Kuo v Chief Commissioner of State Revenue [2011] NSWADT 299 (15 December 2011)

Last Updated: 27 January 2012

Administrative Decisions Tribunal New South Wales

Case Title:	Kuo v Chief Commissioner of State Revenue
Medium Neutral Citation:	[2011] NSWADT 299
Hearing Date(s):	15 June 2011 and 27 June 2011
Decision Date:	15 December 2011
Jurisdiction:	Revenue Division
Before:	M Hole, Judicial Member
Decision:	The decision of the Chief Commissioner of 6 December 2010 is confirmed.
Catchwords:	Double duty, transfer in conformity, section 18(3) Duties Act 1997
Legislation Cited:	Duties Act 1997 Interpretation Act 1987
Cases Cited:	Lake Victoria Ltd v Commissioner of Stamp Duties (1949) 49 SR (NSW) Sharpe v Chief Commissioner of State Revenue [2002] NSW ADT 6 Vickery v Woods [1952] HCA 7; (1951) 85 CLR 336 Blue Metal Industries Limited v Dilley (1969) 117CLR651
Texts Cited:
Category:	Principal judgment
Parties:	Frances Yi-Chun Kuo (Applicant) Roger Wilson Monk (Applicant) Chief Commissioner of State Revenue (Respondent)
Representation
- Counsel:	Counsel J Mitchell (Respondent)
- Solicitors:	Robert Richards & Associates (Applicant) Crown Solicitor (Respondent)
File number(s):	116010
Publication Restriction:

REASONS FOR DECISION

1. The Applicants have made an application to review the re-assessment made by the Respondent on 12 July 2010 concerning the liability for duty on a transfer of a strata title unit.

Facts

2. A contract for sale was entered into on 4 April 2010 by Yea-Hsin Kuo ("Father"), Nai-Hui Liao ("Mother"), Roger Wilson Monk ("Son-in-Law"), and Frances Yi-Chun Kuo ("Daughter") to purchase a property in New South Wales ("the property"). The purchasers were described on the contract thus: -

Father and Mother as joint tenants as to a 95/100 th share as tenant in common with Son-in-Law and Daughter as joint tenants as to a 5/100 th share.

Stamp duty was paid on this contract at the ad valorem rate being $16,640.00.

3. Father and Mother applied for a First Home Owners exemption or concession from stamp duty as to their interest in the property. On 19 April 2010 Daughter informed the solicitor acting for the purchasers that Father and Mother did not wish to proceed; that they now wished to transfer their interest to Daughter.

After 16 April 2010 a transfer was stamped and nominal duty of $10 paid thereon, this disclosed the purchasers as: Daughter as to a 975/1000 th share as Tenant in Common with Son-in-Law as to a 25/1000 th share. This transfer was registered on 4 June 2010.

4. The duty paid on the contract for sale and the transfer were self assessed.

5. The Respondent advised the solicitor for the Applicants by fax on 15 June 2010 that the stamping of the transactions were being audited. Information was sought by way of a copy of the "front page of stamped contract for sale", "stamped transfer", and "statutory declaration" in relation to the section 18(3) transaction. Each of those items was supplied to the Respondent on the same day.

6. The statutory declaration in relation to the section 18(3) transaction was made by the Daughter. The declaration stated that (i a) :-

"3 I say that my parents and I are related persons for the purposes of section 18(3) of the Duties Act 1997 .

4 My parents have transferred their interest in the Contract to me."

The Declaration was sworn on 27 May 2010.

7. The Chief Commissioner of State Revenue made a decision on 12 July 2010 to re-assess the duty on the transfer as $16,640.00 rather than $10.00. The Applicants objected to this decision on 30 September 2010. This objection was partly allowed by the Chief Commissioner of State Revenue and the duty on the transfer reduced to $15,582.50. The Applicants appeal is in respect of this reduced sum.

Legislation

8. The Relevant sections of the Duties Act 1997 which apply are:

Section 1 - "related person" means a person who is related to another person in accordance with any of the following provisions:

(a) natural persons are related persons if:

(i) one is the spouse or de facto partner of the other, or

(ii) the relationship between them is that of parent and child, brothers, sisters, or brother and sister,

Section 8(1) This chapter charges duty on:

(a) - a transfer of dutiable property, and

(b) - the following transactions:

(i) an agreement for the sale or transfer of dutiable property,

(ii) a declaration of trust over dutiable property,

(iii) a surrender of an interest in land in New South Wales,

(iv) a foreclosure of a mortgage over dutiable property,

(v) a vesting of dutiable property by or as a consequence of an order of a court of this or another jurisdiction, whether inside or outside Australia,

(vi) the enlargement of a term in land into a fee simple under section 134 of the Conveyancing Act 1919 ,

(vii) a vesting of land in New South Wales by, or expressly authorised by, statute law of this or another jurisdiction, whether inside or outside Australia,

(viii) a lease in respect of which a premium is paid or agreed to be paid.

(2) Such a transfer or transaction is a dutiable transaction for the purposes of this Act.

Section 14 - For the purpose of assessing duty charged by this Chapter, joint tenants of dutiable property are taken to hold the dutiable property as tenants in common in equal shares.

Section 18(1) - If a dutiable transaction is effected by more than one instrument, one instrument is to be stamped with the duty payable on the dutiable transaction and each other instrument is chargeable with duty of $50.

Section 18(2) - The duty chargeable in respect of a transfer of dutiable property made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if the duty chargeable in respect of the agreement has been paid.

Section 18(3) - The duty chargeable in respect of a transfer of dutiable property that is not made in conformity with an agreement for the sale or transfer of the dutiable property is $10 if:

(a) the duty chargeable in respect of the agreement has been paid

(b) - the transfer would be in conformity with the agreement if the transferee was th e purchaser under the agreement

(c) - the transfer occurs at the same time as, or proximately with, the completion or settlement of the agreement

(d) - at the time the agreement was entered into, and at the completion or settlement of the agreement:

(i) the purchaser under the agreement and the transferee under the transfer are related persons, except as provided by subparagraph (ii), or

(ii) - if the purchaser purchased as a trustee, the transferee and the beneficiary are related persons.

Applicants' submissions

9. The Applicants' representative submitted that the transfer was in conformity with the contract and by application of the provisions of section 18(3)(d)(i), no duty is chargeable on the contract. The dictionary to the act defines "related persons" as where the "relationship between them is of parent and child."

10. That the contract is not a contract for one transaction, rather it was a contract for the transfer:

1 To the Father - as joint tenant with the Mother of a 42.5/100 th share of the Land;

2 To the Mother - as joint tenant with the Father to a 42.5/100 th share of the Land;

3 To the Daughter - as joint tenant with the Son-in-Law to a 2.5/100 th share of the Land;

4 To the Son-in-Law - as joint tenant with the Daughter of a 2.5/100 th share of the Land.

Accordingly the Father and Mother could deal with their undivided shares as they wished. They did so by transferring their shares to Daughter. It did not matter that in the contract the Daughter held her share as a joint tenant with the Son-in-Law.

11. The Applicant's representative submitted that for the purposes of assessing duty and relying on section 14 of the Duties Act 1997 joint tenants are taken to hold the dutiable property as tenants in common in equal shares. That therefore tenants in common "own discrete interests".

12. The submission was made that :

"20 The Father's share instead of being transferred to him was transferred to the Daughter. That is, the transfer was to a "related person" of the Father. Accordingly section 18(3)(d)(1) of the Duties Act 1997 has no present application.

21 The Mother's share instead of being transferred to her was transferred to the Daughter. That is the transfer was to a "related person" of the Mother. Accordingly section 18(3)(d)(1) of the Duties Act 1997 has no present application.

22 The shares the Daughter and the Son-in-Law contracted to purchase were transferred to them in conformity with the Contract.

23 A comparison between the interests agreed to (be) transferred as per the Contract and the interests actually transferred are as follows:

	Per Contract 1/100 th Shares	Per Transfer 1/100 th Shares
Father	42.5	-
Mother	42.5	-
Daughter	2.5	97.5
Son-in-Law	2.5	2.5
	100.00	100.00

"

Respondent's submissions

13. Attention was drawn to section 18 of the Duties Act 1997 which makes provision for 'no double duty' in specific transactions. Where a transfer is made in conformity with the contract then pursuant to section 18(2) the duty payable on the transfer is $10.00. The question of whether the transfer is in conformity with a contract has been considered in Lake Victoria Ltd v Commissioner of Stamp Duties (1949) 49 SR (NSW). In Lake Victoria , Jordan CJ stated at 265 with reference to the section of the Stamp Duties Act 1920 being the equivalent of section 18(2) of the Duties Act 1997.

"A conveyance is not made in conformity with the agreement unless it is made to the purchaser, or if the agreement provides that it is to be made not to the purchaser but to some other person, to that other person. Section 41(4)(a) is a general provision, and must be read subject to any special provisions of the Act."

This reference has been referred to in Vickery v Woods [1952] HCA 7; (1951) 85 CLR 336 and Sharpe v Chief Commissioner of State Revenue [2002] NSW ADT 6 at [27]- [29].

14. In this case the purchasers named in the contract are different persons to the transferees named in the transfer. That is, the purchasers were Father and Mother and the Applicants but the transfer is only to the Applicants accordingly the transfer was not made to the purchasers named in the contract, it is not in conformity with the contract and therefore section 18(2) of the Duties Act 1997 does not apply.

15. Section 18(3)(d) of the Duties Act 1997 refers to 'purchasers' and 'transferee' in the singular form. Section 8(b) of the Interpretation Act 1987 provides:

"a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form"

Section 8(b) Interpretation Act will apply to section 18(3)(d) Duties Act 1997 except where a contrary intention appears in the Duties Act 1997. There is no evidence of a contrary intention in the Duties Act 1997. Thus 'purchaser' as it appears in section 18(3)(d) of the Duties Act 1997 includes 'purchasers' and 'transferee' include 'transferees'. Thus if the purchasers and transferees are related persons then section 18(3)(d) of the Duties Act 1997 will apply.

16. The statutory scheme for interpretation of section 18(3) of the Duties Act 1997 does not allow an exemption where 'some' or the 'majority' of the purchasers and transferees are related persons. There is no indication that section 18(3) of the Duties Act 1997 was intended to apply in this manner. The section clearly states that, in the plural form, it is to apply to 'the purchasers' and 'the transferees'. Section 18(3)(d)(i) of the Duties Act 1997 operates so as to require all purchasers and transferees to be related in order for the exemption to be available.

17. Attention was drawn to Blue Metal Industries Limited v Dilley (1969) 117CLR651 wherein the Privy Council held that the operation of an interpretative provision in similar terms as s8(b) (s21 Interpretation Act 1899 (NSW)) did not extend so as to impose a different legislative purpose to that propounded by the relevant statute.

18. Relying on the definition of 'related person', in the dictionary to the Duties Act 1997, the Son-in-Law is not a related person for the purposes of application of section 18(3)(d)(i) of the Duties Act 1997. As this exemption is not available ad valorem duty is payable on the dutiable value of the transfer.

Reasons for decision

19. Section 18(1) of the Duties Act 1997 considers situations where a dutiable transaction is effected by more than one instrument requiring the duty to be paid on the dutiable instrument and then a duty of $50.00 on each of the other instruments. This ensures that no double duty is payable where this section is applicable. Section 18(2) of the Duties Act 1997 provides that where the transfer of dutiable property is made in conformity with the agreement for sale the duty payable is $10.00 if the duty payable on the agreement for sale has been paid. Thus if the transfer is in conformity with the agreement for sale there is no double duty. This is the usual situation where an agreement for sale is between the Vendor and the Purchaser as shown on both documents as being identical and to use the chart simplified in the Applicants' submissions if the transaction had followed the usual situation would have been from the Vendors to:

Father 47.5 95/100 th as Joint Tenants

Mother 47.5 Tenants in Common

Daughter 2.5 5/100 th as Joint Tenants

Son-in-Law 2.5

100%

In accordance with section 18(1) and 18(2) of the Duties Act 1997, if the transfer had been thus then the issue under appeal would not have arisen.

20. Section 18(3) of the Duties Act 1997 provides at subsections (a), (b), (c) and (d) that four criteria apply where the transfer is not in conformity with the agreement for sale, these subsections are cumulative not alternatives. Each of the subsections must be satisfied to permit the duty on the transfer to be assessed at $10.00.

21. In this matter subsection (a) had been satisfied as the duty chargeable in respect of the agreement had been paid.

22. Subsection (b) requires that the transfer would be in conformity with the agreement if the transferee was the purchaser under the agreement. In this matter the transferees shown on the transfer were not the purchasers under the agreement.

23. Subsection (c) requires the transfer to occur at the same time as, or proximately with, the settlement of the agreement. In this matter settlement of the agreement occurred proximately with the settlement of the agreement thus subsection (c) had been satisfied.

24. Subsection (d) provides that at the time that the agreement is entered into, and at the settlement of the agreement the purchaser under the agreement and the transferee are related persons except where subsection (d)(ii) applies. Subsection (d)(ii) which relates to purchases by a trustee, does not apply to this matter. Consideration must be then given to the definition of 'related person' as defined in section 1 of the Duties Act 1997. In this matter the Son in Law is only a related person to the Daughter. The transfer was in the following form from the Vendors to:

Daughter 975/1000 as Tenants in Common

Son-in-Law 25/1000

The application of section 8(b) of the Interpretation Act 1987 to the reference to purchaser requires all purchasers named in the agreement to be related to enable the application of subsection 18(3)(d)(i) of the Duties Act 1997.

25. The transfer was not in conformity with section 18(3)(d)(i) of the Duties Act 1997 in three respects. They being that the transferees now were shown as receiving different shareholdings, the tenancy of those transferees was shown as tenants in common and two of the original purchasers were omitted.

26. The applicants relied on section 18(3)(d)(i) of the Duties Act 1997 to disclose that the second duty assessed by the Respondent, that is the duty on the transfer as a transfer of dutiable property, was not assessable, as the transfer was in conformity with the agreement for sale and as such exempt from duty other than nominal duty.

27. The Applicants submitted that the agreement for sale was for four separate transfers as set out above at paragraph 10. That consequently the Father and Mother could deal with their undivided share as they wished. That as a consequence they could transfer those shares to the Daughter and since she was a "related person" within the meaning of section 18(3)(d)(i) of the Duties Act 1997 such a separate transfer would be only subject to nominal duty.

28. The submissions by the respondent at paragraph 13 draw attention to the reasoning set out in Lake Victoria, Vickery and Sharpe . Particularly to the statement of Jordan CJ at 265. The transfer is not in conformity with the agreement as the requirements of subsection 18(3)(d)(i) of the Duties Act 1997 have not been satisfied.

29. The Vendor to the Father, Mother, Daughter and Son-in-Law could not be required to transfer the shares as shown on the contract for sale to complete the four suggested transactions set out in paragraph 10 in the absence of a special condition to do so.

30. The Son-in-Law is not a related person as defined in the Dictionary and therefore section 18(3)(d)(i) cannot apply. As there is no provision in the section that it could be applied to some or a majority of purchasers then to construe it in that way would be contrary to the intention of the Duties Act 1997 see Blue Metal .

31. The decision of the Chief Commissioner of 6 December 2010 is confirmed.

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