|Date of judgement||13 November 2020|
|Judge(s)||Meagher JA, Leeming JA and Payne JA|
|Court or Tribunal||Supreme Court of New South Wales, Court of Appeal|
Probate and Administration Act 1898 (NSW)
Stamp Act 1891 (UK)
Stamp Duties Act 1920 (NSW)
Trustee Act 1925 (NSW)
Stamp duties — declaration of trust — application of exemptions — nominal duty
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
Winston-Smith v Chief Commissioner of State Revenue  NSWSC 773
The Chief Commissioner appealed from a decision of Ward CJ to revoke a duties assessment issued to Benidorm Pty Ltd (“Benidorm”) which levied duty on a deed on the basis that the deed constituted a “declaration of trust” and was therefore dutiable under s. 8(1)(b)(ii) of the Duties Act 1997 (NSW) (“Duties Act”).
The Deed was executed by Benidorm as trustee, and (relevantly) “acknowledged and declared” that Benidorm held property for Mr Stubbs “in place of and as successor to” a deceased beneficiary. At first instance, her Honour found that the Deed did not constitute a “declaration of trust”, because it merely acknowledged the existing legal position whereby the interest of the deceased beneficiary had already vested in Mr Stubbs as the executor of his estate due to the operation of the Probate and Administration Act 1898 (NSW).
The relevant provisions of the Duties Act were:
Section 8 - Imposition of duty on certain transactions concerning dutiable property
At first instance, Ward CJ in Eq held that the definition of a declaration of trust in s. 8(3) of the Duties 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].
Her Honour applied Gageler J’s minority judgment in the High Court decision in Chief Commissioner of State Revenue v Rojoda Pty Ltd  HCA 7 in the context of similar Western Australian legislation. At , Ward CJ in Eq 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’”.
The issues in the appeal were:
The Chief Commissioner contended that if the Deed satisfied the statutory definition of “declaration of trust” under s. 8(3) of the Duties Act then nothing more was required to levy it to duty. The Chief Commissioner further contended that s. 8(3) encompassed the mere acknowledgement of an existing trust. Referring to clause 1 of the Deed, the Chief Commissioner submitted that the Deed satisfied the statutory definition and was therefore subject to duty.
In support of this construction of s. 8(1) of the Duties Act, the Chief Commissioner further submitted that the exemptions and concessions contained in ss. 18, 50, 54 and 55 told against a construction that declarations with no operative effect were not a dutiable transaction, because otherwise those provisions would have no work to do.
Alternatively, the Chief Commissioner submitted, if the statutory definition did require a declaration of trust to do “something more than” acknowledge an existing trust, the Deed did have an “operative effect” and therefore satisfied this requirement.
Benidorm submitted that the definition in s. 8(3) of the Duties Act was not satisfied by an instrument that constitutes a mere acknowledgement of an existing trust. The definition required that the instrument vest the identified property for a person at the time of the instrument or at a future time, and that the instrument must effect a transaction.
The Court of Appeal unanimously held that a document which does not effect a transaction, but merely acknowledges an existing legal position, is not liable to duty under the Duties Act.
The Court held that given the focus of the Duties Act is now on “transactions” rather than “instruments”, it is necessary, when considering whether a document is said to be subject to duty, to construe it at the outset in order to identify whether it amounts to a “transaction” within the meaning of s. 8(1)(b) of the Duties Act. If it does not, it is not subject to duty.
The Court further found that the Deed had limited effect and agreed with the findings of Ward CJ that the document did no more than acknowledge the existing position between Benidorm and Mr Stubbs following the grant of probate and the resealing of the will. It followed that the Deed was held not to be a dutiable transaction..
The Court dismissed the appeal, with costs.