BROWNE & ANOR v COMMISSIONER OF STATE REVENUE (QLD)

Judges:
de Jersey CJ
McMurdo P
Jerrard JA

Court:
Queensland Court of Appeal

MEDIA NEUTRAL CITATION: [2002] QCA 388

Judgment date: 27 September 2002

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de Jersey CJ

This is a case stated by the Commissioner of State Revenue under s 24 of the Stamp Act 1894. The appellants are parties to an agreement dated 1 July 2000 for the sale of two pharmacy businesses in Townsville, the equipment used in connection with the businesses, and the business of Townsville Medical and Surgical and stock in trade. That is defined as the ``Property Sold''. The sale price under the agreement is $3 million. Clause 3.1 provides: ``The vendors agree to sell the

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ATC 4873

Property Sold to the Purchasers for the Sale Price.''

2. The agreement effected a redistribution of property rights. It designated the appellants, together with Mr J J Savina, as ``Pharmacy Purchasers''. Three others, J & P Savina Pty Ltd, Health Information Resources Pty Ltd and J Jeon, were designated as ``Equipment Purchasers''. Mr Savina was styled the ``Pharmacy Vendor'' and the company, J & P Savina Pty Ltd, as the ``Equipment Vendor''.

3. Clause 3.1(b) purported to deal with the redistribution of interests in the following terms:

``The parties acknowledge that John Joseph Albino Savina and J & P Savina Pty Ltd are named as Vendors and Purchasers with the intent that the interest transferred beneficially under this Agreement to Mark Douglas Browne and Paul Eunseong Jeon as Pharmacy Purchasers and Health Information Resources Pty Ltd and Jonghae Jeon as Equipment Purchasers is 43.333% in the Pharmacies and the Equipment respectively.''

4. At completion, which was 30 June 2000 unless otherwise agreed, the purchasers were to pay the vendors $1.3 million with the balance of $1.7 million constituting a debt owing by the purchasers to the vendors.

5. The appellants and Mr Savina contemporaneously executed a deed of partnership dated 1 July 2000, as contemplated by the sale agreement, providing for their carrying on business together in partnership in the shares Mr Savina 56.67%, Mr Brown 33.33% and Mr Jeon 10%.

6. The respondent, the Commissioner of State Revenue, assessed the agreement for sale under s 54(1) of the Act and para (4)(a) of the First Schedule heading, ``Conveyance or Transfer'' (para 9 case stated). The duty amounted to $109,725, on the agreed consideration of $3 million.

7. The case stated asserts that in concluding that the agreement was chargeable as a ``Conveyance or Transfer'', the Commissioner took into account (para 11 case stated):

• ``(a) that the Property Sold, as referred to in Clause 3.1(a) of the Agreement for Sale, was to become partnership property and not to remain the personal property of any vendor;
• (b) that each and every vendor was to convey or transfer his or its entire interest in each part of the Property Sold, such then becoming relevant Partnership Property;
• (c) that the Purchasers pursuant to the Agreement for Sale might, provided the terms and conditions thereof were met, become entitled to the conveyance or transfer of the Property Sold.''

8. The questions asked are:

• ``(a) is the Agreement for Sale (Annexure `A' to the case stated) a contract or agreement within the meaning and terms of s. 54(1) of the Stamp Act 1894?
• (b) if `yes' to (a), is the Commissioner's assessment to duty of that instrument, as contained in Assessment Notice issued 3 August, 2000 (Annexure `C' to the case stated), valid?
• (c) If `yes' to (b):
  • (i) is the determination set forth in paragraph 11 of this Case Stated and is the associated opinion formed as set forth in paragraph 9 of this Case Stated correct?
  • (ii) is the assessment of the Commissioner that the relevant consideration is $3m for the purposes of paragraph (4)(a) of the First Schedule Heading to the Stamp Act 1894 `Conveyance or Transfer', correct?
• (d) if `yes' to (c)(ii), is the assessment of the Commissioner of duty in the sum of $109,725.00 correct and, if not, what duty, if any, is payable?
• (e) if `no' to (c)(i) or (c)(ii):
  • (i) what was the relevant property, agreed to be transferred under the Agreement for Sale, for the purposes of s 54(1) of the Stamp Act 1894?
  • (ii) what should be the amount of the considerations for the purposes of paragraph (4)(a)? and
  • (iii) what duty, if any, is thereby payable?
• (f) how should the costs of and incidental to the stating of this case and of the appeal be borne and paid?''

9. The principal contention for the appellants is that, with the agreement properly construed, its legal effect is to transfer, not all of the interest in the property defined as ``Property

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ATC 4874

Sold'' - that is, the pharmacy businesses, equipment and the other business and stock in trade, but only 43.33% of that property, so that duty was chargeable on $1.3 million, not the $3 million consideration. The appellants point to clause 3.1(b), and the legal oddity of one's transferring a portion of one's own property to oneself (cf.
Rose v FC of T (1951) 9 ATD 334 at 336; (1951) 84 CLR 118 at 123-124 ;
Glennon v FC of T 72 ATC 4181 at 4184-4185; (1972) 127 CLR 503 at 511 . The appellants contend that the agreement amounts to no more than an agreement to vest in the appellants (together with Jonghae Jeon and Health Information Resources) a 43.33% interest in the property previously owned by Mr Savina and J & P Savina Pty Ltd: ``an agreement to convert single ownership into joint ownership'', so that the agreement should be stamped only with respect to the conveying of a 43.33% interest.

10. If one may lawfully transfer one's property to oneself and another or others jointly, then that is what has effectually occurred here and the Commissioner was correct in levying duty on the overall consideration.

11. At common law, one may not effectively contract with oneself (cf.
Rye v Rye [ 1962] AC 496 at 510 ). But s 50 of the Property Law Act 1974 as relevant here, ameliorates that position. Section 50 provides:

``(1) Any covenant whether express or implied, or agreement entered into by a person with the person and 1 or more other persons shall be construed and be capable of being enforced in like manner as if the covenant or agreement had been entered into with the other person or persons alone.

(2) This section applies to covenants or agreements entered into before or after commencement of this Act, and to covenants implied by statute in the case of a person who conveys or is expressed to convey to the person and 1 or more other persons, but without prejudice to any order of the Court made before such commencement.''

Consistently, s 14 of that Act authorises transfers of property, by the owner, to the owner and another.

12. Those provisions are to be seen as validating transactions of otherwise doubtful import, and not as converting them into something different from what their terms apparently accomplish:
Stewart v Hawkins [ 1958] 60 SR (NSW) 104 at 106-108 ;
Re Broons [ 1989] 2 Qd R 315 at 316-317 . The point left open by Pincus JA in
FC of T v Sealey 87 ATC 5076 at 5080 , should in my view be determined consistently with Stewart v Hawkins - that is, in a remedial and facultative way. That is the obvious purpose of the provision, as confirmed in the Queensland Law Reform Commission's Working Paper on the Bill:

``At common law a person cannot effectively contract with himself, and the same is true even if the agreement is entered into with himself and another or others: Halsbury's Laws of England (3ed.), vol. 8, p. 59. This is an inconvenient rule: it prevents for example an effective contract from being made between two partnerships having a member common to both: cf.
Stewart v Hawkins [ 1958] 60 SR (NSW) 104 ; or by one member of an incorporated club [ sic., unincorporated club] with other members:
Middlemiss v Broderick [ 1964] SR (NSW) 327 , 335 . The rule has, so far as concerns a contract made by a person with himself and another or others, been abrogated in England, New South Wales and Victoria, and this step seems to be a necessary corollary of permitting a person to convey or lease to himself and another or others, which is proposed by cl. 14. A consequence of the introduction of this provision is, as the above-mentioned cases show, to render possible contracts of the foregoing kind.''

13. The result of the appeal is to be determined by reference to the content of the agreement for sale (cf.
Commr of Stamp Duties (Q) v Hopkins (1945) 71 CLR 351 at 360 ;
Mt Newman Mining Co Pty Ltd v Commr of State Taxation (WA) 94 ATC 4141 at 4145; (1994) 11 WAR 413 at 418 ;
DKLR Holding Co (No 2) Pty Ltd v Commr of Stamp Duties (NSW) 82 ATC 4125 at 4136; (1981-1982) 149 CLR 431 at 449 ). The agreement provided, in terms, for the outright sale of all the property for $3 million. The property purchased by the purchasers, in their respective capacities, became partnership property of the respective partnerships on transfer to the respective purchasers. As to the legal interest, the partners took as joint tenants (s 35(3) Property Law Act 1974). The agreement, otherwise insupportable at common

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law, was validated by s 50 of the Property Law Act . It is then to be construed literally for what it apparently provides, in this case thereby exposing its ``legal effect''. Insofar as the acknowledgement in cl 3.1(b) in inconsistent with the above analysis, it erroneously states the effect of the transaction and is therefore not determinative.

14. This was not, as in
Coles Myer Limited v Commr of State Revenue (Vic) 98 ATC 4537 ; [ 1998] 4 VR 728 , a ``transfer'' which - having regard to its ``real nature or substance'' (ATC 4552; VR 747) - failed to vest any property, right or interest in the ``transferee''. Further, there is no reason to conclude the consideration on which duty falls to be calculated under para 4(a) of Schedule 1, ``the money or value passing which moves the conveyance or transfer'' (
Archibald Howie Pty Ltd v Commr of Stamp Duties (NSW) (1948) 77 CLR 143 at 152 ), is other than the $3 million agreed upon by the contracting parties.

15. I would answer the questions asked as follows:

• (a.) Yes.
• (b.) Yes.
• (c.) (i) Yes.
  • (ii) Yes.
• (d) Yes.
• (e) Not necessary to answer.
• (f) By the appellants.