|Date of judgement||9 August 2019|
Principal Member Harrowell
Senior Member Dubler SC
|Court or Tribunal|
Civil and Administrative Tribunal of NSW – Appeal Panel
Land tax PPR
Green v Green (1989) 17 NSWLR 343
Shepherd v Doolan  NSWSC 42
This was an appeal to the Appeal Panel from a decision of Senior Member Boxall at first instance that set aside two land tax assessments for the 2016 and 2017 land tax years, issued to the Respondent. The case concerned the application of the principles of common intention constructive trusts to the land tax regime.
The Appeal Panel dismissed the Chief Commissioner’s appeal and found that the Tribunal had not erred in applying the principles of law dealing with common intention constructive trusts. The Appeal Panel confirmed Senior Member Boxall’s decision that she was entitled to the Principal Place of Residence exemption under s. 10(1)(r) of the Land Tax Management Act 1956 (“LTM Act”).
The Land in question (Lot 2) is one of two lots in a strata plan. The Respondent is the sole registered proprietor of the Land, which she purchased in April 1999. The Respondent and her husband acquired Lot 1 in November 2013 and are the registered proprietors as tenants in common in equal shares.
Between November 2013 and December 2014, the Respondent and her husband undertook building works involving both Lot 2 and Lot 1. Since December 2014 the Respondent and her husband have occupied Lot 2 and Lot 1 as their matrimonial home. Prior to marrying, the Respondent and her husband had entered into a pre-marital agreement (“the Agreement”), which provided for their financial relationship during their marriage and should the marriage break down. Clause 6 of the Agreement provided that:
“The parties agree that any real property purchased by them from the date of this agreement and during the relationship as their matrimonial home shall be owned as tenants in common in proportion to their financial contributions. The parties also agree that until they purchase a property as their matrimonial home they will reside in [the Applicant’s] property at … Neutral Bay and the provision of this property for their joint use shall be a contribution to their shared lifestyle referred to in clause 19 of this agreement.”
Section 10(1)(r) of the LTM Act deals with the exemption from land tax for principal places of residence. In particular, Schedule 1A clause 14 of the LTM Act applies where the principal place of residence is alleged to comprise two or more strata lots. It provides relevantly as follows:
“14 Application of exemption to residence comprised of 2 or more lots in a strata plan
(1) The principal place of residence exemption does not extend to land that is comprised of 2 or more strata lots, and that is used and occupied by the owner of the lots (or by one of them) as a principal place of residence, unless:
(b) the strata lots are in the same ownership, and
The issue in dispute was whether the two strata lots are “…in the same ownership…” as required for the PPR exemption to apply under clause 14(1)(b) of Schedule 1A to the LTM Act.
At first instance, the Tribunal found that each lot was beneficially owned by the same persons because Ms McFadden held the Land as a constructive trustee for a beneficial interest held in equity by her husband (paragraph ). In reaching this finding, the Tribunal considered that:
The Appeal Panel stated that the issue was whether there was a joint subjective intention of the parties that the husband would have a beneficial interest in Lot 1, evidenced solely from the Agreement, irrespective of strict contractual law principles (at ). The Appeal Panel noted that the “objective” interpretation of the Agreement was irrelevant as it would not prevent the principles of equity intervening to prevent unconscientious conduct (at ).
In relation to the two elements for a common intention constructive trust to exist (as summarised by White J in Shepherd v Doolan (2005)NSWSC 42), the Appeal Panel considered that the Tribunal had not erred in finding that:
The Appeal Panel did not agree with the Respondent’s submission that the grounds of appeal were not tenable. It found that in circumstances where the Agreement had to be interpreted for the purpose of deciding the common intention of the parties on the constructive trust issue, the appeal was not untenable.
(1) The Appeal is dismissed.
(2) The Respondent's application for costs is dismissed.