SPRING GROVE PTY LTD v COMMR OF STATE TAXATION (WA)

Judges:
Heenan J

Court:
Supreme Court of Western Australia

MEDIA NEUTRAL CITATION: [2000] WASCA 138

Judgment date: Judgment delivered 8 May 2000

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Heenan J

This is an appeal under s 33 of the Stamp Act 1921 (WA) from a decision of the Commissioner of State Taxation on an

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ATC 4348

objection made by the appellant with respect to an assessment of stamp duty.

2. By five written agreements dated 12 May 1994 Elmbridge Pty Ltd (``the vendor'') agreed to sell to the appellant company five units in a building known as Claisebrook Court, situated at 48 Wellington Street, East Perth. In each case the appellant was acting in the capacity of trustee for one of five persons. Each of the beneficiaries was to receive one of the units. The price varied from unit to unit, ranging from $171,250 to $178,500. On 9 November 1994 an amount of a little more than $4,000 was paid to the respondent to meet the stamp duty assessed in respect of each agreement.

3. The time for completion of the purchase of the units passed, and on 3 February 1995 the vendor began court proceedings against the appellant and Gerald Kevin Nugawela, one of the directors of the appellant. The proceedings were compromised shortly afterwards. On 17 March 1995 a deed of settlement was executed. The parties to the deed were the vendor, the appellant and Mr Nugawela and his wife. Pursuant to two of the original agreements each of the Nugawelas was to have become the beneficial owner of a unit. In the deed it was agreed that all of the earlier agreements be terminated and that Mr and Mrs Nugawela as joint tenants would purchase three of the units, each for a slightly higher price than that which was to have been paid earlier.

4. On 19 April 1995 the appellant, as trustee of the original intended purchasers of the three units in question, applied to the respondent for cancellation of the assessment or refund of the stamp duty paid in respect of the three original agreements relating to those units. In response to a question on the application form, in each of the three cases the appellant answered ``No'' to the question:

``Is there an understanding, agreement or arrangement outside of the instrument between the person liable for the payment of the duty and another person that the property is or will be conveyed or transferred to another person, whether by the person liable to pay the duty or by any other person?''

On 4 May 1995 the respondent cancelled the three assessments of duty and during the following week refunded to the appellant a total amount of $12,196.75.

5. On 26 May 1995 the appellant, as trustee for the remaining two of the original intended purchasers, made a similar application to the respondent on their behalf and in both cases gave the same answer to the question on the form. On 29 June 1995 the respondent cancelled the assessment in respect of the fourth application and promptly refunded the stamp duty of $4,000 odd. However, by letter dated 11 July 1995 he queried the correctness of the answer which the appellant had given on all five application forms. On 30 October 1995, after an exchange of correspondence with the appellant's solicitors, the respondent wrote to them advising that

• (a) in his opinion, in view of the terms of the deed the answer in each case was incorrect,
• (b) by reason of the provisions of s 15A(6)(b) of the Act each of the five original agreements remained liable for stamp duty,
• (c) no refund should have been made, and
• (d) the fifth application was refused.

The respondent then issued a notice of assessment in respect of the $16,485.50 which had been refunded. The appellant objected to the assessment. On 2 February 1996 the respondent allowed the objection in respect of the original agreements relating to the two units which were not the subject of the purchase agreed to in the deed. He reduced the assessed amount to $12,196.75.

6. At the request of the appellant the respondent now has referred to this Court its objection to the assessment, pursuant to O 77 of the Rules of Supreme Court 1971.

7. As I understand it, the argument put by counsel on behalf of the appellant is as follows. The true purchasers under the original agreements were the beneficiaries of the trust. The appellant was acting merely as trustee and was not purchasing any of the five units in its own right. Pursuant to the deed each of the original agreements was ``terminated by mutual consent'' with effect from the date of execution of the deed. That termination was independent of any other provision in the deed and none of the parties received any benefit under the original agreements. The parties to the later agreement for purchase of those units are different, the prices are different and the subject matter is different. In those circumstances, counsel argued that the respondent is asking for

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ATC 4349

payment of stamp duty twice on the same transaction and is not entitled to do so.

8. The argument presented on behalf of the appellant must be considered against the scheme of the Act. In
Casella v Commissioner of State Taxation (WA) 96 ATC 4145 at 4150 Franklyn J said:

``... The scheme of the Act is that duty is chargeable on instruments and not on the transactions they represent.... The instrument came into being and so became liable for duty. Relief from that liability or the right to a refund in whole or part after payment of that duty or the creation of an obligation to pay a lesser sum by way of duty than the ad valorem duty... can only result by way of the application of a provision of the Act.''

By reason of the provisions of s 15A(1)(b) of the Act the respondent is required to refund all of the duty paid in respect of each of the first three agreements if he is satisfied as to two matters: first, that the agreement is discharged and, secondly, that no amount of money will be paid to or obtained by the appellant in consequence of the discharge of that agreement. In this case it is said on his behalf that the respondent cannot be satisfied as to the second of those matters. By reason of the operation of s 15A(6)(b) of the Act the appellant is deemed to have obtained an amount equal to the duty paid in respect of each of the three original agreements. The provisions of the subsection bring about that deeming effect if

``(b) there exists an agreement, arrangement or understanding between the person liable to pay... ad valorem duty [on the original agreement] and another person that the property is or will be conveyed or transferred to that other person or another person, whether by the person liable to pay that ad valorem duty or by any other person.''

In this case the deed falls within those deeming provisions in that it is an agreement between the appellant (the person liable to pay the duty) and the vendor (another person) that each of the units will be conveyed or transferred to Mr and Mrs Nugawela (being other persons) by the vendor (any other person). Thus, not only is the appellant deemed to have obtained $12,196.75, an amount equal to the duty paid in respect of each of the three original agreements, but also it is clear that the amount was obtained by the appellant in consequence of the discharge of the original agreements: the deed was entered into only on the basis that those agreements were discharged.

9. In the circumstances the respondent cannot be satisfied that the condition expressed in s 15A(1)(b) has been met.

10. The questions of law and fact which the Commissioner has forwarded to the Court pursuant to O 77 r 6(1), together with my answer to each question are as follows:

• (a) Question: Did the respondent err in determining on or about 30 October 1995 that each of the three agreements referred to in paragraph 12 hereof (ie the three original agreements) remained liable to stamp duty and that the appellant was not entitled to a refund of duty in relation to the three said agreements?
• Answer: No.
• (b) Question: Was an amount of money in respect of the recission, annulment, discharge or cancellation of the three said agreements paid or to be paid or obtained by the appellant within the meaning of s 15A(1)(b) of the Stamp Act?
• Answer: Yes.
• (c) Question: Was the appellant deemed to have obtained an amount of money (equal to the amount of duty paid) within the meaning of s 15A(6)?
• Answer: Yes.
• (d) Question: Was the deed of settlement an agreement, arrangement or understanding or evidence of an agreement, arrangement or understanding within the meaning of s 15A(6), namely, an agreement, arrangement or understanding between the appellant and Gerald Kevin Nugawela and Janis Anne Nugawela that Unit 27, Unit 29 and Unit 20 would be conveyed or transferred to Gerald Kevin Nugawela and Janis Anne Nugawela whether by the appellant or by any other person?
• Answer: Yes.
• (e) Question: How the costs of the appeal are to be borne and paid?
• Answer: The appellant pay the costs of the appeal to be taxed.