CHIEF COMMISSIONER OF STATE REVENUE (NSW) v PLATINUM INVESTMENT MANAGEMENT LTD

Judges: Campbell JA

Macfarlan JA
Handley AJA

Court:
New South Wales Court of Appeal

MEDIA NEUTRAL CITATION: [2011] NSWCA 48

Judgment date: 10 March 2011

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Macfarlan JA

I have had the advantage of reading the judgment of Handley AJA in draft. I gratefully adopt his Honour ' s description of the issues that arise on this appeal, the legislative context in which they arise and the principal authorities relied upon by the parties.

28. The declaration of trust in the present case related, at the time of its execution, to shares yet to be issued, that is, to property that was not then in existence. In my view this had the consequence that the declaration was not chargeable under s 8(1)(b)(ii) of the Duties Act 1997 to ad valorem duty.

29. That provision charges duty on " a declaration of trust over dutiable property " . Subject to the effect of the words " to be vested " in the definition in s 8(3) of " declaration of trust " (to which I shall return), it is in my view clear that the reference in this provision to " dutiable property " is to property existing at the time of the declaration. This follows from the legislation ' s use of the word " property " and the absence of any legislative indications that the word should bear any meaning other than its ordinary meaning: in ordinary parlance something is not property if it does not exist. A mere expectancy, as distinct from an existing right or title is not therefore property (see for example
Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation [ 1948 ] HCA 24 ; (1948) 77 CLR 1 at 26 - 7 per Dixon J ). As in the legislation under consideration in
Hepples v Federal Commissioner of Taxation 92 ATC 4013 ; [ 1992 ] HCA 3 ; (1992) 173 CLR 492 , " the most natural reading " of the word " property " in the present case is that it refers to " an existing, and not future, form of property " (see McHugh J at 541).

30. This view is consistent with the following definition of " property " in s 21 Interpretation Act 1987:

" property means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description, including money, and includes things in action " .

31. The words in parentheses in this definition do not indicate otherwise. As pointed out by Templeman J in
The Bell Group Ltd (in liq) v Westpac Banking Corporation (1995) 22 ACSR 337 at 343 in relation to a similar definition in the Corporations Law, " the words ' present or future ' qualify the words ' estate or interest ' : not ' property ' " . The words in parentheses do not therefore indicate that the property referred to includes future property, that is, property that does not presently exist.

32. Contextual considerations led to a broader meaning of the word " property " being adopted in the decisions in the field of corporate law in
Elfic Ltd v Macks [ 2001 ] QCA 219 ; [ 2003 ] 2 Qd R 125 ,
Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [ 2006 ] FCA 1849 ; (2007) 25 ACLC 208 and
Achieve Foundation Ltd v Acnewco Ltd [ 2010 ] FCA 382 ; (2010) 88 ACSR 673 but similar considerations are not in my view present in this case.

33. The definition of " dutiable property " in s 11 Duties Act reinforces the view I have taken. The items identified in the definition as constituting " dutiable property " are types of existing property with no indication that they are to include future property. In particular, the second limb of the reference to " shares " is in the present tense, referring to shares that " are kept on the Australian register kept in New South Wales " (emphasis added).

34. The appellant ' s case that future property is included within the concept of " property " in s 8(1)(b)(ii) rests upon the words " to be vested " contained in the expression " vested or to be vested " in the definition of " declaration of trust " in s 8(3) (see also the Table in s 9).

35. However, in my view those words do not indicate that a declaration of trust is dutiable even if it relates only to future property. They indicate that the property need not be vested in the declarant at the time of the declaration, but that is different from an indication that the property need not be in existence at that time. The words have a sensible meaning if (as their express terms suggest should occur) they are read as being concerned with the vesting of property and as saying nothing about whether the property need be existing. That latter topic is dealt with by the legislature ' s use of the word " property " in the Act ' s description of the transactions that are dutiable. As a consequence, a declaration of trust is dutiable if it relates to existing property that is " to be vested " in the declarant, but not if it relates to the future vesting in the declarant of property that is not in existence at the time of the declaration.

36. I consider that the effect of the words " to be vested " is confined in this way, assuming that they are given their literal meaning. As that literal meaning is not a nonsensical one and there are no contextual indications that a broader meaning should be adopted, there is in my view no reason to depart from the literal meaning. This is particularly so as the words are ones used in a taxing statute. As said by Gibbs J in
Western Australian Trustee Executor and Agency Co Ltd v Commissioner of State Taxation of WA 80 ATC 4567 ; (1980) HCA 50 ; (1980) 147 CLR 119 at 126 , if the words of a statute " do not reveal a clear intention to [ impose a tax ] the liability should not be inferred from ambiguous words " (see also D C Pearce and R S Geddes, Statutory Interpretation in Australia , 6 th ed (2006) LexisNexis Butterworths at [ 9.33 ] - [ 9.35 ] ;
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [ 2009 ] HCA 41 ; (2009) 239 CLR 27 at [ 55 ] - [ 57 ] ).

37. Handley AJA concludes that " there is no compelling reason for holding that the general language of the definition [ of ' declaration of trust ' ] does not apply where the identified dutiable property must come into existence on or before [ the ] future vesting " (see [ 85 ] ). I would approach the matter in a different fashion. In my view the correct question to be asked in the present context is whether the words " to be vested " appearing in s 8 and 9 compel the conclusion that the Act does not use the word " property " with its ordinary meaning but, rather, uses it in a manner that embraces future property. For reasons that I have given, I do not consider that they do. The words " to be vested " certainly contain an element of futurity but that is as to vesting and not as to the existence of dutiable property.

38. As is apparent from Handley AJA ' s discussion of relevant cases, there is no authority that governs the present case. As his Honour points out, the Court in
Tooheys Ltd v Commissioner of Stamp Duties may have assumed that the point made by the appellant in the present case was correct (see [ 64 ] ). However it is clear that the point was not argued in that case. That decision therefore does not constitute a binding determination of the point (
CSR Ltd v Eddy [ 2005 ] HCA 64 ; (2005) 226 CLR 1 at [ 13 ] ).

39. For these reasons I accordingly consider that the declaration of trust in question was not dutiable and that the appeal should be dismissed with costs.

40. On this view, other questions with which Handley AJA deals do not arise. Nevertheless, I indicate my agreement with what his Honour says about them.