Tooheys Ltd v Commissioner of Stamp Duties (NSW)
105 CLR 602(Judgment by: KITTO J)
Between: TOOHEYS LTD
And: COMMISSIONER OF STAMP DUTIES (NSW)
Judges:
Dixon CJ
Kitto JTaylor J
Menzies J
Windeyer J
Subject References:
Taxation and revenue
Stamp duty
Exemptions
Deed between company and trustees establishing pension scheme for employees
Meaning of 'declaration of Trust'
Legislative References:
Stamp Duties Act 1920 (NSW) - Second Schedule
Judgment date: 13 June 1961
SYDNEY
Judgment by:
KITTO J
I agree that the instrument in question in this appeal is liable to be stamped with the duty which the Commissioner has assessed, unless it falls within par. (5) of the general exemptions appearing at the end of the second schedule to the Stamp Duties Act, 1920-1956 (N.S.W.). The paragraph, by force of s. 4, exempts "All instruments relating to the services of apprentices, clerks, and servants". In the Act of 1898 which was the precursor of the present Act, the corresponding paragraph was expressed as exempting "any instrument relating to the service of an apprentice, clerk or servant". For some reason the draftsman chose to express the new paragraph in the plural; but it seems clear enough that the change from "the service" to "the services" was not due to any change of idea or of policy. Each word appears to mean "the employment"; so that an instrument which answers the description of "relating to" the employment of a servant or servants is exempt from duty. How far the class extends is a question depending upon the ambit of the expression "relating to". It is an expression not synonymous with "for", as is recognized by the paragraph of special exemption under the heading "Agreement or Memorandum of an Agreement" in the body of the second schedule, where the words used are "any agreement or memorandum under hand-(a) made for or relating to the sale of any goods, wares, or merchandise ... ". This form of words survives from early Stamp Acts in the United Kingdom, and a line of cases decided on those Acts demonstrates that the inclusion of the words "or relating to" greatly widens the exempt class of instruments.
Of course not every instrument which in any way refers to the employment of servants can be supposed to fall within the intendment of the words "relating to the services of ... servants". How close or substantial must the connection be, if the description is to apply? The answer is to be sought, I think, by observance of the considerations which Blackburn J. explained in Rein v Lane. [F2] The question in that case was whether a guarantee for the due performance of a charterparty was liable to stamp duty as a "memorandum, letter, or other writing ... for or relating to the freight or conveyance of any money, goods, or effects, on board of (a) ship or vessel". After pointing out that if the words were taken in their most literal and extended sense every letter in which a ship's captain mentioned anything about the freight would be dutiable as relating in one sense to the freight, his Lordship held that the intention expressed by the material words when used in such a statute for such a purpose, was only to require a stamp for documents in the nature of a charterparty, or relating to contracts of carriage, or relating to the carriage of goods, in the sense of being used as equivalent to or for the purpose of producing the same effect as a charterparty. This was to construe the expression "relating to" in a narrow sense, but one dictated by the evident purpose of the provision. By way of contrast, his Lordship turned to cases such as Smith v Cator, [F3] in which it had been held that a guarantee of the price of goods sold was an agreement "relating to" the sale of goods within the meaning of an exemption such as I have mentioned above, and he used words which I find so much to the point here that I must quote them. "No doubt the cases, in one sense, are similar; and if the words were applicable to the same subject, they ought to have the same construction. But then, in the one case, the words are used in a statute imposing a duty for the purpose of raising a revenue, and the object in imposing that duty was to catch all things that were really in substance charterparties. In the other case the words are used for exempting and saving from duty all agreements that were made for the purpose of effecting sales. The object of the one statute was to promote commerce, and it said, therefore, that agreements for the sale of goods should not be fettered or hampered by the imposition of any duty of this kind. Consequently the construction put upon it from the very earliest cases was, that wherever an agreement has for its primary object to produce or cause sales ... where, but for the agreement or guarantee, the contract of sale would not be entered into, it should not require to be stamped; because the effect of that would be to check commerce and prevent the sale. In the one case, therefore, the exemption should be liberally construed, and being liberally construed the guarantee was brought within the meaning of the exemption. The legislature meant to free from stamp such documents as tended to produce contracts of sale which were considered meritorious, and good, and advantageous. If their object had been to impose clogs and burdens upon everything that would tend to produce a charterparty, on the ground that they were tainted with a nuisance, the same extended construction might be put upon the words. But the object of the legislature was quite the reverse. It is, I apprehend, in accordance with the general rule of construction in every case, that you are not only to look at the words, but you are to look at the context, the collocation, and the object of such words relating to such a matter, and interpret the meaning according to what would appear to be the meaning intended to be conveyed by the use of the words under such circumstances. The same words might mean a very different thing, when put in to impose a tax, from what they would mean when exempting from a tax". [F4]
In the present case, as in the sale of goods cases, the words to be construed are in an exempting provision, and an exempting provision the policy of which is not difficult to perceive. To regulate or affect by means of written instruments the terms or conditions of service of apprentices, or of clerks (meaning, I suppose, articled clerks, who though they serve for the purpose of learning have been held for some purposes not to be apprentices), or of servants generally, was to engage in an activity for which the Legislature had special solicitude. Are the words "relating to", as used in such an Act and for such an exempting purpose, to be so narrowly construed as to leave outside the exemption an instrument which annexes an incident to the service of designated servants? The exempting provision ought to receive a liberal construction, according to Blackburn J.'s principle: see also per Platt B. in Sadler v Johnson [F5] (in a passage which Starke J. approved in North Shore Gas Co Ltd v Commissioner of Stamp Duties (N.S.W.) [F6] ), and per Lord Ellenborough C.J. in Warrington v Furbor. [F7] Surely if an instrument operates upon a man's service, so that in his capacity of servant, and by his serving, he produces, for himself upon retirement or for his dependants on his death, benefits which in general character are familiar appurtenances of service, the object of that instrument is of the kind which the exemption intends to foster. Its "primary object" (to use the test applied in such cases as Smith v Cator, [F8] Southgate v Bohn, [F9] and Sadler v Johnson [F10] ), is to make the relevant service more attractive, more advantageous, to those who enter it and continue in it, by adding to its immediate emoluments a provision for payments upon retirement or death. True, payments under it will not begin until the service has ended; but the payments are only the fruition of the benefits which the instrument attaches to the service during its subsistence. They are, in truth, earned by the service, as was said by Brereton J. in Watson v Ramsay, [F11] and by Windeyer J. in National Insurance Co of New Zealand Ltd v Espagne. [F12]
If a contract of service were itself to contain a provision for a pension on retirement, surely no-one speaking the language of the exemption we are considering would regard that provision as not "relating to" the very topic to which the rest of the document related. Nor, I imagine, would anyone speaking that language hesitate to describe the Superannuation Act 1922-1959 (Cth) as an Act "relating to" the public service. Some point was made during the argument of the fact that the instrument before us forms no part of the contract of service between an employing company and those of its employees who are admitted to membership of the Fund; but it is, no less than a contractual provision of a similar nature would be, the chosen means for providing pension rights to be acquired by servants in and by their service, and so enhancing employment on the staffs of the employing companies. In that purpose lies the close connection with the service of the members which, in my judgment, makes it an instrument "relating to" that service.
In the foregoing I have spoken on the footing that the instrument provides for pensions in respect of employees only. By means of a definition of "employee" the class is made to include every person, including a managing or other executive director, employed by Tooheys Limited or an associated company as a member of the permanent staff. A suggestion has been made that the class as so constituted is wider than that which the exempting provision of the Stamp Duties Act describes as "servants". I do not think that it is. Notwithstanding what Kekewich J. said in Normandy v Ind. Coope & Co, [F13] and what Eve J. said in In re Lee, Behrens & Co, [F14] a director of a company may be a servant as well as being a director: H. Holdsworth Ltd v Caddies; [F15] and when he is employed as a managing or other executive director on the company's permanent staff, (which he must be if he is to be a member of the Fund under the instrument before us), there is no ground for denying that he is a servant of the company within the purview of such an Act as we are considering: cf. Reg. v Stuart, [F16] Anderson v James Sutherland (Peterhead) Ltd [F17] and Trussed Steel Concrete Co Ltd v Green. [F18]
In my opinion the exemption applies in this case and the appeal should be allowed.