Howard Chen and Liang Zuoming and Zheng Weiting v Betty Palaso (2011) N4374

• Jurisdiction: Papua New Guinea
• Citation: (2011) N4374
• Date: 18 August 2011
• Docket Number: CIA No. 167 of 2010
• Court: National Court
• Year: 2011

Full Title: CIA No. 167 of 2010; Howard Chen and Liang Zuoming and Zheng Weiting v Betty Palaso (2011) N4374

National Court: Sawong, J.

Judgment Delivered: 18 August 2011

COMMERCIAL LAW—Stamp Duties—Duty payable on Trust Deed—s61 of Stamp Duties Act, Ch. 117

COMMERCIAL LAW—Stamp duties—deeds of Settlement or gifts—whether Trust Deed is deed of settlement—appropriate duty payable.

Facts:

The existing shareholders of a company created a Trust Deed under which they transferred 50% of their shares worth K1.5 million to two new shareholders. However these transfers were to be held in trust for the new shareholders. No consideration was paid by the new shareholders. The Trust Deed was subsequently sent to the stamp duties office for stamp duty with an application for nominal stamp duty. The Commissioner General of the Internal Revenue Commission reviewed the duty together with penalty and assessed the dutiable to K155, 732.88. The Appellants paid the duty under protest. The Appellants appealed to the Commission for further reassessment but this was rejected.

The Appellants then appealed to the National Court against the assessment.

Held:

(1) A trust deed is a deed of settlement within the meaning of s61(1) of the Stamp Duties Act and is dutiable.

(2) The appropriate duty is under item 14 of schedule 1 of the Act.

(3) There was no error on the assessment made by the Internal Revenue Commission.

(4) Appeal Dismissed.

Case Cited:

Papua New Guinea Cases

Investment Corporation of Papua New Guinea v Paul Pora, Minister for Finance and Physical Planning and The Independent State of Papua New Guinea [1993] PNGLR 45

Overseas Cases

Commissioner for Stamp Duties (Queensland) v. Hopkins [1945] 71 CLR 351

18th August, 2011

1. SAWONG, J: The Appellant’s challenge an assessment of duty made by the Commissioner General in respect of a certain instrument namely, a Deed of Trust, entered into between the first appellants as Trustees and the second and third Appellants as beneficiaries of certain shares in a company called Mamosa Investment Ltd (the company). It is the Appellants contention that while the document is stampable or dutiable at a nominal rate, they are not liable to pay more duty as the commissioner has assessed it.

2. The matter comes before this court by way of appeal under s21 of the Stamp Duties Act. Ch. 117. The appellants have paid the duty assessed under protest. The essential facts backgrounding this appeal are not in dispute.

3. On 22 May 2009, the Appellant had signed and entered into a Deed of Trust for the First Appellant to hold in trust shares in the company for and on behalf of the Second and Third Appellant (“the Deed”).

4. On 25 February 2010, under cover of letter dated 24 February 2010 from Young & William Lawyers, the Appellants lodged the Deed with the stamp duty officer with an application for impressed stamp duty.

5. On 26 March 2010, the Respondent informed the Appellants (by letter dated 9th March 2010) that she had “reassessed” the stamp duty pursuant to section 13A as duty payable under Item 14 (Deed of Settlement) at the amount of K155, 732.88).

6. On 9 April 2010, the Appellants lodged their objection against the assessment pursuant to section 20A of the Act.

7. In their objection, the Appellants also paid K155, 732.88 as payment of duty and in conformity with the assessment, to the Internal Revenue Commission pursuant to section 20A(1).

8. On 23 September 2010, the Respondent, by letter dated 21 September 2010, informed the Appellants that their objection had been considered and have been rejected in full.

9. On 22 October 2010, the Appellants dissatisfied with the decision of the Respondent of 21 September 2010, filed the appeal herein to the National Court pursuant to section 21 (1) of the Act.

10. The grounds of Appeal as pleaded in the Notice of Appeal are:

(a) The decision of the Respondent made on 21st September 2010 to reject in full the Appellants’ Objection dated 9th April 2010 is unlawful and amounts to an error of law in that the Assessment dated 9 March 2010 was made under the wrong and incorrect Duty under item 14 when the nature of the instrument was not in the nature of a Deed of Settlement and that the Deed of Trust the Appellants seek to impressed duty for does not relate to “property” as defined under section 1 (1) and 61 (b) of the Stamp duties Act.

(b) The Appellants’ Deed of Trust was required to have been assessed and charged duty under item 6 (“Deeds of Agreements under Seal”) of schedule 1 of the Stamp Duties Act, which assessment should...