Commissioner of Stamp Duties (NSW) v Henry
(1964) 114 CLR 322(Judgment by: Kitto J)
Between: Commissioner of Stamp Duties (NSW)
And: Henry
Judges:
Dixon CJ
McTiernan J
Kitto JTaylor J
Owen J
Subject References:
Stamp Duties (NSW)
Judgment date: 25 February 1964
Judgment by:
Kitto J
This appeal arises out of a difference of opinion between the Commissioner of Stamp Duties and a syndicate as to the amount of duty payable under the provisions of the Stamp Duties Act, 1920- 1958 (N.S.W.) on a deed made on 3rd February 1959 between a company called Vale of Clwydd Colliery Limited of the one part and the members of the syndicate of the other part. The deed recited that the company was the registered proprietor of a parcel of land wherein lay certain seams of coal, and that it was the owner of certain pits, tunnels, mine workings, buildings, plant, machinery and stores on the land. It further recited that the syndicate had applied to the company for permission to get, work and win coal from the land. It then witnessed that the company thereby granted to the syndicate what was described as a licence to operate a certain mine on the land (shown on a plan annexed) and to use and operate the pits, tunnels, mine workings, buildings, plant and machinery then thereon for the purpose of the getting, working and mining of coal therefrom. (at p328)
The licence was granted for a term of five years commencing on 1st January 1958, with an option of renewal by the syndicate for a further five years. It was expressed to be determinable in certain events, and the company was to have the right at all times to enter on the land for any purposes other than those of the winning of coal. The syndicate acknowledged having taken delivery of the buildings, plant, machinery, stores, pit timber and other materials listed in a schedule, and was given the custody thereof as bailee for the company with the right of use for the purposes previously mentioned. The syndicate bound itself to pay the company for all stores and pit timber used by it from time to time during the term of the licence, agreeing that at the expiration or sooner determination of the licence it would deliver the residue to the company and pay for any deficiency. (at p328)
The principal provision of the deed as to payments to be made by the syndicate was that "for the use of the facilities aforesaid and for the use of the company's land pits tunnels mine workings buildings plant and machinery" the syndicate should pay to the company fortnightly a fee at the rate of three shillings per ton and in addition a royalty of two shillings per ton for each and every ton of coal won by the syndicate from the land. (at p328)
It will be noticed that the deed reserved no dead rent and provided for no payment as consideration for the grant of the rights it conferred as distinguished from the exercise of those rights. The only payment to be made to the company was the sum of five shillings for each ton of coal which the syndicate should win from the land. Why the sum was divided into two parts is not made clear; but what is clear is that the "fee" of three shillings per ton and the "royalty" of two shillings per ton, both to be paid by reference to the amount of coal won, were both for the use of "the facilities aforesaid" and of the land, pits, tunnels, mine workings, buildings, plant and machinery, all of which the lease granted "for the purpose of the getting working and winning of coal" from the land. It does not seem possible to draw any legal distinction between the "fee" and the "royalty". The whole five shillings per ton was to form the company's compensation for the enjoyment by the syndicate of the rights granted to it. They may be analysed into a miscellany of rights: rights to enter and traverse delimited portions of the company's land, to operate the already-opened mine, to extract coal therefrom, and for these purposes to make use of certain fixtures and chattels on the land. But the deed wrapped them all up together, described the exercise of them all as the "use" of facilities and of property, and bound the syndicate to pay the company for the use a sum measured by the weight of the coal the syndicate should win from the land. (at p329)
It is a possible conclusion from the terms of the deed, the character of the property it dealt with and the nature of the purpose which it contemplated the syndicate's pursuing, that the intention was to grant the syndicate not a mere profit a prendre but the exclusive possession of the land (or some part of it) for the agreed period. If so, it was a lease, in the common law sense of the word. But the point need not be decided, for the Stamp Duties Act defines "lease" for its own purposes to include inter alia any instrument (not being an instrument liable to ad valorem duty as a conveyance) whereby a right to use any property in New South Wales for any purpose whatever is conferred on or acquired by any person. The expression "a right to use . . . property . . . in New South Wales for any purpose whatever" would be too narrowly construed if it were confined to uses which leave property itself undiminished. It is at least wide enough to comprehend a right to use a coal mine, with its pits, tunnels, and workings and its associated buildings, plant and machinery for the winning of coal. Accordingly the deed in the present case is to be deemed a "lease" for the purposes of duty. (at p329)
The Commissioner, however, seeks to charge the deed with ad valorem duty as a conveyance. It is clearly not so chargeable by reason only of its being a "lease", notwithstanding that s. 65 defines "conveyance" to include a lease. The general liability of conveyances to ad valorem duty is qualified in s. 66 (1) by the expression "Subject to the provisions of this Act". Originally this read "Subject to the provisions of this Act as to the duty chargeable on particular instruments". The expression now used is wider and therefore less specific; but whatever else it does, at least it excludes from liability to ad valorem duty as a conveyance every instrument which the Act makes dutiable under a special category. It will have been observed that s. 76 in extending "lease" to include an instrument conferring a right of user, excludes an instrument liable to ad valorem duty as a conveyance; but that seems to mean only an instrument which, while it gives the right to use property, is a conveyance of that property by virtue of its giving a right or interest therein which is more extensive than the right of user. The words in brackets serve only to prevent the charging of two duties. (at p330)
It is true, however, that in one sense the deed here in question gives not only a right to use the property it describes but, by clear implication, a right to appropriate coal, when severed from the land, so as to make it the chattel property of the syndicate. These rights, regarded separately from one another, are different in kind: the one is a right to use property which nevertheless is to remain the company's, while the other is a right to take coal which is the company's at the moment of severance and thereby to cause the property in the coal to pass to the syndicate. If it were sound for the present purpose to consider each right by itself, no doubt the deed would be a lease by reason of granting the first right and a conveyance of an interest in the land by reason of granting the second; and on that footing s. 17 might properly be invoked to charge the deed separately and distinctly with duty in respect of each of the two matters it contains. But this is not how the Act looks at such a case. It recognizes, as the common law recognizes, that a lease which entitles the lessee to work a mine on the demised land is not two grants, but one; and it extends the conception to the wider class of instruments which by definition it treats as leases. This appears from s. 79, which I had better quote in full:
- "s.79(1)
- Where the consideration for a lease is wholly or partly a royalty, payable either in money, produce, or goods, or any other consideration whatever other than a fixed sum of money, then, if it is stipulated that the amount of such money, or the value of such produce or goods, is to amount at least to or not to exceed a given sum, or where the lessee is specially charged with or has the option of paying after any permanent rate of conversion, the yearly amount of such money and value of such produce or goods is to be estimated at such given sum or according to such given rate.
- (2)
- Where there is no possible means of discovering what is the maximum value of the consideration dealt with under a lease, then the duty payable in respect of such lease shall be a fixed sum of one pound ten shillings, in addition to the duty chargeable in respect of the rent and of so much of the consideration as is capable of being valued." (at p330)
What is meant in sub-s. (1) by "the consideration for a lease" is obviously not, in the case of a lease in the common law sense, a consideration in the nature of a premium or foregift, but is the reddendum. Accordingly, in relation to an instrument which is not a lease at common law but is dutiable as a lease because it confers a right of user, "the consideration for a lease" must mean the recompense to the "lessor" for the "lessee's" enjoyment of the right of user. To provide, as in s. 79 (1), that a "lease" which provides for a royalty is to be charged with lease duty by reference to the royalty as well as the rent (if any) is to show plainly that a "lease" for the purpose of mining is not to be regarded because it entitles the "lessee" to take minerals from the land as relating partly to the right to take minerals and partly to the right to use the property for mining purposes. The evident intention is that the instrument is to be dutiable as a lease only, not as a lease and (separately) as a conveyance of a profit a prendre. (at p331)
That the Act should follow this course is only what might be expected, for the law has not been accustomed to regard the right of a lessee to take minerals from a mine as other than an incident of the lease: it regards the taking of the minerals as part and parcel of the use which the grant entitles the lessee to have without being guilty of waste. Thus Lord Coke (Co. Litt. 54 b) wrote in a passage which Kindersley V.C. quoted in Clegg v. Rowland (1866) LR 2 Eq 160 , at p 165 and Lord Blackburn relied upon in Campbell v. Wardlaw (1883) 8 App Cas 641 , at p 645: "A man hath land in which there is a mine of coales, or of the like, and maketh a lease of the land (without mentioning any mines) for life or for yeares; the lessee for such mines as were open at the time of the lease made, may digge and take the profits thereof. But he cannot digge for any new mine that was not open at the time of the lease made, for that would be adjudged waste. And if there be open mines, and the owner make a lease of the land, with the mines therein, this shall extend to the open mines onely, and not to any hidden mine: but if there be no open mine, and the lease is made of the land together with all mines therein, there the lessee may digge for mines, and enjoy the benefit thereof, otherwise those words should be void." (at p331)
Applying the views above expressed as to the relevant provisions of the Act, I am of opinion that the deed here in question is not a conveyance liable to ad valorem duty, and that it is dutiable only as a "lease" because it confers on the syndicate rights to use property in New South Wales for the purpose of mining for coal (including therein the right to take the coal), but does not transfer to or vest in or cause to accrue to them any more than those rights. (at p331)
The amount of duty payable is, in my opinion, to be ascertained under s. 79 (2). Sub-section (1) of s. 79 does not apply, because there is no stipulation for a minimum or maximum amount or value of the royalty, and the lessee neither is specially charged with nor has the option of paying after any permanent rate of conversion. It is sub-s. (2) that applies. There is no possible means of discovering what is the maximum value of the "fee" and the "royalty" which the syndicate is to pay. There is no rent reserved, and no consideration capable of being valued. Accordingly the duty payable, in my opinion, is 1 pound 10s. Od. (at p332)
I would dismiss the appeal. (at p332)