|Date of judgement||30 April 2020|
|Judge(s)||Ward CJ in Eq|
|Court or Tribunal||Supreme Court New South Wales|
Barron (Inspector of Taxes ) v Littman  AC 96
Boensch v Pascoe  HCA 49; (2019) 375 ALR 15
Calverley v Green (1984) 155 CLR 242;  HCA 81
Chief Commissioner of Stamp Duties (NSW) v ISPT Pty Ltd (1998) 45 NSWLR 639
Chief Commissioner of State Revenue v Platinum Investment Management Ltd (2011) 80 NSWLR 240;  NSWCA 48
Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226;  HCA 4
Commissioner of Stamp Duties (NSW) v Pendal Nominees Pty Ltd (1989) 167 CLR 1
Commissioner of Stamp Duties (Queensland) v Hopkins (1945) 71 CLR 351;  HCA 14
Commissioner of State Revenue v Rojoda Pty Ltd  HCA 7
Crowther v Commissioner of Stamp Duties (NSW)  1 NSWLR 82
Davidson (Collector of Imposts) v Chirnside (1908) 7 CLR 324;  HCA 65
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431;  HCA 14
Fair Work Ombudsman v Spotless Services Australia Ltd  FCA 9
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89;  HCA 22
Federal Commissioner of Taxation v Clark (2011) 190 FCR 206;  FCAFC 5
Fremantle Lawyers Pty Ltd v Sarich (2019) 54 WAR 113;  WASCA 48
Harvey v Barton (No 4)  NSWSC 809
King v Denison (1813) 1 Ves & B 260
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360;  HCA 61
Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306;  HCA 45
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355;  HCA 28
Re Blow  1 Ch 233
Rinehart v Rinehart  NSWSC 68
Rojoda Pty Ltd v Commissioner of State Revenue  WASCA 224; (2018) 368 ALR 734
Stokes v Churchill; Estate of Fryer (1994) NSW ConvR 55- 694
Toohey’s Ltd v Commissioner of Stamp Duties (1960) 60 SR (NSW) 539
Tooheys Limited v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602;  HCA 35
Walsh Bay Developments Pty Ltd v Commissioner of Taxation (Cth) (1995) 31 ATR 15
Wedge v Acting Comptroller of Stamps (Victoria) (1941) 64 CLR 75;  HCA 1
On 31 May 2007, Benidorm (as trustee) and Mr Robinson (as sole beneficiary) entered into a deed of trust (the “First Declaration of Trust”) whereby Benidorm declared that it would hold title to an apartment (“the Apartment”) as trustee for Mr Robinson.
On 27 June 2007, the sale of the Apartment was completed and ad valorem duty of
$783,994.00 was paid on the Contract.
On 13 September 2013, Mr Robinson died. By his last will and testament dated 11 September 2013 (“the Will”), Mr Robinson appointed Mr Stubbs as his sole executor and beneficiary.
On 29 January 2015, Benidorm and Mr Stubbs executed the Second Declaration of Trust, whereby Benidorm declared it would hold title to the Apartment as trustee for Mr Stubbs.
On 8 March 2019, the Chief Commissioner issued an Assessment for ad valorem duty in respect of the second declaration of trust. Benidorm sought a review in these proceedings of the Assessment.
The relevant provisions of the Duties Act 1997 (NSW) (“the Act”) are contained in Section 8 - Imposition of duty on certain transactions concerning dutiable property.
The critical issue for determination was whether the Second Declaration of Trust constituted a “declaration of trust” within the meaning of the definition of that term in s 8(3) of the Act.
If this issue was determined in the affirmative, the Plaintiff alternatively contended that the Second Declaration of Trust was liable to nominal duty:
The Plaintiff’s primary contention was that the Second Trust Declaration was not liable to duty on the basis that it had no legal consequence. The Plaintiff submitted that a critical element in the statutory definition of “declaration of trust” is the requirement that the declaration operates “to vest” the beneficial estate in the property in such a way as to create a new trust over the property for the benefit of the beneficial owner.
The Plaintiff contended that since the Apartment was already vested in Mr Stubbs, the Second Declaration of Trust merely recorded the historical fact that the beneficial interest of the late Mr Robinson in the Benidorm Shares had already vested in Mr Stubbs as the sole executor of the Will on 13 September 2013. Thus, the Second Declaration of Trust had no work to do as a matter of law and was therefore not liable to ad valorem duty.
The Chief Commissioner submitted that:
The Court held that the definition in s 8(3) of the Act does not encompass mere acknowledgments of existing trusts. That is to say, in order to come within the definition, a declaration of trust must have “a legal consequence, or consequences, beyond merely acknowledging that which already exists” [at 227].
The Court applied Gageler J’s minority judgment in the recent High Court case of Chief Commissioner of State Revenue v Rojoda Pty Ltd  HCA 7 in the context of similar Western Australian legislation. At , Ward CJ found that “Gageler J recognised that a purported ‘declaration of trust’ that does no more than acknowledge the legal position that had already come to exist is not, relevantly, a ‘declaration of trust’”.
Although the Court found some force in the Chief Commissioner’s submission that the existence of specific relieving provisions tends against a narrow construction of s 8(3), it nonetheless preferred a narrower construction of s 8(3). However, the Court dismissed the Plaintiff’s construction that a declaration must “vest” the beneficial interest, as nowhere in section 8(3) of the Act can such a requirement to vest be found.
Accordingly, the Court concluded that the Second Declaration of Trust did not constitute a “declaration of trust” within the definition of that term in s 8(3) of the Act, finding that upon Mr Robinson’s death the relevant provisions of the Probate Act were engaged. Those provisions operated to vest, in accordance with his Will, the beneficial interest in the Apartment under that trust in Mr Stubbs. That had the consequence of effecting a change in the beneficiary and, in effect, created a new and different trust. The Second Declaration of Trust did no more than acknowledge that fact.
Whilst it was not necessary to decide anything further having regard to her Honour’s primary finding that s.8(3) of the Act was not engaged, Ward CJ found in favour of the Chief Commissioner in respect of the remaining issues as follows: