Payne and Simpson v Chief Commissioner of State Revenue [2014] NSWCATAD 11

Date of judgement 10 February 2014 Proceeding No. 136024
Judge(s) N S Isenberg, Senior Member
Court or Tribunal NSW Civil and Administrative Tribunal
Legislation cited Administrative Decisions Tribunal Act 1997

Civil and Administrative Tribunal Act 2013

Duties Act 1997

First Home Owner Grant Act 2000

Real Property Act 1900

Taxation Administration Act 1996
Catchwords First Home Owners Grant – First Home Plus Scheme – relevant interest in residential property – evidence of constructive trust
Cases cited Bogdanovic v Koteff (1988) 12 NSWLR 472

Breskvar v Wall (1971) 126 CLR 376

Commonwealth v State of New South Wales (1918) 25 CLR 325

Fiegert and Edwards v Chief Commissioner of State Revenue [2001] NSWADT 177

Frazer v Walker [1967] 1 AC 569

Summary

The applicants sought review of the Chief Commissioner’s decision to reverse the First Home Owner Grant and First Home Plus stamp duty concession, previously granted to the applicants, Mr Simpson and Ms Payne, in relation to a property at Coolongolook.

The Tribunal found that Mr Simpson had held the title to another property (the Drummoyne property) in his capacity as trustee for his parents from the date of registration of the purchase in 1986 until the transfer of the Drummoyne Property to his father.

The Tribunal set aside the Chief Commissioner’s decisions to require repayment of the Grant and to reassess the Stamp Duty Concession.

Background

The applicants, Kelly Marie Eileen Payne and Mark Clifford Simpson, jointly applied for the Grant and the Stamp Duty Concession in relation to the purchase of a property at Coolongolook. 

The Chief Commissioner wrote to the Applicants and indicated that one of the applicants (Mark Clifford Simpson) may have been the owner of land known as 2/2a Wolseley Street Drummoyne (“the Drummoyne Property”).

Mark Clifford Simpson provided a statutory declaration stating this was the first property they had purchased either together or individually, and that he was not the same person who owned the Drummoyne Property. The Chief Commissioner paid the Grant and allowed the stamp duty concession. 

After further investigation the Chief Commissioner reversed the decision to provide both the Grant and the Stamp Duty Concession. The Chief Commissioner issued an Assessment Notice requiring repayment of the Grant and payment of a penalty, and a Duties Notice of Assessment requiring payment of the stamp duty, together with interest.

A subsequent objection by the Applicant was partially allowed to the extent that penalty tax was remitted. This decision was the subject of the present review.

The documentary evidence

The relevant documentary evidence in this case was:

  • A transfer  from Anthony Dupont to Mark Clifford Simpson dated 15 October 1986;

  • A mortgage from Mark Clifford Simpson as mortgagor to AMEV Finance Ltd dated 17 March 1987;

  • A caveat claiming an interest in a constructive trust forbidding the recording of dealing over the Drummoyne property in favour of Clifford Stanley Simpson and Shirley June Simpson (Mark Simpson parents) dated 24 April 1987;

  • A discharge of mortgage dated 29 June 1987;

  • A withdrawal of caveat dated 5 April 1988;

  • A transfer from Mark Clifford Simpson to Clifford Stanley Simpson dated 5 April 1988

  • A document stated to be licence details showing Mark Clifford Simpson with an address at the Drummoyne Property from 20 July 1987 to 20 August 2012.

The Applicants’ evidence and submissions

Mark Clifford Simpson gave oral evidence that:

  • the Drummoyne Property was purchased in his name without his knowledge or consent;

  • the Drummoyne Property was purchased by his father, along with an adjoining unit;

  • he resided at the Drummoyne Property for several months during 1986 and 1987 and paid rent to his father as and when he could;

  • the solicitor who signed the transfer for the purchase of the Drummoyne Property as the Solicitor for the transferee (GB Burge) was not, and never was, his solicitor;

  • his mother and had died;

  • attempts were made to locate GB Burge, however he could not be located;

  • GB Burge may have been his father’s solicitor;

  • the signature on the mortgage and the transfer for the sale of the Drummoyne Property was not his; and

  • he may have been the registered owner of the Drummoyne Property through fraud.

No documentary evidence was relied upon to support any of this oral evidence.

The Chief Commissioner’s submissions

The Chief Commissioner submitted that:

  • Mr Simpson was for a period the registered owner of, and had a relevant interest in residential property, namely the Drummoyne property;

  • as such he had a relevant interest for the purposes of the legislation;

  • there was no evidence of the circumstances in which it could be said that a constructive trust arose and Mr Simpson was not aware of the existence of any such trust;

  • the effect of a caveat was merely to prevent any dealing with the land pending the discovery of what the claims of the parties are;

  • attempts were made to locate GB Burge, however he could not be located;

  • the credit of Mr Simpson was not assisted by the different statements made concerning his knowledge of the Drummoyne Property and whether or not he was the registered owner; and

  • the Applicants have failed to discharge their onus of proving that the Drummoyne Property was held on trust.

Hearing

During the hearing, Senior Member Isenberg asked whether the Chief Commissioner had any authority supporting a contention that Mr Simpson could acquire a relevant interest in the Drummoyne property without any knowledge of the purchase in his name and without authorising any person to act on his behalf.

The Chief Commissioner was granted leave to file and serve further written submissions dealing with this issue; the Applicant was given a right of reply.

The Chief Commissioner’s further written submissions

The Chief Commissioner’s further submissions were:

  • the Torrens system is a system of title by registration; not registration of title;

  • the registered proprietor under the Torrens system holds the legal property in the land, subject only to such equities and interests as the Real Property Act (“RP Act”) expressly preserves;

  • even registration of a void instrument is effective and does not prevent the transferee from acquiring an indefeasible interest, in the absence of fraud on the part of the transferee or some other statutory ground of exception;

  • it does not matter that the transferee paid nothing for his or her interest;

  • none of the exceptions to indefeasibility (including fraud) applied in this case – in the case of fraud the fraud must be brought home to the registered proprietor; and

  • the effect of s.42 of the RP Act was to create in Mr Simpson a relevant interest in the Drummoyne property; and

  • neither the First Home Owner Grant Act 2000 (“FHOG Act”) or the Duties Act 1997 expressly provided that actual knowledge was required to own an interest in land and there was nothing in those Acts which evinced an intention that actual knowledge was required to own land for the purposes of that legislation.

The Applicant’s further written submissions

The Applicant’s further submissions were:

  • Mr Simpson could not have been more vigilant or made further enquiries in regard to dishonest and fraudulent practices that did not come to his attention until some 25 years after the fact; and

  • The signature of the transferee of the purchase transfer of the Drummoyne Property was signed by GB Burge, the signature of the transfer to sell the Drummoyne Property was not his and the signature of GB Burge as witness to the transferee indicates that the transfer documentation regarding the Drummoyne Property were dishonestly and fraudulently registered in his name.

Decision

The Tribunal:

  • accepted Mr Simpson’s evidence that he was not aware at any relevant time of the purchase or sale of the Drummoyne Property in his name, or that there was a caveat that was registered on the property in favour of his mother and father;

  • found that Mr Simpson did sign and initial the mortgage as mortgagor at the request of Mr Simpson’s father, with no knowledge or understanding at the time he signed the mortgage of the content or effect of the document nor that title to the Drummoyne Property was registered in his name;

  • adopted the principles enunciated by the Respondent in relation to the effect of lodging a caveat, including the proposition that “a constructive trust will be imposed over a property in circumstances where it would be a fraud for the legal owner to assert a beneficial interest in the property”;

  • made no finding in relation to submissions that fraud was involved;

  • found it was unreasonable to assume that there was no relevant constructive trust when the document registering the claim for the existence of that trust appears to be executed by the same lawyer who, apparently acting on behalf of Mr Simpson, executed the transfer pursuant to which Mr Simpson became registered owner of the Drummoyne Property;

  • found that Mr Simpson held the title to the Drummoyne property in his capacity as trustee for his parents from the date of registration of the purchase in 1986 until the transfer of the Drummoyne Property to his father;

  • stated that the Chief Commissioner submitted that the best authority in relation to the contention that Mr Simpson could acquire a relevant interest in the Drummoyne Property without any knowledge was Fiegert and Edwards v Chief Commissioner of State Revenue [2001] NSWADT 132 (“Fiegert”);

  • accepted the general thrust of the Chief Commissioner’s submissions as to indefeasibility of title of a registered proprietor, subject to relevant fraud and other exceptions such as the registered proprietor holding the property on trust; and

  • held that the decision in Fiergert did not support the Chief Commissioner’s contention that a person could acquire a relevant interest in land without having any relevant knowledge and stated it was not necessary to comment further on Fiegert or counsel’s contentions on this point.

Orders

The decisions of the Chief Commissioner to reverse the decision to pay the Grant and to reassess the Stamp Duty Concession were set aside.

Link to decision

Payne and Simpson v Chief Commissioner of State Revenue [2014] NSWCATAD 11

Attachments

  1. Bogdanovic v Koteff (1988) 12 NSWLR 472
Last updated: 17 May 2016