SUPREME COURT OF VICTORIA - COMMERCIAL AND EQUITY DIVISION
Perpetual Trustee Company Ltd v Commissioner of State Revenue
10-11 April, 12 May 2000 - Melbourne
Hansen J. This is an appeal on questions of law under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic). The appellant, Perpetual Trustee Company Limited (Perpetual), seeks the setting aside of certain assessments to stamp duty of the respondent Commissioner of State Revenue as Comptroller of Stamps under the Stamps Act 1958 (Vic).
2 The assessments, of which there were 13, issued on 12 March 1998. They assessed to ad valorem duty 13 instruments of transfer of land in an aggregate amount of $8,045,170. Earlier, on 7 April 1997, when the transfers were lodged by Perpetual's solicitors for stamping, they submitted that the transfers were exempt from duty pursuant to exemption 23 under Heading VI to the Third Schedule of the Stamps Act 1958 (Vic). On 14 May 1998 Perpetual lodged objections to the assessments pursuant to s 33B of the Stamps Act 1958 (Vic). On 20 November 1998 the objections were disallowed. On 15 January 1999 Perpetual requested the decision to disallow be referred to the Victorian Civil and Administrative Tribunal (the tribunal) for review pursuant to s 33B. The tribunal heard the review on 14 May and by its decision given on 18 May dismissed the application for review and affirmed the decision to disallow the objections to the assessments. In other words, the assessments were upheld as valid.
3 Both on the review before the tribunal and on this appeal Perpetual contended: first, that the transfers were exempt from duty as being within exemption 23; secondly, that the amount of the assessments should have been nil or nominal on the basis that the only property transferred under the instruments of transfer was the bare legal title the value of which was nil or nominal. The second contention was an alternative to, and not dependent upon, the answer to the first contention.
4 Section 17 of the Stamps Act 1958 (Vic) provides that subject to the exemptions contained in the Third Schedule there shall be charged upon the several instruments specified in the said Schedule the duties therein specified. One category of instruments is conveyances and transfers of real property. Duty is charged on such instruments by reference to "the value of the property conveyed or transferred" (see under Heading VI). Part 2, Div 3(6) of the Stamps Act 1958 (Vic) contains provisions which relate to such instruments. That subdivision of the Stamps Act 1958 (Vic) commences with s 63(1). In s 63(1) "conveyance" is defined to include transfer and "real property" to include any estate or interest in real property. Section 63(2) provides that both in that subdivision and in the provisions of the Third Schedule under Heading VI, "a reference to a conveyance of real property includes a reference to an instrument ... by which real property is conveyed to or vested in a person".
5 Section 63(3)(b) provides that except as otherwise provided in the Stamps Act 1958 (Vic) a reference in the subdivision or in the provisions of the Third Schedule under Heading VI:
to the value of real property or property is a reference ...
- (i) in relation to a conveyance on sale of the real property or property ...
- (A) to the sum of the consideration for the sale and the consideration for the transfer of chattels included in the real property or property by reason of paragraph (a); or
- (B) to the sum of the amount for which the real property or property and the amount for which such chattels might reasonably have been sold if they had been sold, free from encumbrances, in the open market on the date of the sale ...
- whichever is the greater; and ...
6 Heading VI of the Third Schedule provides for the imposition of ad valorem duty on instruments in relation to the conveyance and transfer of real property, subject to a number of specified exemptions. Immediately under Heading VI it is stated that:
Exemption 23 exempts from ad valorem duty:
Except as otherwise provided in this Act, a reference in the provisions under this Heading to the value of real property or property is a reference -
- (a) in relation to a conveyance on sale of the real property or property -
- (i) to the consideration for the sale; or
- (ii) to the amount for which the real property or property might reasonably have been sold if it had been sold, if it had been sold, free from encumbrances, in the open market on the date of the sale ...
- whichever is the greater; and
- (b) in any other case, to the amount for which the real property or property might reasonably have been sold if it had been sold, free from encumbrances, in the open market on the date of the conveyance, direction, consent or application.
By definition in s 3 of the Stamps Act 1958 (Vic) the Comptroller of Stamps means the respondent Commissioner of State Revenue.
Any instrument for the conveyance of real property where the Comptroller of Stamps is satisfied that the instrument is made solely in consequence of the appointment or retirement of any trustee or other change in trustees and in order to vest the real property in the trustees for the time being entitled to hold the real property.
7 I now refer to the facts which give rise to the present issue.
8 In Doncaster Road, Doncaster, there is located a large shopping centre complex called Doncaster Shoppingtown. Until 1 April 1997 the several properties comprising Shoppingtown were owned as to one-half by PT Limited (PT) as trustee for the WD Trust and as to the other half by National Mutual Life Association of Australasia Ltd (National Mutual), Bellasin Pty Ltd (Bellasin) and Third Vynotas Pty Ltd (Third Vynotas) as registered proprietors. It is convenient to regard the latter one-half interest as entirely the interest of National Mutual although nothing turns on whether that was the case. By the transaction I am about to describe National Mutual sold its half interest in Shoppingtown to PT. It is convenient to note, although nothing turns on it, that Perpetual is the holding company of PT.
9 On 1 April 1997 National Mutual, Bellasin and Third Vynotas, called collectively the vendor, gave PT, called the purchaser, a document called Offer To Sell Land (the Offer). It contained an offer to sell to PT their one half interest in Shoppingtown. The Offer contained 5 short clauses. Clause 1 stated that all terms used in the offer document "including references to the Property have the meanings given to them in the attached Agreement for Sale of Land" (the Agreement). The attached Agreement was a long and elaborate document, complete in its terms and appropriate for the complex transaction it contemplated. It reflected that the parties (and not merely the offerors) had given considerable prior attention to the concept and detail of the transaction for which it provided.
10 Continuing on with the terms of the Offer, the remaining clauses stated:
The Vendor offers to sell the Property referred to in the Agreement to the Purchaser on the terms and conditions contained in the Agreement. This offer remains open for acceptance until 2.00 pm Melbourne time on the date this offer is made.
3. Method of Acceptance
The Purchaser must accept this offer by paying the sum of $147,000,000 to the Vendor or as directed by the Vendor.
4. Effect of Acceptance
Upon acceptance of this offer, the Vendor and the Purchaser are immediately bound to perform the Agreement and must promptly commence performance of all steps required to satisfy the conditions and effect settlement as described in the Agreement.
5. Effect of Non-acceptance
Time is of the essence of this offer. If the Purchaser fails to accept this offer within the prescribed time, this offer is automatically revoked and has no effect, as if this offer has not been made.
11 The attached Agreement is called Agreement For Sale Of Land Westfield Shoppingtown Doncaster. Counsel for the appellant referred to only a limited number of its provisions as being relevant. I follow his lead. The parties named on the face page of the agreement are National Mutual, Bellasin and Third Vynotas collectively called the vendor, PT as purchaser, Westfield Shopping Centre Management Co (Vic) Pty Ltd as "manager", and Westfield Holdings Ltd.
12 Clause 1 of the Agreement was a definition and interpretation clause. Clause 2 contains the agreement to sell (cl 2.1). Clause 2.2 concerns what Perpetual's counsel said was a special form of property interest in 2 of the properties and which was irrelevant. Accordingly I set out only cl 2.1, viz:
The other provisions which Perpetual's counsel referred to as being relevant were cll 3 and 4. Before referring to them I will revert to noting some of the definitions in cl 1. I commence with the definition of the word Property which is used both in cll 1 and 2 of the Offer and in cl 2.1 of the Agreement.
The Vendor agrees to sell to the Purchaser and the Purchaser agrees to purchase the Property from the Vendor subject to the Encumbrances in exchange for the Purchase Price, subject to the terms of this agreement.
13 "Property" is defined to mean "the Vendor's one-half interest as tenant in common in the Assets". The Assets are defined to mean the Shoppingtown, the Plant and Equipment, the benefit of the tenancies and all rights of the Vendor under the Contracts. I take those in their order. "Shoppingtown" is defined to mean the Land and improvements thereon known as the "Westfield Shoppingtown Doncaster" and all interests, rights, entitlements and benefits which attach to an ownership interest in the Land and the improvements thereon. The Land is the land in respect of which the vendors offered to sell their interest to PT. The Plant and Equipment was identified as the items in the Equipment Schedule being Annexure A to the Agreement and all the plant and equipment and chattels located at Shoppingtown which is not the property of Tenants or included in Leased Plant and Equipment. "Tenancy" was defined to mean any lease, sublease, licence to occupy or other right of occupancy, use or possession or concessionaire agreement referred to in the Tenacy Schedule. That schedule was Annexure B. "Contracts" had an extensive definition. It meant, somewhat summarised, the contracts, agreements, licences, consents or arrangements or correspondence entered into by the Co-owners or any other party on behalf of the Co-owners in relation to Shoppingtown and its operation including, without limitation, all warranties, guarantees and securities provided by third parties under the Contracts or pursuant to the contractual arrangements for the provision of services of any description to or in respect of Shoppingtown. "Co-owners" was defined to mean the vendor and the purchaser in their capacity as co-owners of the Land as tenants in common.
14 The next expression is "Encumbrances". These were all encumbrances, registered and unregistered, which affect the Assets on the date of the Agreement but excluding any that solely affect the vendor's one-half interest in the Assets.
15 The next definition of the terms in cl 2 is the expression "Purchase Price" which was defined to mean the amount of $147,000,000.
16 Finally I note the definition of the expression "WD Trust Deed". It is an original trust deed dated 15 February 1993 between Westfield Management Ltd and PT as the Trust subsequently may be varied from time to time as permitted under the Agreement and known as the "WD Trust".
17 Returning to the operative provisions of the Agreement, cl 3 stated that "completion of this agreement must take place by 2.00 pm on the Completion Date". That date was defined to be the date of the Agreement. In the events which happened that must be taken as being 1 April 1997.
18 Clause 4 was headed Passing Of Title On Completion. It specified a number of obligations to be performed by the vendors on completion, in exchange for the purchaser's payment of the purchase price of $147 million. I mention the provisions which Perpetual's counsel referred to. They included, in their terms or the substance thereof: subject to the Encumbrances and any legislation or regulation requiring registration for passing of title, to "cause the unencumbered beneficial title to the Property to pass to the Purchaser and if and when requested cause the legal title of the Property to pass to the Purchaser" (para (a)); to "give the Purchaser all instruments of title that relate exclusively to the Property" (para (b)); to "cause the benefit of all instruments of title and evidence incidental and relevant to the title to the Property or to the conveyance of the Property which are in the possession or control of the vendor but which are not exclusive to the Property to be produced as reasonably required by the Purchaser on completion" (para (c)); "subject to the tenancies, to give possession of the Property" (para (d)); to "give an executed instrument of transfer for the Property in favour of the Purchaser capable of registration (after stamping) in the appropriate office" (para (e)); and to "give any declaration, application or certificate required under any Act or Regulation in order to enable the transfer to be stamped and registered" (para (g)). Those are the paragraphs which Perpetual's counsel referred to. The remaining paragraphs of cl 4 required the vendor to "give such other assignments of the Property as the Purchaser may reasonably require" (para (f)), "give such other instruments as are required by law or the agreement to be signed by the Vendor" (para (h)), and "give appropriate notices to give effect to the assignments referred to in cll 6.4 and 6.5" which concerned tenancy bonds and documents (para (i)). As these references indicate, and as would be expected, the Agreement provided for the adjustment of matters between the vendors and the purchaser.
19 The next step in the events is that on 1 April and while the offer remained open for acceptance, PT paid the purchase price of $147 million. That payment constituted an acceptance of the offer and without more brought the Agreement into existence as a concluded agreement of sale on the terms contained in it. That is, as a result of the offer being accepted and without more, "the Vendor and the Purchaser [were] immediately bound to perform the Agreement and [were bound to] promptly commence performance of all steps required to satisfy the conditions and effect settlement as described in the Agreement" (cl 4 of the Offer).
20 Following the acceptance 14 deeds in common form, called Deed of Retirement of Trustee and Appointment of New Trustee, which obviously had stood prepared for this purpose, were executed by PT as trustee of the WD Trust as "Beneficiary", the respective vendors as "Old Trustee" and Perpetual as "New Trustee". I note at this point that it is common ground that PT's involvement was as trustee of the WD Trust. The deeds expressly related to the parcels of land which together made up the entirety sold. That is, they did not relate to any other part of the Property sold by the Agreement.
21 Like the Agreement the deeds are undated, but they were entered into on 1 April following acceptance of the offer and the consequent making of a contract on the terms contained in the Agreement. The deeds include 3 recitals. They state that for valuable consideration given (on 1 April, the date being left blank in the deeds) a constructive trust arose concerning the beneficial interest in the property described in the Schedule to the deed of which the named vendor as Old Trustee is trustee and PT as Beneficiary is beneficiary, that the Old Trustee desires to retire as Trustee of the Trust with effect on and from the date of the deed and the New Trustee has accepted appointment as Trustee of the Trust from that time and PT as beneficiary consents to the retirement and appointment. In each deed the property described in the Schedule was real estate sold under the Agreement. No other part of the Property sold by the Agreement was referred to.
22 The constructive trust referred to, and which is relied upon in the deeds is conceded by the respondent to have arisen when PT accepted the offer by paying the Purchase Price of $147 million, and to have existed at the time when on 1 April 1997 the deeds were entered into. The effect of making the payment was to both bring into existence the agreement for the sale of the vendors' interests in the real estate and fully perform the purchaser's requirement to pay the Purchase Price. I note too that under cl 4 of the Agreement the vendor was required on completion to pass or transfer the beneficial and legal title to the purchaser and that the effect of cl 5 of the Agreement and the purchaser's actions is that the purchaser accepted title. In the result the "full beneficial entitlement or ownership of the properties" (to quote the respondent's counsel) passed to PT on the making and completion of the agreement in the manner stated. See McWilliam v McWilliams Wines Pty Ltd (1964) 114 CLR 656 at 660 per McTiernan and Taylor JJ, and Stern v McArthur (1988) 165 CLR 489 at 521-3 per Deane and Dawson JJ for a statement of the relevant principle. In Stern at 523 their Honours said that:
Both counsel proceeded on the basis that this was a correct statement of the relevant principle of law and that the facts in this case satisfy the principle thus stated. Therefore, as the appellant submitted and the respondent conceded, upon the payment of the purchase price and the coterminous coming into existence and completion of the Agreement, PT as purchaser became entitled to the beneficial interest in the land and the vendor became a bare trustee. The 14 deeds of change of trustee were made upon this premise.
The relationship of trustee and beneficial owner will certainly be in existence when the purchase money specified in the contract has been paid, title has been made or accepted and the purchaser is entitled to a conveyance or transfer. At that point the purchaser is entitled in equity to the land and the vendor is a bare trustee.
23 With that explanation I return to the operative provisions of the deeds of retirement and appointment of trustee. They provide as follows: the vendor as Old Trustee retired with effect on and from the date of the deed (cl 1); with effect from the same date PT as Beneficiary and the vendor as Old Trustee appointed Perpetual as New Trustee as the Trustee of the Trust, which appointment Perpetual accepted (cl 2) and undertook all the obligations of the vendor (cl 3), and the vendor as Old Trustee was released from all further obligations concerning the Trust (cl 4); and PT directed the vendor to: (a) vest the Trust assets in PT and deliver to it all books, documents, records, certificates of title to the Property and all property relating to the Trust in its possession as trustee, and (b) execute a transfer of the legal estate in the Property in favour of Perpetual and deliver that transfer of land to Perpetual on the date the vendor executes the deed. Finally, by cl 6 Perpetual agreed to pay all stamp duty in respect of the deed.
24 In summary, by the deeds Perpetual replaced the respective vendors as trustee of the trust of the beneficial interest in the real estate in favour of their purchaser PT.
25 There yet remained on 1 April 1997 some further work to be done. The next and final step on that day was the execution by the respective vendors as transferor and Perpetual, the new trustee, as transferee, of instruments of transfer of the land sold by the Agreement. Again it is obvious that the relevant instruments had been prepared in advance and stood ready for execution accordingly. For this purpose 13 instruments of transfer were required and executed. The transfers are in registrable form. In each case the transfer described the estate and interest of the vendor as "all its estate in fee simple" (in one case subject to rights under a caveat ) and the consideration was stated to be "entitled in equity". No person was named as a directing party in any of the transfers.
26 On 7 April Perpetual's solicitors lodged the deeds and transfers for stamping, as mentioned above.
27 I now deal with Perpetual's contention that exemption 23 was applicable in the circumstances and operated to save the instruments of transfer from duty. It follows, on this part of Perpetual's case, that if the exemption was not applicable the instruments of transfer were properly chargeable to duty.
28 The issue under exemption 23 is whether the instruments of transfer were made "solely in consequence" of the change in trustee. This is a question of fact. Although exemption 23 expressly rests satisfaction on the issue with the Comptroller of Stamps counsel for Perpetual proceeded on the basis, which he said was common ground, that "where the Comptroller should be satisfied he would be satisfied". Each counsel proceeded on the basis that the question was for me to decide, as though ab initio. They addressed no submission as to whether in fact, in the context of the exemption, the question is whether, objectively considered, reasonable grounds existed on which it was open to the Comptroller to conclude that the instruments of transfer were not entered into solely in consequence of the change of trustee and in order to vest the real property of the trust in the new trustee. Whether or not that is the question, I do not rest my decision on a failure of the appellant to establish that it was not so open to the Comptroller.
29 On this part of the case Perpetual is either liable for stamp duty as assessed or for no duty at all. Hence, the respondent Commissioner submitted, Perpetual is seeking to establish that the assessments were excessive. In that situation counsel referred to s 33C(1)(b) which placed upon Perpetual the burden of proving the assessment was excessive. Thus unless Perpetual was to rest its case on a mere assertion that the instruments were made solely in consequence of the change in trustee, the onus was upon it to establish by evidence of relevant facts that they were so made.
30 The tribunal approached the issue on the basis that the application of exemption 23 turned upon an inquiry into the history of the transfer. Adopting a submission which the tribunal stated to be that of Perpetual, a limited causal and temporal inquiry was required and the question was whether the event by reason of which, and following which, the relevant instrument came to be executed was a change in trustee. Putting aside any question of onus the tribunal considered that it would be wrong to find that the transfers came to be executed solely in consequence of the deeds relating to the change in trustee and not in any way as a consequence of the execution of the contracts of sale. There was no reason in logic or experience to hold that the inquiry should go back no further than the deeds of change of trustee and not go back to the Agreement. The Offer and Agreement contemplated execution and settlement on the same day and although they did not refer to the change of trustee they gave rise to a right in the purchaser to direct the transfer to another transferee. The only possible conclusion, the tribunal found, was that the parties intended these consequences to take effect by design.
31 Perpetual submitted that the tribunal fell into error in not concluding that the transfers were made solely in consequence of the appointment of Perpetual as trustee of the bare trusts which arose when PT accepted the offer, and were made in order to vest the relevant property in Perpetual as trustee for the time being of those assets. The tribunal's consideration of the facts should have stopped at the point of the deeds of change of trustee. The change of trustee effected by those deeds was in itself a sufficient reason in law for the transfers and accordingly the court should not inquire further or search in the background facts for any other reason. Wrongly, it was argued, the tribunal went back further and had regard to a wider range of facts and matters, and in particular had regard to the commercial, transactional or practical background against which the transfers came to be executed.
32 In developing its submission on the "solely in consequence" requirement Perpetual submitted that those words direct a limited inquiry. It was submitted that the question is whether the event following which the relevant instrument came to be executed was a change in trustee. If the instrument was executed following such a change, and such a change was in law sufficient to require the instrument to be executed, the instrument is to be treated as executed solely in consequence of the change in trustee. Hence exemption 23 was attracted.
33 In the development of Perpetual's case on exemption 23 its counsel referred to difficulties that could arise in applying the exemption unless the inquiry it required were relatively confined, as Perpetual submitted it should be, and to the fact that on analysis the change of trustee was a separate legal event from the Offer and Agreement neither of which mentioned nor required a change of trustee.
34 The above is I think a fair summary or indication of the essence of Perpetual's written and oral submissions, to all aspects of which I have regard whether or not mentioned above. I specifically refer to the following aspects for the sake of clarity. At one point in Perpetual's written submission it was stated that the Commissioner's interpretation of exemption 23 might lead to the imposition of double duty upon a transfer by Perpetual to PT. That is not the present issue. Further, counsel put it as a "comment" without developing it as a critical consideration. As I understood it the comment was but faintly put by Perpetual's counsel as providing an answer in substance to the issues raised on this appeal. I treat the point accordingly and do not consider it further as an answer of substance to the efficacy of the assessments. I merely add without elaboration that counsel for the Commissioner submitted that exemptions 10 and 17 would provide an answer to the double duty point. Perpetual's counsel further disclaimed reliance on the balance of the references in para 31 of their written submission, namely s 64B of the Stamps Act 1958 (Vic) and McKinnon Wallace Holdings Pty Ltd v Comr of State Revenue  1 VR 397. I note too that counsel for Perpetual said that he did not wish to make much of the point in para 32 of the written submission that in the ISPT case it had not been suggested by the taxing authority that instruments of transfer executed in "relevantly similar circumstances were assessable with ad valorem duty"; see ISPT Pty Ltd v Comr of Stamp Duties (NSW) (1997) 38 ATR 128; 98 ATC 4048, on appeal (1998) 45 NSWLR 639; 41 ATR 29; 99 ATC 4066. That is obviously not a basis on which to rest the decision in this case.
35 The submissions of the respondent Commissioner went to the merits of both contentions raised by Perpetual. Hence, if, as the Commissioner submitted, exemption 23 was not applicable that was the end of the case. I now refer in summary to the respondent's submissions.
36 The Commissioner submitted that it had been open to the tribunal both to consider matters which occurred on 1 April prior to the execution of the deeds of change of trustee, and to conclude that the instruments of transfer were not executed solely in consequence of the change of trustee and in order to vest the real property of the trust in the name of the new trustee. It was further submitted that the tribunal had been correct in its reasoning and conclusions, just as the Comptroller had been correct in assessing the instruments of transfer to duty.
37 Counsel for the Commissioner referred to a number of authorities which contain statements as to whether a court may have regard to extrinsic evidence in determining whether an instrument is chargeable to any and what stamp duty. I do not list the references; they are set out in the Commissioner's written submission. The references indicate that regard may be had to extrinsic evidence to aid in ascertaining the real nature or substance of a transaction and the instrument in question. In this case there is no issue as to the true nature of the Offer, the Agreement, the deeds of change of trustee or the instruments of transfer. The Comptroller does not contend that any of those instruments is not what it purports to be. The question in the present case is whether the instruments of transfer were executed solely in consequence of the change of trustee and in order to vest the real property of the trust in the name of the new trustee. The answer to that question must turn upon the relevant facts and circumstances. It is axiomatic that it is only when such facts and circumstances have been ascertained that a determination can be made whether the exemption is applicable in the circumstances. Hence Perpetual placed a deal of evidence before the Comptroller concerning the transactions of 1 April 1997 and argued that the solely in consequence issue should be decided in Perpetual's favour.
38 It was submitted for the Commissioner that the Comptroller, and the tribunal, had properly regarded the background facts or context provided by the transactions of 1 April 1997 in concluding that the instruments of transfer had not been executed solely in consequence of the change of trustee and in order to vest the real property of the trust in the name of the new trustee. In truth, counsel for the Commissioner submitted, regarding the substance and reality of the matter, the proper inference was that the steps of changing the trustee and then transferring the property to the new trustee were simply the means or method by which PT chose to carry the purchase of the property into effect. Accordingly, it was submitted, the tribunal had been correct in drawing the inference that the transfers had not been executed solely because of the change of trustee and in order to vest the real property of the trust in the trustee for the time being. Counsel referred to several authorities as indicating that regard should be had to all relevant facts to determine what in substance occurred: Chesterfield Brewery Co v IRC 2 QB 7 at 13 per Wills J; Oughtred v IRC  AC 206 at 233 per Lord Denning and 239-241 per Lord Jenkins; Fitch Lovell Ltd v IRC  1 WLR 1325 at 1334 per Wilberforce J; Parinv (Hatfield) Ltd v IRC  STC 305 at 313 per Millett LJ.
39 While I have regard to these - and all the authorities referred to by counsel - I now specifically refer to Oughtred and Parinv. I do so appreciating and without in any way confusing, let alone merging the consideration of, Perpetual's 2 contentions. It simply seems convenient to refer to them at this stage.
40 Both cases concern the assessability of instruments to stamp duty in the context of a trust. The legislation is not the same and the facts are not the same as those which I have to consider. Allowing for that, the reasoning in the cases is instructive.
41 In Oughtred a tenant for life of 100,000 preference shares and 100,000 ordinary shares in a company and her son who held the absolute reversionary interest, agreed that he would exchange his interest under the settlement for certain other shares which she owned in the company and that her life interest in the shares subject to his reversionary interest be enlarged into an absolute interest. There was then executed a release by the mother, son and the trustees of the settlement which stated that the shares were now held in trust for the mother absolutely, and that it was intended to transfer them to her, and the mother and son gave the trustees a release. The transfer was stated to be the consideration for the release. On the same day the mother and the trustees executed a deed by which the shares were transferred to her, the consideration being stated to be 10 shillings. There was a separate transfer of the mother's shares to the son. The question was whether the transfer to the mother attracted ad valorem duty on the basis that it was a conveyance on sale of the son's reversionary interest in the shares. The transfer did not in terms refer to that interest. By majority (Lord Keith, Lord Denning and Lord Jenkins) the House of Lords held that the transfer did attract such duty. The dissenting opinion was that the trustees had at no relevant time held the equitable interest and that they had done no more, and could have done no more, than transfer their legal title in the shares as the beneficiaries directed. Hence the transfer could not be treated as a conveyance of the son's equitable reversion; see per Lord Radcliffe at 228 and Lord Cohen at 231.
42 The majority were clearly of the contrary view. Lord Denning (at 232) noted that the son had not conveyed his reversionary interest direct to his mother or to the trustees. He then went on (at 233) to say:
But he authorised the trustees to convey it to her - not in the shape of a reversionary interest as such - but by way of enlarging her life interest into absolute ownership. It is clear to me that, by the transfer so made by his authority, she acquired his reversionary interest as effectively as if he had conveyed it direct to her. And that is quite enough to attract stamp duty. In my opinion, every conveyance or transfer by which an agreement for sale is implemented is liable to stamp duty on the value of the consideration. It is not necessary for the instrument of implementation to be between the same parties as the agreement for sale, nor for it to relate to the self-same property as the agreement for sale. Suffice it that the instrument is the means by which the parties choose to implement the bargain they have made.
43 Lord Denning concluded by stating that it made no difference if the effect of the oral agreement between the mother and the son, prior to entering into the written documents, was to transfer his reversionary interest to her. When that oral agreement was implemented by the transfer, the transfer became liable to stamp duty.
44 Lord Jenkins, in whose opinion Lord Keith agreed, identified the question at issue as being:
After acknowledging (at 238) that stamp duty is imposed on instruments, not transactions, Lord Jenkins referred (at 238-9) to the taxpayer's argument that:
... whether upon the true construction of section 54 of the Act of 1891, in having regard to the terms and effect of the oral agreement and the nature of the interests with respect to which that agreement was made, the disputed transfer was an instrument whereby property in the shape of the settled shares or any estate or interest in that property was transferred "upon the sale thereof" to a purchaser in the person of the appellant (at 237).
Lord Jenkins then referred to an argument that in view of the requirement of s 53(1)(c) of the Law of Property Act 1925 (UK), the disposition of the son's interest had to be in writing to effect a transfer of his reversionary interest, and a further argument that s 53(2) had the effect of excluding the transaction from the operation of s 53(1)(c). He found it unnecessary to decide those issues:
... the disputed transfer transferred nothing beyond a bare legal estate, because, in accordance with the well-settled principle applicable to contracts of sale, between contract and completion the appellant became under the oral agreement beneficially entitled in equity to the settled shares, subject to the due satisfaction by her of the purchase consideration, and accordingly the entire beneficial interest in the settled shares had already passed to her at the time of the execution of the disputed transfer, and there was nothing left upon which the disputed transfer could operate except the bare legal estate.
... for, assuming in the appellant's favour that the oral contract did have the effect in equity of raising a constructive trust of the settled shares for her untouched by section 53(1)(c), I am unable to accept the conclusion that the disputed transfer was prevented from being a transfer of the shares to the appellant on sale because the entire beneficial interest in the settled shares was already vested in the appellant under the constructive trust, and there was accordingly nothing left for the disputed transfer to pass to the appellant except the bare legal estate. The constructive trust in favour of a purchaser which arises on the conclusion of a contract for sale is founded upon the purchaser's right to enforce the contract in proceedings for specific performance. In other words, he is treated in equity as entitled by virtue of the contract to the property which the vendor is bound under the contract to convey to him. This interest under the contract is no doubt a proprietary interest of a sort, which arises, so to speak, in anticipation of the execution of the transfer for which the purchaser is entitled to call. But its existence has never (so far as I know) been held to prevent a subsequent transfer, in performance of the contract, of the property contracted to be sold from constituting for stamp duty purposes a transfer on sale of the property in question. Take the simple case of a contract for the sale of land. In such a case a constructive trust in favour of the purchaser arises on the conclusion of the contract for sale, but (so far as I know) it has never been held on this account that a conveyance subsequently executed in performance of the contract is not stampable ad valorem as a transfer on sale. Similarly, in a case like the present one, but uncomplicated by the existence of successive interests, a transfer to a purchaser of the investments comprised in a trust fund could not, in my judgment, be prevented from constituting a transfer on sale for the purposes of stamp duty by reason of the fact that the actual transfer had been preceded by an oral agreement for sale.
In truth, the title secured by a purchaser by means of an actual transfer is different in kind from, and may well be far superior to, the special form of proprietary interest which equity confers on a purchaser in anticipation of such transfer.
The parties to a transaction of sale and purchase may no doubt choose to let the matter rest in contract. But if the subject-matter of a sale is such that the full title to it can only be transferred by an instrument, then any instrument they execute by way of transfer of the property sold ranks for stamp duty purposes as a conveyance on sale notwithstanding the constructive trust in favour of the purchaser which arose on the conclusion of the contract.
45 The more recent case of Parinv concerned an agreement for the purchase of the vendor's equitable interest in registered land. The purchase was completed by 2 documents: a declaration of trust by the vendor which recited that the purchase price had been paid; and a transfer of the land which recited that the transferor had agreed to sell the equitable and beneficial interest in the land to the taxpayer, that the vendor had executed a declaration of trust whereby it had declared it held the property as bare trustee and nominee for the taxpayer and that the taxpayer (being solely entitled to the property) had called upon the transferor to transfer the property to it. The taxpayer argued that the transfer was stampable as a transfer of the bare legal estate only with a fixed duty of 50p since the beneficial interest in the land was already vested in it by the declaration of trust. The transfer was assessed to duty on an ad valorem basis calculated on the consideration paid for the beneficial interest. From an unsuccessful appeal against the assessment the taxpayer appealed to the Court of Appeal. Millett LJ, in whose judgment the other members of the court agreed, described the appeal from the tribunal as being as hopeless as any he had heard. He said at 313:
The taxpayer's alternative argument is based on the proposition that, if account is taken of the contract for sale and the declaration of trust, then it is apparent that the declaration of trust is the instrument which constitutes the conveyance on sale with the result that the transfer does not attract ad valorem duty. The argument is based on the decision in Chesterfield Brewery Co v IRC  2 QB 7.
That case is authority for the proposition that a transfer or conveyance on sale need not take any particular form, so that a declaration of trust by a vendor in favour of a purchaser is a conveyance on sale, at least where it is not intended to be followed by a transfer of the legal estate. Wills J relied strongly (at 13) on the inference that the instrument in question was intended to be the purchaser's only document of title and that it was not intended to be followed by a transfer of the legal estate.
In the present case the only possible inference is to the opposite effect. The subject matter of the contract was registered land. The parties were commercial entities. It is most unlikely that the taxpayer would have been content to leave the legal estate outstanding for any length of time. In any event it did not do so. The declaration of trust and the transfer were executed on the same day and were almost certainly both prepared beforehand. The inference is plain. This was not a sale of the equitable interest, as it purported to be. It was a sale of the property. The provisions of the contract, which described the subject matter of the contract as the vendor's equitable and beneficial interest and prescribed the mode of completion, were matters of conveyance and not substance, and were dictated by stamp duty considerations. But it does not matter whether the subject matter of the sale was the vendor's legal estate, or its equitable and beneficial interest as was the case in Oughtred. The declaration of trust and the transfer were the instruments by which the parties chose to implement their bargain, just as the release and the transfer were in Oughtred.
46 I now turn to my conclusion on exemption 23, and commence with the expression "solely in consequence". Counsel for Perpetual submitted that "solely" was best understood as "a word of emphasis" which had "very little significant meaning if any in the context", the idea being conveyed was "something like to give effect to", something which follows the prior event. It was submitted that all that the instruments of transfer did was give effect to the change in trustee. Hence, the instruments were executed solely in consequence of the deeds by which the retirement of the vendor as trustee and the appointment of Perpetual as trustee in lieu was effected. Whether or not that conclusion, that the subsequent act occurred solely in consequence of the immediately preceding act, was correct as a matter of logic, and perhaps out of concern that it might be held not to be, counsel sought to bolster the submission by reference to other matters. He submitted that unless a line was drawn at the deeds of change of trustee and the prior transactions constituted by the Offer and the Agreement were excluded, along with the commercial background which they provided, as being irrelevant to the inquiry, questions of cause and consequence would be involved. Hence the inquiry is concerned to identify that which is sequential, and not to establish the event or events which were causative of the execution of the instruments of transfer.
47 It should be noted that in the course of his submissions Perpetual's counsel indicated, quite properly and as I would have inferred anyway, that the events of 1 April were effected by design, and were not a series of merely adventitious acts. Counsel submitted however that the effecting of matters by design was not an element relevant to the application of the exemption. The issue was not one of intention but whether the instruments of transfer had been entered into solely in consequence of the change of trustee and in order to vest the real property of the trust in the new trustee.
48 Neither counsel had discovered a decision on the construction and operation of the exemption. Each counsel did however refer to some authority as providing guidance on the operation and application of the expression "solely in consequence".
49 Perpetual's counsel referred to 2 cases in which consideration had been given to the word "consequence" where it appeared in a statutory context: Reseck v FCT (1975) 133 CLR 45; 5 ATR 538; 75 ATC 4213 at CLR 51; ATR 541-2 per Gibbs J and CLR 56; ATC 4216-7; ATR 545; ATC 4220 per Jacobs J; American Home Assurance v Saunders (1987) 11 NSWLR 363 at 383 per Mahoney JA.
50 Reseck concerned s 26(d) of the Income Tax Assessment Act 1936 (Cth) which referred to lump sums paid "in consequence of" retirement or termination of employment. At CLR 51; ATR 541-2; ATC 4216-7 Gibbs J stated that for a lump sum to be so regarded it was not necessary that the termination of the employee's services should be the dominant cause of the payment. It was sufficient that the payment followed as an effect or result of the termination, even if the payment was made in consequence of some other factors. Jacobs J was of the same view. American Home Assurance concerned an accident and sickness insurance policy which included the words "a consequence of any kind of sickness or disease". While noting the passage to which counsel referred, the case, like Reseck, concerned a different expression in a different statute, and in the context what their Honours said in them was perfectly understandable.
51 For his part counsel for the Commissioner referred to Baker v David Hose Pty Ltd  VR 176 and Bilney v Western Australian Transport Board (1961) 105 CLR 630 as providing guidance. Baker was a prosecution under the Commercial Goods Vehicle Act 1958 which imposed on the owner of a commercial goods vehicle a liability to pay a charge as compensation for wear and tear caused to the public highways. The charge was excepted while a vehicle was being used "solely for any or some of the purposes specified in" a Schedule to the Stamps Act 1958 (Vic). Those purposes included the carriage of berries and other soft fruits and certain market garden produce. The defendant argued that the exemption from the charge was attracted in the following circumstances. On its outward journey the defendant's truck carried goods for reward. When the trip commenced the owner of the truck would place one or 2 cases of fruit or vegetables in the cabin with instructions to the driver to transfer them to the body of the truck after the outward trip and before returning home. The purpose of doing this was to attract the exemption and thereby avoid the charge. In discharging an order nisi to review the conviction it was held by O'Bryan J that the purpose of the exemption was to benefit primary producers and not owners of commercial goods vehicles as such. The Schedule contemplated the carriage of goods for hire or reward in the course of a trade or business which the carriage in this case was not. Hence in carting the fruit and vegetables the vehicle was not being used for the carriage of goods within the meaning of the Schedule. O'Bryan would also have upheld the conviction on an alternative ground. That ground commenced with the proposition that it is always a question of fact to determine for what purpose a vehicle is at any time being used. The mere fact that articles of the prescribed type were being carried on the vehicle did not mean that the vehicle was being used for the purpose of carrying those articles within the meaning of the Stamps Act 1958 (Vic) and the Schedule. In the circumstances the cases of fruit or vegetables were not carried for a commercial purpose in the course of a trade or business. O'Bryan J said that "They were merely being given a ride in the truck in the hope that thereby the tax would be avoided. It was indeed a sham 'carriage' and, in my opinion, the magistrate should have determined as a matter of fact that the vehicle was not on these occasions being used for the carriage of fruit or vegetables" (at 179). O'Bryan J referred with approval to the judgment of Virtue J in Bilney, whose decision was affirmed by the High Court on appeal subsequent to the decision of O'Bryan J. Bilney had arisen in similar circumstances under similar legislation in which the statutory expression was "used solely for the purposes mentioned in" a Schedule. O'Bryan J concluded (at 180) that there must be reasonable grounds for concluding that a substantial and not merely a colourable use for one of the specified purposes had been involved. That was a matter of degree. O'Bryan J concluded that the use in question was merely colourable and that the magistrate had correctly found that the vehicle was not at the relevant time being used for any purpose stated in the Schedule.
52 Bilney too directs attention to the purpose of the exemption from the charge and the need in that respect to have regard to the substance and reality of the relevant carriage of goods to determine if, as a matter of fact, it was solely for an excepted purpose. As Dixon J observed in Bilney at 636, the sole reason for the journey in that case was the carriage of superphosphates back, and the bag of oats was thrown in only as a token compliance with a condition of immunity from the statutory charge. That, Dixon J observed, was not what the exemption was directed to. The carriage of the bag of oats was not part of the purpose of the journey. It was a mere colourable attempt to comply with the exempting condition. Hence the statutory "purpose" was not satisfied. Counsel for the Commissioner submitted that Dixon J's approach was apposite in the present case. That meant considering the purpose of exemption 23, and whether the exemption of the instruments of transfer from duty in the present circumstances was what exemption 23 was directed to. In particular, counsel posed the question whether it is correct to infer that the instruments of transfer were executed solely for the purpose set out in exemption 23, namely, upon a change of trustee to vest the real property of a pre-existing trust in the new trustee.
53 In my view the purpose of the exemption is clear. It is to exempt from stamp duty a transfer of real property given in the context of a change of trustee of a pre-existing trust in order to vest the real property of the trust in the name of the trustee for the time being. In such a case the transfer is not given in consequence of a sale or other disposition of the real property for valuable consideration. In such circumstances it would be unreasonable to charge the instrument of transfer to duty. The beneficial interest has not changed. There has been a mere change in the registered proprietor (in a case such as the present which concerns land under the Transfer of Land Act 1958 (Vic)) consequent upon and because of the change in the office of trustee and the need for the trust property to be conveyed into the name of the trustee for the time being.
54 It is also clear why the legislature has considered it appropriate to use the word "solely" in conjunction with the words "in consequence of". It aids in the achievement of the purpose. It does that by confining the operation of the exemption to instruments solely of the type described. The Oxford Dictionary includes as meanings of the word "solely": (a) a single person or thing, without any other; without aid or assistance; (b) only, merely, exclusively. In its common understanding in its present context the word "solely" in conjunction with the words "in consequence of" means that the exemption will apply only if the instruments of transfer were executed in consequence of the change in trustee and in order to vest the real property of the trust in the name of the new trustee and not in consequence of any other factor. The object is to protect the revenue when an instrument of transfer is the consequence of another factor or factors. The use of the word "solely" indicates the extent of the legislature's concern in that regard. If the word "solely" had not been used, the question would merely have been whether the transfers were a consequence of the change of trustee in the sense of it being sequential or following on from it. It would not matter if the transfers were also a consequence of another factor or factors. In my view however this construction, which was contended for by Perpetual, cannot stand in face of the qualifying word "solely". The expression "solely in consequence of" requires that for the exemption to apply it must be established, as a matter of fact, that the transfer of real property of the trust was executed only in consequence of a change of trustee and in order to vest the real property of the trust in the name of that new trustee. The consequence is that the legislature has imposed a rigorous test of a factual nature which a taxpayer must surmount for the exemption to apply.
55 It would be artificial and contrary to the breadth of the solely in consequence test, and the nature of the inquiry thus raised, to conclude, as Perpetual submitted, that the inquiry in this case should commence with the deeds of change of trustee and exclude from consideration as the possible source of a relevant factor the immediately preceding acts constituted by the Offer and the Agreement and the commercial arrangements they embody or the background they provide. Perpetual's submissions require that the ordinary and natural meaning of the word "solely" be disregarded and, in effect, that the word be read down to the extent that it has no practical effect. In my view there is no warrant in the plain language of the exemption or any other provision of the Stamps Act 1958 (Vic) or the Schedule, or any necessary intendment to be found therein, that would require or justify the exemption to be read in the way suggested by Perpetual. Nor in my view does any apprehended difficulty or uncertainty in operation of the exemption require or justify such an approach or a reading down of the exemption.
56 For the reasons I have mentioned it seems clear why the exemption has been expressed as it has. While allowing for a legitimate exemption the legislature has sought to protect the revenue by the imposition of a factual test designed to meet the merits of cases as they may arise and restrict the operation of the exemption to cases in the specified category. The test imposed requires the ascertainment of the facts and circumstances relevant to the issue and a determination whether the instruments of transfer were executed solely in consequence of the change of trustee and in order to vest the real property of the trust in the name of the new trustee.
57 It is the Commissioner's submission that in seeking to ascertain those relevant facts and circumstances regard should be had to the acts mentioned which occurred on 1 April 1997. They should be understood as being part of one overall transaction. As I have previously mentioned Perpetual submitted that the inquiry for the purpose of the exemption should commence at the deed of change of trustee and not take account of factors found in the earlier steps.
58 This latter submission has the ring of artificiality about it. Perpetual brings forward evidence of each event which occurred between the parties on 1 April 1997. The evidence is clearly relevant. It informs one as to the relationship between all the parties including the vendors and the purchaser PT as trustee of the WD Trust, and the nature of the commercial transaction they entered into on 1 April 1997. It informs one as to the nature of the constructive trust of which the vendors respectively became bare trustee and of the facts and the reason in law why such a trust arose on the payment of the purchase price and coming into existence of the Agreement. Clause 4 of the Agreement refers to and differentiates between the passing of the "beneficial title" and "the legal title" of the property. It seems a curious proposition that while evidence of the Offer and the Agreement and the background thus provided is admissible and relevant generally, for the purpose of determining whether exemption 23 operated the court is restricted to a consideration of the deeds of change of trustee and the instruments of transfer. Apart from any practical difficulties in drawing such a line, the language of the exemption provides no basis for doing so. Indeed, in my view Perpetual's approach would negative the breadth of the task which in this case is to consider whether as a matter of fact the instruments of transfer were executed solely in consequence of the change of trustee and in order to vest the real property of the trust in the name of the new trustee. If it had been the intention of the legislature that the factual inquiry thus raised should be confined to the terms of the instrument, if any, by which the change in the office of trustee was made, it would have been easy for that to have been stated. Reasons come readily to mind why the legislature did not take that course and so limit the breadth of the inquiry under the exemption. In my view acceptance of Perpetual's submission would constitute a fetter or limitation upon inquiry under the exemption which not only is not warranted by, but is contrary to, the plain meaning and intendment of the exemption.
59 I consider also that some sort of reality check is appropriate having regard to the circumstances of the transaction effected between the parties on 1 April 1997. What occurred was a series of steps which included a sale by the vendors of their interest in Shoppingtown's real estate for $147 million and by which, in the result, the vendors' full estate in fee simple passed to PT as to the equitable estate by way of the constructive trust and as to the legal estate to Perpetual as trustee for PT by way of the instruments of transfer. Whether or not there was between each step, from the Offer to the execution of the instruments of transfer, a mere moment of time or, for some practical reason or other, a somewhat longer period, the fact is that what happened was a pre-planned, highly organised series of steps to the effect mentioned. The line drawing suggested by Perpetual seems artificial and removed from the reality of the parties' own actions.
60 I referred earlier to cl 4 of the Agreement. Paragraph (d) required the vendor, subject to the tenancies, to give possession of the property. That is, on completion on 1 April 1997 on payment of the purchase price the purchaser was entitled to immediate possession. Paragraphs (a), (b), (c) and (e) refer to the change of title. I referred to these sufficiently earlier. Paragraph (a) is important because it reflects that the parties had in contemplation the passing of the beneficial interest or "title" as cl 4(a) referred to it, and the legal title of the property, at different times or in different circumstances. It provides, in summary, that the vendor must on completion, subject to the Encumbrances and any legislation or regulation requiring registration for the passing of title, cause the unencumbered beneficial title to the property to pass to the purchaser. That is exactly what was done by the constructive trust, the existence of which the parties immediately recognised and acted upon. The conclusion is inescapable that the parties, and certainly the purchaser, treated the coming into existence of the constructive trust as performance or satisfaction of that requirement of para (a). The second obligation which para (a) imposed on the vendor concerned the legal title. The vendor, "if and when requested" to do so was to "cause the legal title of the Property to pass to the Purchaser". Further, by para (e) the vendor was also, on completion, to give an executed and registrable instrument of transfer for the property in favour of the purchaser. The vendor performed its obligations in this regard by providing executed instruments of transfer of the property in registrable form. It is immaterial that the transferor in each case was not PT in name but Perpetual which in that respect was acting as trustee for PT. The correct inference in my view is that the parties, in particular PT as the purchaser and the party liable for all stamp duty payable in respect of the agreement (cl 25), chose by these means to implement the agreement of sale and transfer the vendors' fee simple interest in possession to the purchaser. The obvious inference is that the purpose was to avoid stamp duty.
61 It is to be noted that recital A to the deeds of change of trustee which refers to the creation of the constructive trust does not refer to the Agreement or acknowledge its existence or the matters performed under it. It merely states that for valuable consideration given a constructive trust arose concerning the beneficial interest in the property described in the Schedule of which the Old Trustee is trustee and the Beneficiary is beneficiary. The recital provided for the insertion of the date of giving of the consideration. That date was not inserted, but it was 1 April 1997. Unless the Comptroller was prepared to accept the recitals and terms of the deeds as being fully informative of all matters that could be relevant to a decision whether the exemption was applicable, and I do not understand how the Comptroller could have in the face of such a relatively bland and uninformative document, the Comptroller must have required more information concerning the preceding events or underlying transaction and must, in turn, have been able to consider such of the information as related to the solely in consequence issue.
62 In the result I am of the view that Perpetual's submission must fail. When regard is had to the transactions of 1 April, the appointment of Perpetual as new trustee is seen as but one factor in consequence of which the instruments of transfer were executed. The change of trustee was but a step in the overall transaction of sale and the transfer of title and thereby full ownership to the purchaser. It was the means by which that part of the agreement was implemented. It cannot, in my view, in logic or commonsense, be divorced from all the other attendant circumstances and held to have been the sole reason or event in consequence of which the instruments of transfer were executed. For these reasons I hold that in the circumstances the exemption was not applicable. I add that if the question is in fact whether it was open to the Comptroller to make the assessments on the basis impugned by Perpetual, the answer is that it was.
63 This conclusion means it is not necessary to consider the further submission which I understood the Commissioner to make, based on the reasoning in Baker and Bilney, that the circumstances in this case take the instruments of transfer outside the object or purpose to which exemption 23 is directed. On this argument the change of trustee is regarded as a contrived step undertaken for the purpose of attracting the exemption. I would infer that was so.
64 This is sufficient to answer the case based on the exemption. The appeal fails in that respect.
65 As an alternative argument, assuming that exemption 23 is not applicable, Perpetual submitted that the value of the estate or interest conveyed by the instruments of transfer was nil or nominal and that, accordingly, the duty chargeable on the instruments should have been assessed at nil or in a mere nominal amount. Whereas under the exemption 23 submission the step that was critical was the execution of the deeds of change of trustee, on the alternative submission the critical point is the earlier coming into existence of the trust in favour of PT. The point upon which the alternative submission turns is that on completion, when PT accepted title, paid the purchase price and became entitled to a transfer of the property, PT became entitled in equity to the land and the vendor became a bare trustee thereof for PT; see McWilliam at CLR 660 per McTiernan and Taylor JJ, and Stern at CLR 523 per Deane and Dawson JJ. The trust existed prior to and at the time when the instruments of transfer were executed; it was not created by or as a result of the instruments of transfer. Rather, the effect of the transfers was to transfer the legal title, or bare legal interest as it was said, into the name of Perpetual as trustee for PT. Thus the point at which Perpetual's submission commences, and upon which it turns, is that prior to and at the time when the instruments of transfer were executed PT was entitled to the full beneficial interest in the property which, to quote Perpetual's counsel, "Took the whole value so that the value of what is acquired was nil". That is, having identified PT's pre-existing beneficial interest in the property, which accounted for its full value, all that was left for the transfers to convey, and all that they did convey, was the bare legal interest which had a nil value. This argument was raised unsuccessfully in Oughtred and Parinv.
66 Counsel for Perpetual referred to the following authorities, in addition to McWilliam and Stern, as correctly stating the relationship between the legal estate and the equitable estate in land: DKLR Holding Co (No 2) Pty Ltd v Comr of Stamp Duties (1980) 1 NSWLR 510 at 519-521; 10 ATR 942 at 949-51 per Hope JA, and Re Transphere Pty Ltd (1986) 5 NSWLR 309 at 311 per McLelland J. In DKLR 80 ATC 4279 at 4285-7 Hope JA said:
... an absolute owner in fee simple does not hold two estates, with all the rights and incidents that attach to that estate. If he were to execute a declaration that he held the land in trust for himself absolutely, the declaration would be of no effect; it would give him no separate equitable rights; he would remain the legal owner with all the rights that a legal owner has. At least where co-extensive and commensurate legal and equitable interests are concerned, "... a man cannot be a trustee for himself".: Goodright v Wells (1781) 2 Dougl 771 at 778; 99 ER 491 at 495 per Lord Mansfield. "You cannot have a legal estate in trust for yourself".: Harmood v Oglander (1803) 8 Ves Jun 106 at 127; 32 ER 293 at 301, per Lord Eldon. Secondly, although the equitable estate is an interest in property, its essential character still bears the stamp which its origin placed upon it. Where the trustee is the owner of the legal fee simple, the right of the beneficiary, although annexed to the land, is a right to compel the legal owner to hold and use the rights which the law gives him in accordance with the obligation which equity has imposed upon him. The trustee, in such a case, has at law all the rights of the absolute owner in fee simple, but he is not free to use those rights for his own benefit in the way he could if no trust existed. Equitable obligations require him to use them in some particular way for the benefit of other persons. In illustrating his famous aphorism that equity had come not to destroy the law, but to fulfil it, 1, said of the relationship between legal and equitable estates in land: "Equity did not say that the cestui que trust was the owner of the land, it said that the trustee was the owner of the land, but added that he was bound to hold the land for the benefit of the cestui que trust. There was no conflict here."
67 In Re Transphere at 311, McLelland J, after referring to the above dicta of Hope JA, said:
But what is significant for present purposes is the imprecision of the notion that absolute ownership of property can properly be divided up into a legal estate and an equitable estate. An absolute owner holds only the legal estate, with all the rights and incidents that attach to that estate. Where a legal owner holds property on trust for another, he has at law all the rights of an absolute owner but the beneficiary has the right to compel him to hold and use those rights which the law gives him in accordance with the obligations which equity has imposed on him by virtue of the existence of the trust. Although this right of the beneficiary constitutes an equitable estate in the property, it is engrafted onto, not carved out of, the legal estate.
68 Before mentioning further authority which Perpetual's counsel referred to, I note that early in this part of his submissions he referred to provisions of the Stamps Act 1958 (Vic) and the Schedule which, he said, made it clear that in referring to the value of real property it is "the value of the relevant estate or interest the subject of an instrument [that is in question] and not that of the underlying property". It was submitted that the tribunal had erred in concluding otherwise and in having regard to the value of the underlying property including PT's beneficial interest.
69 I note too that in presenting his submissions Perpetual's counsel extensively criticised the reasoning of the tribunal. While I have regard to all that counsel said I will not labour this judgment by setting out and commenting on the criticisms. In my view it is not necessary to do so.
70 Counsel for Perpetual referred to 2 cases on the point whether for stamp duty purposes the value of the bare legal title is nil or nominal. They are O'Sullivan v Comr of Stamp Duties (Qld) (1983) 14 ATR 299, on appeal  1 Qd R 212; and Comr for ACT Revenue v Perpetual Trustee Co (Canberra) Ltd (1993) 116 FLR 296, on appeal (1994) 50 FCR 405; 28 ATR 307; 94 ATC 4403.
71 In O'Sullivan the point now raised by Perpetual was relied upon by the taxpayer before Connolly J at first instance. In that case trustees held certain lands which, on the beneficiaries becoming absolutely entitled to the full beneficial interest, were transferred to the beneficiaries by written instrument. The instrument transferred "an estate and interest in the said piece of land". The Commission took the view that stamp duty was payable on the transfers under the heading "Conveyance or Transfer" and that no consideration being stated in the transfers duty should be calculated on the full unencumbered value of the land. The taxpayer trustees objected to this approach and in particular contended that they had transferred no more than the bare legal estate in the land the full beneficial interest in which was already vested in the transferee beneficiary. They argued that the full unencumbered value of the property conveyed must be regarded as nominal. Connolly J accepted the taxpayer's argument and granted a declaration, which was the relief sought, as to dutiability. His conclusions on the argument appear at 303-304. He noted that the argument had proceeded on the footing that what was conveyed was the unencumbered estate in fee simple absolute in possession and that the taxpayer's argument was that the property in fact conveyed, as distinct from that stated in the transfer, was the value of which should be used to calculate stamp duty. Connolly J then said:
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.
72 Counsel for Perpetual submitted that the conclusion of Connolly J was correct. It is in fact the only decision that counsel could find in which a judge has so concluded. This seems a singular fact in light of the countless times that a trust has arisen on completion under a contract for the sale of land pending registration of a transfer of the land.
73 An appeal from this decision was allowed on the ground that in light of the exclusive appeal provisions in the Stamps Act 1958 (Vic), which the taxpayer had not pursued, the Court did not have jurisdiction to determine dutiability on a proceeding for a declaration. Accordingly the declaration granted by Connolly J was set aside. In these circumstances it was not necessary for the full court to deal with the valuation point and 2 members of the court did not consider it. The third member of the court, G N Williams J, agreed in the result but, out of deference to the argument and because he was of the contrary opinion to Connolly J, he concluded his judgment (at 229-231) with a consideration of the point.
74 G.N. Williams J found the answer to the point in a true understanding of the nature of the equitable estate enjoyed by the beneficiaries prior to the transfer. He referred to a trust being by definition an equitable obligation enforceable by the beneficiary to deal with property of the trust for the benefit of the beneficiary. After referring to the principle in Saunders v Vautier (1841) Cr & Ph 240; 41 ER 482, and noting that it was not unusual for lawyers to say that the equitable estate is vested in the beneficiary, he said that "It must not be overlooked that at law the fee simple in land, being trust property, is vested in the trustee, and when the trustee conveys the property to the beneficiary, thereby putting an end to the trust, he conveys the fee simple to him". He then noted that in the case of land under the Torrens system the registered proprietor cannot transfer the so-called bare legal title to another while retaining the beneficial estate: see Ex parte Property Unit Nominees (No 2) Pty Ltd  Qd R 178. G N Williams J then referred with approval to the passage from the judgment of Hope JA in DKLR, quoted above commencing at "Secondly". As this passage and the observations of McLelland J in Re Transphere, makes clear, there are not 2 estates - legal and equitable - which aggregate to the full fee simple estate in land. There is one estate. Thus, G N Williams J concluded, "The respondents were conveying more than a "bare legal interest in land"; they were conveying the ownership of or the fee simple in the land". It would follow that duty would be payable on the value of the fee simple estate subject to the correct application of the Stamps Act 1958 (Vic).
75 In addition to the fact that his Honour's reasons were obiter, counsel for Perpetual offered 2 critical comments. First, the reasons concentrated on the identification of the estate rather than the valuation point. Assuming validity in this criticism, the reason must be that the answer to the identification of the estate or interest of the parties also answered the valuation point. Secondly, the facts differed from the present case in that in the result the transferee beneficiaries had the entire fee simple interest in the land. That is correct but what is the difference in substance here? Perpetual is entitled to call on its chosen trustee (who it opted to receive the legal estate for it) to transfer the legal estate to it and, pending that, it is entitled to the equitable estate.
76 Counsel then referred to the Perpetual Trustee Co (Canberra) case. In that case, in the course of his decision on an appeal from the Administrative Appeals Tribunal, Higgins J dealt in obiter dicta with an argument that the duty on an instrument which effected a transfer of a Crown lease should be assessed after deducting the value of any outstanding equitable interests held by a third party. In question was a deed whereby a replacement trustee was appointed. The Commissioner argued that the deed effected a transfer of the leasehold interest to the new trustee and was therefore dutiable. The taxpayer argued that the value of the interest was nominal. After referring to a number of authorities including the decisions of Connolly J and G.N. Willliams J in O'Sullivan and DKLR in the High Court ((1982) 149 CLR 431 at 442; 12 ATR 874 at 880; 82 ATC 4125 at 4131-2 per Gibbs CJ) Higgins J concluded that:
... in the absence of statutory provision to the contrary, the value of an interest conveyed by an absolute owner is the commercial value of the entire interest. If the interest is subjected to equitable obligations by virtue of the terms on which the legal estate is to be transferred, that circumstance does not affect the value of the interest so transferred. That is because the equitable interest is created by, not in advance of, the conveyance. Thus, as I have noted, had it been the case that merger had occurred and that the conveyance fell outside of the categories of exempt instruments, duty would have been assessable on the value of the Crown lease. It may be noted that otherwise there would be little need to create the relevant category of exempt instruments.
77 Counsel for Perpetual criticised as inaccurate the statement in that passage as to the equitable interest being created by and not in advance of the conveyance. In fact, he submitted, the interest was created after the conveyance. Further, in the present case the equitable interest existed prior to the execution of the transfer and hence the case is distinguishable. In other words, Perpetual does not rely on the reasoning of Higgins J.
78 An appeal from this decision was allowed and the case was remitted to the Tribunal for further hearing. The appeal was disposed of on another point and the obiter dicta of Higgins J was not discussed directly. I say directly because in the course of his judgment on the appeal Davies J referred to Oughtred as indicating a basis for an argument that might be made in the further hearing of the case.
79 In concluding his submissions Perpetual's counsel emphasised that the pre-existing interest of PT did not change by or as a result of the transfers, and the property transferred to Perpetual did not include any equitable interest in the land. These circumstances, he said, distinguished the case from the ordinary transaction for the sale of land. The distinguishing feature seemed to be the intercession of Perpetual as new trustee and the transfer of the legal estate in fee simple to that new trustee.
80 I should note for completeness that in his submissions counsel for the Commissioner relied, in addition to the authorities mentioned earlier, on Comr for Stamp Duties (NSW) v Perpetual Trustee Co Ltd (1926) 38 CLR 272, and on DKLR (1982) 149 CLR 431 at 449 and 450; 12 ATR 874 at 885-6 and 806; 82 ATC 4125 at 4135 and 4136 per Mason J where his Honour referred to the significance of the description of the estate in the instrument in question.
81 In the end I conclude, having considered all that both counsel submitted, that the Comptroller was correct in assessing the transfers to duty on the value of the fee simple estate in the land. In my view the fact that PT was entitled in equity to the land at the time when the instruments of transfer were executed did not mean that the transfers operated to convey a mere "bare legal title". The analysis of Hope JA and McLelland J of the nature of the fee simple estate in land indicates that there is one estate onto which is engrafted the equitable estate. As McLelland J stated, the right of PT under the trust was "to compel [the vendor] to hold and use those rights which the law [gave the vendor as the legal and absolute owner] in accordance with the obligations which equity has imposed on him by virtue of the existence of the trust". To carry into effect the transfer of ownership of the land it was necessary to transfer the legal estate to the purchaser. Such a transfer would not merely transfer "the legal title" (to use the expression in cl 4 of the Agreement). It would convey all the estate and rights of the absolute owner in fee simple in the land sold. That estate and those rights were of a different nature and more extensive than PT possessed under the equitable estate. As it turned out, the transfer of the legal estate was made not to PT but to a trustee for PT, clearly at PT's design and request as its desired way of obtaining a transfer of the legal estate. The instruments of transfer describe the estate and interest transferred as "all its estate in fee simple". That is, the transferor transferred to Perpetual (as trustee for PT) all the fee simple estate in the land, that being the legal estate on to which was engrafted the equitable estate held by PT. I refer, with respect, to Lord Jenkins' observation in Oughtred at 240 that in truth the title secured by a purchaser by means of an actual transfer is different in kind from and may well be far superior to, the special form of proprietary interest which equity conferred on a purchaser pending transfer.
82 I have already concluded that the steps which were undertaken up to and including the execution of the instruments of transfer were in fact the means by which the parties chose to implement the Agreement to sell and transfer ownership of the vendor's half-interest in Shoppingtown to PT. That is, they were the means chosen by which the vendors' fee simple estate and absolute ownership of the land was transferred to or for PT as PT required. I do not further repeat my earlier conclusions. It is readily to be understood that the instruments of transfer were expressed in terms appropriate to transfer the fee simple estate and thereby all the rights and incidents of full ownership of the land. The transfers were necessary for that purpose.
83 For these reasons I am of the view that duty on the instruments of transfer was to be calculated on the value of the unencumbered fee simple estate (that is including the beneficial estate). Thus the Comptroller was correct in the assessing duty on the ad valorem rates in the Schedule.
84 For all of these reasons, which in all respects are not necessarily those of the tribunal, the appeal must be dismissed and the decision of the tribunal affirmed.
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