Wakefield & Ors v Commissioner of State Revenue

In this case, Bowskill J considered three issues. The first issue was: what is the nature of an appeal under s 69 of the Taxation Administration Act 2001? Her Honour held that it is a fresh hearing conducted by the Court in its original jurisdiction, on the materials that were before the Commissioner, subject to the power of the Court to admit new evidence. The second issue was: what is the proper construction of s 30 of the Duties Act 2001? Her Honour set out detailed guidance on this question. The third issue was: was the Commissioner’s decision as to the application of s 30 of the Duties Act in this case correct? Her Honour held that the Commissioner had erred, and that s 30 did not apply.

Bowskill J

4 April 2019

Introduction

Mrs Anderson owned a block of land. [1]. She subdivided the land into seven lots. [1]. In March 2014 she transferred five of those lots, separately, to each of her four children and one of her grandchildren (“the appellants”), by way of gift. [1]. The transfers were not conditional or dependent on each other, and the blocks of land were never intended to be used together by the appellants. [1]. At the time of the transfers in March 2014, transfer duty was assessed by the solicitor for Mrs Anderson, and was paid. [3]. The Commissioner subsequently issued a reassessment notice, assessing transfer duty at a higher amount, as well as unpaid tax interest. [4]. The difference arose because the Commissioner determined that s 30 of the Duties Act 2001 applied to the transfer, and consequently aggregated the dutiable values of the five transfers and assessed the duty payable accordingly. [5]. The appellants objected to the reassessment, contending that s 30 did not apply. [5]. The objections were disallowed. [5]. The appellants then appealed to the Supreme Court pursuant to s 69 of the Taxation Administration Act 2001. [5].

Three issues arose for decision:

(i) What is the nature of an appeal under s 69 of the Taxation Administration Act?

(ii) What is the proper construction of s 30 of the Duties Act?

(iii) Was the Commissioner’s decision as to the application of s 30 of the Duties Act in this case correct? [6]. 

First issue – nature of the appeal

After considering the relevant statutory provisions and authorities, Bowskill J concluded that the nature of an appeal to the Supreme Court under s 69 Taxation Administration Act 2001 is a fresh hearing conducted by the Court in its original jurisdiction, on the materials that were before the Commissioner, subject to the power of the Court to admit new evidence under s 70B(1) of the Act. [30]. Her Honour held that the Supreme Court does not stand in the shoes of the Commissioner, but exercises its original jurisdiction to make such judgment as it considers ought to have been given, on the facts and the law, at the time of the hearing of the appeal. [32]. She noted that the appeal is in that sense a hearing de novo. [32].

Her Honour further held that where the appeal is from a decision involving the application of the law to objective conclusions of fact, which are not dependent upon the Commissioner’s state of satisfaction, it is open for the Court to give such judgment on the appeal as it considers ought to have been given, on the law and facts as they are at the time of the hearing of the appeal. [34]. On the other hand, where the decision appealed is one which depended upon the Commissioner being satisfied of a particular fact or matter, the appellant needs to demonstrate an error of principle in the Commissioner reaching, or not reaching, that state of satisfaction, before the Court will intervene. [35].

Second issue - proper construction of s 30

Section 30(1) provides that the section applies to “dutiable transactions that together form, evidence, give effect to or arise from what is, substantially 1 arrangement”. Section 30(2) provides that “[f]or assessing transfer duty on each of the dutiable transactions, the transactions must be aggregated and treated as a single dutiable transaction”. Having regard to the text of the provision and the authorities, her Honour set out five principles, which are set out below in summary form:

(i) In order for s 30 to apply, there must be “some unifying factor” that brings the dutiable transactions within the section.

(ii) “Arrangement” is a word of wide, but not unlimited meaning. It is a comprehensive word which extends to embrace all kinds of concerted action by which persons may arrange their affairs for a particular purpose or to produce a particular result.

(iii) The use of the word “substantially” in s 30(1) invites consideration of the substance of the dutiable transactions, looked at together, as opposed to the form, to determine whether the transactions, together, form what is, substantially (or really or essentially), one arrangement, although as a matter of form they may appear as separate transactions.

(iv) The determination to be made under s 30(1) is a question of fact, involving matters of degree, taking into account all relevant circumstances relating to the dutiable transactions (s 30(3)) including, but not limited to, the factors identified in s 30(4).

(v) The objectives, actions and conduct of both the transferors and transferees are potentially relevant.  There is nothing in the words of s 30 which supports a construction that the primary focus is on the objectives, actions, or conduct of the transferees. [53].

Third issue - application in this case

Her Honour ultimately concluded that s 30 did not apply to the dutiable transactions comprising the five transfers. [59]. Among the points emphasised by her Honour were that there was no evidence of any agreement involving the transferees, the individual transactions were not conditional or dependent on each other, the transferees received distinct and different properties, there was no “unifying factor” beyond the timing of the transfers and the relationship between the parties, and there was no relationship, or connection, or interdependence between the dutiable transactions themselves. [60][68]. In the result, the appeal was allowed. [69].

M J Hafeez-Baig