Collector of Imposts (Victoria) v Cuming Campbell Investments Pty Ltd
63 CLR 619(Judgment by: Starke J)
Between: Collector of Imposts (Victoria)
And: Cuming Campbell Investments Pty Ltd
Judges:
Latham CJ
Starke JDixon J
Evatt J
McTiernan J
Subject References:
TAXATION AND REVENUE
STAMP DUTY
Instrument of transfer of real property
No adequate consideration
Legislative References:
Stamps Act 1928 (Vic) No 3775 - Third Schedule, Headings VI and IX
Judgment date: 19 August 1940
Sydney (heard in Melbourne)
Judgment by:
Starke J
Appeal from a decision of the Supreme Court of Victoria upon a case stated by the Collector of Imposts pursuant to sec. 33 of the Stamps Act 1928 of the State of Victoria. (at p637)
2. Edward Campbell owned certain properties, shares and investments. About the year 1931, Campbell was minded to make provision for his family and also, I should think, to avoid the burden of death duties; both perfectly legitimate objects. The steps he took to achieve these objects were as follows: -
- 1.
- He agreed to sell to Cuming Campbell Investments Pty. Ltd. and the company agreed to buy the properties, shares and investments and to take over all rents and profits, interest and dividends accrued or to accrue thereon as from 1st July 1931 for the sum of 80,000 pounds. By an agreement dated 17th September 1931 the company acknowledged that the properties, shares and investments were purchased as from the 1st July 1931 and Campbell declared that he held the same and all rents & c. on behalf of the company and agreed to transfer the same as the company should direct. On the same day, 80,000 fully paid shares in the company were allotted to Campbell and one share to each of three sons. No money was paid to the company, but I take it that the shares were allotted in satisfaction of the sale price or sum of 80,000 pounds mentioned in the agreement already set forth. Campbell died in December 1931. In July of 1937 his executors and trustees, in "consideration of the sum of 50,000 pounds paid to Campbell deceased during his lifetime" transferred to the company certain real property mentioned in the agreement of September 1931 between Campbell and the company. The sum of 50,000 pounds was the portion of the sale price attributed to the real properties set forth in the agreement, but those properties were in fact of a value between 89,000 pounds and 101,000 pounds. The balance of the 80,000 pounds was represented by other investments.
- 2.
- By three trust deeds of the same date, September 1931, it was recited that Campbell, referred to as the settlor, had placed three several sums of 10 pounds to the credit of certain accounts to be held upon trusts expressed therein and might from time to time hand over to the trustees other property real or personal as and by way of addition to the trust fund. The several deeds provided that the trustees mentioned therein should be entitled to the several sums of 10 pounds and the full benefit thereof and any additions made to the trust fund from time to time upon trust to accumulate the net income until Campbell ceased to be a trustee but with power to make payments for the benefit or maintenance of the beneficiaries under the deed and thereafter, after certain portions were set aside by his sons, then as to the residue of the trust fund and the income thereon for the benefit of his sons and their families. The trustees were authorized with the consent of the settlor to invest any moneys of the trust in the purchase of fully paid-up shares in any company incorporated in any State of the Commonwealth. A power was also reserved to the settlor, with the consent in writing of the trustees, to revoke, alter or vary any of the trusts, powers or provisions contained in the trust deeds.
- 3.
- By three several agreements, also of September 1931, the trustees of each of the trust deeds agreed to purchase from Campbell 25,000 shares in the company at a price of five shillings per share or in all 75,000 fully paid shares of the 80,000 shares which had been allotted and issued to Campbell in satisfaction of the purchase money before mentioned. At the time of the execution of these agreements, the trustees had no funds in their hands with which to discharge the sum of five shillings per share and it appeared as a debt owing to Campbell deceased in the statement of his assets and liabilities lodged for probate purposes.(at p639)
3. The collector on these facts stated for the opinion of the court the question whether the instrument of transfer of the properties from the executors and trustees of Campbell to the company "in consideration of the sum of 50,000 pounds" was chargeable with any and what amount of duty under the Stamps Act 1928. (at p 639)
4. The contest between the parties to this appeal is whether the transfer should be charged with stamp duty under the Act as a conveyance or transfer on sale of any real property (Third Schedule, item VI.) or as a settlement or gift, deed of (Third Schedule, item IX.) under which heading is included "Any instrument other than a will or codicil whether voluntary or upon any good or valuable consideration other than a bona-fide adequate pecuniary consideration whereby any property is settled or agreed to be settled in any manner whatsoever, or is given or agreed to be given in any manner whatsoever, such instrument not being made before and in consideration of marriage." (at p639)
5. The substance of the various transactions which have been mentioned is that Campbell transformed or changed his properties and investments into shares of the company and then handed over shares to trustees for his family for a nominal sum which had no relation to the value of the shares and which was not paid by them but remained a debt at the time of his death. In short, he made provision for his family without receiving any adequate pecuniary consideration therefor. But he achieved his end by several steps. The first was by a sale to the company of his properties, shares and investments and the completion of that sale, so far as it included real properties, by means of an instrument of transfer. The transaction was not a sham; Campbell intended and made a sale. The instrument of transfer effectuated and completed that sale. According to its legal operation and effect the instrument was a transfer on sale and prima facie so dutiable. (at p640)
6. But the collector contends that the instrument of transfer is nevertheless dutiable as a gift (which carries a higher duty) because of the explicit provision of the schedule already mentioned. According to this contention, any instrument (with certain exceptions which are inapplicable to the present case) upon good and valuable consideration other than a bona-fide adequate pecuniary consideration whereby property is given or agreed to be given in any manner whatsoever falls within the description "Gift, Deed of" in the Third Schedule, item IX. The case states that the true value of the properties transferred was on the date of the agreement of sale 89,515 pounds and on the date of the instrument of transfer 101,718 pounds.(at p640)
7. It is not easy to suggest any limitation upon the words of the schedule. But limitation it must have, otherwise the disposition of property in the ordinary course of business, other than for an adequate pecuniary consideration, would fall within the terms of the schedule. Parties who genuinely negotiated the sale of property would fall within the description if it appeared that the consideration was not a pecuniary one or was not in fact adequate. That view is opposed, I think, to the opinion given by this court in Collector of Imposts (Vict.) v. Peers (1921) 29 CLR 115 , and clearly to the decision of Hood J. in Atkinson v. Collector of Imposts (1919) VLR 105, which was approved in Peers' Case (1921) 29 CLR 115 . It was decided in Atkinson's Case (1919) VLR 105. that the transfer there in question was not an instrument of gift, though the consideration was not a pecuniary one. It bore no resemblance, said Hood J., to what is ordinarily known as a deed of gift. (at p640)
8. However, the words of the Act are controlling and if explicit they must prevail. The schedule to the Act, though, is not very explicit. It uses the words "gift" and "given" or "agreed to be given," which point to a transference of property from one person to another voluntarily and without any valuable consideration. But the words in the schedule widen the legal conception of a gift to the transference of property for a consideration that is not bona fide, adequate and pecuniary. Still, the dominant words of the schedule suggest an instrument whereby some benefaction is intended and conferred.
"The real meaning of the schedule is,"
as Hood J. said in Atkinson's Case (1919) VLR, at p 113,
"that a deed of gift shall not escape taxation merely because there is some good or valuable consideration therefor."
"In some cases the absence of a good bona-fide adequate pecuniary consideration may be evidence that the transaction is in reality a gift."
It cannot be pretended that this conclusion is satisfactory, for it affords no clear rule and requires the consideration of the facts of each particular case. Thus the third step taken by Campbell in the present case, the handing over of 75,000 shares to the trustees under the deeds already mentioned for a nominal sum of five shillings per share, may perhaps constitute a gift for the purposes of the schedule and be dutiable. But that is a matter for further consideration if it ever arises. (at p641)
9. In my opinion, for reasons already appearing, no gift or benefaction was intended or conferred by the instrument of transfer from Campbell to the company: it completed a genuine sale of real property and was in fact and in law a transfer on sale and is so dutiable. (at p641)
10. The decision of Gavan Duffy J. in the Supreme Court was right and should be affirmed. (at p641)