SUPREME COURT OF QUEENSLAND
O'SULLIVAN v COMMISSIONER OF STAMP DUTIES (QLD)
31 May 1983 -
Connolly J By an Indenture of 10 October 1967 the sum of $20 was settled on trustees to hold the same together with after required property for the benefit of Delle Anne Catherine Butler. Miss Butler died before the vesting date, which was to have been 30 days from her 21st birthday and by virtue of cl 3 of the Indenture the trust property vested in Robert Brian Butler and Desmond Rodney Butler, they having survived 30 days from the 21st birthday of the latter, which was 3 August 1981. In 1973 and 1975 the trustees acquired four parcels of real estate, the transfers to them being by way of Nomination of Trustees. In conformity with s 54 of the Stamp Act each contract of sale and the relative Nominations of Trustees were stamped with ad valorem conveyance duty in respect of the purchase by the trustees of the land in question. In each case a schedule of trusts is attached to the Nomination of Trustees and the trustees in terms agree that the within described land is to be held by them upon the trusts of the Indenture of 10 October 1967 the terms of which are set out in full. This acknowledgement is executed by the trustees. Although the stamp duty chargeable on a Declaration of Trust is the same duty on the full value of the property as on the amount or value of the consideration for a conveyance or transfer on sale and although the amount of that duty is denoted on the Nominations of Trustees it is the contention of the Commissioner that stamp duty at the ad valorem rate has not been paid on the Nominations of Trustees under the head of charge "Declaration of Trust".
By 25 February 1982 Robert Brian Butler and Desmond Rodney Butler were, as I have already said, absolutely entitled to the full beneficial interest in the lands. The then trustees accordingly executed Memoranda of Transfer of each of the parcels and the Commissioner now claims that ad valorem duty is payable upon each of the transfers under the head of charge "Conveyance or Transfer". As there is of course no consideration for the transfer in each case the duty is claimed under par (4)(b), the duty being calculated on the full unencumbered value of the property. Nominal stamp duty of $4 is payable in situations referred to in the proviso but the Commissioner contends that none of them is applicable. The relevant provision would appear to be cl (iii) which provides for stamp duty of $4 in respect of conveyances or transfers made for the sole purpose of - "(iii) transferring to a beneficiary his entitlement under the terms of a Declaration of Trust where duty has been paid at the ad valorem rate under the 'DECLARATION OF TRUST' head of charge ... on an instrument relating to the particular property and whereby the property became subject to such terms." If the expression "the ad valorem rate under the Declaration of Trust head of charge" means the rate prescribed under that head of charge then it is arguable that cl (iii) is satisfied. The Commissioner's point would seem to be that although the duty was in fact charged and paid the warrant for its imposition was not the Declaration of Trust head of charge but the Conveyance or Transfer head of charge.
If it be assumed that the Commissioner is right in his contention it becomes necessary to identify the property transferred in order to arrive at its full unencumbered value. On the face of the Memoranda of Transfer what is expressed to be transferred is a tenancy in common to each of the transferees of "an estate and interest in the said piece of land". Obviously it was intended to vest in each of them a legal estate in fee simple but the question nonetheless arises whether, having regard to the circumstances, it can be said that the entire property in the land passes by these transfers. The beneficial interest was already in the transferees and the transferors were dry trustees. As I have said, I treat the subject matter of the transfers as the unencumbered estate in fee simple but it is permissible in order to ascertain the operation of the instrument to take into account the true nature of the subject matter: cf Comr of Stamp Duties (Qld) v Hopkins (1945) 71 CLR 351 at 378 per Dixon J.
This is the obverse of Comr of Stamp Duties (NSW) v Perpetual Trustee Co Ltd (Quigley's case) (1926) 38 CLR 272. The transferor in that case who, with an immaterial exception, had the beneficial ownership of the land, transferred it to trustees for himself for life with remainders over. It was held that the instrument was liable to ad valorem duty in respect of the whole of the property thereby settled including the life interest limited to the settlor. Counsel had submitted that the beneficial interest during the lifetime of the settlor was not conveyed because after the conveyance it remained where it was before. Quigley's case is authority for the proposition that the before and after test does not provide the correct approach: see also DKLR Holding Co (No 2) Pty Ltd v Comr of Stamp Duties (NSW) (1982) 12 ATR 874 at 882; 56 ALJR 287 at 292 per Gibbs CJ and at (ATR) 886; (ALJR) 294-5 per Mason J in whose judgment Stephen J agreed. However while it must be accepted that to identify the extent and value of what is transferred one cannot look at the net result of a transfer on the one hand and a settlement on the other, one must still identify the property conveyed by the transfer: see DKLR at (ATR) 886; (ALJR) 294 per Mason J. Here the trustees had no more than the bare legal estate to convey. Both Quigley's case and DKLR were cases of transfers by the beneficial owner, the land in the hands of the transferees being impressed with trusts the effect of which was to revest in the transferor the whole or part of the beneficial interest.
It is noteworthy that in Quigley's case the court was concerned to dispose of the reasoning of the Supreme Court where it had been held that a beneficial interest in the life estate did not pass because it had "previously existed and in substance remained unaffected.": see the judgment of the majority at 277. Of this their Honours observed that it was inaccurate unless the limitation of a life interest to the settlor was regarded as a reservation to himself of that interest out of the property conveyed by him to the trustees upon the trusts of the settlement. Their Honours observed that neither in form nor in substance did the settlor make any such reservation but that he assigned the whole of his property and then proceeded to create new interests including a beneficial interest for himself. Had this not been the situation the case would have been within an exemption of conveyances under which no beneficial interest passes in the property conveyed. There is no such exemption in general terms in the Queensland legislation, the scheme being to charge nominal duty only on instruments which are within the specific exemptions to the head of charge, of which I have already referred to cl (iii). The question is whether the concern in Quigley's case with whether the beneficial interest passed or not is relevant only where there is an exemption of instruments which do not pass the beneficial interest and whether, even though there be no such general exemption, it is none the less relevant in determining the amount of duty which is payable on the instrument.
The general principle is that whether an instrument is or is not within the provisions of the Stamp Act must be determined by examination of the instrument itself and not upon extrinsic evidence: Davidson (Collector of Imposts) v Chirnside (1908) 7 CLR 324 at 340 per Griffith CJ (Barton and O'Connor JJ concurring). Cf Isaacs J at 343 and the authorities there cited. As Philp J pointed out in Re Sharpe; Queensland Trustees Ltd v Comr of Stamp Duties (Qld)  St R Qd 26 at 32 Davidson (Collector of Imposts) v Chirnside reiterated the following propositions: (1) that the duty is payable in respect of the instrument and not the transaction; (2) that the liability to duty must be determined by examination of the instrument itself and not upon extrinsic evidence; (3) that it is immaterial that the rights declared by the instrument are substantially the same as rights already existing whether under a previous instrument or otherwise.
Philp J went on to point out that the Act does contemplate that for certain purposes evidence dehors the instrument may be regarded, chiefly in relation to the determination of the true consideration given or the value of the property. At 33 his Honour pointed out that extrinsic evidence may be admissible to found an exemption. The actual decision in Re Sharpe is instructive. It concerned a conveyance of land by nomination of trustees to trustees who were also trustees under a will. A schedule of trusts provided that the lands were to be held by the trustees upon the trusts set out in the will. Philp J points out at 35 that the matter contained in the documents would no doubt have been written on the same piece of paper but for the Real Property Act, which provides that the first document is registrable while the other is not; and that it is usual if not obligatory to have the trusts declared in a separate document which is merely deposited for sale custody and reference. The judgment proceeds:
"Looking, then, at the face of the documents and treating them as one instrument (as I think is proper) they evidence, it seems to me, an equitable transfer of the land ... to the named trustees on trusts which are delineated and for named cestuis que trust. On the face of the instrument it appears that land which theretofore was subject to no trust is transferred by the company - the settlor - to trustees, who, so far as the instrument shows, had no prior interest in the land, for the benefit of persons, who, so far as the instrument shows, had no prior rights or no similar prior rights in the land. In my view, therefore, the instrument is a settlement ..."
At 36 his Honour refers to the documents being by themselves an instrument and described it, in terms of passages from Davidson v Chirnside, supra, as an instrument which on its face purports to be the charter of future rights and obligations with respect to the property comprised in it saying that it contains limitations usually found in settlements and that it is immaterial whether those rights could have been established aliunde or not. The decision of the court was that settlement duty attached. The decision was affirmed by the High Court Re Sharpe; Queensland Trustees Ltd v Comr of Stamp Duties (Qld)  St R Qd 1. Latham CJ (Rich and McTiernan JJ concurring) said at 5:
"These nominations of trustees so far as their terms are concerned satisfy all the requirements of a settlement. Each one of them vests property in trustees upon certain trusts. These trusts are of the nature of the trusts ordinarily found in settlements. Prima facie each one is a settlement within the meaning of the Acts. It was contended however by the appellants that the property dealt with by the nominations of trustees was already subject to the trusts specified in the nominations, so that the transfers made by the nomination of trustees effected no change in the rights of the cestui que trust and that their rights were derived from and dependent on the will and not on the documents executed by the company and the trustees, which did not change the position in any way."
The Chief Justice goes on to point out that in truth the property which originally vested in the trustees by virtue of the will was shares in the transferor company and that it was the transfers and the Nominations of Trusts which vested the land as such in the trustees. So regarded, the form of the documents was held to correspond with the substance of the transaction, namely the transfer of the lands to trustees to be held upon specified trusts. His Honour concluded that the transfers and Schedules of Trusts were settlements within the meaning of s 2 of the Stamp Acts. It is, I think, not unimportant that the Chief Justice expressed his agreement with the judgments of Philp and Mansfield JJ saying that they had dealt with the whole matter fully and satisfactorily.
Against this background I turn to the problem raised by the case before me. I have drawn attention to the unsatisfactory description of the estate transferred by the Memoranda of Transfer. It is apparent however that they have in fact been registered and despite the unsatisfactory state of the material, the argument before me proceeded on the footing that what was conveyed was the unencumbered estate in fee simple absolute in possession. The applicants did not suggest that the four instruments were not dutiable as conveyances or transfers but directed attention to the true state of the interests in the lands in question and to the fact, which as I have said, I accept, that the transferors had when the transfers were executed no more than the bare legal estate. The consequence is said to be that the stamp duty is to be calculated pursuant to cl (4)(b) under the head of charge "Conveyance or Transfer" on "the full unencumbered value of the property" being the property in fact conveyed rather than the property as it must be taken to be described in the Instrument of Transfer. Although I was referred to no reported case in which this approach has been adopted it seems to me in principle to be correct. Extrinsic evidence may be resorted to not only to ascertain the true value of the property but also to identify the true nature of the subject matter of the instrument. It follows in this case that the transferees got only the legal estate to property the full beneficial interest in which was already vested in them. The full unencumbered value of the property conveyed must accordingly be regarded as nominal.
If however I should be wrong about this it seems to me that the view of the Commissioner in relation to cl (iii) of the exemptions cannot be sustained. The Commissioner contends, by way of an affidavit by one of his officers, that stamp duty at the ad valorem rate has not been paid on the Nominations of Trustees under the head of charge "Declaration of Trust". Now Re Sharpe, supra, shows that that was in truth the appropriate head of charge. The Commissioner's contention can mean no more than that, in the computation of the duty payable the Commissioner (or the appropriate officer) directed his mind only to the head of charge "Conveyance or Transfer". However the rate of duty is the same under both heads of charge and the expression in exemption (iii) - "at the ad valorem rate under the Declaration of Trust head of charge" calls for payment at the rate set out under or appropriate to that head of charge. I drew attention to this situation on further consideration of this application. The Commissioner's answer was twofold. First it was insisted that what was critical was the head of charge under which the Commissioner had affected to act. In my opinion this is not acceptable. The denotation of the duty does not refer it to any particular head of charge and if it did there would be no warrant for this in the Act. In my judgment the operation of exemption (iii) depends upon an identification of the appropriate head of charge and of the duty actually paid.
Then it was contended that the Nomination of Trustees and the Schedule of Trusts are in truth two distinct instruments or alternatively an instrument containing or relating to several distinct matters within s 15(a) of the Act. Re Sharpe, supra, is authority for the view that a conveyance to trustees of property to be held upon existing trusts, contained in two documents by reason of the provisions of the Real Property Act, is properly to be treated as one instrument and stampable under the head of charge "Declaration of Trust". It follows, in my judgment, that the Memoranda of Transfer should have been stamped at $4.
This brings me to the final question. The Commissioner contended that the only procedure available to the applicants in this case to test the validity of his contentions as to the stamp duty which is payable on these instruments is by the machinery provided for in ss 22and 24 of the Act. The Commissioner issued what he described as his final assessment on 9 February 1983 and the appellants had 30 days from that date to appeal. No such appeal was instituted and the originating summons did not issue until 27 April 1983. The fact however is that duty was paid on 29 April 1982 in order to obtain a release of the instruments the payment being made under protest with the right to object being reserved.
Whether ss 22and 24 provide the only means by which the taxpayer may put in issue in the courts the correctness of the Commissioner's claim to stamp duty calls for some consideration of the history of the duty and of this form of appeal. This is set out by Philp J in Re Sharpe  St R Qd 26, supra, at 31 in the following words:
"Prior to the passing of the English Act 13 and 14 Vic c 97 s 14 the question of stamp or no stamp, and if a stamp what stamp, arose only upon the tendering in evidence of a document; and the only question before the judge was whether the document on its face evidenced a transaction of a type set out in the schedule to the Act; if it did and was not exempted the document was inadmissible unless properly stamped. The fact that the transaction or right asserted could be proved aliunde by oral evidence or by another document was of no moment: if the party desired to rely on the tendered document it must be properly stamped. In determining the proper duty the court looked only at the face of the document and nothing else: Gatty v Fry  2 Ex D 265, Royal Bank of Scotland v Tottenham  2 QB 715.
"Under this system a party might be deprived of his action or defence through an honest mistake of stamp law (see eg Beckwith v Benner and Simpson,  6 C & P 681; 172 ER 1417), and to assist in ameliorating this position the system of adjudication by the Commissioners was introduced by 13 & 14 Vic c 97 s 14, and is reproduced with some variation in s 22 of the Queensland Act.
"It should be remembered that the question of stampability could, and still can, fall for determination by a judge at a trial as well as by the Commissioner. Indeed in Queensland the question can arise also in a Crown suit for the duty, since here by s 43 the duty is a Crown debt, and also under s 80."
The reference to s 43 may be a misprint for s 4B which was inserted in 1926 and which provides that any duty payable under the Act shall from and after the date of execution of the instrument, constitute a debt due and owing to His Majesty from every party by whom the instrument is signed or executed. The section further provides that all duties payable to the Crown under the Act shall be recoverable in any court of competent jurisdiction by the Commissioner by action or other proceedings in his official name. Section 43 does indeed contain a proviso which for some reason is not reprinted in the current reprint. Section 43 deals with the stamping of bills of lading and provides for a penalty for executing an unstamped bill and the proviso inserted by the Act of 1918 permitted the Commissioner instead of instituting proceedings for recovery of the penalty to demand and receive the amount or such reduced amount as he might think fit. Whatever be the explanation of the reference to s 43 in the judgment of Philp J it does not affect the proposition there stated.
Viewed against this background it is apparent that the machinery provided by s 22 and the appeal provided by s 24 is to be set in motion by the taxpayer at his election in order to relieve against the hardship of uncertainty. However the obligation to stamp an instrument arises under s 4 which provides that the stamp duties to be charged for the use of Her Majesty upon the several instruments specified in the First Schedule to the Act shall be the several duties in the said Schedule specified. By s 4A an instrument chargeable with stamp duty shall not, except incriminal proceedings, be given in evidence or be available for any purpose whatever unless it is duty stamped. Section 4B which makes the duty payable a debt due to the Crown has already been noted. None of these liabilities depends upon the making of an assessment by the Commissioner. Section 26(3)(b) requires the lodgement in the Stamp Duties Office of every instrument charged with stamp duty for the purpose of the assessment of the amount of the duty but, having regard to the other provisions of the Act it is in my opinion clear that the liability attaches from the moment of execution. Viewed against this background it is difficult to conclude that s 24 provides the sole means of testing the validity of the Commissioner's claim to stamp duty. Indeed in this case the duty was paid on 29 April 1982 and the Commissioner's final assessment was communicated on 9 February 1983. After argument I was furnished (by invitation) with supplementary submissions in writing and these included a reference to s 22(7) of the Act which prescribes that an assessment of stamp duty may be noted on or attached to the prescribed form of requisition for impressed duty stamps which accompanied the instrument when it was lodged. One would naturally read s 22(7) as part of the machinery provided when the Commissioner is required to express his opinion as to the obligation to stamp the instrument under s 22(1). Be that as it may, it does not affect the position that the obligation to pay the duty arises independently of assessment and that the appeal provided for in s 24 deals only with the situation where a person is dissatisfied with an assessment. Such dissatisfaction may fairly arise whether or not the assessment is itself the source of the liability. The very reason which causes the taxpayer to call for an adjudication by the Commissioner rather than risk reliance on his own opinion may obviously involve his testing the Commissioner's assessment. Moreover an assessment is a convenient way of demonstrating to third parties what the stamp duty is and this can be important in conveyancing transactions where the duty is cast by the contract on one party or the other.
However the Commissioner's right to recover the duty under s 4B does not depend in the least on an assessment having been made. It is true that s 26(3)(b) requires the instrument to be lodged "for the purpose of the assessment of the amount of duty charged thereon" accompanied by the prescribed form of requisition for impressed duty stamps. Failure to lodge the instrument renders "every person by whom the duty is payable" guilty of an offence and liable to a penalty. The section on its face assumes the duty to be payable although ex hypothesi no assessment has in fact been made. The only provision by which consequences attach to the assessment itself would seem to be s 26(c)(i) which makes it a continuing offence to fail to pay "the amount assessed to be the stamp duty charged under the Act" upon the instrument. This undoubtedly gives force to the assessment for the purpose at least of penalties. It does not make the amount of the assessment, as such, payable or recoverable. In an action to recover the duty under s 4B it would be for the Commissioner to prove his case. He could aver that the assessment was "duly made": s 78A but this does no more than shift the burden of proof. In the final analysis it is for the court to determine whether any and what duty is payable. Above all, there is no provision which renders the assessment conclusive unless it is displaced on appeal under s 24.
The current situation is complicated by the inclusion in the Stamp Act, which was framed as a tax on instruments, of a variety of taxes on transactions. Examples are s 31D, s 35A, s 35B, s 35E, s 42A, s 46A, s 46B, s 47B, s 54A and s 72A. These concepts sit uneasily with a legislative scheme built around a tax on instruments, the sanction for non-payment being that the instrument was ineffectual. It was obviously an understanding of the problem thereby created which led to the insertion of s 22A which permits the Commissioner not only to assess returns made by the taxpayer but also to bring an instrument into existence where no return has been made. Section 22A may go some distance towards providing machinery for bringing such cases within the appeal provisions but it is plain enough that they cannot cover the whole field and that s 24 cannot be regarded as the exclusive mode of testing the correctness of the Commissioner's opinion as to the liability to duty and the amount of that duty. I was pressed with the decision of the Full Court of Victoria in Cuming Campbell Investments Pty Ltd v Collector of Imposts (Vic)  VLR 153. In that case the taxpayer, having instituted an appeal pursuant to the equivalent of our s 24, contended that on the proper construction of our s 24(1), a general appeal lay unless the taxpayer further required the Commissioner to state and sign a case. This view was rejected on the footing that the only right of appeal under the relevant provision was by way of case stated. The leading judgment was delivered by O'Bryan J and the final paragraph of that judgment is instructive. It reads:
"Although I have come to the above conclusion with some reluctance, it must be remembered that it is the taxpayer who requires the Collector's opinion and consequent assessment under s 32. He invokes the procedure provided by ss 32and 33. There is no obligation upon him to require the Collector to express his opinion under s 32. He is at liberty to form his own opinion as to whether the instrument is chargeable with duty, and with what amount of duty it is chargeable: see s 28(2). If he forms an erroneous opinion, certain unpleasant consequences may follow. He might, however, present the instrument to the Collector to be impressed with a stamp of the value which in his own opinion is the amount of duty chargeable. Should the Collector refuse to stamp the instrument, the question could possibly be tested either in mandamus proceedings (see Cuming Campbell Investments Pty Ltd v Collector of Imposts (Vic) (1938) 60 CLR 741 at 756) or in an action against the Collector for a declaration that sufficient duty had been tendered. Or if the Collector impressed the transfer with the stamp for which payment was tendered and the Registrar of Titles were to refuse to register the instrument on the ground that it was insufficiently stamped, the question of what duty was chargeable could probably then be tested in the courts by appropriate proceedings against the Registrar. At all events there is no obligation upon the holder of an instrument to require the Collector to express his opinion under s 32, and there are probably means, inconvenient though they may be, having regard to the penalties for late stamping, etc, available to enable the taxpayer to have the question of what duty the instrument is chargeable with, tested in the courts with all matters of fact open for determination upon evidence then adduced."
The views there expressed accord with those expressed by Philp J in Re Sharpe, supra. If the correctness of the Commissioner's view is open to question in the courts and if the taxpayer has not set in motion the machinery of s 22 and s 24, there is in my judgment no good reason why the court should not declare the rights of the parties. See Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; R v Lambert; Ex parte Plummer (1980) 55 ALJR 71. The case does not resemble Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552 in which the courts refused to restrain a pending application to a Licensing Court with specific jurisdiction to determine the question in issue, appeal lying to a Supreme Court from an erroneous determination.
Accordingly there will be a declaration that each of the Memoranda of Transfer which are Exhs A to D to the affidavit of Neil Alexander O'Sullivan filed herein on 29 April 1983 is liable to stamp duty of $4. I order that the applicants' costs and incidental to the application be taxed and paid by the respondent.
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