|Date of judgement||22 May 2015|
|Judge(s)||The Hon DA Cowdroy OAM QC, Principal Member|
A Britton, Principal Member
|Court or Tribunal||NSW Civil and Administrative Tribunal, Appeal Panel|
ADMINISTRATIVE LAW — stamp duty — whether an interest in land constitutes “dutiable property” —whether exemption for stamp duty on “matrimonial property” applies where property purchased by former party to the marriage and third party, as tenants-in-common
Bunny Industries Limited v FSW Enterprises Pty Limited (1981) Qd R 2588
On 7 August 2013, Orders were made by the Family Court of Australia requiring the sale of matrimonial property at Dee Why (the “property”) at a public auction. Prior to the orders being made, the property was owned by Mr and Mrs Knezevic (the “Respondents”) as tenants in common.
The outcome of the auction was that the property was sold to Danny Knezevic, the former husband of the marriage, and his brother Stevan Knezevic for a purchase price of $1,352,000. The Respondents paid stamp duty to the amount of $25,930 under the Duties Act 1997 (‘the Act’) by calculating ad valorem stamp duty rates to 50% of the purchase price. On 6 December 2013, the Office of State Revenue (the “Appellant”) issued an assessment requiring a further $33,940 in stamp duty, which the Respondents paid. However, the Respondents later lodged an objection to the assessment and contended that duty was only payable on 50% of the purchase price.
Dutiable property is defined as “land in New South Wales” under s.11(1)(a) of the Act. Matrimonial property is defined under s.68(5) of the Act as “property in relation to the parties to a marriage or either of them”. Section 68 provides an exemption from the payment of duty where there is a dissolution of marriage or other relationship, and where an interest in matrimonial property is being transferred. Specifically, s 68(1)(a) of the Act, provides an exemption to duty being chargeable on matrimonial property that is transferred to either of the parties to the marriage, or to a child or children of either of them, or to a trustee of such child or children. The key issue in this appeal was whether or not s 68(1) operated to exempt half the transfer of the matrimonial property in Dee Why from the parties of the former marriage to Danny Knezevic.
When this matter came before Senior Member R Deutsch (the “Tribunal member”) at the NSW Civil and Administrative Tribunal, the Tribunal member held that the focus must be on what has been transferred rather than the manner in which the transfer was made. The Tribunal member decided that, while Danny Knezevic and his wife had transferred the shares in the property as a whole, in law, they in fact sold their individual interests as tenants in common.
The Appellant appealed the decision of the NSW Civil and Administrative Tribunal on two main grounds. These grounds were that the Tribunal member erred in finding that Danny Knezevic and his wife had sold individual interests in the property rather than the property as a whole and that therefore the exemption under s 68(1) applied to the transaction. As such, the critical issue before the Appeal Panel was whether or not the transfer of the Dee Why property constituted a transfer of the whole property to the Respondents.
In citing Chief Commissioner of State Revenue v Centro (CPL) Limited  NSWCA 325, the Respondents submitted that, while there was a conveyance of the whole of the land, the interests of each purchaser were separately defined. Such separate interests could be found on the front page of the Contract for Sale, which stated that that the purchasers were acquiring equal shares in the property as tenants in common rather than purchasing the property as a whole. Having defined the separate interests in the property, the Respondents contended that the exemption under s 68(1) was enlivened through the transfer of matrimonial property to Danny Knezevic as a former party to the marriage.
The Respondents further submitted that the property did not lose its character as “matrimonial property” under s 68(5) and the rights of Danny Knezevic was not extinguished because there was an auction sale of the property. This proposition was supported by relying on the decision of the Queensland case of Bunny Industries Limited v FSW Enterprises Pty Limited (1981) Qd R 2588.
The Appeal Panel first turned its attention towards the wording of the orders in order to ascertain the intention behind it. The Appeal Panel reasoned that the intention of the orders was to effect a transfer of the fee simple of the property at a public auction during which auction the former parties to the marriage might make a bid. However, the orders do not specify that any interest in the property be transferred to Danny Knezevic. Furthermore, the Appeal Panel noted that contrary to the Tribunal member’s view, the Contract for Sale demonstrates that the whole of the property was to be transferred and did not refer to the sale of separate interests in the property.
The Appeal Panel cited the Western Australian case of Nullagine Investments Pty Limited v The Western Australian Club Inc (1993) 177 CLR 635 in which the majority acknowledged the strong support for the view that the “the making of [an] order for sale extinguishes the equitable interest of the co-tenants in the land itself even before a sale is effected”. The Appeal Panel noted that there is no reason why these principles should not apply to the present case especially in light of the fact that paragraph 8 of the orders, which made it clear that either party was entitled to bid for the whole property.
After deciding that individual interests had ceased to exist in the property upon the orders being made for the sale, the Appeal Panel then turned its attention to the issue of the s.68(1) exception. The Appeal Panel held that the exemption under s.68(1) did not apply as the property had been transferred as a whole to both of the Respondents and Stevan Knezevic was not one of the persons defined in s 68(1)(a) as a person to whom matrimonial property could be transferred to without duty being payable.
The Appeal Panel, after applying the principle in Nullagine, found that the Tribunal member erred in deciding that the sale of the property constituted two separate transactions.
The Appeal Panel proceeded to make the following orders: