Cavill v Chief Commissioner of State Revenue [2004] NSWADT 79 (23 April 2004)

Last Updated: 23 April 2004

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL GENERAL DIVISION

CITATION: Cavill v Chief Commissioner of State Revenue [2004] NSWADT 79


PARTIES: APPLICANT
Anna Marilyn Cavill
RESPONDENT
Chief Commissioner of State Revenue



FILE NUMBERS: 033179

HEARING DATES: 17/11/2003

SUBMISSIONS CLOSED: 15/12/2003



DECISION DATE: 23/04/2004

BEFORE: Montgomery S - Judicial Member





LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
First Home Owners Grant Act 2000
Real Property Act 1900

CASES CITED: Berkley v Poulett [1976] EWCA Civ 1; [1977] 1 EGLR 86, 93
Breskvar v Wall [1971] HCA 70; 126 CLR 376
Calverley v Green [1984] HCA 81; (1984) 155 CLR 242
Chang v Registrar of Titles [1976] HCA 1; (1976) 137 CLR 177
Chief Commissioner of Stamp Duties v Paliflex Pty Ltd [1999] NSWSC 889
Commonwealth v New South Wales [1923] HCA 34; (1923) 33 CLR 1
Fels v Knowles (1906) 26 NZLR 604
Hemmes Hermitage Pty Ltd v Abdurahman And Another (1991) 22 NSWLR 343
In the Marriage of Komaromi 2 Fam LR 11,590
Kern Corp Ltd v Walter Reid Trading Pty Ltd (1987) 164 FC 87/019
Lysaght v Edwards (1876) 2 Ch D 499
Midland Montagu Australia Ltd v Cuthbertson (1989) 17 NSWLR 309
R v Toohey (Aboriginal Land Commissioner) [1982] HCA 69; (1982) 158 CLR 327
Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209
Rayner v Preston (1881) 18 Ch D 1
Street v Mountford [1985] UKHL 4; [1985] AC 809
Stuart v Kingston [1924] HCA 30; (1924) 34 CLR 394
Tietyens v Cox (1916) 17 SR (NSW) 48 at 54-55; 34 WN 10 at 13
Waimiha Sawmilling Co. Ltd. v Waione Timber Co. Ltd. (1926) AC 101

APPLICATION: first home owners grant - approval of application
First Home Owners Grant Act - first home owners grant - approval of application

MATTER FOR DECISION: Principal matter


APPLICANT REPRESENTATIVE: APPLICANT
A Comanos, agent

RESPONDENT REPRESENTATIVE: RESPONDENT
N Sharp, barrister

ORDERS: The Chief Commissioner’s decision refusing Ms Cavill’s application for a grant under the First Home Owner Grant Act 2000 is affirmed.


Reasons for Decision:

1 By an Application filed on 7 July 2003, Ms Anna Marilyn Cavill ("the Applicant") seeks review of the decision by the Chief Commissioner of State Revenue ("the Chief Commissioner") refusing her a first home owners grant ("the Grant") under the First Home Owner Grant Act 2000 ("the Act"). The Applicant sought the Grant in relation to the property at 7 Rivertop Close, Normanhurst. Prior to the Application to the Tribunal the Applicant’s objection to the Commissioner’s decision refusing the Grant was dismissed. The Applicant was notified of that refusal by letter dated 25 June 2003.

2 It is not in dispute that on 13 March 2000 the Applicant entered a contract to purchase a property at 14 Mikkelsen Avenue Tregear NSW ("the Tregear property"). On 20 April 2000 the Applicant obtained the duly executed transfer for the Tregear property, however registration under the Real Property Act 1900 ("the RPA") did not occur until 12 May 2000.

3 On 4 May 2000, the Applicant entered into a contract with Donald Thompson and Tara Thompson ("the Thompsons") by which she agreed to sell the Tregear Property to them ("the Thompsons' Contract"). The Thompsons' Contract is an instalment contract, which allowed for payment of the principle over a 25 year period. The "Completion Date" for the Thompsons' Contract is specified as "the Due Date for Payment of the Final Instalment."

4 On 18 September 2002 the Applicant and her husband applied for the Grant. On 1 October 2002 the Chief Commissioner denied their application. The Applicant and her husband objected to the Chief Commissioner’s decision on 21 October 2002. This objection was followed by a series of correspondence and discussions between the parties culminating in the Chief Commissioner’s decision that is now under review.

Applicable legislation

5 The Act sets out the eligibility criteria for a grant. Section 7 of the Act provides:

"7 Entitlement to grant

(1) A first home owner grant is payable on an application under this Act if:

(a) the applicant or, if there are 2 or more of them, each of the applicants complies with the eligibility criteria, and

(b) the transaction for which the grant is sought:

(i) is an eligible transaction, and

(ii) has been completed.

(2) Despite subsection (1) (a), an applicant need not comply with the eligibility criteria to the extent the applicant is exempted from compliance by section 8A (2), 9 (2) or 12 (2).

(3) Despite subsection (1) (b), a first home owner grant is payable before completion of the relevant eligible transaction, as authorised by section 20.

(4) Only one first home owner grant is payable for the same eligible transaction."

6 However, to be eligible, an applicant or the applicant's spouse must not have had a relevant interest in residential property. Section 11 of the Act provides:

"11 Criterion 4--Applicant (or applicant's spouse) must not have had relevant interest in residential property

(1) An applicant for a first home owner grant is ineligible for the grant if the applicant or the applicant's spouse has, before 1 July 2000, held:

(a) a relevant interest in residential property in New South Wales, or

(b) an interest in residential property in another State or a Territory that is a relevant interest under the corresponding law of that State or Territory.

(2) In working out for the purposes of subsection (1) whether an applicant held a relevant interest (within the meaning of this Act or a corresponding law) in residential property at a particular time, any deferment of the applicant's right of occupation (because the property was subject to a lease) is to be disregarded.

(3) An applicant is ineligible if the applicant or the applicant's spouse has, on or after 1 July 2000 and before the date on which the application is made, held an interest in property (other than property to which the application relates) used at any time on or after 1 July 2000 as the residence of the applicant or the applicant's spouse, being:

(a) a relevant interest in residential property in New South Wales, or

(b) an interest in residential property in another State or a Territory that is a relevant interest under the corresponding law of that State or Territory."

7 Various definitions are provided in section 3 of the Act. Relevantly, this includes:

"relevant interest --see section 5 (2), (3) and (4). ...

residential property --land in Australia is residential property at a particular time if there is, at that time, a building on the land lawfully occupied as a place of residence or suitable for occupation as a place of residence."

8 The relevant provisions of section 5 of the Act state:

"5 Ownership of land and homes

(1) A person is an owner of a home or a home owner if the person has a relevant interest in land on which a home is built.

(2) Each of the following is, subject to subsection (3), a relevant interest in land:

(a) an estate in fee simple in the land,

(b) a life estate in the land approved by the Chief Commissioner,

(c) a perpetual lease of the land granted by the Commonwealth or the State,

(d) a leasehold interest in the land granted by the Commonwealth or the State that may be converted under the terms of the lease or by statute into an estate in fee simple,

(e) an interest as purchaser under a contract for the purchase from the Commonwealth or the State of an estate in fee simple in the land by instalments,

(f) a licence or right of occupancy granted by the Commonwealth or the State in relation to the land that gives, in the Chief Commissioner's opinion, the licensee or the holder of the right reasonable security of tenure,

(g) an interest in a company's shares or in units in a unit trust scheme, if the Chief Commissioner is satisfied that:

(i) the interest entitles the holder of the interest to exclusive occupation of a specified home situated on the land and owned by the company or trustees, and

(ii) the value of the shares is not less than the value of the company's or trustees' interest in the home.

(3) Subject to subsection (4):

(a) an interest is not a relevant interest at a particular time unless the holder of the interest has, or will have within 12 months after that time (or a longer time allowed by the Chief Commissioner), a right to immediate occupation of the land, and

(b) an interest is not a relevant interest in the hands of a person who holds it subject to a trust.

(4) The Chief Commissioner may recognise an interest (a non-conforming interest) as a relevant interest in land even though the interest may not conform with the above provisions (and even though the interest may not be recognised at law or in equity as an interest in land) if there is, in the Chief Commissioner's opinion, good reason to do so."

9 Sections 41 and 42 of the Real Property Act 1900 ("RPA") provide:

"41 Dealings not effectual until recorded in Register

(1) No dealing, until registered in the manner provided by this Act, shall be effectual to pass any estate or interest in any land under the provisions of this Act, or to render such land liable as security for the payment of money, but upon the registration of any dealing in the manner provided by this Act, the estate or interest specified in such dealing shall pass, or as the case may be the land shall become liable as security in manner and subject to the covenants, conditions, and contingencies set forth and specified in such dealing, or by this Act declared to be implied in instruments of a like nature.

(2) (Repealed)"

"42 Estate of registered proprietor paramount

(1) Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except:

(a) the estate or interest recorded in a prior folio of the Register by reason of which another proprietor claims the same land,

(a1) in the case of the omission or misdescription of an easement subsisting immediately before the land was brought under the provisions of this Act or validly created at or after that time under this or any other Act or a Commonwealth Act,

(b) in the case of the omission or misdescription of any profit [Atilde] prendre created in or existing upon any land,

(c) as to any portion of land that may by wrong description of parcels or of boundaries be included in the folio of the Register or registered dealing evidencing the title of such registered proprietor, not being a purchaser or mortgagee thereof for value, or deriving from or through a purchaser or mortgagee thereof for value, and

(d) a tenancy whereunder the tenant is in possession or entitled to immediate possession, and an agreement or option for the acquisition by such a tenant of a further term to commence at the expiration of such a tenancy, of which in either case the registered proprietor before he or she became registered as proprietor had notice against which he or she was not protected: Provided that:

(i) The term for which the tenancy was created does not exceed three years, and

(ii) in the case of such an agreement or option, the additional term for which it provides would not, when added to the original term, exceed three years.

(2) In subsection (1), a reference to an estate or interest in land recorded in a folio of the Register includes a reference to an estate or interest recorded in a registered mortgage, charge or lease that may be directly or indirectly identified from a distinctive reference in that folio."

The Applicant’s case

10 The Applicant’s case is that she did not have a "relevant interest" in land prior to 1 July 2000. Accordingly she is entitled to the Grant. She argues that her interest in the Tregear property at the time she entered the Thompsons' Contract was not an estate in fee simple and was not a relevant interest because of the application of sections 5(3)(a) or 5(3)(b) of the Act.

11 She submits that the definition of relevant interest in land under section 5 of the Act is an exhaustive list. The list includes, as relevant interests, an estate in fee simple; and an interest as purchaser under a contract for the purchase from the Commonwealth or the State of an estate in fee simple in the land by instalments. She argues that while a purchaser's interest in a contract for sale of land from another private entity, as in the case of the Tregear property, was not included in the list, certain other purchaser's interests were included. The Applicant argues that the exclusion makes it clear that the legislature's intended to include an estate in fee simple and not include a purchaser's interest under a contract for sale of land as between private entities.

12 The Applicant further argues that the Tregear property is a Torrens title property. The Torrens title system of law is title by registration, not a system of registration of title. Pursuant to section 41(1) of the RPA the Applicant would only receive title by registering the relevant instrument. Registration occurred on 12 May 2000. Therefore it cannot be said that she had an estate in fee simple in the land until that date.

13 In support of this argument the Applicant referred to the views of Barwick CJ in Breskvar v Wall [1971] HCA 70; 126 CLR 376 where the Chief Justice stated at paragraph 15:

"The Torrens system of registered title ... is not a system of registration of title but a system of title by registration. ... It is the title which registration itself has vested in the proprietor."

14 The Applicant also referred to views expressed in Land Law, Butt P, 2001, LBC 4th Edition, Sydney ("Land Law") in which the learned author stated at 2010:

"This needs to be distinguished from the system of "registration of title" under the old system. Under the Torrens system, title rests upon the act of the Registrar-General in registering an instrument, rather than upon the act of the party executing the instrument. It is not the parties who effectively transfer the land, but the State, and in some circumstances more fully than the parties could."

15 The expression "estate in fee simple" is not defined in either the Act or the RPA. The Applicant argues that therefore it is necessary to consider the common law definition. In this regard she refers to the Oxford Companion to Law which defines an estate in fee simple as:

"In the English law of real property an estate (q. v.) in land, held heritably (fee), and descending to heirs generally, without restraint to any particular class of heirs (simple). An estate in fee simple comes as close to absolute ownership as the system of tenure will allow; when absolute ... and in possession it is the only estate of freehold which may now exist at law. Other estates in land exist as equitable interests only."

16 Further, the learned author of Land Law states:

"The full technical description of the position of an "owner" in fee simple- as it is found in the modern-day conveyance of old system land- conveniently summarises the legal theory: the person is "seised for an estate in fee simple ". The description used for an "owner" of land under Torrens title illustrates the same point: the person is "the registered proprietor of an estate in fee simple."

17 The Applicant argues that from when she signed the contract to purchase the Tregear property on 13 March 2000 she had an equitable interest in the property, and the vendor held their title on trust for her as purchaser. The Applicant then sold her equitable interest in the property to the Thompsons, with an express warranty that she would receive legal title to the property at a future stage, and the implied warranty that she would hold the legal title on trust for the Thompsons. In her submission, between 20 April and 12 May 2000 she had a mere equitable interest in the land, however she did not have an estate, and certainly did not have an estate in fee simple, as required by the Act. The Applicant asserts that under section 5(3)(a) the interest created on 12 May 2000 is not a "relevant interest" because she did not have a right to immediate occupation of the land. Under the Thompsons' Contract the Thompsons had this right, along with the rights to the rents and profits of the land as well as the responsibility for rates and taxes on the land.

18 While she agrees that she had something she could sell, in the Applicant’s submission, she did not have a "relevant interest" in land under the Act when she sold the Tregear property to the Thompsons.

19 The Applicant submits that a vendor under a contract for sale of land holds the property subject to a trust for the purchaser. She referred to views expressed by Mason J in Chang v Registrar of Titles [1976] HCA 1; (1976) 137 CLR 177 at 184 where he sated

"it has long been accepted that a vendor of real estate under a valid contract for sale is a trustee of the property sold for the purchaser".

20 The Applicant also referred to views expressed by Deane J in Kern Corp Ltd v Walter Reid Trading Pty Ltd (1987) 164 FC 87/019 where he stated:

"For limited purposes, the distinction between legal title and beneficial ownership may provide a useful reference point in describing the position of the ordinary unpaid vendor of land under an uncompleted contract of sale. However, and with due respect to some past statements of high authority to the contrary, it is wrong to characterize the position of such a vendor as that of a trustee. True it is that, pending payment of the purchase price, the purchaser has an equitable interest in the land which reflects the extent to which equitable remedies are available to protect his contractual rights and that the vendor is under obligations in equity which attach to the land. Nonetheless, the vendor himself retains a continuing beneficial estate in the land which transcends any "lien" for unpaid purchase money to which he may be entitled in equity after completion. Pending completion, he is beneficially entitled to possession and use. Pending completion, he is beneficially entitled to the rents and profits. If the purchaser enters upon the land without the vendor's permission and without authority under the contract, the vendor can maintain, for his own benefit, an action for trespass against the purchaser. While the practical significance of those continuing beneficial rights of the vendor may vary according to particular circumstances (e.g. whether completion is already overdue or is not due for some lengthy period), it is both inaccurate and misleading to speak of the unpaid vendor under an uncompleted contract as a trustee for the purchaser (see, generally, per Brett L.J., Rayner v. Preston (1881) 18 ChD 1, at pp 10-11 and Waters, The Constructive Trust, (1964), pp 74ff.). There is authority for the view that, after completion has actually taken place, some of the equitable rights of the purchaser, which (in their entirety) then constitute beneficial ownership, relate back to the date of the contract. But there is no relation back of beneficial ownership in the sense that the vendor is retrospectively deprived of his beneficial right, pending payment of the full purchase price, to the possession, use, rents and profits of the land. Regardless of whether his rights be viewed in the perspective of foresight (i.e. before completion) or hindsight (i.e. after completion), the ordinary unpaid vendor of land is not a trustee of the land for the purchaser. Nor is it accurate to refer to such a vendor as a "trustee sub modo" unless the disarming mystique of the added Latin is treated as a warrant for essential misdescription."

21 The Applicant argues that Deanne J's comments in Kern Corp Ltd v Walter Reid Trading Pty Ltd do not apply to this situation, and that case should be distinguished. She argues that Deanne J. was referring to an ordinary unpaid vendor; in ordinary circumstances where the vendor retains the right to possession and use; and where the vendor could maintain an action for trespass against the purchaser, should the purchaser enter the property. In those circumstances the ordinary unpaid vendor of land is not a trustee of the land for the purchaser. However, the Applicant submits that she is not an ordinary vendor of the sort outlined by Deanne J. She is not entitled to possession, nor use of the property. She could not maintain an action for trespass against the purchaser. On the contrary, the purchaser could most likely maintain an action against her for trespass should the Applicant enter the property without permission.

22 She further submits that her ability to assign the right of holding the asset, and the income stream associated with holding the asset is quite distinct from dealing with the property for her own benefit, and should not be confused. She asserts that it is akin to a trustee company that receives a fee for holding assets and is able to assign the holding of those assets to another trustee company, who would then be entitled to the fee or income stream. The Applicant concedes that in this case she had more latitude that a public trustee company may have, but argues that any party assigned the interests under the contract would also hold the property on trust for the purchasers. They could not simply occupy the property.

23 It follows, the Applicant submits, that at the date of acquiring an estate in fee simple, she held the Tregear property's title on trust for the benefit of the Thompsons. Accordingly, she did not have a "relevant interest" in land prior to 1 July 2000 and therefore she is entitled to the Grant.

The Chief Commissioner’s case

24 The Chief Commissioner’s letter of 25 June 2003 sets out the reason for refusing the Grant. In essence, the Chief Commissioner’s case before the Tribunal is as stated in that letter. The letter states:

"Having given a careful consideration of the issues raised, I am of the view that you held a relevant interest prior to 1 July 2000 and consequently your objection has been disallowed.

I am unable to accept the argument put forth by you that you are holding the Tregear property on trust for the purchasers D&T Thompson, when they have not paid the consideration in full and the necessary transfer documents have not been duly signed and delivered to them.

Although, D & T Thompson do have an equitable right having signed the contract for sale and made a certain number of instalment payments, it does not in any way affect your legal right until the entire money has been paid to you on time and in accordance with the conditions of Contract for sale. This means that you did have a relevant interest in terms of section 5(2) and did not meet the requirements under section 5(3) of First Home Owner Grant Act 2000.

25 The Chief Commissioner argues that pursuant to the Thompsons' Contract, the Applicant continues to hold the legal interest in the Tregear Property. The front page of the Thompsons' Contract specifies the "Completion Date" as "the Due Date for Payment of the Final Instalment." Clause 16.4 provides that "the legal title to the property does not pass before completion." One of the incidents of legal title is the right to exclusive possession of that property. In the present case, the Applicant has done nothing to dispose of her right to exclusive possession. All she has done is grant the Thompsons a licence to occupy the Tregear Property. In this regard, clause 5.1 of the Instalment Payment Schedule, which modifies the terms of the contract of sale, provides:

"The Purchaser and the Purchaser's Family are licensed to occupy the property and are entitled to possession of the property from the Possession Date." (emphasis added)

26 The Chief Commissioner further argues that it is made clear by clause 5.3 of the Instalment Payment Schedule that the Thompsons have been granted a mere licence. Clause 5.3 provides:

"The Purchaser acknowledges and agrees on behalf of the Purchaser and the Purchaser's Family that the possession given under paragraph 5.1 is not a residential tenancy or lease and is not subject to any legislation governing residential tenancies or leases."

27 In other words, the Chief Commissioner argues, clause 5.3 of the Instalment Payment Schedule expressly indicates that the Thompsons have not received a right of exclusive possession. The Chief Commissioner relies on Radaich v Smith [1959] HCA 45; (1959) 101 CLR 209 as authority for this principle and asserts that this means that the Applicant has not disposed of her right of exclusive possession.

28 In further support for the argument that the Thompsons have been granted a mere licence the Chief Commissioner refers to the case of Street v Mountford [1985] UKHL 4; [1985] AC 809 at 826-827 as authority for the principle that there can be no lease where the possession, although exclusive in fact, is pursuant to the legal relationship between an owner and occupier under an exchanged contract of sale. This is significant because while a lease gives a tenant a right to exclusive possession, a licence gives a mere right to occupy and generally gives no interest in the land: R v Toohey (Aboriginal Land Commissioner) [1982] HCA 69; (1982) 158 CLR 327 at 332, 340-344, 350-354, 363-364; Land Law at [1509].

29 The Chief Commissioner argues that it is clear that in using the terminology of a "right of occupation" in section 5(3)(a) of the Act, the Legislature intended to convey the concept of a "right to exclusive possession." This is made clear by the fact that the Act expressly recognises that a lease, which is characterised by a right of exclusive possession, is not to be taken as having eliminated the right to immediate occupation for the purposes of the Act. As noted above, section 11(2) of the Act provides:

"In working out for the purposes of subsection (1) whether an applicant held a relevant interest (within the meaning of this Act or a corresponding law) in residential property at a particular time, any deferment of the applicant's right of occupation (because the property was subject to a lease) is to be disregarded."

30 As a licence is a lesser interest than a lease, it is submitted, it must automatically follow that any deferment of the right of occupation as a result of a licence is also to be disregarded in determining whether the Applicant has a "relevant interest".

31 With respect to the Applicant’s argument that she hold the Tregear Property subject to a trust within the meaning of section 5(3)(b) of the Act, the Chief Commissioner argues that as there is no express deed of trust in the present case it is necessary for the Applicant to prove on the evidence that it was the joint intention of her and the Thompsons to create a trust. The Chief Commissioner relies on Calverley v Green [1984] HCA 81; (1984) 155 CLR 242 at 251 as authority for this principle. The Applicant has adduced absolutely no evidence in support of the proposition that she and the Thompsons intended to create a trust.

32 The Chief Commissioner referred to the decision of Chang v The Registrar of Titles [1976] HCA 1; (1976) 137 CLR 177 where Jacobs J, at 189-190, cautioned against the transposition into the vendor and purchaser relationship the laws governing the rights and duties of trustees. In fact, it is argued, the relationship between vendor and purchaser is essentially contractual. Jacobs J said that it was unlikely that a vendor could be characterised as a trustee unless settlement had taken place and all that remained to be done was to transfer the legal estate. The law does not ordinarily regard a vendor in an uncompleted contract for the sale of land as holding the property on trust for the purchaser.

33 The Chief Commissioner urged that the express terms of the Thompsons' Contract be considered as indicating that there was no intention to create a trust. In particular it is submitted that the Thompsons' Contract shows that the Applicant was not under a personal obligation to deal with the property for the benefit of the Thompsons, with the result that one of the essential preconditions of a trust is not satisfied. In this regard, clause 7.1(ii) of the Instalment Payment Schedule entitles the Applicant to encumber the Tregear Property without the consent of the Thompsons. A trustee could not do this as a trustee, as a trustee cannot deal with trust property for his or her own benefit: Stuart v Kingston [1924] HCA 30; (1924) 34 CLR 394 at 401.

34 Clause 7.1 of the Instalment Payment Schedule relevantly provides:

"Until the whole of the price payable under this Contract has been paid:

The Vendor will be entitled to mortgage and maintain all mortgages, give the property as security and maintain other encumbrances upon the property to a value of no more than the Balance Price."

35 Further, clause 7.2 of the Instalment Payment Schedule provides that, "[t]he Vendor shall be entitled to assign its interest under the Contract." Again, a trustee could not do this as a trustee as a trustee cannot deal with trust property for his or her own benefit. Further still, penalties are imposed on the Thompsons under clause 3.6 of the Instalment Payment Schedule if they fail to pay instalments by the due date.

36 Accordingly, the Chief Commissioner urged the finding that the Applicant had a "relevant interest" in land prior to 1 July 2000 and therefore she is not entitled to the Grant. The decision under review should therefore be affirmed.

Reasons and Decision

37 I agree with the Chief Commissioner that the Applicant’s relance on the RPA is misplaced. The RPA distinguishes between registered interests and unregistered interests. It does not refer to an estate in fee simple. The estate in land introduced by the RPA is a statutory estate that is independent of the existing estates. Upon registration, the Applicant became the registered proprietor of the estate in fee simple. This does not equate to obtaining an estate in fee simple at that time. I do not accept that the authorities to which I have been referred suggest otherwise.

38 The RPA provides for the registration of interests in Torrens title but only those interests that the legislation recognises as capable of registration may be recorded on the Register. Not all interests in Torrens title land can be registered. The registration of an instrument does not affect the estate or interest in land with which the instrument deals: Fels v Knowles (1906) 26 NZLR 604; Waimiha Sawmilling Co. Ltd. v Waione Timber Co. Ltd. (1926) AC 101.

39 The scope of the interest connoted by a fee simple estate is broad, as emphasised by Isaacs J in Commonwealth v New South Wales [1923] HCA 34; (1923) 33 CLR 1 at 42, where he referred to the term "fee simple" in the following terms:

"... A fee simple is the most extensive in quantum, and the most absolute in respect to the rights which it confers, of all estates known to the law. It confers, and since the beginning of legal history it always has conferred, the lawful right to exercise over, upon, and in respect to, the land, every act of ownership which can enter into the imagination, including the right to commit unlimited waste; and for all practical purposes of ownership, it differs from the absolute dominion of a chattel, in nothing except the physical indestructibility of its subject ..."

40 My understanding of the present state of the law is that once a contract for sale is signed, before settlement takes place, the purchaser gets the "equitable fee simple", while the vendor retains the "legal fee simple" until completion. In Hemmes Hermitage Pty Ltd v Abdurahman And Another (1991) 22 NSWLR 343 Kirby P at 347 adopted the view, expressed in Tietyens v Cox (1916) 17 SR (NSW) 48 at 54-55; 34 WN 10 at 13, that although the object of the Torrens system of land titles is to create a statutory estate dependent upon the act of registration, the whole course of judicial interpretation and application of the RPA has recognised the old law and practice of conveyancing as still applicable to equitable interests in land under the Act. The new system was superimposed upon the existing system. However, the latter was not extinguished. Similar views were expressed by Powell J in Midland Montagu Australia Ltd v Cuthbertson (1989) 17 NSWLR 309 at 313.

41 Under section 5(2)(a) of the Act the Legislature expressly elected to make an estate in fee simple the relevant indicia of ownership rather than making registration or the holding of a registered interest pursuant to the RPA the indicia of ownership. This takes account of the fact that land conveyed in New South Wales includes both Torrens title and old system title land. In other words, the Legislature chose to distinguish between holding an estate in fee simple on the one hand, and owning a legal interest recognised for the purposes of the indefeasibility provisions of the RPA on the other.

42 On its terms, section 41(1) of the RPA is expressly limited to the passing of an interest under the terms of, and for the purposes of that Act. It follows that registration has no bearing of when an estate in fee simple in the land can be said to arise for the purposes of the Act.

43 This being the case, it is my view that the Applicant obtained at least the equitable estate in fee simple prior to entering into the Thompsons' Contract. This is sufficient to bring the Applicant’s circumstances within the scope of section 5 of the Act. Accordingly, I find as a fact that the Applicant held an estate in fee simple in the Tregear property before 1 July 2000.

44 Subject to any exceptions that arise under section 5 of the Act, the Applicant would therefore have held a relevant interest in residential property in New South Wales before 1 July 2000 and would be ineligible to receive the Grant. Section 5(3) of the Act relevantly provides:

"(3) Subject to subsection (4):

(a) an interest is not a relevant interest at a particular time unless the holder of the interest has, or will have within 12 months after that time (or a longer time allowed by the Chief Commissioner), a right to immediate occupation of the land, and

(b) an interest is not a relevant interest in the hands of a person who holds it subject to a trust."

45 The Applicant asserts that each of these exceptions apply to the Tregear property. Firstly, she argues that she did not have a right to immediate occupation of the land because of the rights given to the Thompsons under the Thompsons' Contract. Secondly, she argues that the Tregear property is held subject to a trust. In my view, neither of these arguments can succeed.

46 I do not accept the Applicant’s argument that the exclusion under section 5(2)(f) of the Act with respect to a contract for the purchase from the Commonwealth or the State by instalments also indicates the legislature's intention to not include a purchaser's interest under a contract for sale of land by instalments as between private entities. In my view, the specific mention of the exclusion in section 5(2)(f) of the Act suggests the opposite view.

47 I agree with the Chief Commissioner that the Thompsons' Contract gives the Thompsons a licence to occupy the Tregear Property. I also agree that as a licence is a lesser interest than a lease, any deferment of the right of occupation as a result of a licence is to be disregarded in determining whether the Applicant has a relevant interest in the Tregear Property. The Applicant remains the registered proprietor. In my view the licence gives the Thompsons a mere right to occupy and no interest in the land. While no doubt the Thompsons would have contractual rights that could be enforced against the Applicant, the Applicant could revoke the licence and therefore has a right to immediate occupation of the land.

48 With respect to the Applicant’s argument that the Tregear property is held subject to a trust for the Thompsons, I am satisfied that there is no express deed of trust in the present case. The Chief Commissioner argues that as there is no express deed of trust it is necessary for the Applicant to prove on the evidence that it was the joint intention of her and the Thompsons to create a trust. I agree with tat submission. I have been referred to several authorities with respect to the Applicant’s argument that a trust nevertheless exists. In my opinion those authorities establish that, under Australian law, when the purchaser of land has paid the purchase money, the vendor becomes a constructive trustee of the property sold. However, the law does not ordinarily regard a vendor in an uncompleted contract for the sale of land as holding the property on trust for the purchaser.

49 The law is conveniently summarised by Austin J in Chief Commissioner of Stamp Duties v Paliflex Pty Ltd [1999] NSWSC 889 where he stated:

The existence of the purchaser's equitable interest does not imply that the vendor is a mere trustee once the contract for sale is entered into. The position was well summarised by Stamp LJ in Berkley v Poulett [1976] EWCA Civ 1; [1977] 1 EGLR 86, 93:

`But to say that it is the duty of the vendor as trustee for the purchaser to care for the property is to put the cart before the horse and may lead you into error. He is said to be a trustee because of the duties which he has, and the duties do not arise because he is a trustee but because he has agreed to sell the land to the purchaser and the purchaser on tendering the price is entitled to have the contract specifically performed according to its terms. Nor does the relationship in the meantime have all the incidents of the relationship of trustee and cestui que trust.'

50 Similar views were expressed by Hogan J in the Family Court Of Australia matter of In the Marriage of Komaromi 2 Fam LR 11,590:

"The case of Lysaght v Edwards (1876) 2 Ch D 499 is often relied upon as authority for the proposition that once a contract to purchase is entered into the vendor then becomes the trustee of the fee simple in equity for the purchaser and the purchaser then becomes the trustee of the purchase moneys for the vendor. It was then said following upon that argument that the purchaser then acquired an equitable fee simple in the property the subject of a contract. This authority was doubted in subsequent cases and in particular in Rayner v Preston (1881) 18 Ch D 1, where Lord Justice James said:

"I agree that it is not accurate to call the relation between the vendor and the purchaser of an estate under a contract, while the contract is in fieri, the relation of trustee and cestui que trust. But this is because it is uncertain whether the contract will or will not be performed; the character in which the parties stand to one another remains in suspense as long as the contract is in fieri."

His Lordship then proceeds to propound what in my view is the true position. It is only when the whole of the purchase money has been paid that it can then be established that the relationship was then and has always been that of trustee and cestui que trust."

51 These views are particularly relevant to the circumstances of this matter given the rights retained by the Applicant under the Thompsons' Contract. In my view, the relationship between the Applicant and the Thompsons does not have all the incidents of a trust relationship. In my opinion, the Applicant’s duties do not arise because she is a trustee but because she has agreed to sell the Tregear property to the Thompsons and the Thompsons are entitled to have the contract specifically performed according to its terms.

52 It follows, in my view, that the exceptions provided for under section 5 of the Act are not available to the Applicant. Accordingly, the Chief Commissioner’s decision is the correct and preferable decision and should be affirmed.

Order

The Chief Commissioner’s decision refusing Ms Cavill’s application for a grant under the First Home Owner Grant Act 2000 is affirmed.