Commissioner of Stamp Duties (NSW) v Henry
(1964) 114 CLR 322(Judgment by: Owen J)
Between: Commissioner of Stamp Duties (NSW)
And: Henry
Judges:
Dixon CJ
McTiernan J
Kitto J
Taylor J
Owen J
Subject References:
Stamp Duties (NSW)
Judgment date: 25 February 1964
Judgment by:
Owen J
The instrument produced to the appellant for stamping was a deed, dated 3rd February 1959, made between a colliery proprietor and the respondents whereby the former granted to the latter as from 1st January 1958 the right, on certain terms and conditions, to win coal from a mine upon the colliery proprietor's land and for that purpose to use and operate the plant and other mining facilities on that land. The deed did not impose any obligation upon the respondents to exercise the right so conferred but provided that, if they did exercise it, they were to pay the colliery proprietor a "fee" of three shillings per ton for the use of the plant and other facilities and a royalty of two shillings per ton for every ton of coal won. What was granted then was a profit a prendre coupled with a licence to enter and use the mining facilities on and under the surface of the land for the purpose of winning coal. The colliery proprietor reserved to itself the right at all times to enter upon the land for any purposes whatsoever other than the winning of coal and, apart from any relevant provisions in the Stamp Duties Act, the deed was not a lease. (at p337)
It appears that the respondents had in fact been working the mine and winning coal before the date of execution of the deed and it was no doubt for this reason that it was expressed to be operative as from 1st January 1958. Up to the date when the deed was produced for stamping, fees and royalties paid by the respondents to the colliery proprietary amounted to 9,760 pounds. (at p337)
The appellant claimed that the instrument was a "conveyance on sale" within the meaning of s. 66 of the Act. Section 56 (1) declares that every conveyance is to be charged with ad valorem duty "in respect of the unencumbered value of the property conveyed"; and by s. 66 (2) ad valorem duty on a "conveyance on sale" is to be charged on the "amount or value of the consideration for the sale" or, if the amount or value of the consideration is less than the unencumbered value of the property conveyed, the duty is to be charged on the unencumbered value of the property ascertained in accordance with s. 68. Section 68 provides machinery by which the Commissioner may ascertain the value of the property conveyed. (at p337)
In the present case the Commissioner took the view that the fees and royalties which would become payable if the respondents exercised the right which the deed conferred upon them were the consideration for the grant of that right and, since it was obviously impossible to ascertain the total amount of those fees and royalties until such time as the deed ceased to operate, he invoked the aid of s. 42 (7) and assessed interim duty at the rate of 1 pound 5s. Od. per centum on 9,760 pounds, that being the amount of the fees and royalties paid by the respondents to the colliery proprietor between 1st January 1958 and 31st December 1960. Section 42 (7) provides that: "In case the full amount on which ad valorem duty is payable cannot be immediately ascertained, the duty may be paid upon so much (if any) thereof as is ascertainable and the conveyance may be stamped accordingly and marked 'interim stamp only', and when so stamped shall be admissible in evidence. The balance of such duty shall be paid as soon as the same is ascertained or assessed by the Commissioner, and thereupon and upon payment of the fine (if any) the conveyance shall be stamped with the amount of such balance and shall be marked as duly stamped." (at p338)
Assuming for the moment that the deed is either a "conveyance" or a "conveyance on sale" within the meaning of s. 66, it was not open to the appellant, in my opinion, to act under s. 42 (7). As Brereton J. pointed out in the Supreme Court, that sub-section is intended to deal only with agreements for sale followed by conveyances made in the circumstances set out in the earlier sub-sections of s. 42 and is not of general application to all conveyances. For this reason alone I am of opinion that the present assessment cannot stand. (at p338)
The question then is under what provision of the Act is the deed brought to duty and how is the amount of duty to be ascertained. The profit a prendre which it created was undoubtedly "property" as defined by s. 3, and "conveyance" is defined by s. 65 to include, inter alia, " . . . . . every other instrument (except a will) . . . . . whereby property in New South Wales is transferred to or vested in or accrues to any person". The deed is therefore to be regarded as a conveyance of property for the purposes of s. 66. If it was a conveyance made without consideration, s. 66 (3) (a) provides the means of determining the amount on which the duty is to be assessed. If, however, it was a conveyance on sale, that is to say one made for a consideration in money or money's worth, then s. 66 (2) comes into operation. In such case the Commissioner must determine "the amount or value of the consideration" and he must also, it seems to me, ascertain what is the unencumbered value of the property conveyed because, if the amount or value of the consideration is less than the unencumbered value of the property conveyed, the duty is to be charged on that unencumbered value. (at p338)
The first question then is whether consideration was given for the conveyance of the right which the deed created and conveyed to the respondents and this, in turn, involves deciding what was the property conveyed. It was a conveyance of a right to win coal and use the mining facilities for that purpose conditionally upon payments being made calculated upon the amount of coal won in the event of the right being exercised. Any payments made were not the consideration for the conveyance of the right. They were payments for the use of the mining facilities and for the coal won in the event of the right granted by the deed being exercised. It was suggested, however, that the provision in the deed whereby the respondents covenanted to pay fees and royalties if they exercised their right to enter and win coal was to be regarded as consideration for the conveyance of the right. But I do not think this argument can be supported. The deed created and conveyed something less than an absolute right to enter and win coal. It was a right to do these things subject to conditions, one of which was that if they were done certain payments should be made. For the conveyance of that conditional right, there was, it seems to me, no consideration. (at p339)
Accordingly, I think the deed is to be regarded as a conveyance made without consideration and falls within s. 66 (3). Whether it is possible to ascertain the value of the property conveyed I do not know. If the value cannot be ascertained, or if it has no value, it follows that no ad valorem duty can be charged. In that event the deed would appear to me to fall under the heading in the Second Schedule of "Deed of any kind whatever not otherwise charged in this Schedule" and the amount of duty would be 1 pound 10s. Od. An alternative suggestion was made that if no ad valorem duty was chargeable the deed might be regarded as a "lease" within the definition in s. 76 (1) as being an "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 . . . . . ". But the right of user granted by the deed relates only to the mining facilities, not to the winning of coal and that right of user seems to me to be merely ancillary to the right to win coal. In that event "there is no better established rule as regards stamp duty than that all that is required is, that the instrument should be stamped for its leading and principal object, and that this stamp covers everything accessory to this object": Limmer Asphalte Paving Co. Ltd v. Commissioners of Inland Revenue (1872) LR 7 Ex 211 , at p 217 (at p339)
In the result, therefore, I am of opinion that the appellant should be given the opportunity to ascertain whether the property conveyed has any value and, if so, what that value is. If it has a value and the amount can be ascertained, then ad valorem duty determined in accordance with s. 66 (3) is payable. If the value of the property conveyed cannot be ascertained or is not ascertained or if the property conveyed is found to have no value, then the amount of duty payable is 1 pound 10s. Od. (at p339)
In these circumstances, I think the questions asked should be answered as follows:
- 1.(a)
- No.
- (b)
- The deed is liable to be charged with ad valorem duty as a conveyance made without consideration if the property conveyed has a value which can be and is ascertained.
- 2.(a)
- No.
- (b)
- No.
- 3.
- No.
- 4.
- If the property conveyed has no value, or its value cannot be or is not ascertained, the duty payable is 1 pound 10. 0. (at p340)