Forever Grateful Holdings Pty Ltd v Commissioner of State Revenue [2026] NSWSC 761  

In this decision of the New South Wales Supreme Court, the Court reduced an incorrect assessment of transfer duty from $93,055 plus surcharge foreign trust purchaser duty of $160,000 to the correct $100 nominal duty for a change of trustee transaction. 

The taxpayer succeeded and should have only ever been assessed for the $100 nominal amount for a change of trustee made for nil consideration.

The Trust

The discretionary trust (the Trust) was established on 1 February 2005 with Michael as the initial appointor and Michael and Lisa as the initial individual trustees (all of the same surname).

On 9 April 2008 the individual trustees resigned and were replaced with a company (Hume Contracting Pty Ltd) as the corporate trustee of the Trust (Michael was the sole shareholder and sole director of Hume Contracting).

Under a Deed of Appointment and Retirement of Trustee dated 6 March 2024 (DART) Hume Contracting was replaced as trustee with Forever Grateful Holdings Pty Ltd as the new trustee, the taxpayer plaintiff (Michael was the sole director of Forever Grateful Holdings and Michael and Naomi were the 50/50 equal shareholders, all of the same surname).

The NSW Moama Property Sale

Hume Contracting was trustee of the Trust when a property in Moama NSW was originally acquired by the Trust on 15 July 2013.

On 19 April 2024 (after the DART was signed) that Moama property was sold under a contract of sale signed on that date.

However the legal transfer of the Moama property from Hume Contracting as former trustee to the new trustee Forever Grateful Holdings (which signed the contract of sale) had not been done. (See Absolute Vision case note for more on this issue)

Therefore settlement of the contract of sale for the Moama property was made subject to this change of trustee transfer being completed by the settlement date of 25 June 2024, which should have been assessed for $100 nominal duty.

Change of Trustee Transaction on PEXA - Relevant Date

An unexecuted transfer of land was created on PEXA Exchange on 10 May 2024 from Hume Contracting to Forever Grateful Holdings for no consideration, which should attract only nominal duty of $100 as long as the trust deed contains a “successor and continuing trustee beneficiary exclusion clause” under section 54(3) of the NSW Duties Act.

Next, on 24 May 2024, to prepare for settlement by 25 June 2024, a cover letter and certain documents attached to that cover letter, including the unexecuted transfer (and assumedly the trust deed, trustee details and ASIC searches) were uploaded onto the Revenue NSW eDuties Portal. The unexecuted transfer was undated and made no provision for the transferor to sign. 

This date of 24 May 2024 was only generally intended as preliminary to upload draft documents for review and confirmation prior to completing the change of trustee transaction via eDuties for nominal duty. A purpose of this being to confirm the required clauses are approved in the trust deed. However the Commissioner argued 24 May 2024 to be the actual (not draft) change of trustee transaction date, which was held to be incorrect by the NSW Supreme Court.

The Five NSW OSR Requisitions 

After the unexecuted transfer of land was created on PEXA Exchange and the accompanying documents were uploaded to the eDuties Portal, Revenue NSW reviewed and asked five requisitions of the taxpayer.

The first requisition of Revenue NSW on 31 May 2024 asked for a market appraisal for the Moama property and confirmation of no further variations to the trust deed.

The second requisition of Revenue NSW on 3 June 2024 asked about whether the trust deed excluded foreign beneficiaries, to which the taxpayer had to prepare a deed of variation for foreign beneficiaries exclusion provided to Revenue NSW on 11 June 2024 (but it was invalid being signed by Hume Contracting which was no longer the corporate trustee of the Trust having been replaced with Forever Grateful Holdings back in March). 

The third requisition of Revenue NSW on 17 June 2024 asked for a date on the deed of variation for foreign beneficiaries exclusion, which was dated 11 June 2024.

The fourth requisition of Revenue NSW of 20 June 2024 requested a successor and continuing trustee beneficiary exclusion deed of variation noting that clause was not in the original trust deed. This time the deed of variation was uploaded on 21 June 2024 and had the correct trustee as Forever Grateful Holdings and included both the foreign beneficiaries exclusion clause and the successor and continuing trustee beneficiary exclusion clause.

Then the fifth requisition of Revenue NSW of 24 June 2024 requested executed deed of variation, and confirmation of the trust deed and original stamping and confirmation that all variations to the Trust had been lodged. The executed deed of variation dated 24 June 2024 was uploaded in response on 25 June 2024.

The Assessment by Revenue NSW followed on 26 June 2024 (bold emphasis added): 

The documents have been reviewed and the matter has been assessed and is not in accordance with Section 54(3) of the Duties Act 1997. 

A PEXA transfer was lodged with the liability date being 24 May 2024 showing the transferee as Forever Grateful Holdings Pty Ltd atf The Hume Enterprises Family Investment Trust. 

The trust deed was amended on 24 June 2024 to include the ‘irrevocable clause’ being after the liability date of 24 May 2024 therefore this transaction is liable to ad valorum [sic] duty and Surcharge Purchase Duty.” 

Revenue NSW asked the taxpayer through five requisitions to make all of those amendments for the supposed purpose of allowing the Trust to complete the standard change of trustee for $100 nominal duty. 

And once this was complete Revenue NSW then proceeded to assess the taxpayer instead for $93,055 and surcharge foreign trust purchaser duty of $160,000.

This act of Revenue NSW forced the taxpayer to seek resolution in the NSW Supreme Court that the Commissioner had incorrectly applied section 12(4)(b) of the NSW Duties Act, rather than the section found to be correct - section 12(4)(a).

The Court’s Reasoning - Section 12(4)(b) incorrectly applied

Paragraph 39 of the Court’s Judgment set out the section of the NSW Duties Act on which the Commissioner’s case was based upon (bold emphasis added):

12 When does a liability for duty arise? 

(1) A liability for duty charged by this Chapter arises when a transfer of dutiable property occurs. 

(2) However, if a transfer of dutiable property is effected by an instrument, liability for duty charged by this Chapter arises when the instrument is first executed. 

(3) A liability for duty in respect of a dutiable transaction that is charged with duty as if it were a transfer of dutiable property arises even if the dutiable property is not in existence at the time that the transfer is taken to have occurred, or the instrument effecting the transfer is first executed, as the case requires. 

(4) An electronic registry instrument is taken to be first executed— 

(a) if the instrument is digitally signed by a subscriber within the meaning of the Electronic Conveyancing National Law (NSW)—on the date the instrument is first digitally signed by the subscriber, or 

(b) otherwise—when the Chief Commissioner first receives information relating to the instrument. 

The question here was whether the state of the trust deed at the relevant transaction time included the 24 June 2024 deed of variation (either: as varied after 24 June 2024 final lodgment with Revenue NSW; or not varied as before 24 June 2024 as the unsigned upload of documents on 24 May 2024).

The Commissioner claimed under section 12(4)(b) that the relevant date should be the date when the Commissioner first received the draft unsigned upload on 24 May 2024.

The Court found that section 12(4)(b) should not apply here and that the Commissioner was incorrect to use the draft unsigned upload date of 24 May 2024 as the relevant duty liability date, where the trust deed had no chance of being varied as the five Revenue NSW requisitions had requested, as stated at paragraphs 81 and 83 (bold and underline emphasis added): 

81. Whatever may have been the particular concern, it is clear that subsection (4)(b) was concerned with cases where an instrument was not signed by anyone, as opposed to draft instruments to be digitally signed at a later date. The explanatory note to the Revenue, Fines and Other Legislation Amendment Bill 2023 (NSW) said of the amendment to s 12(4): 

“Schedule 1[2] clarifies that an instrument lodged electronically under the Electronic Conveyancing National Law (NSW) that is not digitally signed is taken to have been first executed when the Chief Commissioner of State Revenue (the Chief Commissioner) first receives information relating to the instrument.” 

[...]

83. I do not consider that this material supports the construction advanced by the Chief Commissioner. Rather, as the plaintiff submitted, it suggests that s[ection] 12 was amended only to deal with the question of first execution of electronic instruments that are not signed by anyone. Either way, the ‘minor’ amendment that introduced s 12(4)(b) does not appear to have been intended to create a fundamentally different regime in relation to electronic registry instruments compared to that which has prevailed in relation to all other instruments since the Duties Act came into operation. 

The Commissioner accepted that if the Court found against the Commissioner’s interpretation of section 12(4) in claiming the draft documents date of 24 May 2024 was the actual transaction date under section 12(4)(b), that “it would [not] be necessary to remit the matter to [the Commissioner] to consider whether he was satisfied that the s[ection] 54(3) requirements were met as at [the actual transaction date of] 15 July 2024” [under section 12(4)(a)] (at paragraph 84). 

Conclusion

The dispute was not over whether the trust deed had been correctly varied to not attract the surcharge duty, it was merely over the application of a section of the NSW Duties Act as to the effective date of that variation.

The Court ordered that the assessment of transfer duty of $93,055 and surcharge foreign trust purchaser duty of $160,000 be replaced with a $100 nominal duty for a change of trustee transaction.

The Court at paragraph 82 noted that an explanation against such anomaly was already present in the relevant explanatory materials (bold emphasis added):

“The bill also contains a number of minor duty amendments. Every year more duty transactions involving electronic instruments are occurring. Uncertainty has arisen as to when and where an electronic instrument is first executed. When an electronic instrument is first executed determines when duty is due and whether interest and penalty tax apply. Currently, the Act provides that an electronic registry instrument is first executed when it is digitally signed by a subscriber to the Electronic Lodgment Network, such as a legal practitioner. However, there are instances where an instrument is not digitally signed and is uploaded without a digital signature. [which was not the case here] To address that, the bill deems the time and date when an unsigned electronic instrument is first executed to be when information relating to it is received.” 

The transfer between the former corporate trustee Hume Contracting and the new corporate trustee Forever Grateful Holdings was not a document that would be signed by no one and should not be subject to section 12(4)(b) as the Court held.

Take Away Points

Here, the contract of sale was signed merely a month and a week after the deed of appointment and retirement of trustee, and the unexecuted change of trustee transfer of land was created in PEXA Exchange a month after that. 

Without knowing the underlying reason for a change of trustee so close to a real estate property sale this could have been avoided if the change of trustee was done after the property sale, otherwise the risk arises that the relevant date of the transaction could be interpreted as the date of the deed of appointment and retirement of trustee on 6 March 2024, on which date the trust deed would definitely not have any chance to have added the successor and continuing trustee beneficiary exclusion clause. Or a trust deed could have been originally ordered including that clause, and the foreign beneficiary exclusion clause, as default clauses from the beginning.