For business reasons, decided that another company, DKR Holdings, should own the property as trustee for 29 McQuarry
Objective:
29 McQuarry would continue to occupy and use the land
Legal ownership would be transferred to DKR Holdings
Stamp Duty Dispute
Stamp Duty in New South Wales: Payable when land is transferred
Commissioner's Demand: DKR, as the purchaser, to pay the stamp duty
DKR's Argument:
Beneficial use of the land was not changing
The transfer was merely a formality
Therefore, no duty should be payable
Legal and Equitable Interests
Legal Interest: Holder has title to the land and can generally do as they please
Equitable Interest: Arises when someone has the right to benefit from the land, despite not holding the legal title
Often, the trustee holds legal title and the beneficiary holds the equitable interest
Key Issue: Whether Stamp Duty Was Payable
DKR's Position: Only received legal title, no equitable interest
Court's Decision: Stamp duty is payable
Court's Reasoning
Justice of Appeal Hope's Conclusion:
An absolute owner does not hold a separate legal estate and equitable estate
The owner only holds the legal estate with all associated rights
Rights of a beneficiary are tied to the land but are a right to ensure the legal owner adheres to equitable obligations
Implications and Learnings
Legal Title: Always exists with the potential obligations
Equitable Obligations: Can be imposed upon the legal titleholder in favor of a beneficiary
Stamp Duty: Even if a transfer is for trust purposes, stamp duty may be applied as the full title is transferred
Conclusion
Legal and equitable interests are distinct but interconnected
Transfer of land ownership, even for trust purposes, can entail stamp duty, as legal ownership with its full rights and responsibilities is being transferred.