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Sandgate Road Property Pty Ltd v Commissioner of State Revenue[2021] QCAT 84

Sandgate Road Property Pty Ltd v Commissioner of State Revenue[2021] QCAT 84

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Sandgate Road Property Pty Ltd v Commissioner of State Revenue [2021] QCAT 84

PARTIES:

SANDGATE ROAD PROPERTY PTY LTD

(Applicant)

v

COMMISSIONER OF STATE REVENUE

(Respondent)

APPLICATION NO/S:

GAR008-20

MATTER TYPE:

General administrative review matters

DELIVERED ON:

9 March 2021

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Member Kent

ORDERS:

  1. The Commissioner’s decision to disallow the objection to her decision in relation to transfer duty assessment numbers 517735155 and 518074059 is set aside.
  2. Assessment notice 518074059 is to be re-assessed to a value of $0.
  3. Assessment notice 517735155 - the sum of duty payable is to remain the same as the original notice ($193,275.00).

CATCHWORDS:

ADMINISTRATIVE LAW – ADMINISTRATIVE TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – Review of decision of Commissioner of State Revenue – exemption from duty for transfer to correct clerical error

Duties Act 2001 (Qld), s 152, s 152A

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20, s 23

Taxation Administration Act 2001 (Qld), s 71

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Bond & Anor v Queensland Department of Justice and Attorney-General (Workers’ Compensation Regulator) [2015] QSC 252

Simonova v Department of Housing and Public Works [2019] QCA 10

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld).

REASONS FOR DECISION

Background

  1. [1]
    This matter involves the purchase of a property (known hereafter as 1856-1860) from Alljap Properties Pty Ltd (‘Alljap’) by Sandgate Road Property Pty Ltd (Sandgate). These are associated entities with Mr John Pinder being a director of both companies at the time of the relevant transactions.
  2. [2]
    Essentially, the applicant objected to the transfer duty assessment completed by the Office of State Revenue (OSR). The decision to be reviewed is the decision made by the OSR in relation to transfer duty assessment numbers 517735155 and 518074059 made in relation to 1856 -1860. 
  3. [3]
    There were two assessments relating to 1856-1860. In the first transaction the property was described as 1856-1860 lots 1, 23 and 24. The property was transferred from Alljap to the applicant Sandgate for the amount of $3,700,000. Sandgate submits that 1856-1860 is properly described as lots 1, 2, 23 and 24.
  4. [4]
    The applicant claims there was a clerical error in the contract and the transfer excluded Lot 2 (valued at $800,000) – and stamp duty has been paid on an incorrect amount of $3.7million instead of $2.9millon which would have been the value of lots 1, 23 and 24. There was a second  transfer in  August 2019 of Lot 2 – the documents submitted to the OSR state the value of this lot is $800,000, however no consideration was paid for this. It is the applicant’s contention that the $3.7million paid under the first  transaction (517735155) covered all four lots and duty was properly paid on this total amount.
  5. [5]
    Therefore, the applicant, via the mechanism of objection, sought a refund for overpayment of the duty paid on the first contract (517735155) because the OSR had required payment of $46,000 on the second transaction which had a nominal value  of $800,000  (518074059). Alternatively, it was requested that the duty on 517735155 be re-assessed on the amount of $2,900,000 (the original sale price minus the value of   Lot 2 - $800,000) and the difference refunded and the assessment of 518074059  remain the same.
  6. [6]
    However, the OSR indicated on 5 December 2019 that this objection was disallowed, as the omission of one of the lots (Lot 2) from the transfer does not qualify for the duties exemption under s 152 of the Duties Act 2001 (Qld) (‘Duties Act’).
  7. [7]
    The applicant then sought review of this decision.

Applicant’s position

  1. [8]
    The applicant position is  that after all submissions had been filed and exchanged and further evidence submitted, the one issue that remained was whether or not the  second transaction for Lot 2  should have the duty refunded because it is a duty exempt transaction within the meaning of s 152 of the Duties Act, which stated that the correcting transaction must be for the same property transferred by the defective transaction.
  2. [9]
    It was submitted that it was the same property, 1856-1860,  which included all  four lots (1, 2, 23 and 24) and the second transaction was merely correcting the omission of Lot 2 from the first contract. Both contracts were describing the same property (1856 - 1860).
  3. [10]
    They submitted that if s 152 of the Duties Act did not describe the current situation then what possible function could it have? Reference was made to the construction of  the legislation in context and reference was made to the authority of Project Blue Sky Inc v Australian Broadcasting Authority[1] (Project Blue Sky). This case was cited as an authority for the principles of statutory interpretation.
  4. [11]
    It was submitted that a windfall to the OSR of $46,000 on the second transaction could not be legitimate. In their submission the second transaction was a correcting transaction and it was the intention of the legislation that such  transactions be exempt from duty.
  5. [12]
    In discussing s 152A of the Duties Act  it was submitted that while it did provide a mechanism for correcting mistakes it was not the only way this was intended to occur under  the legislation. It was submitted that s 152 of the Duties Act could stand on its own without s 152A of the Duties Act  to provide a corrections mechanism. It was their view that this operation of s 159 of the Duties Act is the one that should be  adopted in  this case.

OSR’s Position

  1. [13]
    The OSR’s position in applying s 152(1) of the Duties Act (exemption) is quite distinct to the applicant’s. The OSR’s reasoning lies in the application of s 152(1) as set out in the Public Ruling DA152.1.2 – Correcting a clerical error in a previous transfer. For example, for the exemption to apply, the following facts must be established:
    1. (a)
      There must be a clerical error in a previous dutiable transaction (the defective transaction), such as an accidental misdescription of the property or a party to the transaction;
    2. (b)
      The dutiable transaction being considered for the exemption (the correcting transaction) must be entered into to correct the clerical error in the defective transaction;
    3. (c)
      The correcting transaction must be for the same property transferred by the defective transaction;
    4. (d)
      There must be no additional consideration for the correcting transaction;
    5. (e)
      If the correcting transaction alters the beneficial interest in the property, it does so only to the extent necessary to correct the clerical error.
  2. [14]
    Originally the OSR indicated that the applicant had not been able to establish the above facts – and that a clerical error of the type contemplated by s 152 of the Duties Act  had not occurred. The exemption applies when there is an inconsistency between the contract and actual transfer, which results in the wrong property being transferred etc. In the present case, there was no dispute about the legal description in the contract, nor does a subsequent transfer return the parties to their original position or correct a defect. The subsequent transfer gave rise to the parties’ intentions as expressed in the contract of sale – therefore no clerical error occurred. For this reason, the exemption in s 152 of the Duties Act is not applicable. The OSR claims they were correct to assess the subsequent transfer’s duty on an aggregated basis with the original transfer. 
  3. [15]
    Upon subsequent submissions the respondent appears to have not maintained their position on the matter not involving a clerical error, instead stating that the sole issue was whether the correcting transaction must be for the same property transferred by the defective transaction. The OSR states that it must be the same property in the first and second transactions.
  4. [16]
    Both parties agreed to new evidence being filed in the proceedings pursuant to
    s 71(3)(a) of the Taxation Administration Act 2001 (Qld). This new evidence was in the form of  affidavits including those of  John Norman Pinder and the employee of Porta Lawyers who is said to have made the error.

What are the Tribunal’s powers?

  1. [17]
    The Tribunal may confirm, amend or set aside the Commissioner’s decision and substitute a new decision.[2] The Tribunal’s role is to produce the ‘correct and preferable’ decision[3] by way of a fresh hearing on the merits.[4]   Pursuant to s 71 of Taxation Administration Act new evidence that was not before the Commissioner at the time of making her decision was, by consent, admitted as evidence for the Tribunal’s consideration in coming to the correct or preferable decision in this matter.

Discussion

  1. [18]
    One issue remains before me for decision and that is whether or not the property described in the second transaction (Lot 2 – value $800,000) is the same property as the property that was “misdescribed” in the first transaction, i.e. lots 1, 23 and 24.
  2. [19]
    It is clear from all parties’ submissions that the property being discussed in Transaction  1 is the property at the address of 1856-1860. It is common ground that this property is comprised of four lots not three, i.e 1, 2, 23 and 24. The property at 1856-1860 is not  comprised only of  lots 1, 23 and 24 as described in the original contract.
  3. [20]
    The second transaction has been used as a mechanism to add in lot number 2 to the description of 1856-1860  so Sandgate holds the title to all lots that comprise 1856-1860  and not only three lots (1, 23 and 24) as  caused by the clerical error made by the solicitor’s employee in the first transaction. The applicant says this has been a successful correction and therefore should be eligible for the exemption from duty as discussed in s 152 of the Duties Act. The respondent says that this is not the case, that these are not the same properties, preferring a more limited definition of “property” i.e. the lot descriptions or real property descriptions as opposed to the address used in the contract.
  4. [21]
    In essence, the applicant says that the second transaction is to correct a clerical error in the previous transaction therefore it is simply within s 152 of the Duties Act. It is submitted that this being the case duty is not imposed on the correcting transaction.
  5. [22]
    The respondent submits that the collective scheme of s 152 and s 152A of the Duties Act  requires a reconveyance of the property and then another conveyance which is then exempted. This would require a retransfer and retransfer in the titles office as well. The respondent said this flows from the meaning of the words “same property”.[5]
  6. [23]
    In  submissions filed on 24 August 2020 the applicant resists the view taken by the respondent (as outlined in the paragraph above) on several points:
    1. (a)
      such a meaning of “same property” would leave s 152 with no work to do, in relation to the misdescription of a property, because if the same lot description was necessary in both the original and correcting transactions, where is the original clerical error in misdescription of the property that the section refers to?[6]
    2. (b)
      section 152A does not oust the operation of s 152.[7]
    3. (c)
      the s 152A process is not, as the respondent contends, mandatory for the transfer of the property. There is simply no such indication in the sections.
    4. (d)
      the respondent is simply wrong where the respondent refers to the explanatory memorandum to the amendment of s 152 and insertion of s 152A as mandating two further transactions. The passage in the explanatory memorandum expressly says may require two further transactions. Therefore, this is not a mandatory statement.
    5. (e)
      the applicant says in this case of a lot simply being omitted, there is no need for the three-step transfer process. It is submitted that the three-step process is directed to errors in the original description not omissions in the original description such as occurred here. 
    6. (f)
      the term “same property” can refer to the description of the street address. It is submitted this is the correct interpretation in this case.  That was the parties’ intention and s 152 of the Duties Act should be read that way in accordance with the purposive approach.[8]
    7. (g)
      here what is being referred to in both transactions is the same property. Both parties have considered that there has been a clerical error. The transactions that have been carried out are as follows:
      1. a transaction where there is an omission of Lot 2; and
      2. a transaction which transfers Lot 2 to  the rightful party and  puts the parties in their correct position and is within the process contemplated within s 152 of the Duties Act.[9]

Approach to considering the meaning of “Same Property”

Caselaw

  1. [24]
    In the decision of Bond & Anor v Queensland Department of Justice and Attorney-General (Workers’ Compensation Regulator)[10] Daubney J refers to Project Blue Sky suggesting one should look at the purpose of the legislation to see if the act done in breach of the provision is intended to be invalid:

[61] In Project Blue Sky Inc v Australian Broadcasting Authority, the plurality said (omitting references) [per McHugh, Gummow, Kirby and Hayne JJ at [91] – [93]]:

[91] An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various context, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue.

Traditionally, the courts have distinguished between acts done in breach of an essential preliminary to the exercise of a statutory power or authority and acts done in breach of a procedural condition for the exercise of a statutory power or authority. Cases falling within the first category are regarded as going to the jurisdiction of the person or body exercising the power or authority. Compliance with the condition is regarded as mandatory, and failure to comply with the condition will result in the invalidity of an act done in breach of the condition. Cases falling within the second category are traditionally classified as directory rather than mandatory. In Pearse v Morrice, Taunton J said ‘a clause is directory where the provisions contain mere matter of direction and nothing more’. In R v Loxdale, Lord Mansfield CJ said ‘[t]here is a known distinction between circumstances which are of the essence of a thing required to be done by an Act of Parliament, and clauses merely directory’. As a result, if the statutory condition is regarded as directory, an act done in breach of it does not result in invalidity. However, statements can be found in the cases to support the proposition that, even if the condition is classified as directory, invalidity will result from non-compliance unless there has been ‘substantial compliance’ with the provisions governing the exercise of the power. But it is impossible to reconcile these statements with the many cases which have held an act valid where there has been no substantial compliance with the provision authorising the act in question. Indeed in many of these cases, substantial compliance was not an issue simply because, as Dawson J pointed out in Hunter Resources Ltd v Melville when discussing the statutory provision in that case: ‘substantial compliance with the relevant statutory requirement was not possible. Either there was compliance or there was not.’

In our opinion, the Court of Appeal of New South Wales was correct in Tasker v Fullwood in criticising the continued use of the ‘elusive distinction between directory and mandatory requirements’ and the division of directory acts into those which have substantially complied with a statutory command and those which have not. They are classifications that have outlived their usefulness because they deflect attention from the real issue which is whether an act done in breach of the legislative provision is invalid. The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning. That being so, a court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. This has been the preferred approach of courts in this country in recent years, particularly in New South Wales. In determining the question of purpose, regard must be had to ‘the language of the relevant provision and the scope and object of the whole statute’. Similarly in the decision of Simonova v Department of Housing and Public Works (omitting references):[11]

The contemporary approach to statutory interpretation was recently summarised by Kiefel CJ, Nettle and Gordon JJ in Sztal v Minister for Immigration and Border Protection:

The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognised that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.

  1. [25]
    See also the recent observations by Kiefel CJ, Bell and Nettle JJ in SAS Trustee Corporation v Miles.[12] Noting that the starting point for statutory construction is the text of the provision in light of its context and purpose. Where the text read in context permits more than one potential  meaning, the choice between those meanings  may ultimately turn on  an evaluation  of the relative  coherence  of each with the  scheme of the stature  and its identified  objects or polices.

Findings

  1. [26]
    I have considered s 152 and s 152A of the Duties Act  in the light of their context and purpose.  I have also considered the explanatory memorandum to the relevant amendments to the legislation. I can find  no  evidence in the Duties Act or its explanatory memorandum that leads me to the conclusion that the correction mechanism in s 152A is the only one that exists under the legislation for the  clerical errors described in s 152 of the Duties Act. After taking into account  both the caselaw and s 32CA  of the Acts Interpretation Act 1954 (Qld) I note that the explanatory memorandum to the amendment of  s 152 of the Duties Act refers to the term “may” not the  term “must”. Section 32CA of the Acts Interpretation Act indicates that  the term “may” means the power  may be exercised  or not exercised, at discretion. Therefore, it is possible for s 152A’s powers not  to be exercised; they are not mandatory.
  2. [27]
    It is in this context  that I make the finding that s s 152  of the Duties Act applies to  the circumstances of this case. The purpose of this section is to correct clerical errors in dutiable transactions and provide exemptions from the payment of duties when a subsequent transaction needs to be carried out to correct  a clerical error.
  3. [28]
    Here there is no dispute that a clerical error has occurred. The applicant has contended this from the beginning  of the proceedings and the respondent has now conceded this point.
  4. [29]
    All that remained in issue for me was to decide the meaning of the term “same property” as it appears in s 152 of the Duties Act. The applicant urged upon me a wide definition of property to take into account all of the different types of errors that may cover the range of differing circumstances in which a “clerical error” could be made.[13] The respondent urged me to take the view that the mechanism in s 152A of the Duties Act  is mandatory and the only way a clerical error as described in s 152 of the Duties Act may be corrected.
  5. [30]
    Upon consideration of all the material before me I do not accept the respondent’s proposition concerning the mandatory nature of s 152A’s mechanism. I find that s 152 of the Duties Act and the words “same property” therein are wide enough to cover the circumstances of the applicant’s first and second transactions in this case. I find that s 152A’s mechanism does not oust but is supplementary to the mechanism available through s 152 of the Duties Act.
  6. [31]
    I find that if I accepted the respondent’s submission on this point as  correct,  it is very difficult to understand what “work” s 152 of  the Duties Act has to do if  the  description of the property must be identical in both  transactions – what error is capable of being corrected?
  7. [32]
    Section 152 of the Duties Act’s purpose, as accepted by both parties, is to place the parties in their correct position.[14] Here the correct position is that Alljap transferred to Sandgate the property described as 1856-1860. This property is made up of lots 1, 2, 23 and 24. Through a clerical error Lot 2 was omitted from  the  first transaction for 1856 - 1860. The second transaction corrects this omission by transferring Lot 2 to the correct owner (Sandgate). As a result, all the lots in 1856 -1860 are now transferred to Sandgate. This property, with all four lots, was valued at $3.7 million; that is the amount the applicant had correctly paid duty on in the first transaction. There was no further money paid in the second correcting transaction. This was merely a mechanism to achieve the correction of a clerical error that is the purpose of s 152 of the Duties Act. It therefore should be classed as an exempt transaction.
  8. [33]
    The amount charged on the second transaction should be refunded as this transaction is properly classified as a section 152 of the  Duties Act exempt transaction.

Decision

  1. The Commissioner’s decision to disallow the objection to her decision in relation to transfer duty assessment numbers 517735155 and 518074059  is set aside.
  1. Assessment notice 518074059 is to be re-assessed to a value of $0.
  1. Assessment notice 517735155 - the sum of duty payable is to remain the same as the original notice ($193,275.00).

Footnotes

[1](1998) 194 CLR 355.

[2]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 23(2).

[3]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20(1).

[4]Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 20(2).

[5]Paragraph 4 page 32 of the respondent’s submissions in reply filed  3 August 2020.

[6]Paragraph 10 of submissions of  24 August 2020 by the applicant.

[7]Paragraph 11 of submissions of 24  August 2020 by the applicant.

[8]Paragraphs 16 to 18 of submissions of 24 August 2020 by the applicant.

[9]Paragraph 24 of submissions of  24 August 2020 by the applicant.

[10][2015] QSC 252.        

[11][2019] QCA 10 para 46.

[12](2018) 265 CLR 137.

[13]Paragraph 9 of the applicant’s submissions of 24 August 2020.

[14]See paragraph 11 of the applicant’s submissions of  24 August 2020.

Close

Editorial Notes

  • Published Case Name:

    Sandgate Road Property Pty Ltd v Commissioner of State Revenue

  • Shortened Case Name:

    Sandgate Road Property Pty Ltd v Commissioner of State Revenue

  • MNC:

    [2021] QCAT 84

  • Court:

    QCAT

  • Judge(s):

    Member Kent

  • Date:

    09 Mar 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Bond v Queensland Department of Justice and Attorney-General (Workers' Compensation Regulator) [2015] QSC 252
2 citations
Jump To
Cite 1 - [2015] QSC 252
Cite 2 - [2015] QSC 252
Project Blue Sky v Australian Broadcasting Authority (1998) 194 C.L.R 355
2 citations
Jump To
Cite 1 - (1998) 194 C.L.R 355
Cite 2 - (1998) 194 C.L.R 355
SAS Trustee Corporation v Miles (2018) 265 CLR 137
1 citation
Jump To
Cite 1 - (2018) 265 CLR 137
Simonova v Department of Housing and Public Works [2019] QCA 10
2 citations
Jump To
Cite 1 - [2019] QCA 10
Cite 2 - [2019] QCA 10

Cases Citing

Case NameFull CitationFrequency
Commissioner of State Revenue v Sandgate Road Property Pty Ltd [2023] QCATA 264 citations
1

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