DEANE & ANOR v COMMISSIONER OF STAMP DUTIES (QLD) (NO 2)

Judges:
Fryberg J

Court:
Supreme Court of Queensland

Judgment date: Judgment given on 1 March 1996

---

Fryberg J

Gary and Suzanne Deane lived at Weinholt Street, Sherwood in early 1992. They had lived there for some ten years. With them lived their two children, who were tertiary students. Early in that year they decided they wanted to buy a larger house. They retained a real estate agent to find one for them, and spent several months searching for a house.

They found one at Dewar Terrace, Corinda. lt was an older style home on a larger block of land, a delightful spot, as Mr Deane described it, but it needed renovating. It was far more valuable than their existing home. They found it toward the end of the year 1992.

Having reached agreement between themselves on buying it, they entered into a contract for its purchase. That contract was dated 16 November 1992, and provided for settlement to take place on 9 December. At the same time as entering into the contract they listed the property at Weinholt Street for sale and engaged an architect to plan the renovations needed on the Dewar Terrace property.

Even before settlement took place, the architect began work on this project. They also had the property inspected by a builder and a geotechnical engineer.

On or about 30 November 1992, as part of the execution of documentation required for settlement under the contract, the Deanes signed a Form Q published by the present respondent for the purposes of the Stamp Act. That form comes in a number of parts. Part C is a recital by the Deanes in the form of a statutory declaration which includes these sentences:

```The property described at item 1' - which was the Dewar Terrace property - `comprises a place of residence, which is a dwelling-house. The place of residence erected on the property will be occupied by us and as for our principal place of residence forthwith upon obtaining possession of the property and we will remain in continuous occupation thereof as and for our principal place of residence for a period of not less than six months immediately following possession.'''

In addition to signing that statutory declaration, the Deanes signed what was called, in part B of the form, a record for the Commissioner of the acknowledgment by the acquirers of their obligation to notify the Commissioner. That was in these terms:

``We, the persons named in part C, certify that we have read part A and acknowledge that if we fail to occupy the place of residence erected on the property as and for our principal place of residence forthwith upon obtaining possession of the property, or if we fail to remain in continuous occupation thereof, as and for our principal place of residence, for a period of not less than six months immediately following possession, we are required to notify the Commissioner of Stamp Duties of that failure within 28 days of that failure, or such longer time as the Commissioner, in his discretion, in the particular case allows and account for additional duty payable, and if we fail to so notify the Commissioner that we will be required to pay a substantial penalty.''

Having signed that document the Deanes arranged for it to be returned to the respondent. He assessed stamp duty on the contract on the basis of that document and by reason of it he assessed that duty at a rate much lower than would otherwise have been the case. The duty came to $8,000. It would otherwise have been $27,225.

Settlement duly took place on 9 December 1992. The applicants moved in some furniture to their new premises, but left a considerable amount of furniture at Weinholt Street on the advice of their agent. That furniture included their own bedroom furniture, though they did move a double bed which had recently been given to them into the Dewar Terrace property. They did not intend to live immediately at Dewar Terrace. They expected to move in after

---

ATC 4385

four or five weeks of renovations and to do further renovations subsequently in stages.

In the days leading up to Christmas they used the Dewar Terrace property to entertain, entertaining their guests at least ten times in that period. In the same period they realised that the swimming pool had a serious structural defect and had the pool removed. In the course of that process the telephone line was cut, although they did not realise that until a few months later.

Plans for the first stage of the renovation work were lodged with the Brisbane City Council on 24 December, and in early January a landscape gardener was engaged. It was their intention to go on holidays for a short period and then to live with friends while the first stage of the renovations were completed.

The Weinholt Street property had been listed for sale when the contract was entered into in November 1992. After Christmas the Deanes went on holidays, as planned, at first on the Gold coast and then after a week back in Brisbane, overseas, returning in mid-February. It was expected or, perhaps, hoped that the Weinholt Street property would have been sold during that period, but on their return they found that it was not sold. Moreover, the plans for the renovations had not yet been approved by the Brisbane City Council. In fact, it took until August 1993 to obtain that approval. They decided to live at Weinholt Street for some period.

In April they took that property off the real estate market. That was done, Mr Deane swore, for a variety of reasons. He said it was because the building plans had not yet been approved. They were concerned that the Weinholt Street property, if left unoccupied for too long, would go stale, particularly if it stayed on the market for that time. They were under pressure from their son, who was stressing that he needed somewhere he could study for university, and Mrs Deane was ill on her return from overseas, an illness which lasted for some eight or ten weeks and which required some hospitalisation. There was a degree of financial stress associated with the protraction of bridging finance in respect of the two houses, and also in respect of the difficulties associated with getting approval for the renovations.

Throughout this period their mail continued to be delivered to Weinholt Street, and in June a formal redirection notice was lodged with the post office redirecting any mail that might happen to go to Dewar Terrace to Weinholt Street.

Mr Deane ran part of his business from ``home'', he said in his evidence before me, and that was from Weinholt Street. On the other hand, throughout the first six months of 1993 the Deanes periodically visited Dewar Terrace and used the premises for entertaining. In addition, their children from time to time used the premises and slept overnight at the premises as, indeed, they themselves did from time to time.

In August 1993 a contract for renovations was entered into by them for the sum of $225,000. It provided for practical completion within 12 weeks. Subsequently, and for reasons and by mechanisms not completely explained to me, there were variations to the contract which resulted in the price increasing to about half a million dollars, and completion being delayed until August 1994. It seems that, at least in part, that was due to a decision to do all stages of the renovations at once in the light of the delays which had occurred to date. The Weinholt Street property was not put back on the market until October 1993.

Things remained quiescent as regards the respondent and the Deanes until December 1993. Then they received a letter from the Commissioner in the following terms:

``Documents relating to the purchase by you of a dwelling situated at 207 Dewar Terrace, Corinda were stamped on 9 December 1992.

Those documents were accompanied by a statutory declaration dated 3 November 1992 signed by you stating that the property was acquired as your principal place of residence and that you would remain in continuous occupation of the property for a period of not less than six months.

A concessional rate of duty was assessed on the basis of the information declared by you. However, enquiries conducted by this Office show that you may not have occupied the property as your principal place of residence on the terms and for the continuous period declared by you.

I am forwarding to you a copy of section 55A of the Act.

Please consider that section taking particular note of sections 3, 4 and 5.

---

ATC 4386

Should you have no entitlement to a concessional rate of duty the full rate of conveyance duty will be reassessed with a penalty imposed equal to the total duty reassessed without allowing for any amount paid on the original assessment.

Therefore if you have not occupied the property as your principal place of residence on the terms and for the continuous period declared, you will be subject to the following reassessment:

Full conveyance duty reassessed       $27,225.00
Stamp Duty paid on 9 December 1992    $ 8,000.00
                                      ----------
Additional duty outstanding           $19,225.00
Penalty                               $27,225.00
                                      ----------
Total amount payable                  $46,450.00
                                      ----------
          

Before reassessment is considered I request you forward a written submission detailing circumstances whereby you failed to meet the provisions of the declaration signed by you. Reasons why you did not notify the Office that you were unable to take up residence should also be addressed. The contents of your submission will also determine whether a lesser penalty should be imposed.

If you have occupied the property as your principal place of residence on the terms and for the continuous period declared by you or have subsequently paid the additional duty please provide documentary evidence to support your claim.

If you do not reply within one (1) month of the date of this letter I will proceed with the reassessment and imposition of penalty.''

There are two features to that letter to which I would at this stage draw attention. First, it seeks from the Deanes documentary evidence to support any assertion that they might make that they had, in fact, occupied the Dewar Terrace property. Second, it asserts the inevitability of some penalty being applied if they had not continuously occupied the property. It sought reasons only in respect of the amount of the penalty which would be applied, not in respect of the possibility that no penalty would apply.

A response to that letter was sent by Steindl Robertson McPherson, solicitors for the Deanes, on Christmas Eve 1993. By that response they asserted that the Dewar Terrace property had, indeed, been their principal place of residence until August 1993 from the time of its acquisition. A number of facts were stated in the letter in support of that proposition. Not all of the facts stated in that letter were correct, at least according to the evidence before me. For example, it was stated in the letter that the pool was made functional. The evidence before me suggested that the pool was removed. It was stated in the letter that the Deanes' furniture was moved into Dewar Terrace except for the furniture of their children, which they were leaving at the Sherwood property. That was not completely correct either. The letter asserted that they allowed their children to remain at Weinholt Street, but did not make any mention of the fact that they, themselves, used Weinholt Street, except to say that they ``moved back when it became too difficult to reside amongst'' the works, that is, in August of 1993.

The letter did not enclose any documentary support as the Commissioner had requested in the event that it was contended that they had been in occupation, and it contained no explanation for not reporting any non- occupation.

Thereafter there was correspondence and various telephone calls between the solicitors and officers of the respondent. Initially these focused on the electricity accounts for the Dewar Terrace property. This, apparently, was thought to be good evidence of whether the property was occupied. The account for the period up to about the end of January 1993 was sent to the respondent together with an explanation of its apparent lowness, consisting of the fact that the applicants were on holidays.

Further accounts were requested for the full period up to the middle of the year, that request being made in February 1994, but no response was made to that in the period up to 8 August 1994, that is, for some four and a half months. No satisfactory explanation was given to me for this failure. I note that the accounts for that period, which were put into evidence before me, and which eventually had been before the Commissioner, disclosed very low electricity usage for the six month period. Not having received the electricity accounts or any other material, the respondent proceeded to reassess stamp duty on the contract for the Dewar Terrace property on 8 August 1993. He reassessed on the basis that the duty payable was the full amount payable on conveyance or

---

ATC 4387

transfer, and assessed a penalty in an amount of 100 per cent of the amount of the total duty payable.

That produced immediate negotiations between the applicants then solicitors and Mr Nunn of the Commissioner's office, leading to a conference between them on 23 August 1994. Despite the submissions made to him, Mr Nunn did not change his views. As a result, the applicants filed application 619 of 1994 in this Court seeking a review of the decisions relating to reassessment and to the penalty. They made a prompt application for reasons for the decision pursuant to the Judicial Review Act, but notwithstanding the promptness, those reasons were not provided until December of that year. In the meantime, they implemented the objection procedure provided for in the Stamp Act and that procedure resulted in a decision embodied in a letter dated 12 October 1994 upholding the reassessment of duty, but reducing the penalty by 25 per cent, so that it thereafter amounted to 75 per cent of the total duty payable under the reassessment. That left the applicants with a net liability of some $39,600. That decision on the objection became the subject of an application for judicial review also, number 773 of 1994.

Those two applications were at one stage consolidated, but before me it became apparent that the convenient course was to order that that order be vacated and that the two applications be heard together. That course I took.

The reasons which were given for the decision on the objection accompanied the decision in the letter of 12 October 1994. It might be thought, when one looks at those reasons, that they are, perhaps, incomplete or not in compliance with the relevant legislation. That view, however, is to a considerable degree negated by the fact that subsequently the applicants sought further reasons which were refused on the basis that all the reasons required to be given had already been given by the letter of 12 October. It therefore seems reasonable to proceed on the basis that those reasons are complete.

They deal first with the question of the reassessment on the basis of an absence of continuous occupation. They refer to the minimal use of electricity during the first seven months of 1993, to the fact that the applicants were not on the electoral roll until June 1993 at their new address at Dewar Terrace and to evidence held by the Commissioner that nobody as living at Dewar Terrace between February and July 1993, though people were coming and going once or twice a week.

The conclusion on that aspect of the matter was that the amended assessment should stand. It was said that that should take place in the interests of consistency with other similar breaches under section 55A of the Act and the protection of the revenue base.

The letter also dealt with the question of penalty. In that regard it said as follows:

``When making a statutory declaration for the purposes of obtaining a concessional rate of stamp duty, it is the responsibility of the applicant to be fully aware of the terms of the declaration. There is a presumption at law that persons who sign a statutory declaration are cognisant of the terms and conditions sworn therein. In this regard the declaration Form Q which your clients signed on 2 December 1992 sets out their responsibility to notify the Commissioner within 28 days of failing to occupy the property as their principal place of residence, which occupation they declared would commence on possession.

Accordingly, I regret to advise that your clients' failure to notify the Commissioner of their inability to remain in continuous occupation of the premises is a serious breach of Section 55A of the above Act and is liable to one hundred per cent penalty. As your clients did not continuously occupy the premises or advise the Commissioner of their changed circumstances, duty has been correctly reassessed in the amount of $22,225.00 less paid $8,000.00 with an amount payable in respect to the reassessment of $19,225.00 (There is no discretion to reduce the additional duty payable).

Penalties were imposed under Section 55A(5) of the Act which provides for penalties equal to the total amount of duty so reassessed without allowance for any amount paid in respect to the original assessment and as such penalty of $27,225.00 was imposed.

In considering your clients' objection I have determined that there was no blatant abuse of the concession and accordingly have reduced the penalty by twenty-five (25) per

---

ATC 4388

cent to $20,419.00. However, I have determined that there are insufficient grounds for any further reduction. The amended assessment should stand in the interests of consistency with other similar breaches under Section 55A of the above Act and the protection of the revenue base.''

There are several features of that part of the letter to which I would draw attention. First, the writer of the letter alleges the existence of a presumption of law that the Deanes knew of their obligation to notify the Commissioner of the failure to occupy the property. Second, it refers to the signing of the Form Q setting out the responsibility to notify the Commissioner and, thirdly, it asserts, as a consequence of those two matters, that the breach is a serious breach rendering the Deanes liable to a 100 per cent penalty.

It does not appear to distinguish clearly between that part of the Form Q, which is a statutory declaration part C, and the acknowledgment for the Commissioner, which is part B. It shows no sign that the question whether the applicants had a genuine belief that there was no need to notify the Commissioner was considered by the decision maker, nor indeed that any other factor than the mere failure to notify having signed an acknowledgment of awareness of that obligation was taken into account. It indicates a reduction because of the absence of any blatant abuse, but while it refers to there being insufficient grounds for any further reduction it fails to identify those grounds or to indicate whether they are any different from those which are identified, and it fails to give any reason why they are thought to be insufficient.

There is evidence before me from which I conclude that the decision maker in making the decision recorded in the letter took into account the guidelines set out in Exhibit W to Mr Deane's affidavit. Those were identified before me as guidelines in force at the time of the decision which would, in the ordinary course of the conduct of the Commissioner's affairs, be taken into account by an officer considering an objection. More over, the internal evidence in the letter, particularly the reference to the absence of any blatant abuse of the concession, reflects the language of the guidelines. In the end I did not understand Mr Logan, who appeared for the Commissioner, to contest that the guidelines were considered in relation to the decision in regard to the penalty.

I turn now to the relevant law. The duty was assessed under section 55A of the Stamp Act 1894. There are two definitions under that Act which are of relevance. First, ``place of residence'', which means:

``(a) in the case of property that consists of or includes a dwellinghouse - the dwellinghouse; or

(b) in the case of property that consists of or includes a block of flats, a double-unit dwellinghouse or a multiple-unit dwellinghouse - a flat, unit or part designed for human habitation by a single family unit; or

(c) in the case of property that consists of or includes a structure containing shop, factory or similar premises - a part of the structure designed for human habitation by a single family unit;

and includes the land comprising the curtilage of the place of residence.''

Second, prescribed principal place of residence, which means:

``a place of residence in respect to which the Commissioner is satisfied that-

• (a) the premises are being acquired for the purpose (wholly or in part) of occupation as and for the principal place of residence of the person acquiring the same; and
• (b) the person acquiring the premises shall enter into and remain in continuous occupation thereof as and for the person's principal place of residence for a period of not less than 6 months immediately following the delivery of possession of the premises or within such further time thereafter not exceeding 6 months as the Commissioner in the exercise of the Commissioner's discretion shall allow.''

Subsection 55A(2) of the Act is the executory section and provides that where duty is chargeable under the heading ``Conveyance or Transfer'' in respect to an instrument affecting the acquisition of any prescribed principal place of residence such duty shall, in the first instance, be as specified for such a place in schedule 1 and no other.

---

ATC 4389

That, however, is subject to subsection (3). Subsection (3) provides:

``(3) If it appears to the commissioner-

• ...
• (b) the person acquiring such premises has not entered into occupation of the premises as the person's principal place of residence upon taking possession of the premises or within such further time as the commissioner in the exercise of the commissioner's discretion has allowed; or
• (c) the person acquiring such premises, having entered into occupation, has not thereafter remained in occupation as and for the person's principal place of residence for a continuous period of 6 months;

then the amount of duty chargeable in respect of the instrument effecting the acquisition of the premises shall be the amount chargeable as if the premises were not acquired as a prescribed principal place of residence...''

Power is given to reassess in that circumstance.

In the event that duty is paid on the basis set out in subsection (2), the Act imposes a duty on a person who fails to occupy the premises to which the stamped instrument relates ``as the Commissioner was satisfied the premises would be occupied when assessing the instrument'' to notify the Commissioner of the failure within 28 days of its occurrence or such longer time as the Commissioner allows.

Subsections (5) and (5A) provide as follows:

``(5) Where a person fails to notify the commissioner in compliance with subsection (4), the commissioner, when reassessing duty payable pursuant to subsection (3), (3B) or (3D), may demand and receive by way of penalty an amount equal to the total amount of duty so reassessed without allowance for any amount paid in respect of the original assessment.

(5A) The commissioner may, in a particular case and for reasons which in the commissioner's discretion the commissioner considers sufficient, reduce or waive the penalty which the commissioner has demanded or would otherwise demand under subsection (5).''

The first issue, therefore, was whether there was, indeed, an acquisition of a ``place of residence'' which was a ``principal place of residence'' as those terms were defined. Both parties before me accepted that the Dewar Terrace property was a place of residence within the meaning of the definition of that term. That definition is not without its problems since it seems to impute to the words a meaning narrower than that which would ordinarily be given to the words at Common Law. In the end that fact does not seem to bear upon the problem in the present case.

Both parties also accepted that the provisions of paragraph (a) of the definition of ``prescribed principal place of residence'' were satisfied. Before me the argument revolved around paragraph (b) of that definition. The applicants argued that the respondent must have erred in law as to the meaning of paragraph (b) or, alternatively, that the decision was inevitably affected by some error of law, either in taking into account irrelevant considerations, excluding relevant ones or simply as being wholly irrational.

They contended that the occupation referred to in paragraph (b) of the definition was not an occupation which required physical occupation of the relevant premises, nor a residence in those premises or, at least, not continuous residence in them. Alternatively, they submitted that, in fact, substantial occupation of the premises had been proved. They submitted that intention to make the premises the principal place of residence was a relevant factor to the question of whether the premises were, in fact, a residence and also to whether they were the principal place of residence. Finally, they submitted that the term ``principal'' in that definition meant the most important, apparently, to the person concerned.

The respondent accepted the third of those propositions, but contested the others. There was also some attempt on the part of the applicants to argue that the respondent had ignored some of the evidence put before him, but as I understood the argument this view was not ultimately pressed.

It seems to me that the Act regards occupation as being occupation by way of residence. That seems to me to follow from the context in which the term ``occupation'' is used in the Act, that is, occupation as and for the person's principal place of residence, and also

---

ATC 4390

from the apparent policy underlying the Act. That, it seems to me, is a policy designed to give relief in relation to stamp duty payable of a substantial margin, which is explicable by reason of the fact that large numbers of people are affected by such duty and with increasing inflation are likely to be exposed to large levels of duty in the absence of a concession in respect of their own home.

There are, of course, many cases on the word ``occupation'', and it is used in many different contexts. A number of these were cited to me, but it does not seem to me that they are a great deal of help. Some of those cited by Mr Alexander on behalf of the applicants in his able argument in this respect were quite close to the present situation, particularly the rating cases, and I have given anxious consideration to whether the sense contended for in those cases is the appropriate sense to apply to the word in the present case. On balance, however, it seems to me that the context of the Act and the apparent policy of the Act outweigh considerations of the sort taken into account in the rating cases.

It also seems to me that the word ``principal'' in the definition allows a wide range of factors to be taken into account, and also implies an objective test of what is the principal place of residence. That is not to say that the intention of the person acquiring the residence is not relevant. Indeed, Mr Logan for the Commissioner conceded that intention could be taken into account as a factor in the assessment. It seems to me that intention is relevant, but not dominant. That view of the law also seems to me substantially to be the test which was applied by the respondent in the present case.

Now, strictly, the only question before me is whether the conclusion which the respondent reached was reasonably open to him on a correct view of the law, that is, the view which I have just stated. However, I would say that in my view one can on the evidence go further than this and say that the respondent's conclusion was correct on this approach. That has the advantage that I do not need to consider the degree to which it was open to the respondent to err on the facts. In my view he has not erred.

The evidence regarding the applicant's mail, their usage of electricity, the electoral roll, the time which they spent at Dewar Terrace compared with the time which they spent at Weinholt Street, the number of nights slept at each place, all combines to found a proper inference as to what was their place of abode or their residence - to put it another way, the place where their home was. Indeed, it was revealing that when Mr Deane referred during his oral evidence to carrying on business from home he did so in the context of referring to carrying on business from Weinholt Street.

I, therefore, see no reason to interfere in the Commissioner's decision with regard to the reassessment of duty. In some respects this conclusion is unfortunate for the applicants, since they appear to me to be genuine home buyers buying a home for their principal place of residence. Indeed, the Commissioner's acceptance that paragraph (a) of the definition of prescribed principal place of residence was satisfied shows that he also took the view that this was their purpose.

The fact of the matter is that the legislation requires more than just a purpose of acquisition, and it does not seem to me that they did enough to bring themselves within the terms of the Act.

I turn, therefore, to the question of the penalty, first in relation to the decision as to penalty contained in the objection decision made in October 1994. That decision required the Commissioner, through his delegate, to exercise two discretions; first, the discretion under subsection (5) to decide whether to demand and receive a penalty and, second, the discretion under subsection (5A) to consider whether to reduce or waive the penalty which he had demanded or would otherwise have demanded under subsection (5).

The argument for the applicants in this area was multi-faceted. It centred around taking irrelevant considerations into account, ignoring relevant considerations and Wednesbury type unreasonableness.

I accept at once that not every consideration which may be taken into account as relevant must be taken into account as relevant. So much is apparent from the decision of the High Court in Peko-Wallsend, but it is unnecessary to deal with all of the matters which were urged on behalf of the applicants. I consider, first, the question of the exercise of the discretion under subsection (5). Mr Logan accepted that that discretion required to be exercised by reference to some criterion or criteria. He submitted, initially, that fault was the relevant test. Later he varied that to the cause of the failure, and

---

ATC 4391

that is the view taken by the Commissioner in one of the documents put before me.

Since the statute calls the imposition a penalty, and since its nature is clearly penal I would have thought that in all probability fault was the consideration of the most importance, though it must not, of course, be assumed that ``no fault'' penalties do not exist or are to be presumed against. I do not need to decide whether fault or cause is the primary test under subsection (5).

It seems plain to me that neither test was applied by the Commissioner in making the decision contained in the objection decision. That decision, as I have already pointed out, seems to proceed solely on the basis that it is to be presumed that persons who sign a statutory declaration are cognisant of the terms and conditions therein.

No authority was cited to me to suggest that there is any such presumption of law. Perhaps the writer simply meant that one might infer as a matter of fact that persons who signed a statutory declaration are cognisant of its terms and conditions, and so one might. However, it does not follow that they remain aware of that obligation as a conscious awareness forever thereafter.

The letter suggests that the mere signing of the form is enough to render the failure to notify a serious breach of section 55A. That view seems to me completely unreasonable and not one which is open or was open in the circumstances of the case. It could only have been reached by some process which the law would not allow.

What that process was can, to some degree, be inferred from earlier documents of the Commissioner. The Form Q, for example, provides in the acknowledgment that in the event of failure to notify, ``we will be required to pay a substantial penalty''. It makes no mention of any discretion which exists to determine whether or not such a penalty is appropriate, and appears to have been designed to be applicable at a time prior to the amendment of the Act to confer that discretion on the Commissioner in 1988. That error appears to have infected the thinking or the Commissioner's officers, since in the letter in August of 1993, Exhibit G to Mr Deane's affidavit, the same assertion of obligation to pay a penalty without regard to any discretion is made. The only discretion referred to is one to reduce the amount.

For that reason it seems to me the decision to impose a penalty must be set aside. That being so, there is strictly no need to consider the matters arising under subsection (5A). In the absence of any decision to impose a penalty questions of reduction become irrelevant and that decision can no longer stand in the light of the setting aside of the earlier one. However, in view of the argument addressed to me it may be helpful if I indicate my views on it, particularly in case I am wrong in what I have said so far.

The decision on the reduction was, as I have said, substantially influenced by the guidelines then in force. Those guidelines have since been replaced. They were not used by Mr Nunn when he made the August decision, though I accept that they were used, as I have said, in relation to the objection decision. I infer that the reason Mr Nunn did not use them was that he regarded their application, in the circumstances of the case, as unreasonable. In any event, it seems to me on their face the guidelines reflect a policy which is so unreasonable that it could not be accepted as a policy which the law would regard as a relevant consideration in the making of a decision on penalty.

The replacement or the guidelines in 1995, to some extent, reflects a recognition of the fact that the guidelines were defective. The guidelines seem to me to be so unreasonable because they seem to assume that fault is only a consideration by way of reduction, and that only if there is a complete inability to notify the Commissioner of the failure to comply with the requirements for the concession can there be a waiver of the penalty. Examples that are given of such a situation are the death of the purchaser or complete incapacity through serious illness for a significant period.

The existence of a compelling reason for not notifying the Commissioner is said to warrant only a reduction to 25 to 50 per cent of the full penalty. The absence of a compelling reason for notifying the Commissioner, for example, ignorance of the obligation, warrants 75 per cent of the prescribed penalty. That, it seems to me, is not only an approach which is excessively rigid, but is one which does not relate the amount of the penalty to the statutory purpose for which the penalty is imposed.

The penalty is not, in my view, imposed as a revenue raising device, but rather as a device to

---

ATC 4392

facilitate and encourage compliance with the terms of the legislation. Those guidelines are so far away from adhering to the statutory prescription and purpose that they cannot, in my view, be valid.

Mr Logan for the Commissioner accepted that if they were invalid, then the decision under subsection (5A) could not stand. It is unnecessary to determine whether it is to be characterised as infected with an irrelevant consideration or simply as completely unreasonable.

Mr Logan did submit that it was proper in formulating guidelines to start off with the proposition that the legislature has imposed a 100 per cent penalty or, at least, has decreed that there shall be a 100 per cent penalty once the Commissioner has exercised the discretion under subsection (5) and that therefore, somehow, that fact warrants the reduction under subsection (5A) being less than otherwise might be the case or being to a level which still imposes a penalty despite the absence of fault. It is unnecessary to deal with that argument. It seems to me, however, full of difficulties.

The power under subsection (5A) is to reduce or to waive. It seems to me the Commissioner has a very wide discretion under that subsection and should not begin its exercise by assuming anything. In particular, he should not begin its exercise by assuming against or for the exercise of the power. He should simply consider the merits of the case in the light of any proper policies or guidelines before him.

I would also, had it been necessary to decide, have thought that the decision under subsection (5A) was invalidated by the failure of the Commissioner to take into account considerations relating to fault other than the question of whether there had been a blatant abuse. In my view the limiting of the consideration to that issue unreasonably narrowed the Commissioner's viewpoint. He ought to have identified what were the other grounds considered to be insufficient, which were referred to in his reasons, and to have specified why they were insufficient. The process of doing so would have helped him to perceive wider considerations than just the question of blatant abuse.

The issue seems to be so integrally related to the application of the guidelines that one is left with the feeling that the probable course which the matter took was a rather mechanical application of the guidelines. In case it may be helpful, I would add that it seems to me necessary in exercising this discretion to look at the final result, that is, the amount of the penalty in dollar terms, and to examine whether that is an appropriate penalty in the circumstances. There seemed to be a tendency in the argument and in the documents in this case to think of penalty only in terms of percentages and percentage reductions in the amount of the penalty referable to the total amount of penalty imposed.

While, obviously, it is proper to take into account what the maximum penalty is, which will vary from case to case, it is also necessary, particularly with some transactions which are in respect of large values to consider whether the actual amount of the penalty is a fair penalty proper for the purposes of the legislation. In that regard the Commissioner could, if he wished, take into account other statutory penalties either in the Stamp Act or under other legislation in Queensland imposed for comparable situations to that which may be before him in any particular case, particularly situations involving failure to lodge documents through inadvertence or genuine mistake.

In some cases a penalty of a few hundred dollars and expressed that way might be appropriate rather than a penalty expressed in terms of a percentage. That, however, must be a matter for the Commissioner to decide in each case.

New guidelines introduced in 1995 were put in evidence before me, but they do not require any opinion from me in the present case. That is better done in the context of a case applying those new guidelines. It will be obvious that some of the comments, which I have made regarding the guidelines which were in force at the time of the present decision, may be applicable to the new guidelines, as well.

That leaves only the question of what is to happen to the decision made in August, which is the subject of application under 619. No-one contended that that decision could stand in relation to the penalty aspect of it if the objection decision on that aspect is set aside. The respondent contended that it was subsumed into the later decision and, therefore, it was unnecessary to deal with it. It seems, however, to me that it is better to set it aside so there can be no argument about it in the future. With both penalty decisions set aside the penalty question

---

ATC 4393

will become one for the respondent to determine in accordance with law.

I, therefore, propose to order that both of the decisions in relation to penalty be set aside. I will hear the parties on the precise form of that order and also on the question of whether money should be ordered to be repaid with interest and on costs.

...

HIS HONOUR: I order that the sum of $20,419 paid to the respondent on 11 November 1994 as penalty under section 55A of the Stamp Act be repaid to the applicants together with interest at the same rate as is prescribed for the purposes of section 24(4A) of the Stamp Act from 11 November 1994 until the date of repayment.

I order that the respondent pay the applicants' costs of the application including reserved costs, if any, taxed on a solicitor and client basis. Liberty to apply.