AOUN INVESTMENTS PTY LTD & ANOR v CHIEF COMMISSIONER OF STATE REVENUE (NSW)Judges:
New South Wales Supreme Court
MEDIA NEUTRAL CITATION:
 NSWSC 1394
1. In August 2003, Aoun Investments Pty Ltd, the first plaintiff, became the registered proprietor of land at Telopea, New South Wales, being lot 27 of section 1 in deposited plan 14134. The second plaintiff, Boutros Najm Aoun, was already the registered proprietor of the adjoining land, being lot 28 of section 1 in deposited plan 14134.
2. The plaintiffs executed a deed of partition dated in August 2003. It recited that as a requirement of a development application, lot 27 and lot 28 had been consolidated into lot 24 in deposited plan 1064574. It was further recited that the parties had agreed to develop the parcels as a strata plan creating 12 lots and common property and the parties had agreed that the property should be partitioned between them, lots 1-6 to be held by the first plaintiff and lots 7-12 to be held by the second plaintiff.
3. Consent to a development application issued later in August 2003. A condition of the consent was that the two adjoining lots be consolidated and the plan of consolidation be registered at the Land Titles Office.
4. In May 2004, lot 27 and lot 28 were consolidated into lot 24. It described the registered proprietors as the first plaintiff of the part formerly in lot 27 and the second plaintiff of the part formerly in lot 28.
5. After the completion of the development of the land in October 2004, the folio for lot 24 was cancelled upon registration of strata plan 73778 and folios were created for lots 1-12 in that strata plan. The registered proprietors of lots 1, 2, 4, 5, 6, 8, 9, 10 and 12 were the first plaintiff of the part formerly in lot 27 and the
ATC 4146second plaintiff of the part formerly in lot 28. The registered proprietor of lots 3, 7 and 11 was the first plaintiff.
6. The evidence revealed that it is the practice of New South Wales Land and Property Information, in the absence of transfers between registered proprietors, to issue a dual ownership or multiple ownership folio upon consolidation describing the interests in the consolidated land by reference to the interest that was held by each proprietor under the previous folios cancelled by operation of the plan of consolidation until the matter is resolved by transfers between the registered proprietors or to a third party or third parties.
7. In November 2004, a transfer was lodged with the Office of State Revenue. The transferor was the second plaintiff and the transferee was the first plaintiff. Lots 1, 2, 4, 5 and 6, part formerly in lot 28, were transferred. On the same date a transfer from the first plaintiff to the second plaintiff of lots 7, 8, 9, 10, 11 and 12, part formerly lot 27 was lodged.
8. Initially, the defendant, the Chief Commissioner of State Revenue, stamped the transfers with nominal duty. He subsequently issued a notice of assessment in respect of the transfers charging ad valorem duty. He rejected the plaintiffs' notice of objection. The plaintiffs seek a review by the court of the Chief Commissioner's determination.
9. Nominal duty only is payable on a partition under the Duties Act 1997, s 30. A partition is defined in s 30(1). As it stood at the time the transfers were executed, that provision was as follows:
"What is a partition? For the purposes of this section, a partition occurs when property (some or all of which is dutiable property) that is held by persons jointly (as joint tenants or tenants in common) and beneficially is transferred or agreed to be transferred to one or more of those persons."
10. Land and an interest in land in New South Wales are within the definition of "dutiable property" in terms of the Duties Act 1997, s 11(1)(a) and s 11(1)(l).
11. The plaintiffs submitted that the transfers satisfied this definition as they held lots 1-12 as joint tenants or, in the alternative, as tenants in common.
12. The Real Property Act 1900, s 100(1) was in the following terms:
"Two or more persons who may be registered as joint proprietors of an estate or interest in land under the provisions of this Act, shall be deemed to be entitled to the same as joint tenants."
13. Of the lots other than lots 3, 7 and 11, the plaintiffs argued that they were joint proprietors and should be deemed to hold the lots as joint tenants.
14. There is some difficulty of interpretation of this provision. There is no definition of "joint proprietors" in the legislation. The provision appears to be inconsistent with the Conveyancing Act 1919, s 26(1) which is in the following terms:
"In the construction of any instrument coming into operation after the commencement of this Act a disposition of the beneficial interest in any property whether with or without the legal estate to or for two or more persons together beneficially shall be deemed to be made to or for them as tenants in common, and not as joint tenants."
Hircock v Windsor Homes (Development No 3) Pty Ltd  1 NSWLR 501 at 505-506, Hutley JA with whom the other members of the Court of Appeal agreed on this point, sought to resolve the apparent inconsistency:
"It was held by the trial judge, and submitted before this Court, that s. 100(1) of the Real Property Act was inconsistent with s. 26, so that the lease on registration became a joint tenancy. This would produce an extraordinary situation. When the lease was executed, but before registration, it would effect a disposition of property in equity which was to be construed as a tenancy in common, unless it expressly, or by necessary implication, provided that the tenancy was to be joint. However, on registration, the opposite construction is to prevail, unless the contrary was to be inferred. Any reasonable construction which will avoid this is to be preferred. There is
ATC 4147such a construction. Section 100(1) can be read as applying the incidents of joint tenancy to the joint proprietorship. The words 'who may be registered' do not relate to their state prior to registration, but as a description of their position on registration. The subsection means: 'If two or more persons are registered as joint proprietors of an estate or interest in land under the provisions of this Act, they shall have the same rights as if they were joint tenants of a similar estate or interest at common law.'"
16. Peter Butt, Land Law, 5th ed, Lawbook Co, Sydney, 2006 at  suggests that on registration, so far as third parties are concerned, the joint proprietors of land are joint tenants with rights of survivorship. But that does not affect the way they hold the beneficial interest as between themselves. They may hold that interest as tenants in common.
Substance of the transaction
17. Of the three lots that were registered in the name of the first plaintiff only, it was submitted that the court should look at the substance of the transaction and should not be bound by the apparent tenor of the transfers. Reference was made to
Commissioner of Stamp Duties (Q) v Hopkins (1945) 71 CLR 351 at 378.
18. The Real Property Regulation 2003, reg 6(1) was in the following terms:
"The following applications and dealings must state whether the persons concerned take as joint tenants or as tenants in common:
- (a) an application by 2 or more persons to be registered as proprietors of land,
- (b) a transfer, mortgage, charge or lease in favour of 2 or more persons,
and, if they take as tenants in common, the shares in which they take."
19. It was submitted that the substance of the transaction was partition and the registration of the three lots should be regarded as corrected to show the plaintiffs holding as joint tenants or as tenants in common.
20. The joint tenancy and tenancy in common are forms of co-ownership. Each expression has a technical legal meaning. It is to be presumed that the legislature intended the terms to have that technical meaning, unless a contrary intention appears, where they are used in the Duties Act 1997, s 30(1) (
Attorney-General for NSW v Brewery Employés Union of NSW (1908) 6 CLR 469 at 531). No contrary intention was asserted or is divined from the legislation.
21. Each joint tenant is seised of the whole of the estate or interest in the land, subject only to the rights of other tenants. A joint tenant does not hold a right to any particular part of the land. In
Wright v Gibbons (1948-1949) 78 CLR 313 at 330, Dixon J cited with approval from Radcliffe's Real Property Law, at 33 the rights of joint tenants:
"Each of them has a right shared with his co-tenants to the whole common property, but no individual right to any undivided share in it...for this reason, joint tenants should not be spoken of as holding undivided shares."
22. A tenant in common has an undivided share and a right to occupy the whole of the property in common with others. In
Nullagine Investments Pty Ltd v Western Australian Club Inc (1992-1993) 177 CLR 635 at 643-644, Brennan J analysed the concept thus:
"The share or interest which a tenant in common has in land is an "undivided" share, that is to say, "a distinct share in property which has not yet been divided among the co-tenants". A division of the property is repugnant to the nature of a tenancy in common, for it is an essential characteristic of a tenancy in common that each of the tenants has the right to occupy the whole of the property in common with the others. Like joint tenants, tenants in common have a unity of possession; unlike joint tenants, they need not have a unity of interest, nor a unity of title, nor need there be a unity in the time when the interests of the co-owners vest. Each tenant in common has a separate and individual title to the property, limited according to the estate or term granted to or acquired by the tenant. Thus one tenant in common may be seised of an estate in fee simple, another seised of an estate for life, while a third may be a tenant for term of years, each of their interests being separately acquired at
ATC 4148different times. There is no right of survivorship among tenants in common." (footnotes omitted).
23. Peter Butt at  suggests that the term "joint proprietors" was used by the framers of the early Torrens statutes to replace the term "joint tenants" so that the Real Property Act 1900, s 100(1) merely provided that when registered as joint tenants, parties enjoyed the entitlements of joint tenants at common law.
24. The plaintiffs submitted that in the absence of a technical legal meaning of the phrase, joint proprietors should be given their ordinary meaning. Joint means shared, held by two or more people and a proprietor is a holder of property. Hence, the plaintiffs were joint proprietors because they held lot 24 and, subsequently, lots 1, 2, 4, 5, 6, 8, 9, 10 and 12 together.
25. Reference was made to
Kidson (Inspector of Taxes) v Macdonald  1 All ER 849. But that decision does not assist the plaintiffs because at 858, Foster J interpreted the word "jointly" in its ordinary meaning as including an equitable tenancy in common:
"In my judgment, 'jointly' in its ordinary sense means 'common to two or more', and therefore is wide enough to include an equitable tenancy in common of English real property."
26. There is a heading to the Real Property Act 1900, s 100 in the document containing the text of the Act as printed by the Government Printer. It says "Registered co-tenants." The Interpretation Act 1987, s 35(2) provides, with exceptions irrelevant for present purposes, that a heading to a provision of an Act is taken not to be part of the Act. But s 35(5) provides that that does not limit s 34, and s 34(1)(b)(i) provides that in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material to determine the meaning of the provision if the provision is ambiguous or obscure. Section 34(2)(a) provides that the material that may be considered in the interpretation of a provision of an Act includes all matters not forming part of the Act that are set out in the document containing the text of the Act as printed by the Government Printer.
27. In my view the meaning of the Real Property Act 1900, s 100(1) is obscure. The heading to the section does not form part of the Act but is included in the Government Printer's text of the Act. Recourse may, therefore, be had to the heading in aid of the interpretation of the provision.
28. A co-tenant is one of two or more persons who hold property. There is, in my view, a suggestion of co-ownership that connotes a joint tenancy or a tenancy in common. The Oxford English Dictionary defines a co-tenant as a joint tenant and hence co-tenancy and co-tenure.
29. In my view, the expression "joint proprietors" as used in the Real Property Act 1900, s 100(1) connotes some form of co-ownership of property and is to be distinguished from the situation in which two or more persons are owners of particular parts of property, even though those parts are included in a single certificate of title. That form of ownership is described as severalty. Osborn's Concise Law Dictionary, 10th ed, Sweet & Maxwell, London, 2005 says that property is said to belong to persons in severalty when the share of each is ascertained (so that he can exclude the others from it) as opposed to joint ownership, ownership in common, and coparcenary, where the owners hold in undivided shares.
30. In my view, the plaintiffs hold in severalty in this case. When lot 24 was created, the first plaintiff had title to a particular part of it, namely that part formerly in lot 27. Likewise, the second plaintiff had title to the other part of lot 24, namely that formerly in lot 28. There was no entitlement to possession and enjoyment of the whole of the land in either the first plaintiff or the second plaintiff. Their rights were distinct and not rights of co-ownership.
31. The same applies to lots 1, 2, 4, 5, 6, 8, 9, 10 and 12. The first plaintiff held a distinct and divided interest to part of those lots formerly in lot 27 and the second plaintiff likewise had a divided interest in the lots as formerly held in lot 28. The divided interests were reflected in the dual ownership folios.
Lots 3, 7 and 11
32. The evidence does not reveal why lots 3, 7 and 11 were registered in the name of the first plaintiff alone. A suggestion was made in submissions that it was because those lots were wholly within what had been lot 27. But there was no evidence to this effect.
33. Since lot 3 was registered in the name of the first plaintiff alone, there was no need to transfer it. Lots 7 and 11 were transferred to the second plaintiff. It may have been the intention of the parties that the folios for them record the divided interests of each plaintiff. But that was not the case, and an appeal to an analysis of the substance of the matter cannot alter the registration. The plaintiffs cannot call in aid, with respect to those transfers, the Real Property Act 1900, s 100(1) to deem them to be joint tenants for the purpose of the Duties Act 1997, s 30(1) because the former provision only operates with respect to persons registered as joint proprietors.
34. In my view, the Real Property Act 1900, s 100(1) does not assist the plaintiffs. They have not demonstrated that they were registered as "joint proprietors" of the lots the subject to the two transfers. The plaintiffs are not deemed by virtue of that provision to be joint tenants. They were not joint tenants in the technical sense and so they do not fall within the Duties Act 1997, s 30(1) as joint tenants.
35. Nor do the transfers affect a partition of the land that was lot 24. Portions of it, namely lots 3, 7 and 11, were not held by the plaintiffs jointly.
36. The plaintiffs were driven to argue that each lot should be looked at separately and the transfers of each lot with the exception of lots 3, 7 and 11 were within the Duties Act 1997, s 30(1). Even if this approach could be regarded as falling within the notion of a partition, for the reasons given, the lots were held in severalty and not in co-ownership. The plaintiffs were not joint tenants or tenants in common and the Real Property Act 1900, s 100(1) did not deem them to be joint tenants.
37. It was submitted that the Real Property Regulation 2003, reg 6(1) made it clear that, on consolidation, lot 24 could only be held by the plaintiffs as joint tenants or tenants in common. Since the instrument of consolidation disposed of interests in the newly created property to the plaintiffs together beneficially, they held lot 24, and hence the strata lots, as tenants in common by virtue of the Conveyancing Act 1919, s 26(1).
38. But the transfers of the lots and not the instrument of consolidation are the subject of the charge to duty. The Conveyancing Act 1919, s 26(1) says nothing about the transfers which are to be stamped at ad valorem rates unless they fall with the Duties Act 1997, s 30(1).
39. The Conveyancing Act 1919, s 26(1) is confined to the construction of an instrument, in this case the application for consolidation. It does not have the effect that the strata lots were deemed to have been held by the plaintiffs as tenants in common. Nor does it apply to the transfers in question. They were not instruments that disposed of a beneficial interest in property to, or for, two or more persons, together beneficially.
40. The plaintiffs have failed in their appeal to the Court. The transfers in question were subject to ad valorem duty unless they constituted a partition within the meaning of the definition of partition in the Duties Act 1997, s 30(1).
41. To constitute a partition within that definition, the lots the subject of the transfers in question had to be held by the plaintiffs as joint tenants or tenants in common. The lots were not so held.
42. Nor were the plaintiffs deemed to be joint tenants by the Real Property Act 1900, s 100(1) because it required the land to be held by the plaintiffs by way of co-ownership and the land was held by them in severalty.
43. Nor were the plaintiffs deemed to be tenants in common by the Conveyancing Act 1919, s 26(1). The transfers in question were not instruments that disposed of a beneficial interest in property to, or for, two or more persons, together beneficially.
44. I dismiss the summons. I order the plaintiffs to pay the defendant's costs.