Thurley v Commissioner of State Revenue
[2015] QCAT 152
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
- Thurley v Commissioner of State Revenue[2015] QCAT 152
- Add to List
Thurley v Commissioner of State Revenue[2015] QCAT 152
Thurley v Commissioner of State Revenue[2015] QCAT 152
CITATION: | Thurley & Innes v Commissioner of State Revenue [2015] QCAT 152 |
PARTIES: | Dean Edward Thurley and Kylie Louise Innes (Applicants) |
v | |
Commissioner of State Revenue (Respondent) |
APPLICATION NUMBER: | GAR300-14 |
MATTER TYPE: | General administrative review matters |
HEARING DATE: | 19 February 2015 |
HEARD AT: | Brisbane |
DECISION OF: | Member Howe |
DELIVERED ON: | 29 April 2015 |
DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. Leave granted the Applicants to raise fresh grounds of review. 2. The decision of the Commissioner made 29 August 2014 disallowing the objections of the Applicants to the assessments of duty dated 30 May 2014 is confirmed. |
CATCHWORDS: | Express trusts – requirement as to writing Property Law Act – constructive trust – resulting trust – vendor trust – circumstances of imposition of constructive or resulting trust by a Court – arising out of agreement between parties – equitable discretionary remedy – alternate remedy available – strata titling as improvement to freehold land – “bundle of rights” concept under strata titling legislation – obligations of original owner under strata titling scheme – limitations necessary for a bare trust – obligations and powers associated with a bare trustee – concept of series of steps but one “transaction” – double duty exemption – nominal value concept in transfer of bare legal title Duties Act 2001 ss 14(4), 21, 123 Taxation Administration Act 2001 s 71(2) Property Law Act 1974 s 11 Body Corporate and Community Management (Specified Two-Lot Schemes Module) Regulation 2011 s 67 Muschinski v Dodds (1985) 160 CLR 583 Australian Building & Technical Solutions Pty Ltd v Boumelhem [2009] NSWSC 460 West v Mead [2003] NSWSC 161 White v Cabanas Pty Ltd (No 2) [1970] Qd R 395 Bannister v Bannister [1948] 2 All E.R. 133 Timber Top Realty Pty Ltd v Mullins [1974] VR 312 Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 Lysaght v Edwards (1876) 2 Ch D 499 Tanwar Enterprises Pty Ltd v Gauchi (1987) 163 CLR 164 Mercier Rouse Street v Burness & Ors [2015] VSCA 8 Corumo Holdings Pty Ltd v ITOH Ltd (1991) 24 NSWLR 370 Growing Wealth Pty Ltd v Commissioner of Stamp Duties [2000] QCA 418 Commissioner of State Revenue v Lend Lease Funds Management Ltd (2011) 33 VR 204 Tighe v Commissioner of State Revenue [2008] QSC 30 Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51 |
APPEARANCES and REPRESENTATION (if any):
APPLICANT: | The applicants represented by Mr Gino Milani Solicitor of Deacon & Milani |
RESPONDENT: | The respondent represented by Mr Mark Hinson QC instructed by Crown Law |
REASONS FOR DECISION
- [1]On 3 February 2010 Mr Thurley and Ms Innes entered into a contract to purchase vacant land at 32 Union Street, Taringa (Lot 14) for $700,000. Transfer duty was assessed on the contract in the sum of $24,525. They bought Lot 14 as tenants in common in equal shares.
- [2]In April 2012 they signed a residential building contract to build 2 units on lot 14 for $1,200,000. On 22 April 2014 a survey plan cancelling Lot 14 and creating new lots 1 and 2 and common property was lodged for registration with the titles registry office.
- [3]On 21 May 2014 they signed separate contracts as original owner to transfer unit 1 to Mr Thurley and unit 2 to Ms Innes. The expressed consideration for the transfers was ‘pursuant to a constructive trust arising on the purchase of the land of Lot 14 …’.
- [4]Market appraisals of the value of the units as at 24 and 25 March 2014 was respectively unit one, $1,150,000 and unit 2, $1,200,000.
- [5]The Commissioner assessed the contracts of 21 May 2014 to transfer duty on the basis they were partitions under s 31 of the Duties Act 2001. The applicants objected to the assessments but the objection was disallowed.
- [6]The applicants seek review of the decision of the Commissioner on the objection pursuant to s 69(2) of the Taxation Administration Act 2001.
- [7]The Commissioner does not dispute that the applicants’ intention at the time of purchase of Lot 14 was to construct two units on the land, strata title (community titles scheme) the units and take one unit each.
Issues
- [8]The grounds of objection to the assessments were initially twofold. First, that the Commissioner should have determined that on the purchase of Lot 14 a resulting or constructive trust arose whereby the applicants were bound to build 2 units on the land, strata title those units and transfer one unit to each of the applicants. Accordingly the transfer of each unit should have been regarded as a transfer of dutiable property to beneficiaries under a trust within the exemption provided by s 123 of the Duties Act.
- [9]Alternatively the applicants contended that in determining the unencumbered value of the units under s 14 of the Duties Act for the purpose of assessment of duty, the value of the improvements by way of strata titling should not have been included.
- [10]By the time of hearing the grounds of objection had been added to and the following issues have been raised for determination:
- Did a constructive trust arise on the purchase of Lot 14?
- Alternatively did a resulting trust arise?
- Was there a vendor trust following registration of the community titles scheme in April 2014 or execution of the contracts of May 2014?
- If a trust arose, does s 123 of the Duties Act apply?
- Does s 14(4) of the Duties Act apply in so far as conversion of the freehold title to a community titling scheme was an improvement to the land and to be excluded in assessing dutiable value?
- Was the dutiable value of the interests transferred in units 1 and 2 only nominal?
- Does s 21 of the Duties Act apply whereby the Commissioner has charged double duty?
Did a constructive trust arise on the purchase of Lot 14?
- [11]The applicants’ case is that when they purchased Lot 14 a constructive trust arose pursuant to which they were obliged to build two units on the land, strata title the units and then transfer one unit to Mr Thurley and the other to Ms Innes. Accordingly the transfer of each unit was a transfer of dutiable property to a beneficiary and exempt under s 123.
- [12]The applicants say when they first purchased Lot 14 they had agreed on the objective to be attained though not precisely on the amount to be spent or how to carry the project through to completion. They argue a constructive trust arose, immediately after they purchased the land, whereby if either of them had changed their mind and insisted the units be sold rather than transferred one to each of them, the court would enforce the obligation to transfer regardless of the absence of any formal written contract between them.
- [13]I am unable to conclude that a constructive trust arose as suggested or at all.
- [14]Constructive trusts arise by operation of law, not by agreement between the parties as with express trusts. There was no express trust evidenced in writing between the applicants as required by s 11 of the Property Law Act 1974.
- [15]A constructive trust is an equitable remedy imposed by the courts. A constructive trust is most commonly imposed where the court determines it is unconscionable for the person on whom the trust is imposed to deny a beneficial interest claimed or due another.[1] Generally (the vendor/purchaser constructive trust is perhaps an historical exception) every constructive trust has at heart an aspect of wrongful denial or withholding of a beneficial interest in property from another who, in the eyes of equity, is entitled to it.
Notions of what is fair and just are relevant but only in the confined context of determining whether conduct should, by reference to legitimate processes of legal reasoning, be characterized as unconscionable for the purposes of a specific principle of equity whose rationale and operation is to prevent wrongful and undue advantage being taken by one party of a benefit derived at the expense of the other party in the special circumstances of the unforeseen and premature collapse of a joint relationship or endeavour.[2]
- [16]In the matter at hand the problem for the applicants is that there has never been any suggestion of denial of either applicant’s beneficial interest by the other or by any third party. Nor is there any allegation of wrongful conduct or indeed failure of the agreed joint enterprise between the applicants. The applicants held full legal and beneficial title in Lot 14 from date of purchase through to strata titling and then passed full legal and beneficial title as agreed in one unit to each of them. The ownership and outcome in respect of units 1 and 2 reflect their true contributions to both the purchase price of Lot 14 and the costs of development. The venture successfully continued through to fruition.
- [17]In Australian Building & Technical Solutions Pty Ltd v Boumelhem[3], Ward J referred with approval to the decision of Campbell J in West v Mead[4], where Campbell J said there were three things to be established before a constructive trust could be imposed. First there had to be a joint relationship or endeavour. Second the substratum of that joint relationship or endeavour had to be removed or the joint endeavour prematurely terminated without attributable blame. Third there had to be an element of unconscionability associated with the matter.
- [18]Those second and third elements are lacking here.
- [19]The applicants say however that the form of constructive trust which only comes into existence when the need for a remedy arises is not the form or type of constructive trust which applied to the agreement between them. It is not made clear however exactly the form of constructive trust which is relied upon or the basis upon which it is said to arise. There is no element of unconscionability involved. Perhaps of greater significance, there was no failure of the substratum of the joint endeavour. It appears the basis upon which it is claimed a trust arose is linked to the failure to commit the project to writing. The applicants contend, in such circumstances, the court will find a constructive trust. White v Cabanas Pty Ltd (No 2)[5] is cited as authority for that proposition.
- [20]White v Cabanas Pty Ltd (No 2) involved a husband and wife, the joint owners of land, agreeing with a company to transfer the land to the company at an undervalue to allow the company to develop the land. It was agreed (between the husband and the company) that if the development did not proceed the land would be transferred back to the husband alone on his repayment of the undervalue amount. The development did not proceed. The company however borrowed a large amount of money using the land as security without the husband’s consent. Campbell J concluded the company never acquired the beneficial interest in the land but held the land as trustee for the husband and wife.
Cabanas Pty Ltd did not acquire the beneficial interest in the land at the time the legal title was transferred to it. It was the intention of the plaintiff and Huybers that the sale to Cabanas Pty Ltd was to be absolute in appearance but that the beneficial interest in the property was not to pass until such time as the cabin project proceeded. In such circumstances … Cabanas Pty Ltd held the land as trustee for the plaintiff and his wife. It was the contract between the plaintiff and Huybers, which, on the transfer of the land, gave rise to this trust…. It seems to me immaterial … whether this trust could be categorised as an “express trust or an “implied” or “constructive” one.[6]
- [21]In so far as it might be an express trust not evidenced in writing as required by the Statute of Frauds legislation applicable at that time, Campbell J said
Notwithstanding the statute, it is competent for a person claiming land conveyed to another to prove by parole evidence that it was so conveyed upon trust for the claimant, and that the grantee, knowing the facts, is denying the trust and relying upon the form of the conveyance and the statute, in order to keep the land himself. Rochefoucauld v Boustead [1897] 1 CH 196 at 206.[7]
- [22]Then apparently considering the matter from the perspective of implied or constructive trusts he referred to the following extract from the English Court of Appeal decision of Bannister v Bannister:
The fraud which brings the principle into play arises as soon as the absolute character of the conveyance is set up for the purpose of defeating the beneficial interest, and that is the fraud to cover which the statute of frauds … cannot be called in aid in cases in which no written evidence of the real bargain is available.[8]
- [23]It seems clear that the basis upon which White v Cabanas Pty Ltd (No 2) was decided was the denial of the beneficial interest of one party by another party wrongfully relying on its legal interest to deny the beneficial interest. It was not based simply on an agreement between parties which, without more, thereby raised a constructive or resulting trust at the time of agreement.
- [24]The applicants contend a constructive trust arose before any breach of faith by the other party. The decision of Timber Top Realty Pty Ltd v Mullins[9] is relied on. There, Nelson J, after reciting the statement from Bannister v Bannister about fraud bringing the equity into play, went on to say after that that the plaintiff there
held the property after the transfer to it upon a constructive trust to transfer to the defendant the area containing the house for a consideration of $2000 as soon as the necessary plan of subdivision was approved and, in the meantime, to permit the defendant to retain possession of it.[10]
This case might well be considered more appropriately one concerning a resulting trust, although that distinction is not strictly relevant given in Timber Top the defendant was wrongly denied his rightful beneficial interest in land by the plaintiff, the legal owner, who had purchased the land from the defendant without due recognition of the beneficial interest intended to be retained by the defendant. That is entirely different from the matter at hand where there was never a beneficial interest of one party undermined, refuted or under challenge. More is said about this below when discussing the suggestion of a resulting trust having arisen here.
- [25]But finally, concerning constructive trusts, regardless of the above, a constructive trust will generally not be imposed if there are other orders capable of doing full justice.[11] It is entirely a discretionary remedy. The applicants say here there was no other available equitable remedy.
- [26]
Before the court imposes a constructive trust as a remedy, it should first decide whether, having regard to the issues in the litigation, there are other means available to quell the controversy. An equitable remedy which falls short of the imposition of a trust may assist in avoiding a result whereby the plaintiff gains a beneficial proprietary interest which gives an unfair priority over other equally deserving creditors of the defendant.
- [27]To my mind the necessary preliminary query is wider than enquiring about other equitable remedies. The appropriate enquiry is, are there any other remedies available that would give justice to the parties?
- [28]There were other suitable remedies available here had they been required. The parties could have sold the land and buildings and divided the sale price. Alternatively, if one of them wanted to retain a part of the land he or she could have applied to have statutory trustees appointed and Lot 14 partitioned.
- [29]Here, in all the circumstances, I cannot conclude a constructive trust arose from the agreement between the applicants to build two units then partition or subdivide the strata titled land with each retaining one unit.
- [30]Given that finding there is no requirement to consider whether a constructive trust is of institutional or remedial effect. I might note however that the remedial constructive trust concept, whereby the trust does not come into existence until order of the court from the time stipulated in the order, seems to hold sway in Australia, as indeed too the United States and Canada.[13]
Did a resulting trust arise?
- [31]A late contention[14] raised by the applicants is that the trust that arose between the parties might better be described as a resulting trust rather than a constructive trust.
- [32]According to Jacob’s Law of Trusts in Australia:
A resulting or implied trust is a trust which arises by presumption of law in favour of the settlor or the settlor’s representatives. The circumstances in which such trusts may arise can be grouped under two main headings. The first is where the settlor has transferred property to trustees but has not disposed of, or not wholly disposed of, the beneficial interest. The second is where a purchaser of property directs that it be transferred into the name of a third person and there is nothing to indicate an intention that the person should take the property beneficially. In these circumstances, the law presumes that the settlor or purchaser, as the case may be, intended to retain the beneficial interest which has not been disposed of.[15]
- [33]The resulting trust is said to have come into existence here on the conveyance of Lot 14 to the applicants in 2010.[16] But at that time they took full legal and beneficial title to Lot 14. Their beneficial and legal title reflected their respective contributions to the purchase price and intended equality of holding.[17] Accordingly there was no separation of legal and beneficial interests and therefore no basis for a resulting trust to arise in such circumstances.
If no constructive (or resulting) trust arose, was there a vendor trust?
- [34]The applicants argue, even if there was no constructive trust, after registration of the survey plan in April 2014, or on execution of the separate contracts in May 2014 to transfer the units one to each of them respectively a trust arose. The transfers of title were giving effect to the obligations under that “vendor trust” and before actual conveyance a bare trust arose in favour of each unit in respect of the appropriate applicant.
- [35]The applicants rely on the authority of Lysaght v Edwards[18] for the proposition that a trust arises on execution of a contract of sale. The applicants note subsequent cases have observed the principle in Lysaght v Edwards as to the passing of beneficial ownership in property has been overstated, however those cases[19] dealt with the situation before payment of the purchase price. Here there was no price to be paid and therefore no restriction on the arising of such a trust.
- [36]In Tanwar Enterprises Pty Ltd v Gauchi the High Court said the analogies drawn over a century ago in Lysaght with the trust and the mortgage are no longer acceptable. The Court referred to the statement by Jacobs J in Chang v Registrar of Titles[20] that:
(w)here there are rights outstanding on both sides, the description of the vendor as a trustee tends to conceal the essentially contractual relationship which, rather than the relationship of trustee and beneficiary, governs the rights and duties of the respective parties.[21]
- [37]Admittedly, as pointed out by the applicants, most of the cases expressing doubt in the application of a trustee/beneficiary doctrine to vendor/purchaser situations, such as Tanwar, and too Chang, concerned an unpaid vendor.
- [38]In a recent decision of Mercier Rouse Street v Burness & Ors[22] however, Santamaria JA of the New South Wales Court of Appeal (with whom Warren CJ and Neave JA agreed) concluded in more emphatic tones
A contract for the sale of land does not create a trust of the estate in favour of the purchaser in the sense that the vendor has rights and obligations equivalent to those of a trustee. Under a contract for the sale of land, the purchaser acquires a right to seek specific performance of the contract.[23]
He went on to refer to the decisions of Chang and Tanwar.
- [39]There was no conditioning of that statement by reference to an unpaid as opposed to paid vendor, though in Mercier Rouse Street there were monies outstanding to the proposed trustee vendor.
- [40]Santamaria JA went on to consider more closely the concept of a bare trustee. He referred to the decision of Meagher JA in Corumo Holdings Pty Ltd v ITOH Ltd[24] where his Honour said
A bare trust is one in which the trustee has no active duties to perform and is usually contrasted with a trust where there are such active duties… As a matter of strict logic, almost no situation can be postulated where a trustee cannot in some circumstances have active duties to perform… I think the expression must be related to situations where a trustee is no more than a nominee or cypher, in a commonsense commercial view.[25]
- [41]He also referred to the statement by Barret J in ISPT Nominees v Chief Commissioner of State Revenue[26] where he reviewed authorities on bare trusts to conclude ‘it seems to me that an ‘active power’ (as opposed to an ‘active duty’), regardless of its significance, will be sufficient to render the trust something other than a bare trust. There does not have to be a duty expressed as such’.[27]
- [42]Here, the applicants had a number of duties to perform arising from their position as original owner under the community titles scheme. Those duties continued from the time of their request to record the community titles scheme on 22 April 2014 and execution of contracts of sale in May 2014 through to the actual transfers of the units to each of them as individual owners.
- [43]As the original owner under 32 Union Street Community Titles Scheme they were obliged to insure the units[28] and then give the policies of insurance to the body corporate after transfer of the units to the applicants, together with those other listed documents and things referred to in s 67 of the Body Corporate and Community Management (Specified Two-Lot Schemes Module) Regulation 2011.
- [44]I might note it is also common at settlement of sales from original owner to new lot owner for monies paid by the original owner in respect of insurance, including insurance of the lot being transferred, to be recoverable by the original owner from the new lot owner. Accordingly on this count as well it does not seem to be the case that all monies due had been paid by the purchaser to the vendor before settlement.
- [45]Perhaps more significantly and directly under clause 13.5 of the First Community Management Statement[29] the original owner, rather than the body corporate, had power to revoke an allocation of exclusive use of common property with the written consent of the unit holder having the benefit of the allocation. That power apparently remained extant beyond registration of the transfers to each applicant, or at the least until that date.
- [46]Accordingly, I cannot conclude the applicants here were bare trustees after registration of the survey plan in April 2014, or on execution of the separate contracts in May 2014 with the only obligation left to transfer the units one to each of them respectively.
Does Section 14(4) of the Duties Act Apply to the Transactions?
- [47]Section 14(4) of the Duties Act provides:
If, before a dutiable transaction mentioned in section 9(1)(a), (b) or (d) for which the dutiable property is land, improvements are made to the land at the transferee’s expense, the unencumbered value of the land must be determined as if the improvements had not been made.
- [48]The applicants maintain that if transfer duty is payable on the contracts of May 2014, the transactions should have been assessed on the unimproved value determined pursuant to s 14(4), that is as if the improvements had not been made.
- [49]The applicants submit the benefit of s 14(4) should not be lost because the applicants chose to improve the land by strata titling it. No new land has been created by strata titling. It is the same land but with additional rights and obligations grafted on.
- [50]In Growing Wealth Pty Ltd v Commissioner of Stamp Duties[30], the Court of Appeal considered whether duty should be paid on a transfer of land where the transferor had bought land as agent for appellant taxpayers who held interests as tenants in common in proportion to the amount they had originally contributed. The parties had agreed that the agent would construct residential units on the land, subdivide the land under a community titles scheme and then transfer a lot or lots as had been agreed to the parties. The Court held no exemption applied because the property transferred was not the same as the property originally purchased by the agent.
- [51]The Court observed:
[11] It may be accepted that, when it acquired the property consisting of the raw land, Strata did so by purchase, evidenced by contract of sale, as agent for all appellants as tenants in common in proportion to the amounts for which they agreed to subscribe.… What it later transferred to each appellant by the transfer assessed was not its proportional interest in the whole of the land but property of a different kind created by acts done pursuant to the Body Corporate and Community Management Act, property which was not in existence when Strata acquired the land.
[12] The difficulties which this raises for the application of s 53(9) to the transfer in this case are obvious and, in our opinion, insuperable. Even if the subdivision which had created the property transferred by the transfer had been a traditional subdivision of land it would, in our opinion, have been difficult to bring the transfer within the terms of the section. The property purchased as agent for the transferees would not have been that which was transferred to them. What would have been transferred would have been the whole interest in part of the land which the transferor had acquired as agent for the transferee and others in common.
[13] However the application of the provision is made even more difficult by the nature of a subdivision under the Body Corporate and Community Management Act. Not only was what was transferred something which was not in existence when Strata acquired the land, it was property consisting of a bundle of statutory rights created by the Act upon registration of a community titles scheme. For these reasons we do not think that s 53(9) can apply to this case.
- [52]The applicants say that the Court there was simply highlighting the difference between what each investor acquired and what was transferred. What was acquired was an interest as tenant in common in the whole of the land. What was transferred was an interest in part of the land with additional rights engrafted onto it by the strata titling process. What was transferred included the land that was acquired.
- [53]But that ignores the distinction sought to be drawn by the Court between the rights and obligations associated with property in the freehold land initially purchased and the “bundle” of statutory rights granting rights and creating obligations which replaced the freehold rights and obligations when the community titles scheme under the Body Corporate and Community Management Act was created.
- [54]For example on creation of the community titles scheme exclusive use and entitlement to parts of the common property became rights held by one unit holder to the exclusion of the other and in effect obliged all others to recognise that fresh and unique entitlement.
- [55]Hence it is not correct to say that the “land” to which title is conferred by reason of registration of the community titles scheme is the same land as existed before the scheme but with additional rights and obligations engrafted on to the holding of it. Nor do I accept that the benefit of the concession in s 14(4) is inappropriately lost by the “chance circumstance” that the applicants chose to strata title the improvements that they made.[31] The concession is limited to improvements made to the land, not alterations which change the obligations and rights associated with the land.
- [56]I cannot see why the clear statements made in Growing Wealth do not have application to the matter at hand, even though that decision dealt with s 51D of the Stamp Act 1894, the predecessor of s 14(4) of the Duties Act. For the concession in s 14(4) to apply, the “land”, which here encompassed the rights and obligations associated with freehold title, had to remain a constant. As explained in Growing Wealth, the freehold titled land no longer existed after registration of the community titles scheme. An entirely new set of rights and obligations arose by virtue of the Body Corporate and Community Management Act. I therefore conclude s 14(4) has no application to the subject transactions.
Dutiable Value of the Interest Transferred
- [57]The applicants also contend that what was agreed to be transferred on 21 May 2014 was the bare legal title to the units. That, say the applicants, was of nominal value only and rely for that proposition on the decision in Commissioner of State Revenue v Lend Lease Funds Management Ltd[32].
- [58]The applicants argue when they transferred title from themselves as original owners under the community titles scheme to each of them in respect of one unit each the only thing that was transferred was the bare legal title to each unit. Lend Lease, they say, is relevant because there the transfer of bare legal title was found by the Court to have only nominal value.
- [59]The applicants rely on Lend Lease to argue here, as in that case, the transfer of a unit to each of them in May 2014 was no transfer of anything other than the bare legal estate. Lend Lease concerned a change in trustees, not a transfer of legal title to the beneficiary under a trust. In Lend Lease the issue was whether an exemption under s 33 of the Victorian Duties Act 2000 applied. By that exemption, if the Commissioner was satisfied a transfer was made solely because of the retirement of a trustee or the appointment of a new trustee or other change in trustees, and the transfer was in order to vest the property in the new trustee, then the transfer was exempt from duty. It was made clear in Lend Lease however that the particular relationship and transaction considered there, that is the transfer to vest title in the new trustee, did not extend to ‘the orthodox character of a trustee and beneficiary relationship’.[33]
- [60]It is however, in so far as may be argued to be relevant, an orthodox trustee and beneficiary relationship falling for consideration in the matter at hand. To argue the transfer of a unit to each of them in May 2014 was the transfer of simply the bare legal estate suggests the full beneficial interest in each unit being transferred to them was already held by each applicant in respect of each of their particular units. That was not the case however. Both applicants held a full legal and beneficial undivided half interest in each unit. It was only by the transfers of May 2014 that each applicant then became solely entitled to claim a full legal and beneficial interest in each of their respective units, to the exclusion of the other. Hence the transfers did not constitute simply a transfer of a bare legal estate of nominal value to the beneficial owner.
Substantially One Transaction, Section 21 of the Duties Act
- [61]Finally, the applicants raise a fresh ground of review not put forward in the objection to assessment. By s 71(2) of the Taxation Administration Act 2001 a review in the Tribunal is limited to the grounds of the relevant objection to the Commissioner unless the Tribunal orders otherwise. The applicants seek leave to raise the fresh ground of review. The applicants say that leave is sought as an abundance of caution because leave was previously granted to them on 8 December 2014 to make further submissions.
- [62]The Commissioner raises no objection to the new ground of review being raised at this late stage. It seems appropriate to allow the matter to be considered and in so far as necessary leave is granted.
- [63]The new ground of objection is based on s 21 of the Duties Act which provides:
- (1)If a transaction for property constitutes more than 1 dutiable transaction for the property and imposition of transfer duty on all of the dutiable transactions for the property would result in transfer duty being imposed more than once on the transaction, the commissioner must decide the dutiable transaction on which transfer duty is imposed.
- (2)For subsection (1), the commissioner must decide the dutiable transaction that is the most applicable dutiable transaction having regard to the provisions of this chapter and the primary purpose of the transaction.
- [64]The applicants identify “the transaction” as the agreement to buy the land, build two units, strata title the units and take one unit each. That transaction involved the various steps necessary to achieve that. The applicants rely on a number of authorities to contend first that the word “transaction” is a comprehensive expression and may include any dealings with property, and the word should not be given a narrow construction here. They say the Commissioner may have been unaware of the many features of the present transaction when assessing the original contract to purchase Lot 14 in 2010, but now the Tribunal is aware of the facts and applying s 21 should determine that duty is payable only once in respect of all the dutiable transactions which were the steps in effecting the “transaction”.
- [65]Section 21(1) commences ‘If a transaction for property constitutes more than 1 dutiable transaction for the property…’. The words in s 21 the applicants say are significant to support their contention are extracted by them as follows: ‘If a transaction … constitutes more than one dutiable transaction…’. What is omitted is the reference to “property”.
- [66]In Tighe v. Commissioner of State Revenue[34], de Jersey CJ said ‘Mr Hoare, who appeared for the appellant, relied on s 21 of the Duties Act. That concerns, however, a transaction – in the singular – which may throw up more than one head of duty’.
- [67]Section 21 applies to a transaction for property. The focus of s 21 is limited to those situations where there is more than one dutiable transaction but both (or more) concern the same transaction involving the same property. It does not extend to different transactions constituting a step taken or part of some larger scheme or amalgam of transactions able to be described in broad terms as an overall transaction between the parties. Where that is the case, then the dutiable value of all steps in the overall dutiable transaction might be available for assessment as one entire dutiable transaction.[35]
- [68]For s 21 to apply, the transactions concerned must reflect a transaction involving the same property, not separate transactions referrable to different items of dutiable property. The latter is the case in the matter at hand.
- [69]Section 21 has no application here.
Conclusion
- [70]Neither a constructive nor a resulting trust arose on purchase of Lot 14. The benefit of the concessions in s 14(4), s 21 and s 123 of the Duties Act are not available to the applicants. The Commissioner was correct in dismissing the applicants’ objections to the assessments of duty.
Footnotes
[1] Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 per Deane J at [6].
[2] Ibid per Deane J at [15].
[3] [2009] NSWSC 460 at [50] – [53].
[4] [2003] NSWSC 161.
[5] [1970] Qd R 395.
[6] Ibid at 406.
[7] Ibid at 407.
[8] [1948] 2 All E.R. 133 at 136.
[9] [1974] VR 312.
[10] Ibid at 319.
[11] John Alexander’s Club’s Pty Ltd and Anor v White City Tennis Club Ltd [2010] HCA 19 at [128]; and see Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 at [200] ‘Ordinarily relief by way of constructive trust is imposed only if some other remedy is not suitable’.
[12] (1998) 195 CLR 566; [1998] HCA 59 at [42]; approved in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 at [10].
[13] See the papers presented on this vexed question by Lord Neuberger, President of the Supreme Court of the United Kingdom, adopting the position of institutional trust, and Justice Heydon presenting the case for remedial at the Banking Services and Finance Law Association Conference, Queenstown, 10 August 2014.
[14] Applicants’ submissions in answer to the respondent’s submissions in reply dated 18 February 2015.
[15] 7th Ed., 2006, at [1201].
[16] Counsel’s advice to the applicants dated 13 December 2013 at [18] relied on in submissions by the applicants.
[17] See Gibbs CJ in Calverley v Green (1984) 155 CLR 242 at 246.
[18] (1876) 2 Ch D 499.
[19] (2003) 217 CLR 315; Bunny Industries Ltd v FSW Enterprises Pty Ltd [1982] Qd R 712; Zabart v McKay [2002] QCA 280; Road Australia Pty v Commissioner of Stamp Duties [1999] QCA 328.
[20] [1976] HCA 1; (1976) 137 CLR 177 at 190.
[21] (1987) 163 CLR 164; [1987] HCA 20.
[22] [2015] VSCA 8.
[23] Ibid at [82].
[24] (1991) 24 NSWLR 370.
[25] at [97].
[26] [2003] NSWSC 697.
[27] at [280].
[28] Body Corporate and Community Management (Specified Two-Lot Schemes Module) Regulation 2011..
[29] Statement of Reasons documents p261.
[30] [2000] QCA 418.
[31] Applicants’ submissions 4 December 2014 at [25].
[32] (2011) 33 VR 204; (2011) VSCA 182.
[33] Ibid at [163] per Tate JA.
[34] [2008] QSC 30 at [14].
[35] Commissioner of State Revenue v Lend Lease Development Pty Ltd [2014] HCA 51.