White Rock Properties Pty Ltd v Commissioner of State Revenue [2014] VSC 312

The appellant, White Rock Pty Ltd (“White Rock”), appealed against three assessments under the Duties Act 2000 (Vic) (“Duties Act”) on transfers of land.

The land was held in common by multiple trustees held under a will. Under the terms of each testamentary trust, the trustees were entitled to enter into a partnership agreement with each other to develop and sell the land. Under the terms of the partnership agreement, the land was transferred to White Rock as an agent for the trustees.

The case primarily turned on the wording of sections 35(1)(a) of the Duties Act. This provision provides an exemption to paying duty where a transfer of dutiable property is made to a trustee or nominee to be held solely as trustee, without any change in the beneficial ownership of the property.

White Rock argued that it had merely been delegated some of the functions of the trustees of the pre-existing trusts of the will. White Rock, therefore, alleged that it took the land without a change in beneficial ownership. 

The Commissioner argued that under the terms of the transfers, the properties were not to be held by White Rock solely as trustee, because it acquired significant powers over the property.

Ultimately, the Victorian Supreme Court held that section 35(1)(a) of the Act could not be enlivened.  The transfers resulted in White Rock receiving particular powers.  These powers, the Court found, were greater than the powers of the individual trustees as White Rock could sell, develop, borrow and charge in circumstances where the trustees could not do so by themselves. 

As an alternative, White Rock relied on section 33(3) of the Duties Act.  This exempts a transfer made solely because of a change in trustee, in order to vest the property in the new trustee.  The Court also held that this did not apply, because a new and separate trust was created by the transfers of the land under which White Rock had active duties.

This case is a warning to all trustees who engage an agent when dealing with property under a testamentary trust. If too much power is given to the agent, the transfer may be subject to duty.