisition effected or evidenced by an instrument chargeable with ad valorem conveyance or transfer duty? We have said that the appellant contends for an affirmative answer to this question, submitting that that instrument was the contract. That seems to us to be plainly correct. It was the execution of that contract, albeit in the light of what had earlier taken place, sufficient to result in the creation of a resulting trust upon its execution, which created the appellant's equitable interest in the property. And it was the performance of that contract which caused that interest to become equitable ownership of the property. It follows, in our view, that the contract was a transaction which resulted in the appellant obtaining an interest in real property in Queensland within the meaning of s 54AB(1)(a). The obligation stated in s 54AB(2) and its consequences therefore did not arise.
- What we have said so far means that each appeal must succeed. It does not, however, sufficiently deal with the arguments of the respondent which we proceed now to do.
- The respondent accepted that, on 3 January 1989, McCarthy Road acquired an equitable interest in the property. And it contended that, on 27 April, the appellant acquired an equitable interest in the property. Its argument beyond that point is not entirely clear.
- The primary submission of the respondent appears to have been that, whatever interests the joint venturers may have had arising from the resulting trust before then, those interests did not become interests in land until McCarthy Road became registered as proprietor of the property. Hence the statement in the assessment and the contention that the appellants acquired an interest in the property on 27 April 1989. But why that should be so is not at all clear.
- At one stage it was submitted that it was because, until then, the joint venturers could not bring an action directly against the person "who actually holds the land". Unless the quoted phrase means the person who holds legal title that statement is not true because from 10 February McCarthy Road was the equitable owner of the land and the joint venturers could plainly have brought equitable proceedings against it in the same way as a beneficiary under an express trust.
- However the respondent submitted that, in this case, a resulting trust was not imposed until the legal estate was held by the trustee, McCarthy Road. Why, in this respect, a resulting trust should differ from any other form of trust was not made clear. Reference was made to s 43 of the Real Property Act 1861. But this section simply stated the self-evident proposition, under the Torrens system, that a registrable instrument is not effectual to pass any estate or interest in lands under the provisions of the Act until registration. It is difficult to see how this could assist in an argument that equitable interests in land are not created in beneficiaries of a resulting trust when the trustee enters into and completes the contract to purchase that land.
- In the end the respondent's submission, in this respect, appears to have been that, where a resulting trust arises because potential beneficiaries cause the potential trustee to purchase land upon their undertaking to pay the purchase price and they do so, although the beneficiaries acquire rights upon the execution of the contract they do not acquire interests in land until registration of title in the name of the trustee. Until then, it was submitted, their beneficial interests are analogous to those of a beneficiary under a discretionary trust or a residuary beneficiary in an unadministered estate. Neither of these is a true analogy. In the first there can be no identifiable property to which the beneficiary is entitled until an appointment of specific property is made in favour of that beneficiary.[5] And in the second the property to which the residuary beneficiary will become entitled cannot come into existence until administration is complete.[6] Here, by contrast, the identity of the property and the extent of the interests of the beneficiary in that property are certain when the contract is executed.
- The appellant advanced some additional arguments. However in view of the conclusion which we have reached it is unnecessary to consider those. The appeal in each case must be allowed.
- In Appeal No 11969 of 1998 we would answer the questions submitted for the Court's determination as follows:
- yes, on 3 January 1989;
- no;
- unnecessary to answer;
- unnecessary to answer;
- unnecessary to answer;
- unnecessary to answer;
- the assessment of the Commissioner is incorrect and no duty is payable;
- order that the respondent refund the appellant the sum of $16,290;
- order that the respondent pay interest at the prescribed rate on the amount refunded from the period 11 April 1996 until the date on which the refund is made;
- order that the respondent pay the appellant's costs of and incidental to the case to be taxed.
- In Appeal No 11972 of 1998 we would answer the question submitted for the Court's determination as follows:
- yes, on 3 January 1989;
- no;
- unnecessary to answer;
- unnecessary to answer;
- the assessment of the Commissioner is incorrect and no duty is payable;
- order that the respondent refund the appellant the sum of $35,351.25;
- order that the respondent pay interest at the prescribed rate on the amount refunded for the period from 11 April 1996 until the date on which the refund is made;
- order that the respondent pay the appellant's costs of and incidental to the case to be taxed.
Footnotes
[1] Then called 296 TH P & C Nominees Pty Ltd. It changed its name to 53 McCarthy Road Pty Ltd on 29 March 1989.
[2] It has, in fact, been described as equitable ownership. Sir Frederick Jordan described it as such in his Chapters on Equity in New South Wales, reprinted in Sir Frederick Jordan: Select Legal Papers, Legal Books Pty Ltd, Sydney, 1983 at 52. But it seems now to be generally accepted that this overstates the matter. In Haque v Haque [No 2] (1965) 114 CLR 98 at 124, Kitto J said that the making of the contract to some extent transferred the beneficial ownership to the purchaser; and the extent to which it does not has been illustrated by Deane J in Kern Corporation Ltd v Walter Reid Trading Pty Ltd (1987) 163 CLR 164 at 191 – 192 and by Deane and Dawson JJ in Stern v McArthur (1988) 165 CLR 489 at 521 – 522. See also Bahr v Nicolay [No 2] (1988) 164 CLR 604 at 612; Corin v Patton (1990) 169 CLR 540 at 563; Re Henderson's Caveat [1998] 1 QdR 632 at 642; [1999] QCA 328 at [17] – [24]; Road Australia Pty Ltd v Commissioner of Stamp Duties [2000] 2 QdR 000 at 000 [1999] QCA 328 at [17] - [24].
[3] There was no instant in time in which McCarthy Road acquired its equitable interest free of the equitable interests of the appellant and the other joint venturers. From the moment it acquired its interest it held it on trust for the joint venturers: cf Chief Commissioner of Stamp Duties v ISPT Pty Ltd (1998) 45 NSWLR 639 at 655, 658; and see the text below.
[4] The respondent correctly described the trust so created as a resulting trust: Nelson v Nelson (1995) 184 CLR 538 at 547.
[5] Re Goldsworthy dec'd [1969] VR 843.
[6] Commissioner of Stamp Duties (Queensland) v Livingston [1965] AC 694 at 713.