LR Corrie Glen Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 33

Date of judgement 24 March 2014 Proceeding No. 136063
Judge(s) NS Isenberg, Senior Member
Court or Tribunal NSW Civil and Administrative Tribunal, Administrative and Equal Opportunity Division
Legislation cited Administrative Decisions Review Act 1997 (formerly Administrative Decisions Tribunal Act 1997)

Civil and Administrative Tribunal Act 2013

Duties Act 1997

Higher Education Support Act 2003 (Cth)

Interpretation Act 1987

Stamp Duties Act 1920 (repealed)

Taxation Administration Act 1996
Catchwords Duty - establishment of a trust relating to unidentified property - declaration of trust - whether there is a requirement for a completely constituted trust - s58(2) Duties Act 1997
Cases cited DKLR Holding Co. (No. 2) Pty Ltd v The Commissioner of Stamp Duties (1981-1982) 149 CLR 431

Legal Services Board v Gillespie Jones [2013] HCA 35

Kauter v Hilton (1953) 90 CLR 86

Tooheys Limited and others v Commissioner of Stamp Duties (NSW) [1960-1961] 105 CLR 602

Summary

The Taxpayer sought a review of the Chief Commissioner’s decision to assess the taxpayer under s.58(2), and to impose interest for late lodgement pursuant to s.17, in respect of an instrument declaring that property was to be held in trust for a particular person for a specified purpose. The document did not establish a trust and did not identify the property concerned.

The Tribunal confirmed the Chief Commissioner’s assessment decision.  The Tribunal confirmed that duty may be chargeable pursuant to s.58(2) of the Duties Act in respect of an instrument that declares property (when vested in the person executing the instrument) is to be held in trust even though a completely constituted trust may not have been established by the instrument.

Background

The Taxpayer, LR Corrie Glen Pty Ltd, sought review of the Chief Commissioner’s assessment of the Taxpayer, made pursuant to s.58(2) of the Duties Act 1997. The assessment was made in relation to a document signed by LR Corrie Glen Pty Ltd (the Taxpayer) as "trustee" and Super Corrie Glen Pty Ltd as "Beneficiary" (in its capacity as trustee of the Corrie Glen Fund) (‘the Document’). The title of the Document was “the Corrie Glen Fund Security Trust Rules”.

The Taxpayer also sought review of the Chief Commissioner’s decision to impose interest for late lodgement, in accordance with s.17 of the Duties Act.

The parties agreed that the Document did not establish a trust and that it involved no identified property, and was therefore not a declaration of trust over dutiable property, as defined in s.8(1)(b)(ii) of the Duties Act.

The Chief Commissioner relied on s.58(2) of the Duties Act to impose duty, so the issue in the proceedings was whether the Document, being an instrument executed in New South Wales that declares that property, although not identified in the instrument, when vested in the person executing the instrument, is to be held in trust for a person or persons or a purpose or purposes mentioned in the instrument.  The heading of s.58 is: “Establishment of a trust relating to unidentified property and non-dutiable property”.

The Taxpayer argued that duty should not be imposed, as the heading of s.58 makes the establishment of a trust a prerequisite for duty to be levied pursuant to s.58(2). It was submitted that as section 58(1) deals with the establishment of a trust for non-dutiable property, section 58(2) by inference must also deal with establishment of a trust for unidentified property. Sections 34 and 35 of the Interpretation Act 1987 were used to support this interpretation, respectively, regarding the use of extrinsic materials to aid interpretation and the use of headings to provisions in legislation.

The Chief Commissioner submitted that the Document fell within the description in section 58(2). The Chief Commissioner relied on a number of authorities, including Tooheys Limited and others v Commissioner of Stamp Duties (NSW) [1960-1961] 105 CLR 602. This case found that s.58 applies to instruments, not the underlying transactions to which they give effect, and that duty may therefore be charged on a legal instrument which is devoid of legal effect.

Decision

The Tribunal found:

  • The Taxpayer's interpretation of s. 58 was based on a misconstrued view of ss. 34 and 35 of theInterpretation Act 1987  (“IA”):

    • In relation to s.34 of the IA, the Taxpayer did not address in any substantial manner the express words of s.58(2), but relied on the heading and the words of s.58(1) to make good its interpretation of s.58(2) and therefore could not rely on s. 34 of the IA;

    • Based on s.35 of the IA, the Tribunal held that the heading of s.58 of the Duties Act is not part of that Act;

  • Whether or not the Document has any immediate effect, it is subject to duty if it comes within s.58(2);

  • Section 58(2) may impose duty on an instrument even though a completely constituted trust may not have been established by the instrument, notwithstanding the heading of s.58 of the Duties Act.

On the basis of the above, the Tribunal held that duty may be chargeable pursuant to s.58(2) of the Duties Act in respect of an instrument that declares that property (when vested in the person executing the instrument) is to be held in trust even though a completely constituted trust may not have been established by the instrument.

Orders

The decision of the Chief Commissioner under review was confirmed.

Link to decision

LR Corrie Glen Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 33

Last updated: 18 May 2016