Baptist Union of New South Wales v Chief Commissioner of State Revenue [2013] NSWADT 270

Date of judgement 28 November 2013 Proceeding No. 126097
Judge(s) Judicial Member, A Verick
Court or Tribunal Administrative Decisions Tribunal
Legislation cited Administrative Decisions Tribunal Act 1997

Baptist Union Incorporation Act 1919

Conveyancing Act 1919

Duties Act 1997

Higher Education Support Act 2003

Taxation Administration Act 1996
Catchwords State Revenue – Stamp Duties – Trusts – Formation – Whether an express trust exists on transfer of two properties from vendors – Absence of any written declaration – Exemption from duty under Duties Act 1997, s.275
Cases cited Bolton v Federal Commissioner of Taxation (1964) 9 AITR 385

Briggs v James Hardie & Co Pty Ltd & Co Pty Ltd (1989) 16 NSWLR 549 at 577

Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253

Commissioner of Stamp Duties (Qld) v Jollife [1920] HCA 45; (1920) 28 CLR 178

Commissioner of State Revenue v Lam & Kym Pty Ltd (2004) 10 VR 420

Deryk Rowan Andrew as Trustee of Colin George Ward (Deceased) v Zant Pty Ltd & Ors [2004] FCA 1716

Industrial Equity Ltd v Blackburn [1977] HCA 59; (1977) 137 CLR 567

Kauter v Hilton [1953] HCA 95; (1953) 90 CLR 86

Kelly v Commissioner of Taxation [2012] FCA 423

Klewer v Official Trustee in Bankruptcy (2008) FCA 1788

Lee v Lee's Air Farming Ltd [1962] AC 12

McEvoy v McEvoy [2012] NSWSC 1494

Milroy v Lord [1862] EngR 951; (1862) 4 De GF & J 264

Rochefoucauld v Bousted (1897) 1 CH 196

Salmon v Salmon & Co Ltd [1897] AC 22

Sheikholeslami v Tocher [2011] FCA 1050

Trident General Insurance Co Limited v McNiece Bros Proprietary Limited (1988) 165 CLR 107

Summary

This matter concerned an appeal against a decision of the Chief Commissioner that the Baptist Union was not entitled to exemption under s 275 of the Duties Act 1997 (Charitable and benevolent bodies) for the purchase of two villas alleged to have been acquired on trust for Morling College.

The Court held that the Baptist Union failed to establish an intention to create an express trust in favour of Morling College in respect of both properties.  In the absence of such a trust, the Chief Commissioner’s decision was affirmed. 

Background

This matter concerned the question of ownership of two villas for the purposes of a claim for exemption from duty under the Duties Act 1997 (Duties Act) by the taxpayer, Baptist Union of New South Wales (Baptist Union), which is a body corporate, incorporated under s.1 of the Baptist Union Incorporation Act 1919.  Under Baptist Union’s by-laws, Morling College provides training for ministry, missionary activity and other spheres of Christian service.  In November 2010, Baptist Union purchased a residential property located at 76/116 Herring Road, Macquarie Park (Villa 76).  In December 2011, Baptist Union purchased another residential property located at 84/116 Herring Road, Macquarie Park (Villa 84). 

Baptist Union claimed that it had purchased the properties in its capacity as trustee for Morling College Limited (Morling College), a theological and Bible College established in 1916 and incorporated in 2006.    The properties were purchased for Morling College faculty housing purposes.  Evidence was provided to show that Morling College and not Baptist Union paid for utilities and loan repayments in respect of the properties.

After the purchase of each of the properties, Baptist Union sought a ruling from the Chief Commissioner of State Revenue (Chief Commissioner) that it was exempt under s.275(1) of the Duties Act in respect of duty otherwise payable on the contract for sale, transfer and mortgage. 

On 22 February 2012, the Chief Commissioner decided that Baptist Union was not exempt under s.275(1) in respect of both applications.  On 10 April 2012, Baptist Union objected to both decisions and shortly thereafter the Chief Commissioner disallowed the objection.  Baptist Union then sought a review of the decisions.

Legal Issues

Broadly stated, Baptist Union’s case before the Tribunal was that it purchased the properties as a trustee for Morling College Limited, which operates Morling College, a body corporate as per s.275(3)(a) of the Duties Act and that Baptist Union, in its capacity as trustee, was an exempt charitable or benevolent body as defined in that section. 

The parties relied on a joint statement of issues, which identified the following issues:

  1. Trustee Issue

    Whether in terms of s.275(3)(c) of the Duties Act, Baptist Union was acting in the capacity of trustee for Morling College when it entered into the dutiable transactions for which the exemption was sought.

  2. Promotion of Education Issue

    Whether Morling College, for the purposes of s.275(3)(a) of the Duties Act, uses its resources wholly or predominantly for the promotion of education.

  3. Statutory Construction Issues

    Two statutory construction issues were raised by the words used in s.275(3)(a) of the Duties Act, namely the meaning of “for the time being approved by the Chief Commissioner for the purposes of this paragraph” and “used wholly or predominantly”.

The parties also identified issues that were not in dispute.  These are set out in paragraph 14 of the decision.

Decision

To succeed in its application, Judicial Member Verick found that Baptist Union had to establish an express or inferred intention to create the alleged trust.  It was unsuccessful in doing so as there was no direct evidence that it held the villas on trust for Morling College, the beneficial owner of the two villas.  There was only evidence of it having been perceived to be necessary for it to be the legal owner.  That being the case, there was no direct evidence that Morling College was the beneficial owner of the villas.

In this matter, the alleged trusts were not, as in Sheikholeslami v Tolcher [2011] FCA 1050, a result of family dealings, where “imprecise language” is often used to create a trust.  Here, the parties were found to have had an in-house legal adviser and a firm of solicitors to advise them. Therefore, it was found that if the parties had intended to create trusts, precise language would have been used in their written documentation.  In particular, the parties had the opportunity and should have stated this relationship in their Memorandum of Understanding.  Instead, they chose merely to agree that Baptist Union would allow Morling College to use the villas, subject to Morling College paying for utilities and loan repayments, but without paying Baptist Union any rent.

The burden of proof was on Baptist Union to show that an intention to create the express trusts could have been discerned from the language employed by the parties to the Transactions.  Baptist Union was found to have failed to discharge that burden.

In these circumstances, Judicial Member Verick could not be satisfied that Baptist Union and/or Morling College had shown an intention that the two villas were held by Baptist Union as trustee for Morling College.

Judicial Member Verick also highlighted the difficulties of Baptist Union’s alternative formulation of its case, namely that a trust was created by an oral declaration.  What emerged from the evidence including a “matrix of circumstances” was found to be a failure by Baptist Union to establish an intention to create an express trust in respect of both properties.

In the absence of a trust in favour of Morling College in respect of the two properties, the Chief Commissioner’s decision under review was affirmed.  In light of this, it was found to be unnecessary to deal with the Promotion of Education Issue and the two Statutory Construction Issues.  These would only have been relevant if Baptist Union had established the existence of a trust in respect of the properties in favour of Morling College.

Link to decision

Baptist Union of New South Wales v Chief Commissioner of State Revenue [2013] NSWADT 270

Last updated: 19 May 2016