Bottle Tower Investments Pty Ltd v Chief Commissioner of State Revenue [2014] NSWATAD 172

Date of judgement 14 October 2014 Proceeding No. 1410248
Judge(s) N S Isenberg
Court or Tribunal Administrative & Equal Opportunity Division, NSW Civil and Administrative Tribunal
Legislation cited Administrative Decisions Review Act 1997

Civil and Administrative Tribunal Act 2013

Duties Act 1997: Sections 10, 15, 21, 22, 49 and 58(2)

Interpretation Act 1987

Taxation Administration Act 1996
Catchwords ‘declaration of trust’ as defined in s 8(3) of the Duties Act 1997
Cases cited B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; (2008) 74 NSWLR 481

Lionore Australia (Avalon) Pty Ltd v Commissioner of State Revenue [2006] WASAT 250


On 14 October 2014 judgment was delivered in this matter by the NSW Civil and Administrative Tribunal. The Crown Solicitor acted for the Chief Commissioner of State Revenue (“Chief Commissioner”).

In these proceedings, the Taxpayer, Bottle Tower Investments Pty Ltd, sought review of the Chief Commissioner’s assessment concerning the payment of $70,000 additional duty.


In mid-2009, Mr Paul James McCullagh decided to transfer a property at Palm Beach (“the Property”), jointly owned by himself and his wife, to the Taxpayer. Mr McCullagh was at all time the sole director of the Taxpayer company. Mr McCullagh also decided that if the purchase price of the property was to increase within the two years of purchase, the Taxpayer would pay to Mr McCullagh and his wife this increase in value up to $1 million (“Oral Agreement”).  

Clayton Utz was instructed by the Taxpayer on the transfer of the Property. A valuation was obtained for $4.8 million. A transfer dated 3 July 2009 was executed by the parties and was stamped with duty of $276,490 as a transfer of real property with a dutiable value of $4.8 million, and registered at Land and Property Information.

In June 2011, Mr McCullagh contacted his accountants and informed them that the Taxpayer may have to pay an additional amount to himself and his wife based on the increased value of the Property as at 3 July 2011. A Deed setting out the details of the 2009 Oral Agreement was signed by the Taxpayer and Mr and Mrs McCullagh. 

This Deed was sent to the Chief Commissioner by Clayton Utz with a valuation dated 9 June 2011 which stated the property had a value of $6.5 million. Also enclosed, was a cheque for $70,000 payable to the OSR which accounted for the duty payable on the $1 million addition to the consideration amount. The Deed was stamped by OSR on 31 January 2012 with a total duty amount of $346,490.00.

On 2 December 2013, the Chief Commissioner received an objection to the assessment on the grounds that it was not a transfer of dutiable property. The Chief Commissioner disallowed this objection stating that the true consideration for the 2009 transfer of the Property was the purchase price of $5.8 million.

Reason for Decision

There was no dispute that the Deed was not a transfer of dutiable property. Thus if the 2009 sale was subject to an unconditional transfer, duty would be calculated solely on $4.8 million. The Chief Commissioner also conceded that the Oral Agreement did not constitute the creation of an encumbrance.

The main issue in this case turned on the determination of the relevant consideration for the dutiable transaction. Whilst the Taxpayer submitted there were two separate transactions, the Chief Commissioner determined that they were two limbs of a single transaction and thus both the amount in the Transfer and the $1 million in the Oral Agreement moved the transfer. The Tribunal accepted this submission by the Chief Commissioner.

Mr McCullagh’s evidence was that he wished to protect Mrs McCullagh from a ‘distressed property market’. The Tribunal found that there was no compelling evidence to support the submissions that the total acquisition of the Property should involve two separate transactions and that the evidence of Mr McCullagh was that the terms of the Oral Agreement were made in 2009.

The Tribunal found that the total consider for the dutiable transaction was $5.8 million. The vendors had done everything required to transfer the Property, however the Taxpayer had a contingent obligation to pay them an additional $1 million subject to a relevant change in the value of the property within the agreed period.

The second issue was how the consideration should be dealt with in accordance with the revenue legislation. The Taxpayer submitted that since the Chief Commissioner stamped the deed, rather than the transfer, and the transfer itself was not assessed, the appeal should be allowed. The Taxpayer cited sections 297 and 288 of the Duties Act which state that the Chief Commissioner must stamp an ‘instrument’ under which duty is chargeable, or effects or evidences a dutiable transaction. The stamping of this instrument is to constitute an assessment.

The Tribunal recognised that, at the time of the stamping of the transfer, the Chief Commissioner was unaware of all the relevant facts and circumstances surrounding the 2009 transaction sufficient to enable him to determine the relevant duty payable in respect of the dutiable transaction. He did not know of the terms of the Oral Agreement until a covering letter, deed, and a cheque were received in 2011. Therefore the Taxpayer did not comply with s10(1) of the Taxation Administration Act. 

The Tribunal accepted that the Chief Commissioner, by stamping the Deed for duty of $346,490, was a reassessment.

Notwithstanding the formal failure to issue a notice of assessment in respect of the reassessment of duty, the Tribunal found that the Deed is a document, and hence an instrument as defined in dictionary of the Duties Act and s21(1) of the Interpretation Act 1987, that effects or evidences a dutiable transaction. The Chief Commissioner stamped the Deed by way of reassessment of duty payable in respect of the relevant dutiable transaction.  The Taxpayer cannot use its failure to comply with its statutory obligations to assert that the Chief Commissioner cannot impose duty in accordance with the law.

Both parties made submissions in relation to the ‘contingency principle’. Counsel for the Chief Commissioner referred to authorities from Australia and the United Kingdom, however there were no judicial or tribunal decisions in NSW. Considering the above findings, Senior Member Isenberg, did not find it necessary to deal with the possible application of the contingency principle.

The taxpayer did not satisfy the Tribunal that it was more likely than not the decision by the Chief Commissioner was incorrect.


The relevant decision is confirmed.

Link to decision

Bottle Tower Investments Pty Ltd v Chief Commissioner of State Revenue [2014] NSWCATAD 172

Last updated: 17 May 2016