ISPT PTY LIMITED v CHIEF COMMR OF STAMP DUTIES (NSW)

Members:
Studdert J

Tribunal:
Supreme Court of NSW

Decision date: Judgment given on 19 December 1997

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Studdert J

By summons in each of these matters the plaintiff claims:

``1. An order that the decision of the Defendant of 22 February 1996 disallowing the Plaintiff's Notice of Objection dated 20 October 1995 to a notice of assessment by the Defendant dated 21 September 1995 be set aside.

2. An order that the Plaintiff's Notice of Objection be allowed.

3. A declaration that the events of 27 January 1995 with respect to [the subject land] did not oblige the plaintiff to lodge a Statement with the Defendant under Division 3A of Part 3 of the Stamp Duties Act (New South Wales), 1920.''

In each case, as the relief sought indicates, what is in issue is the liability (if any) of the plaintiff to pay stamp duty under Division 3A of Part 3 of the Stamp Duties Act in connection with transactions that occurred on 27 January 1995 concerning properties at Forster and at Bondi Junction. There occurred on that date an elaborate chain of events which, as Mr Gzell of Queen's Counsel who appeared for the plaintiff readily acknowledged, was structured in an endeavour to avoid the payment of stamp duty. Should the scheme be successful there would be a very considerable saving for the plaintiff. Duty was assessed for the property at Forster in the sum of $974,060 and for the property at Bondi Junction in the sum of $2,177,779.

It is convenient to set out certain provisions of Division 3A of the statute which address the liability for stamp duty on transactions (as opposed to instruments) and which are relevant to the issues that arise on these summonses:

``44(1) This Division applies to a transaction which... causes or results in a change in the beneficial ownership of an estate or interest in-

• (a) land situated in New South Wales;
• ...

44(2) A reference to a change in beneficial ownership in this section does not include a reference to a change in beneficial ownership occurring as the consequence of-

• ...
• (d) the issue or redemption of units in a unit trust scheme.''

``Unit trust scheme'' is defined in s 3(1) of the Act as meaning:

``... any arrangements made for the purpose, or having the effect, of providing, for persons having funds available for investment, facilities for the participation by them, as beneficiaries under a trust, in any profits or income arising from the acquisition, holding, management or disposal of any property whatsoever pursuant to that trust.''

``44A(1) A person, being a party to a transaction to which this Division applies which is not effected or evidenced by an instrument chargeable with ad valorem duty...

...

shall, if the person would have been liable to pay such ad valorem duty in respect of the transaction had such an instrument been executed, lodge with the Chief Commissioner a statement in respect of the transaction.

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ATC 4086

...

44A(5) The statement... shall, for the purposes of this Act, be deemed to be an instrument effecting the transaction to which it relates and is chargeable with the ad valorem duty... appropriate to the transaction.''

The proceedings on each summons were heard together. It is common ground that what occurred concerning each property was identical, so that precisely the same considerations arise in each case.

On the earlier summons the evidence relied upon by the plaintiff is to be found in the following affidavits:

• 1. The affidavit of Diana Angela Chang sworn 28 June 1996;
• 2. The affidavit of Douglas James Gregg sworn 22 July 1996;
• 3. The affidavit of Warren Tully sworn 22 July 1996;
• 4. The affidavit of Christopher Lovell sworn 23 July 1996;
• 5. The affidavit of Rebecca Northeast sworn 28 June 1996.

The defendant relied upon the affidavit of Gerardus Hendricus Van Emmerik sworn 5 August 1996.

In reply the plaintiff relied upon the affidavit of Douglas James Gregg sworn 19 November 1997.

On the second summons there was affidavit evidence from the same deponents to the same effect, the only relevant point of distinction being in respect of the property the subject of the transaction.

None of the above deponents was required for cross examination and there is really no factual dispute in either case.

The facts

A statement of facts in support of the appeal was filed, and in their written submissions counsel for the plaintiff have also addressed the facts. There being no objection to this course from counsel for the defendant, I propose to draw largely on counsel's written submissions in summarising what I perceive to be the relevant facts:

• 1. Immediately prior to the events of 27 January 1995 Coles Myer Property Investments Pty Limited (``CMPI'') was the owner of the subject land at Forster and the subject land at Bondi Junction.
• 2. On 28 November 1994 several Coles Myer property companies (including the plaintiff) entered into a joint venture agreement (this is Annexure A to the affidavit of Mr Van Emmerik earlier mentioned). The expressed objectives of the joint venture included the acquisition of retail properties, two of which were the properties at Forster and at Bondi Junction. Under clause 3 of that agreement the expressed intention was for a separate unit trust to be established for the acquisition of each property, and under clause 4 the expressed intention was for units in each trust to be held as to seventy-five percent by the plaintiff and as to twenty-five percent by Coles Myer Trust Investments Pty Limited.
• 3. On 27 January 1995 the parties to the earlier joint venture entered into a supplementary agreement providing for:
  • (i) the structuring of the beneficial ownership: Forster was to be owned by ISPT Coles Myer (Forster) Property Trust (No. 1) in which ordinary units were to be held as to fifty percent by ISPT and as to fifty percent by ISPT Coles Myer (Forster) Property Trust (No. 2) in which units were to be held fifty percent by ISPT and fifty percent by Coles Myer.
  • (ii) Clause 2 of the supplementary agreement provided that no further approval by unit holders was required for the registered title of both the Forster and the Bondi Junction properties to remain in the name of CMPI as a nominee under the relevant trusts.
  • (iii) Clause 4 declared ``for the avoidance of doubt'' that until payment of the purchase price under a contract for the acquisition of the Forster land or the Bondi Junction land:
    • ``no party shall have any right in, or right or interest to seek to enforce any proposed contract concerning, the relevant property, nor shall any party be regarded as a beneficiary or entitled to any interest under an Initial Trust until an issue or transfer of units in favour of that party has been effected.''

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      ATC 4087

• 4. What next occurred on 27 January 1995 was that the plaintiff became the trustee of the ISPT Coles Myer (Forster) Property Trust (No. 1), and the trustee of the ISPT Coles Myer (Eastgate) Property Trust (No. 1). (Each Trust Deed became Exhibit A in the proceedings to which it related, the Eastgate property trust, of course, relating to the property at Bondi Junction.)
• 5. Each of the No. 1 trusts provided in clause 3:
  • ``3.1 The beneficial interest in the fund (to be constituted in accordance with 2.1) is divided into equal units.
  • 3.2 A unit shall not confer any interest in any particular investment, asset, property or cash comprising the assets of the Trust, but only a beneficial interest in the Fund as a whole. Each unit of the same class shall confer on the unit holder an equal entitlement and be of equal value at all times.''
• Clause 2 of the deed provided for the initial fund:
  • ``The Trustee agrees to hold upon trust for the duration of the Trust in accordance with this Deed:
    • (a) any money lodged with the Trustee by the Manager; and
    • (b) all money and property paid to or transferred to or vested into the Trustee as additions to the Fund.''
• 6. Neither of the No. 1 trusts was settled with any property, the next step being the payment by CMPI to the plaintiff of an amount in excess of the market value of the land, both at Forster and at Bondi Junction in exchange for the allotment of units in each trust. CMPI then held the complete beneficial interest in the assets of the fund of each of the trusts.
• 7. The plaintiff then made offers in writing, as the trustee under the relevant deeds (Exhibit A in each case), to purchase from CMPI the properties at Forster and at Bondi Junction. In the case of the Forster property the letter was in these terms:
  • ``In our capacity as trustee of the ISPT Coles Myer (Forster) Property Trust (No. 1) (`the Trust'), we offer to purchase from Coles Myer Property Investments Limited (`CMPI'), the property known as the Forster Shopping Village located in Breese Parade, Forster, New South Wales, more particularly described in certificate of title Volume 15150 Folio 63 being Lot 52 in DP635345, (including all chattels, fixtures and fittings owned by you located at the property), on the terms and conditions set out in the attached unexecuted form of contract of sale (the cover of which I have signed for identification).
  • CMPI may accept this offer verbally, whereupon we will pay the full purchase price of $17,973,995.
  • If this offer is accepted:
    • 1. CMPI will be taken to have waived in its capacity as the sole unitholder of the Trust, any requirement of the Trustee of the Trust to obtain a valuation of the property for or on behalf of the Trust before the offer is accepted.
    • 2. We will require an assignment of all your reversionary interest in each and every tenancy at the property and an assignment of the benefit of each and every form or security held by you in respect of those tenancies.
    • 3. Once the purchase price is paid in full, CMPI is appointed to hold the property as a nominee under the deed establishing the Trust for so long as CMPI remains the registered proprietor.
    • 4. CMPI may request us to nominate a replacement trustee if CMPI wishes to retire as trustee but the replacement trustee may not be, nor may it become, a beneficiary of the Trust.
    • 5. Any change in trustees under 4 may be effected by a decision of CMPI recorded in writing.''
• An offer in relation to the Bondi Junction property was expressed in identical terms, save as to the property and the price.
• 8. CMPI accepted each offer verbally on 27 January 1995 and the plaintiff then endorsed the cheques it had earlier received for the allotment of shares, receiving some refund for the difference between the price paid for the allotment and the lesser sum paid for the two properties. Upon payment of the purchase price, CMPI was appointed to hold

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  ATC 4088

  the property as a nominee under the deed of trust.
• 9. What next occurred was that the plaintiff in its capacity as trustee for the ``Industries Superannuation Property Trust'' (the superannuation trust) and ISPT Custodians Pty Limited (ISPT Custodians) as trustee for the ISPT Coles Myer (Forster) Property Trust (No. 2) each made application for and was allotted units in the No. 1 (Forster) trust equal to those held by CMPI. A similar step was taken in relation to the Bondi Junction property by the plaintiff as trustee of the superannuation trust and by ISPT Custodians as trustee of the ISPT Coles Myer (Eastgate) Property Trust (No. 2).
• 10. The next measure taken on 27 January 1995 was that ISPT paid CMPI for the units it had acquired in each of the No. 1 trusts (paragraph 6 above). The plaintiff redeemed those units by endorsing in favour of CMPI each of the cheques which it had received for the new units on the event described in paragraph 9 above.
• 11. CMPI then requested its removal as a nominee under No. 1 property trust by letter addressed to the plaintiff and dated 27 January 1995. On the same date the plaintiff advised CMPI of its nomination of ISPT Nominees Pty Limited as a replacement nominee of the trust.
• 12. Finally, by memoranda of transfer to which CMPI affixed its seal on 27 January 1995, the properties at Forster and at Bondi Junction were transferred by CMPI to ISPT Nominees Pty Limited.

When later in this judgment I refer to the facts set out in a particular paragraph, I intend the reference to be to one of the paragraphs numbered 1 to 12 above.

Stamp duty is assessed

The affidavit of Miss Chang reveals that on 6 March 1995 the transfers I have identified in paragraph 12 above were submitted to the Commissioner for Stamp Duties for stamping and in that and subsequent letters and meetings the plaintiff's liability for stamp duty was debated. On 16 March 1995 the Commissioner made it plain by letter that it considered duty was payable under Division 3A of the statute and on 27 March 1995 the plaintiff, through its solicitors, lodged with the defendant a cheque for $3,151,839, being the calculated duty if the Commissioner's contention was correct. This payment was made with the express purpose of avoiding any possible penalties for late payment should it ultimately be determined that duty was attracted in respect of the acquisitions of these two properties.

The Commissioner was invited to issue his assessment under s 127B of the Stamp Duties Act so that in due course the plaintiff could be afforded the opportunity of objection and appeal in accordance with the machinery provided in Part 5 of the statute.

In his letter dated 7 April 1995, in which it acknowledged receipt of the cheque abovementioned, the Commissioner wrote:

``Based on the information furnished each of the transactions conducted on 27 January 1995 concerning the Eastgate Trust and the Forster Trust triggered the provisions of Division 3A of the Stamp Duties Act (`Act') and as a result a statement is required to be lodged with the Commissioner in respect of each transaction in accordance with the provisions of Section 44A(1) of the Act. However, to accommodate your concerns that the lodgement of a statement may be interpreted as an acknowledgement of the need to comply with the provisions of Division 3A of the Act, I am prepared to defer the requirement to lodge a statement for each of the said transactions, without the imposition of any penalties that would otherwise accrue under the provisions of Section 44E of the Act.

Subject to the Eastgate property having a value which did not exceed the consideration of $37,859,745 the duty payable on the transaction that took place on 27 January 1995 between the above- mentioned parties is estimated at $2,177,779. It is acknowledged that the said duty was paid within two months of 27 January 1995.

Similarly, subject to the Forster property having a value which did not exceed the consideration of $17,973,995, the duty payable on the transaction that took place on 27 January 1995 is estimated at $974,060. It is acknowledged that such duty was paid within two months of 27 January 1995.''

On 2 June 1995 the Commissioner again wrote to the plaintiff's solicitors and on this occasion his letter, inter alia, stated:

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ATC 4089

``From the information furnished I am of the opinion that the transaction that took place on 27 January 1995 between Coles Myer Property Investments Pty Limited and ISPT Pty Limited as trustee of the ISPT Coles Myer (Eastgate) Property Trust (No. 1), triggered the provisions of Division 3A of the Stamp Duties Act (`Act'). As a result a statement is required to be lodged with the Commissioner in accordance with the provisions of Section 44A(1) of the Act.''

Section 35B authorises the Chief Commissioner in his absolute discretion to amend an assessment at any time within two years after the date of the original assessment. On 21 September 1995 the Commissioner wrote to the plaintiff's solicitors:

``The assessments purportedly made by my letters of 7 April 1995 and 2 June 1995 are hereby amended under section 35B of the Act.

It is considered that contracts for sale and purchase of land, created by acceptance of the written offers dated 27 January 1995, caused or resulted in a change in the beneficial ownership of land situated in New South Wales. ISPT, being a party to those transactions who would have been liable to pay duty if such transactions had been effected or evidenced by an instrument liable to ad valorem duty under the heading `Conveyances of any property', is required to lodge 2 statements under section 44A. As ISPT has failed to lodge such statements, duty has been assessed in accordance with section 127B.''

The plaintiff promptly lodged notice of objection to the assessment dated 20 October 1995, in compliance with s 124 of the Stamp Duties Act in each case. By letter dated 22 February 1996 the Commissioner advised that the objection taken in each case had been disallowed. Hence the matter has come before this court pursuant to s 124A of the Stamp Duties Act:

``124A(1) An appeal to the Supreme Court under this Part is by way of rehearing the original objection to the Chief Commissioner and is limited to the grounds of the original objection.''

The plaintiff's contentions reviewed

I have had the advantage of a written outline of the plaintiff's submissions and of the further oral submissions of Mr Gzell of Queen's Counsel. Without I trust truncating the plaintiff's case, it may be summarised thus:

• 1. The defendant has identified the facts set out in paragraphs 7 and 8 of my earlier review as attracting a liability for stamp duty under Division 3A, because those events ``caused or resulted in a change in the beneficial ownership'' of each of the properties at Forster and Bondi Junction.
• 2. No such change was brought about by such offer and acceptance.
• 3. There was no writing signed by CMPI, its acceptance being only verbal. Hence the requirements of s 23C(1)(a) of the Conveyancing Act were not satisfied:
  • ``No interest in land can be created or disposed of except by writing signed by the person creating or conveying the same...''
• 4. Whilst s 23C(2) provides that the section ``does not affect the creation... of constructive trusts'', no constructive trust arose on the facts as earlier outlined for the following reasons:
  • (i) A constructive trust will arise when the purchaser under a contract of purchase obtains a right that can be protected by equitable remedy. That remedy may be a decree of specific performance, an injunction or some other form of relief: see
    Stern v McArthur (1987-1988) 165 CLR 489, and in particular the joint judgment of Deane and Dawson JJ at 522-523; and
    Chan v Cresdon Pty Limited (1989) 168 CLR 242, and in particular the joint judgment of Mason CJ and Brennan, Deane and McHugh JJ at 252-253.
  • (ii) Equity will not grant specific performance where to do so would be a futile exercise. Thus, for instance, it would not order specific performance of an agreement to enter into a partnership at will, because that partnership might be dissolved immediately: see
    Hercy v Birch (1804) 9 Ves. Jun 357 at 360 and 32 ER 640; and
    Sheffield Gas Consumers' Company v Harrison (1853) 17 Beav 294 at 297 and 51 ER 1047.
  • (iii) In
    Saunders v Vautier (1841) 4 Beav 115 at 116 and 49 ER 282 a legacy was directed to accumulate for a certain

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    ATC 4090

    period, but it was held that a legatee with an absolute and indefeasible interest in the legacy was not bound to wait until that period expired, but could require payment as soon as he could give a valid discharge. In the present case, it would be futile for equity to enforce either of the subject contracts because CMPI as the only beneficiary of the No. 1 trusts could terminate them at any time; and would thus hold the properties on bare trusts for itself.
  • (iv) Equity will not recognise a trust where the legal owner and the beneficiary under such trust is identical. Thus in
    Corin v Patton (1989-1990) 169 CLR 540 at 579 Deane J said:
    • ``... that equity, with its regard for substance rather than form, would not go through the charade of intervening to create trusts of property under which the legal owner held as bare trustee for another who in turn held as bare trustee for the legal owner. To the contrary, equity firmly denies the possibility of any such intervention in that it would disregard the interposed beneficiary whom it would see as having no interest in the property at all (see e.g.
      Grainge v Wilberforce ([1889] 5 TLR 436 at 437);
      In re Lashmar; Moody v Penfold ([1891] 1 Ch. 258 at 267, 270); Baker and Langan, Snell's Principles of Equity, 28th ed. (1982), p 104; Meagher and Gummow, Jacobs' Law of Trusts in Australia, 5th ed. (1986), par. 2312; Pettit, Equity and the Law of Trusts, 6th ed. (1989), p 73; Hanbury and Maudsley, Modern Equity, 13th ed. (Martin) (1989), p 113). That means that such a trust is not possible since, once the interposed beneficiary is disregarded, the trustee and the beneficiary would be the same person with the result that the legal and beneficial interests were merged.''
  • See also
    Suncorp Insurance and Finance v Commr of Stamp Duties 97 ATC 4826 and in particular the judgment of Davies JA at 4838-4839.
  • (v) Equity would not have intervened before the allotment of the additional units as described in paragraph 9 of the outline of facts, at which time CMPI ceased to be the only beneficiary of the trust.
• 5. If, contrary to the submissions summarised in 4, equity would have intervened to enforce the contract constituted by the verbal acceptance of the written offer, that contract did not bring about a change in the beneficial ownership of either property, because CMPI owned the legal interest before that contract, and immediately after it, it held the legal ownership and the only beneficial interest under the trust.
• 6. The change in beneficial ownership occurred on the issue of the new units in the No. 1 trust as outlined in paragraph 9 of the outline of facts as I recited them, but that change was exempted from the operation of Division 3A by s 44(2)(d) of the Act. The new units issued were units in a unit trust scheme as defined in s 3(1) of the statute.
• 7. When the units which CMPI held in the trust were redeemed as described in paragraph 10 of the outline of facts, the entire beneficial interest in the properties was thereupon enjoyed by the superannuation trust and by the No. 2 trusts referred to in paragraph 9 of that outline. However once again the change in beneficial ownership was exempted from Division 3A because it had been effected by the redemption of units, and s 44(2)(d) again applied.
• 8. The memoranda of transfer described in paragraph 12 of the outline of facts attracted only nominal duty of $2 each under s 73(2A) of the Stamp Duties Act, because by then CMPI was only a bare trustee which had ceased to hold that position following the events described in paragraph 11 of that outline. The defendant accepted that s 73(2A) applied to those documents and accepted the $2 transfer as being the duty payable.

The defendant's contentions reviewed

Mr Davies of Senior Counsel submitted that the determination of the defendant was correct and that this was so because:

• (a) The proper approach to s 44 of the statute is to look at what occurred overall: at the start of the day the ownership of each property was enjoyed by CMPI, but by the

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  end of 27 January 1995 that ownership in each property had passed to the plaintiff as trustee for the relevant joint trust. It is not appropriate to focus only on one or more of the steps taken to bring about that result, but on the contrary all the steps as I have identified them in the outline of facts are to be regarded as part of the one transaction.
• (b) If however it is necessary to focus on a particular step or steps for the purposes of s 44, the relevant step was described in paragraph 8 of the outline. That step, Mr Davies submitted, brought about a change of beneficial ownership which equity would have acted to protect.

In developing submission (b), Mr Davies advanced a detailed argument which I shall endeavour to summarise:

• (i) Mr Davies argued that once the step described above in paragraph 8 of ``the facts'' was complete, and the purchase price had been paid by the plaintiff, equity regarded CMPI as a bare trustee for the plaintiff. Thus in Stern v McArthur (1987-1988) 165 CLR 489 at 522-523 Deane and Dawson JJ in their joint judgment said:
  • ``The extent of the purchaser's interest is to be measured by the protection which equity will afford to the purchaser. That is really what is meant when it is said that the purchaser's interest exists only so long as the contract is specifically enforceable by him. Specific performance in this context does not mean specific performance in the strict or technical sense of requiring the contract to be performed in accordance with its terms. Rather it encompasses all of those remedies available to the purchaser in equity to protect the interest which he has acquired under the contract. In appropriate cases it will include other remedies, such as relief by way of injunction, as well as specific performance in the strict sense. As Sir Frederick Jordan put it: `Specific performance in this sense means not merely specific performance in the primary sense of the enforcing of an executory contract by compelling the execution of an assurance to complete it, but also the protection by injunction or otherwise of rights acquired under a contract which defines the rights of the parties': Jordan, `Chapters on Equity in New South Wales', Select Legal Papers, 6th ed. (1947), p 52, n.(e). See also
    Legione v Hateley (1983) 152 CLR 406 at 446 per Mason and Deane JJ;
    Tailby v Official Receiver (1888) 13 AC 523 at 547-549, per Lord Macnaghten;
    Redman v Permanent Trustee Co. of N.S.W. Ltd. (1916) 22 CLR 84 at 96 per Isaacs J,
    Hoysted v Federal Commissioner of Taxation (1920) 27 CLR 400 at 423;
    Pakenham Upper Fruit Co. Ltd. v Crosby (1924) 35 CLR 386 at 398-399 per Isaacs and Rich JJ.
  • To put the matter in this way is to say little more than that the equitable interest of a purchase under a contract for the sale of land is that which equity recognises and protects:
    Hewett v Court (1983) 149 CLR 639 at 665-666 per Deane J. The relationship of trustee and beneficial owner will certainly be in existence when the purchase money specified in the contract has been paid, title has been made or accepted and the purchaser is entitled to a conveyance or transfer. At that point the purchaser is entitled to equity to the land and the vendor is a bare trustee:
    McWilliam v McWilliams Wine Pty Ltd (1964) 114 CLR 656 at 660 per McTiernan and Taylor JJ.''
• (ii) It is not to the point that equity would not make a decree of specific performance in the primary sense identified by Jordan CJ in his writing referred to in Stern v McArthur in the passage above cited. It suffices if equity would recognise the passing of a beneficial interest in any one of a variety of ways: Stern v McArthur (supra);
  Ogilvie v Ryan (1976) 2 NSWLR 504. In the latter case specific performance in the strict sense was not available in the absence of the requisite writing required by s 54A of the Conveyancing Act but a constructive trust was proved nevertheless effective to afford a defence to a claim for possession based upon the plaintiff's legal title. In the course of his judgment, Holland J said (at 519):
  • ``It is well established that the declaration of a constructive trust is not inhibited by the statute of frauds or, more

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    correctly for New South Wales, s 54A of the Conveyancing Act, 1919.''
• (iii) In the present case it was submitted equity would have acted to protect the interests of the plaintiff once the purchase price had been paid, although there was absent the writing required by the Conveyancing Act. If, for instance, CMPI having received the purchase price from the plaintiff had entered into a contract to sell the same property to some third party, equity would have come to the plaintiff's aid by granting an injunction to prevent CMPI from proceeding with such later contract.
• (iv) For so long as CMPI remained the legal owner after acceptance of the plaintiff's offer and of the purchase price, it was restricted in how it could exercise its legal rights: see
  DKLR Holding Co. (No. 2) Pty Limited v Commr for Stamp Duties (NSW) 82 ATC 4125; (1981-1982) 149 CLR 431 and in particular per Gibbs CJ at 443; and in the Court of Appeal 80 ATC 4279, 4285-4287; (1980) 1 NSWLR 510, 519-521 per Hope JA. In the course of his judgment, and his Honour's statement of principle was not disturbed by the subsequent decision of the High Court, Hope JA said at ATC 4285-4286; NSWLR 519:
  • ``... an absolute owner in fee simple does not hold two estates, a legal estate and an equitable estate. He holds only the legal estate, with all the rights and incidents that attach to that estate. If he were to execute a declaration that he held the land in trust for himself absolutely, the declaration would be of no effect; it would give him no separate equitable rights; he would remain the legal owner with all the rights that a legal owner has. At least where co-extensive and commensurate legal and equitable interests are concerned, `... a man cannot be a trustee for himself.':
    Goodright v Wells (1781) 2 Dougl 771 at p 778; 99 ER 491 at p 495 per Lord Mansfield; `You cannot have a legal estate in trust for yourself.':
    Harmood v Oglander (1803) 8 Ves Jun 106 at p 127; 32 ER 293 at p 301, per Lord Eldon. Secondly, although the equitable estate is an interest in property, its essential character still bears the stamp which its origin placed upon it. Where the trustee is the owner of the legal fee simple, the right of the beneficiary, although annexed to the land, is a right to compel the legal owner to hold and use the rights which the law gives him in accordance with the obligations which equity has imposed upon him. The trustee in such a case has at law all the rights of the absolute owner in fee simple, but he is not free to use those rights for his own benefit in the way he could if no trust existed; equitable obligations require him to use them in some particular way for the benefit of other persons. In illustrating his famous aphorism that equity had come not to destroy the law, but to fulfil it, Maitland (op cit, at p 17) said of the relationship between legal and equitable estates in land:
    • `Equity did not say that the cestui que trust was the owner of the land, it said that the trustee was the owner of the land, but added that he was bound to hold the land for the benefit of the cestui que trust. There was no conflict here.'''
• Then in
  Re Transphere Pty Ltd & Ors (1986) 4 ACLC 426 at 427-428; (1986) 5 NSWLR 309 at 311, McLelland J, after referring to the above dicta of Hope JA, said:
  • ``... But what is significant for present purposes is the imprecision of the notion that absolute ownership of property can properly be divided up into a legal estate and an equitable estate. An absolute owner holds only the legal estate, with all the rights and incidents that attach to that estate. Where a legal owner holds property on trust for another, he has at law all the rights of an absolute owner but the beneficiary has the right to compel him to hold and use those rights which the law gives him in accordance with the obligations which equity has imposed on him by virtue of the existence of the trust. Although this right of the beneficiary constitutes an equitable estate in the property, it is engrafted on to, not carved out of, the legal estate.''
• (v) Once the beneficial interest in each property passed to the plaintiff, the equitable interest which went back to CMPI as the

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  ATC 4093

  beneficiary under the deed of trust was a restricted beneficial interest, and this distinguished the present case from Corin v Patton. The present was not a case where CMPI held the property as a bare trustee for the plaintiff which in turn held as a bare trustee for CMPI because of the terms of the trust deed. This is the critical point of distinction, it was submitted, between the type of bare trust considered by Deane J in the passage relied upon by Mr Gzell and cited earlier and the trust deed pursuant to which CMPI was to be a beneficiary here. A proper analysis of the situation, Mr Davies argued, was that upon completion of the events described in paragraph 8 of ``the facts'', the plaintiff held the land on the terms of the trust deed for CMPI, but simultaneously CMPI as nominee held the property on trust subject to the terms of the deed. CMPI, for so long as it was a sole unit holder in the trust, had a lesser interest for CMPI, but simultaneously CMPI as nominee held the property on trust subject to the terms of the deed. CMPI, for so long as it was a sole unit holder in the trust, had a lesser interest in the property than ISPT because of the terms of the deed and could not have put an end to the trust because of those terms. Hence the rule in Saunders v Vautier (supra) did not apply.
• (vi) Before CMPI could acquire its beneficial interest as ISPT's nominee under the deed, that beneficial interest must have moved across to ISPT. It was submitted CMPI did not acquire its interest under the trust by reason of having been the owner of the land but rather it acquired it from the trustee. Further when the two new unit holders acquired their beneficial interest in the trust property and the subject land, (see paragraph 9 of ``the facts''), they acquired it from ISPT as trustee in issuing units, and therefore the beneficial interest must have moved away from CMPI at an earlier point of time. Certainly, it was submitted, this was at a point of time prior to the events described in paragraph 9 of ``the facts'' which was the first point at which any exemption from duty under s 44(2)(d) could occur.

Conclusions

Having reflected upon the competing submissions of counsel, I have concluded that those advanced on behalf of the plaintiff are to be preferred.

The correctness of Mr Davies' submission (b) as he developed it, focusing upon what I have described in paragraph 8 of ``the facts'' as the critical step, depends upon whether equity would have acted to afford protection in the circumstances of this case once those events in paragraph 8 had occurred: Stern v McArthur (supra) and
Chan v Cresdon Pty Limited (1989) 168 CLR 242 esp at 252-253.

Would equity ``with its regard for substance rather than form'' have been prepared to step in to enforce the trust arising by reason of the deed, when CMPI was the only unit holder?

Mr Davies' submission that it would have done so because CMPI's equitable interest under the deed was less than that held by ISPT requires consideration of the terms of the deed of trust. Mr Davies drew attention to the following provisions:

• (i) Clause 3 of that Deed.
• Clause 3.1 and 3.2 I set out earlier in paragraph 5 of my review of the facts. Mr Davies points also to Clause 3.5 which limits the rights of the unit holders:
  • ``Except as provided in this deed or as agreed between all Unit Holders, a Unit Holder may not:
    • (a) interfere with or question the rights, powers, authority or discretion of the Manager or the Trustee under this deed;...
    • (d) require that any part of the Fund be transferred to a Unit Holders...''
• (ii) Part 6 deals with the functions of the manager and 6.1 provides, inter alia:
  • ``(a) The Manager must manage the Trust (which includes but is not limited to the Fund and all borrowings and liabilities of the Trust) for the benefit of the Unit Holders.
  • (b) The Manager has full and complete powers of management and subject to this deed, the Trustee must not exercise any powers of management except as directed or requested by the Manager...''
• The Trustee is required to act on directions or requests:
  • ``(a) Subject to any express provision in this deed to the contrary, the Trustee must act in accordance with a direction

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    ATC 4094

    or request of the Manager, except where the Trustee reasonably believes that acting in accordance with the request or direction:
    • (1) is not in the interests of the Unit Holders; or
    • (2) is in breach of this deed or any statute.
  • (b) If the Trustee rejects any proposal made by the Manager, the Manager may convene a meeting of Unit Holders in accordance with part 26 and put forward its proposal and the Trustee's reason for rejection.
  • (c) In the meeting referred to in clause 6.2(b) the Unit Holders may, by Ordinary Resolution, overturn the Trustee's rejection but only in relation to the proposal referred to in clause 6.2(b).
  • (d) The Trustee must give effect to a proposal confirmed by a resolution of Unit Holders under clause 6.2(c).''
• (iii) Part 7 addresses the term of the trust, which is expressed in 7.1 to be eighty years from the date of the deed or an earlier date determined under 7.1(b) or (c):
  • ``(b) any earlier date which the Trustee, with the consent of the holders of 90% of the Units either in writing or given in a meeting held under part 26, appoints as the vesting date for the purposes of this deed; and
  • (c) any earlier date determined in accordance with this deed.''
• 7.3 defines the procedure on winding up of the trust and in (f) affords an indemnity to the trustee in these terms:
  • ``(f) The Trustee is entitled to an indemnity in respect of, and may retain from the proceeds and assets referred to in clause 7.3(d), all costs, charges and expenses incurred:
    • (1) by the Trustee in connection with the administration of or winding up of the Trust;
    • (2) by or on behalf of any creditor of the Trustee in relation to the Fund;
    • (3) by or on behalf of any agent, solicitor, banker, accountant or other person employed by the Trustee in connection with the administration of or winding up of the Trust.''
• (iv) Part 8.10 provides for the appointment by the trustee of a nominee or custodian. The nominee's powers are defined in this part but 8.10(a) provides that:
  • ``the exercise of any power or discretion exercisable by the Trustee under this deed remains exercisable by the Trustee notwithstanding such appointment.''
• Part 8.10(b) provides:
  • ``(b) A nominee or custodian may perform the following actions in the name of the Trustee or, at the direction of the Trustee, in its own name as nominee for the Trustee:
    • (1) purchase or sell at the direction of the Trustee any Authorised Investment and execute all transfers and assurances necessary for any such purpose;
    • (2) receive and hold on behalf of the Trustee any Authorised Investment and any document of title thereto in safe custody provided that the Trustee may request access to, and return of, any Authorised Investment in the custody of the nominee or custodian and any document of title thereto;
    • (3) receive on behalf of the Trustee all amounts arising from any Authorised Investments referred to in sub-paragraph (2) above;
    • (4) procure registration of such Authorised Investments;
    • (5) hold and disburse moneys in the name of the Trust at the direction of the Trustee;
    • (6) perform any action the Trustee directs; and
    • (7) perform all actions incidental to any of the foregoing powers (other than any action which involves the exercise of a discretion).''
• (v) (a) Part 22 confers indemnities upon the trustee and in particular 22.2 provides:
  • ``(a) Without limiting clause 12.1, and without limiting the Trustee's indemnity at law, the Trustee is indemnified out of the Fund:
    • (1) against all losses, costs, damages or expenses incurred by the Trustee in performing any of its duties or exercising any of its powers, or as a

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      ATC 4095

      result of the exercise or non-exercise of any discretion, in relation to the Trust; and
    • (2) against any expense or liability incurred in prosecuting or defending any legal proceeding or other similar action in respect of this deed,
  • except in circumstances involving the Trustee's negligence, fraud, wilful default, breach of trust or breach of duty.
  • (b) The Trustee is entitled to apply money from the Fund to pay, or be reimbursed from the Fund for, all amounts referred to in clause 22.2(a).''
• (b) Later, 22.27 affords an indemnity in favour of ``Coles Myer'' (a different entity from CMPI):
  • ``(a) The Trustee indemnifies Coles Myer against all losses, costs, expenses and consequences incurred or suffered by Coles Myer as a result of any breach of trust or breach of duty by the Trustee.
  • (b) The indemnity granted under clause 22.27(a) may be satisfied out of the assets of the Trust and the Trustee must charge those assets in support of the indemnity. If required at any time by Coles Myer, the Trustee will execute a separate document (in a form satisfactory to Coles Myer) granting that charge.''

I do not consider that the above provisions of the deed produced the consequence for which Mr Davies contended.

Dealing firstly with Part 3, until such time as the further units were allotted as described in paragraph 9 of ``the facts'', the only unit holder under the deed of trust was CMPI. Part 3.5 did not restrict CMPI in its capacity as a unit holder, for so long as it was the only one, and until the allotment of further units, CMPI could do what later could only be done ``as agreed between all unit holders''.

Passing to Part 7 and the indemnity provided for in 7.3(f), the trustee is not entitled to an indemnity before a liability is incurred: see
Vacuum Oil Co Pty Limited v Wiltshire (1945) 72 CLR 319 and in particular the judgment of Dixon J at 335; and
Custom Credit Corporation Limited v Ravi Nominees Pty Limited (1992) 8 WAR 42 and in particular the judgment of Owen J at 52. Prior to the allotment described in paragraph 9, no event occurred by reason whereof the plaintiff incurred any liability giving rise to a right of indemnity under that provision.

Turning to Part 8.10, which I set out earlier, I am mindful of course that consequent upon the terms of the offer made by the plaintiff and accepted by CMPI, CMPI became a nominee. However CMPI performed no actions under 8.10(b). It was given no direction under (b)(1), nothing occurred to attract any activity by it under (b)(2); it received no moneys under (b)(3); nor was there occasion to register investments under (b)(4); it was given no direction under (b)(5); nor was it given any direction by the trustee under (b)(6); it follows that there was no occasion to perform any incidental actions under (b)(7). CMPI was replaced as described in paragraph 11 of ``the facts'' in the manner contemplated by the written offer described in paragraph 7 of those facts, and the replacement trustee was not to become a beneficiary under the trust.

I do not consider that in the circumstances reviewed the fact that CMPI was a nominee assumes any practical significance.

So far as the trustees' indemnities provided for in Part 22.2 and 22.27 are concerned, I accept the submission by Mr Gzell that absent any event attracting a liability as there contemplated the indemnities provided for in this Part have no application.

Consistently with the decision in Corin v Patton (supra), Mr Davies acknowledged that equity would not intervene to protect an interest which could immediately be brought to an end, as for instance where the owner of property held it as the bare trustee for another who in turn held it as bare trustee for the owner. I am not persuaded that the principle in Corin v Patton is displaced by reason of the provisions of the deed of trust in this case and I accept Mr Gzell's submissions to the contrary. It seems to me that this deed would not have prevented CMPI for so long as it was the sole unit holder from requiring the trust to be brought to an end. Therefore I do not accept that equity would have intervened for so long as CMPI remained the only unit holder.

Further in relation to Mr Davies' submission (b)(vii), it seems to me that once the relevant units were issued by the trustee CMPI was required to exercise its right of ownership in favour of the new unit holders but it does not follow that the beneficial interest must have passed from CMPI at an earlier point of time.

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ATC 4096

Indeed, I do not consider that it did. Until those new units issued there was in my opinion no change in beneficial ownership.

However once those additional units were allotted and upon payment therefor, the position altered, and equity would have intervened to protect the interests then arising under the deed of trust. With the change in unit holders, there was a change in the beneficial ownership of the trust asset, namely the relevant property. I identify the events described in paragraph 9 of ``the facts'' as being the point at which the relevant change occurred.

I therefore reject submission (b) as advanced by Mr Davies.

This brings me back to the first of Mr Davies' submissions, which invites the broad approach to s 44 that he expressed and which I endeavoured to summarise earlier when reviewing Mr Davies' submissions. In essence it is submitted that there was a change in beneficial ownership at the completion of the events of 27 January 1995 and that change necessarily attracted a liability to pay duty.

I referred earlier to the three letters written by the defendant in which the defendant addressed the issue of stamp duty. The third of those letters was expressed to be by way of amendment under s 35B of the Act and it focused upon the ``contracts for sale and purchase of land created by acceptance of the written offers dated 27 January 1995'' as causing or resulting in a change in the beneficial ownership for the purposes of s 44(1) of the statute.

The plaintiff here complains that having made that amendment to its assessment the defendant ought not to be permitted to go outside the ground there expressed to support the determinations presently under appeal. The plaintiff is, by reason of the provisions of s 124A(1), limited on this appeal to reliance upon the grounds of the objection expressed in the notice of objection prompted by the amended assessment, and it would be unjust, the plaintiff submitted, if the defendant could in those circumstances change its ground.

Upon reflection I do not consider that the terms of the defendant's letter of 21 September 1995 have the result that the defendant is necessarily confined to an examination of what I have described in paragraphs 7 and 8 of ``the facts'', provided the sequence of events was such as to attract a finding that what has been focused on in that assessment was causative of or did result in the requisite change. It seems to me that it is relevant in considering the question of causation in the present context that the events described in paragraphs 7 and 8 were steps in an elaborate scheme planned in advance, and that both the offeror and the offeree were involved in the planning throughout.

For the reasons already expressed I do not find that the events described in those paragraphs, viewed in isolation, caused or resulted in a change in the beneficial ownership. That change was brought about by the events described in paragraph 9, but it is at this stage that the provisions of s 44(2) come into play and must take effect, breaking the causative chain. At this point there was a change in beneficial ownership and sub-s (2) excludes from the operation of s 44 a change ``occurring as the consequence of the issue or redemption of units in a unit trust scheme''. The allotment of the units to the unit holders identified in paragraph 9 amounted to ``the issue... of units in a unit trust scheme'' within the definition contained in s 3 of the statute and recited earlier, and the change of beneficial ownership occurred as the consequence of that issue.

When the plaintiff redeemed the units that had been held by CMPI the entire beneficial interest in the relevant properties was then held by the superannuation trust and by the No. 2 trusts but once again it seems to me that what occurred at this stage attracted the application of s 44(2)(d), because the further change occurred ``as the consequence of the redemption of units in a unit trust scheme''.

It seems to me therefore that in the particular circumstances of this case the broad approach to s 44(1) which Mr Davies invites, would require the Court to ignore the language of s 44(2)(d) and the protection which I perceive to be afforded by that sub-section.

In my opinion the objection to the defendant's assessment in each case is well founded and, accordingly, on each summons I make the orders sought in paragraphs 1 and 2. I order the defendant to pay the plaintiff's costs.