A family dispute in this matter triggered a number of property transactions. The first lot of transactions involved direct transfers of properties from the applicant as trustee of a family trust to a number of beneficiaries of the family trust. The Commissioner accepted that those transfers were exempt from duty pursuant to section 36A of the Duties Act 2000 (the Act). However, the Commissioner assessed total duty on the second lot of transactions, which involved transfers of the properties from the receiving beneficiaries back to the trustee of the family trust (“reverse transfers”).
The primary issue in dispute was whether the reverse transfers were executed in error and failed to have effect. That is, whether they were “failed instruments” within the meaning of section 260 of Act with the result that no duty would be chargeable.
The Tribunal decided the matter in favour of the Commissioner. In doing so, it found that the transfers and the reverse transfers were executed by the relevant parties as intended by them at the time. As such, section 260 of the Act did not apply in the matter. That section was not intended to cover situations where there was a deliberate act to rescind an already completed transaction due to a subsequent change of intention by the parties.
