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Superannuation Fund Investment Trust v. Commissioner of Stamps (S.A.)

Judges: Hogarth ACJ
White J

Jacobs J

Court:
Supreme Court of South Australia

Judgment date: Judgment handed down 21 August 1978.

Jacobs J.: This appeal comes before the Court by way of case stated pursuant to sec. 24 subsec. (3) and (4) of the Stamp Duties Act 1923-1976. The appellant is the Superannuation Fund Investment Trust (hereafter called ``the Trust'') constituted as a body corporate under Pt. III Div. 1 of the Superannuation Act 1976, an Act of the Commonwealth Parliament assented to on 7 May, 1976. In or prior to February, 1977, the Trust purchased three valuable commercial properties in the suburbs of Adelaide, the respective vendors being Arndale (Marion) Pty. Ltd., Arndale (Kilkenny) Pty. Ltd., and Arndale (Burnside) Pty. Ltd. The total purchase price was $34,430,000. On 22 February, 1977 the Trust accepted Memoranda of Transfer of the three properties, duly executed by the vendors in registrable form under the Real Property Act 1886, as amended, and submitted the three instruments to the Commissioner of Stamps for his opinion as to whether the instruments were chargeable with any duty and if so, with what amount of duty ( Stamp Act sec. 23(1)). The Trust asked that the transfer ``be marked not subject to duty'' (sec. 23(2)). The Commissioner, however, was of opinion that the instruments were chargeable with duty, and proceeded to assess the instruments to duty in a total amount of $1,373,990. If, as a matter of law, the instruments are assessable to duty, the correctness of the assessment is conceded. By sec. 24(1) of the Stamp Act , any person who is dissatisfied with the assessment of the Commissioner may, on payment of duty in accordance with the assessment, within fourteen days from the date thereof, lodge with the Treasurer an objection to the assessment (sec. 24(1)(a)), or within twenty-one days, appeal to the Supreme Court. The Trust chose the first alternative. On 22 December, 1977 the Treasurer disallowed the objection and confirmed the assessment. The Trust, being still dissatisfied, then appealed to this Court (sec. 24(3)). The next ensuing subsections of sec. 24 of the Stamp Act are as follows (the emphasis being mine): -

``24. (4) For the purpose of any appeal to the Supreme Court under this section, the appellant may require the Commissioner to state and sign a case setting forth the question upon which his opinion was required and the assessment made by him.

(5) The Commissioner shall thereupon state and sign a case accordingly and deliver the same to the appellant, and upon his application such case may be set down for hearing in the Supreme Court.

(6) Upon the hearing of such case (at least seven days' notice of which shall be given

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to the Commissioner) the Court shall determine the question submitted , and assess the duty, if any, chargeable under this Act.''

The Trust sought to avail itself of the procedure embodied in these statutory provisions. The questions submitted for the ``opinion'' (i.e. the determination) of the Court are (a) whether the instruments and each of them are chargeable with the ad valorem duty assessed by the respondent and (b) whether the appellant is liable to pay stamp duty. In my judgment, question (b) ought not to be answered in its present form. It is too widely stated and is not authorised by the relevant statutory provisions. It is not a question which was submitted to the Commissioner, or upon which he has expressed any opinion, neither has he required the Trust to pay the stamp duty assessed. True it is that the Trust has paid the duty, as a condition of the appeal, but if the instruments are not chargeable, the duty is to be refunded. If some of the appellant's contentions are correct, it may be that duty is irrecoverable from the Trust, but non constat that the instrument is therefore not chargeable at all, and it will be necessary to examine those contentions as they affect the answer to question (a). But if the instruments are otherwise chargeable to duty, the statutory liability of the vendors to pay the duty (to the possible exclusion of the Trust) arises under sec. 5(2); whether the Trust is also liable - which is the issue posed by question (b) - being outside the scope of the questions which can properly be made the subject of appeal, ought not to be answered as a separate question in these proceedings. That was, in effect, the submission of counsel for the vendors, who was heard by consent as ``amicus curiae'' in the course of argument, and his submission in my opinion was correct.

The foundation of the case for the appellant lies in the proposition that the Trust is entitled in law to the privileges and immunities of the Crown in right of the Commonwealth. If that proposition is wrong, caedit quaestio: it was not contended that in that event the status of the Trust as a party to the instruments that have been assessed to duty can operate in any way to invalidate the assessment. But if the Trust is ``the Crown'', the case for the appellant, in substance, asserts (1) that the instruments are exempt from duty by force of the Stamp Duties Act itself, and in particular, the relevant schedule of exemptions; (2) that if the instruments are not so exempt, the assessments are nevertheless a tax upon the Commonwealth by the State and, as such, cannot stand; and (3) that the assessment of the instrument is forbidden by sec. 114 of the Constitution by which ``a State shall not, without the consent of the Parliament of the Commonwealth... impose any tax on property of any kind belonging to the Commonwealth...''.

I have come to the conclusion, after some hesitation, that the Trust ought properly to be regarded as entitled to the privileges and immunities of the Crown in right of the Commonwealth. Counsel for the appellant eschewed such expressions as ``servant or agent'', ``instrumentality'' or ``emanation'' of the Commonwealth, all of which occur in the cases. He preferred to say that the Trust was the `` alter ego '' of the Commonwealth; indeed it may be permissible, by parity of reasoning with that expressed by Barwick C.J. in
Inglis v. Commonwealth Trading Bank of Australia (1969) 119 C.L.R. 334 (at p. 336) and concurred in by Mason J. in
Maguire v. Simpson (1978) 52 A.L.J.R. 125 (at p. 138) to say that the Commonwealth ought to be regarded as the party to the instruments. In truth, however, the precise characterisation of the Trust in relation to the Commonwealth seems to me not to matter very much. What is important is its constitution, its statutory role and functions, and in the particular context of this case, its relationship to the executive government.

The Superannuation Act 1976 is expressed to be an Act ``to make provision for and in relation to an occupational superannuation scheme for persons employed by the Commonwealth and for certain other persons''. It supersedes the Superannuation Act 1922, as amended, and the superannuation scheme established under that Act is now to be administered under and in accordance with the provisions of the 1976 Act. Provision is made for the appointment by the Governor-General of a Commissioner for Superannuation who has the general administration of the Act, other than Part III, and the general administration of the

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superseded Act (sec. 17). Part III establishes the Trust as a body corporate. It consists of a full-time chairman, and two other members, one of whom shall be an eligible employee or a pensioner, all appointed by the Governor-General. The Trust is charged with the management (sec. 41) and investment (sec. 42) of the Superannuation Fund. Eligible employees, for the purposes of the scheme, are comprehensively defined. They include persons who immediately before the commencement of the Act were employees for the purposes of the superseded Act, which in substance means persons employed in a full-time permanent capacity by the Commonwealth; they include permanent employees and various categories of temporary employees, as defined. A permanent employee is one who is an officer for the purposes of the Public Service Act , or any other person employed by the Commonwealth or by an approved authority in a permanent capacity, and a temporary employee is such a person who is so employed otherwise than in a permanent capacity. The distinction between an officer and an employee, for the purposes of the Public Service Act , is not material for present purposes.

The Constitution itself expressly contemplates the establishment of the Public Service, or other officers of the Executive Government, as a legitimate arm of the executive power. It is, in my view, beyond argument that the remuneration and emoluments of such persons, including a provision for superannuation benefits, is an ordinary and legitimate activity of the government, and although it was not formally conceded, it follows that the Commissioner charged with the administration of the Act is discharging a function of government. It seems to me that at least in some cases that is not an inappropriate test to apply (
Goodfellow v. F.C. of T. 77 ATC 4086 ; (1977) 51 A.L.J.R. 437 ), although it may not be the only or exclusive test. Much may depend upon the nature and function of the person or body whose status is under consideration, as disclosed by the relevant legislation. But I am content to accept the test as formulated by Kitto J. in Inglis v. Commonwealth Trading Bank of Australia (1969) 119 C.L.R. 334 (at pp. 337-8): -

``The decisive question is not whether the activities and functions with which the respondent is endowed are traditionally government in character, though their possession of a traditional or generally accepted governmental character may well help in the ascertainment of the legislative intention. The question is rather what intention appears from the provisions relating to the respondent in the relevant statute: is it, on the one hand, an intention that the Commonwealth shall operate in a particular field through a corporation created for the purpose; or is it, on the other hand, an intention to put into the field a corporation to perform its functions independently of the Commonwealth, that is to say otherwise than as a Commonwealth instrument, so that the concept of a Commonwealth activity cannot realistically be applied to that which the corporation does?''

The respondent seizes upon this distinction to assert that even if the Commissioner falls within the first of these alternatives the Trust clearly falls within the second. Why else, it is said, should Parliament go to the trouble of separating the management and investment of the Fund from the administration of the scheme, unless to establish the former as a wholly independent activity, more especially as there was no such separation in the superseded Act? My answer is that the management and investment of the Fund is an essential part of the scheme as a whole, although there may well be considerations of policy which make it desirable that the management and investment of the Fund should be, and be seen to be, in the hands of a body not concerned with such matters as the determination of entitlement or benefits, and that the proper conclusion is that ``the Commonwealth has chosen to operate in a particular field - the management and investment of the Fund - through a corporation created for the purpose''. There are many features of the legislation which tend to support this conclusion. Apart from the role of the Governor-General in the appointment and dismissal of members of the Trust, and the role of the Treasurer in granting leave of absence or filling casual vacancies, the Fund itself is part of the Trust Fund established under the Audit Act 1901-1973 sec. 60, and that Trust Fund is part of

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the Commonwealth Public Account ( ibid sec. 2). The basic scheme of the Act is that pensions are paid out of Consolidated Revenue, and the Fund reimburses Consolidated Revenue to the extent of the employee's accumulated contributions (sec. 112); and all the expenses of the administration and management of the Fund are paid out of Consolidated Revenue (sec. 160). I pass over the audit provisions and the role of the Auditor-General in relation to the Fund, which standing alone are equivocal, for similar statutory provisions may be found to apply to statutory bodies which are independent of the Crown, but such provisions are certainly not inconsistent with the conclusion expressed.

Neither, in my view, is the conclusion invalidated by the fact that persons outside the Commonwealth Public Service may be brought within the ambit of the scheme, these being the ``other persons'' referred to in the preamble to the Act. They derive their right to participate from the definition of ``permanent employee'' (who is also by definition an eligible employee) which includes any person employed by an approved authority in a permanent capacity. The definition of an ``approved authority'' is as follows: -

```approved authority' means -

  • (a) an authority or other body that is specified in the regulations as an approved authority for the purposes of this Act, being -
    • (i) a body corporate incorporated, whether before or after the commencement of this Act, for a public purpose by an Act, regulations made under an Act or a law of a Territory;
    • (ii) an authority or body, not being a body corporate, established, whether before or after the commencement of this Act, for a public purpose by, or in accordance with the provisions of, an Act, regulations made under an Act or a law of a Territory;
    • (iii) a company or other body corporate incorporated, whether before or after the commencement of this Act, under a law of a State or Territory, being a body corporate in which the Commonwealth has a controlling interest; or
    • (iv) an authority or body established, whether before or after the commencement of this Act, and whether by or in accordance with the provisions of an Act, regulations made under an Act or a law of a Territory or otherwise, and whether a body corporate or not, being an authority or body which is financed in whole or in substantial part, either directly or indirectly, by moneys provided by the Commonwealth; or
  • (b) an authority or body that, immediately before the commencement of this Act, was an approved authority for the purposes of the superseded Act;.''

An examination of this definition discloses that an approved authority must bear one of three characteristics - (a) it must be a body established under the law of the Commonwealth for a public purpose, or (b) it must be a body in which the Commonwealth has a controlling interest, or (c) it must be a body which is financed wholly or substantially by monies provided by the Commonwealth. The inclusion in the scheme of the employees of such authorities thus closely identified with government, although not themselves public servants, does not alter the essential character of the scheme itself or the Fund. Their inclusion may be an added reason for establishing the Fund as a separate entity, in which their investment by way of contributions is not under direct Commonwealth control, but the Fund nevertheless remains a component of the Commonwealth Public Account, albeit subject to different powers of investment from the Trust Fund established under the Audit Act , of which it forms a part.

Finally, on this aspect of the case, it is necessary to notice sec. 42(5) of the Act, which provides that income derived from the investment of monies standing to the credit of the Fund, or otherwise from the management of the Fund by the Trust, shall form part of the Fund, and is not subject to taxation under law of the Commonwealth a

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Territory or a State. It is sufficient to say that in my view no decisive effect can be given to this section. It may well be otiose if the Trust otherwise enjoys the status of the Crown, but I prefer to think that in the context of the whole of the legislation, it serves merely to confirm that status.

Are the Instruments of Transfer to the Trust Exempt from Stamp Duty Under the Provisions of the Stamp Duties Act ?

The relevant exemption is said to be that which appears in the Second Schedule to the Stamp Duties Act under the heading ``General Exemptions From All Stamp Duties'': -

``13(b) Conveyance, whether on sale or otherwise, to the Crown, or to any person on behalf of the Crown (not being a surrender to the Crown or any such person of a lease or other interest in the land in order that the Crown may grant to a person other than the surrenderor a lease of or other interest in the same land or any part thereof).''

This exemption, in my judgment, is of no avail to the appellant. In the first place, the history of the legislation denies the inclusion of the Commonwealth as ``the Crown''. The relevant exemption first appears, in virtually identical terms, in Act No. 526 of 1891 sec. 5. Plainly, in 1891, the only Crown that could be referred to was the Crown in right of South Australia. There was no Commonwealth. The relevant exemption was retained in the Stamp Duties Act of 1923, which was said to be a consolidating Act, but there is no reason to suppose that its meaning had changed (
The Municipal Council of Sydney v. The Commonwealth (1904) 1 C.L.R. 208 per Griffith C.J. at 231). To the like effect are the observations of Dixon J. (as he then was) in
Essendon Corporation v. Criterion Theatres Limited 74 C.L.R. 1 at pp. 25-6 . That case also is authority for the proposition that, in any event, there is a presumption that a reference to the Crown in a State Act shall be taken to be to the Crown in right of that State only, unless the Statute in express terms or by necessary implication makes it clear that the reference is to the Crown in some other sense. Far from there being any provisions of the Stamp Duties Act to displace that presumption, the indications are all the other way. Cheek by jowl with the relevant exemption is an exemption in favour of a grant of land from the Crown, which it is conceded can refer only to the Crown in right of the State. Apart from that, there are explicit references to the Commonwealth of Australia, both in the Act itself (sec. 48(a)) and in other exemptions in the second schedule. It is sufficient to refer to the exemption from stamp duty of certain receipts, e.g. a receipt ``for any payment to a department of the Government of the Commonwealth or of this State or any other State'', and a receipt ``for any subscription for or for any money received on redemption purchase or sale of any stock debenture or treasury bonds... of the Commonwealth or the State of South Australia or any other State of the Commonwealth or the stock debentures bonds or other securities of any public statutory body of the Commonwealth or of the State of South Australia or any other State of the Commonwealth''. These explicit references both to the Commonwealth and to the State or States led counsel to assert that the use of the expression ``the Crown'', simpliciter, must be taken to be all embracing - not, of course, by reference to the elusive and esoteric doctrine of the indivisibility of the Crown, which now finds no relevant place in our constitutional law, but simply as a matter of construction. I prefer to think, however, that the draftsman found no other convenient method of expressing the relevant exemptions, and that the language used cannot expand the meaning of ``the Crown'' to overcome the presumption. The exemption accordingly does not touch these instruments.

Does the assessment of the instruments subject the Commonwealth in the person of the Trust, to taxation without its consent ?

The Stamp Duties Act levies a charge upon instruments. Prior to 1915, it was silent as to the obligation to meet the charge. It depended for compliance on inbuilt sanctions. There was a penalty duty imposed upon instruments not stamped within one month after the execution thereof (sec. 20); an instrument could not be pleaded or given in evidence or admitted to be good useful or available at law or in equity unless duly stamped (sec. 22); and no instrument could be registered or enrolled unless duly

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stamped. Then, by Act No. 1216 of 1915 sec. 15, it was provided ``that the duty chargeable upon any instrument shall be a debt due to His Majesty from every party who executes such instrument , and shall be recoverable in the name of the Commissioner on behalf of His Majesty from any such parties in any Court of competent jurisdiction.'' This is now sec. 5(2) of the Stamp Duties Act . Pausing there, that enactment operated, in the case of a transfer of land under the Real Property Act , to charge only the vendor with payment of the duty for the alone executed the instrument. No doubt the vendor might stipulate for a contractual indemnity from his purchaser, but the Act did not in terms charge the purchaser.

On each of the transfers in question, however, there appears at the end of the document the words ``Superannuation Fund Investment Trust hereby accepts the above Transfer'', a statement attested under the common seal of the Trust. Can it be said that the Trust thereby executed the transfer, and is therefore within the ambit of liability for payment of the stamp duty thereon, recoverable as a debt pursuant to sec. 5(2)? I think not. The procedure whereby ``every transfer shall contain a statement signed by the transferee indicating that he accepts the transfer or grant of the land'' was introduced into the Real Property Act (as sec. 96a) by Act No. 36 of 1939. It is subject to two qualifications (a) that the Registrar-General may accept and register a transfer without such a statement if he is satisfied that it is difficult or impossible to procure the signature of the transferee, and (b) where the transferee is an infant or a mentally defective person the said statement shall be signed by his guardian or the committee of his estate or by a person appointed... under sec. 245 of the Act. There are several things to notice about this section. In the first place, there is a marked contrast between a statement to be signed by the transferee and the primary procedure for the transfer of land (sec. 96), which requires the registered proprietor to execute a transfer in the form of the sixth schedule. The language does not suggest that the signing of the statement ( not the transfer) is necessary to the due execution of the transfer, and indeed the transfer may be regarded as duly executed and registrable notwithstanding that no such statement has been signed. The purpose of sec. 96a was probably to guard against forgery and fraud, but it is idle to speculate: I am not prepared to hold that the Parliament, by such a side-wind, rendered or intended to render a transferee liable for payment of stamp duty, when prior to the amendment to the Real Property Act , such duty could not be recovered from the purchaser by legal process.

The decision in
The Commonwealth v. The State of New South Wales 3 C.L.R. 807 , upon which reliance was placed, does not compel a contrary conclusion. Although the Stamp Act there in question has similar inbuilt sanctions, it then had no provision expressly charging a party with the payment of duty; the decision, that the instrument to which the Commonwealth was a party did not attract stamp duty, proceeded upon the footing that no such instrument to which the Crown in right of the State was a party would be so chargeable, and a fortiori , if a party was the Crown in right of the Commonwealth. That involves a concept of the Crown which is no longer tenable. Moreover, Griffith C.J. would have supported the decision upon the footing that the transfer was made by the vendor in aid of the exercise by the Commonwealth of compulsory powers of acquisition on just terms, and that to levy stamp duty as an expense incurred in the exercise of an express constitutional power was improperly to fetter the exercise of that power. A transfer in such circumstances bears no analogy to the Trust's purchase of land on the open market as a commercial investment. More in point is The Commonwealth v. The State of New South Wales (1918) 25 C.L.R. 325. There the Crown was the transferor of land, but the relevant Stamp Duty legislation placed the obligation for payment of duty on the transferee. The contention that the instrument of transfer was not assessable to duty was rejected. Barton J. said (at p. 335) ``... the contention that the Stamp Duties Acts do not bind the Crown in the sense of the Commonwealth, although true, is beside the question. The contention that the tax is an attempt to burden an instrumentality of the Commonwealth cannot be supported, because there was no burden.'' So here, there is no statutory burden on the Trust as purchaser.

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But even if I am wrong in my view that the assessment of the instruments does not, by virtue of sec. 5(2) of the Stamp Duties Act , operate to tax the Trust, I would hold that the statute under which the Trust is constituted itself submits the Trust to such taxation. Reference has already been made to sec. 42(5) which exempts the income of the Trust from (inter alia) State income tax. In the face of that express exemption, the inference is that other forms of State tax might be imposed. If that were not the intention, Parliament might have been expected to say so, as it has purported to do by subsequent amendment in Act No. 17 of 1978. However that may be, I remain of the opinion that the Stamp Duties Act does not of itself subject the purchaser of land to a tax. Whether, having regard to the provisions of sec. 64 of the Judiciary Act and the decision in McGuire v. Simpson (supra) it might lawfully do so if the purchaser is the Commonwealth I do not find it necessary to decide.

Does the assessment of the instruments to Stamp Duty contravene sec. 114 of the Constitution ?

An affirmative answer to this question involves the proposition that by assessing the instruments to duty, the State has, without the consent of the Parliament of the Commonwealth, imposed a tax on property belonging to the Commonwealth. It was but faintly argued that the assessment imposes a tax upon the subject properties, or more particularly, upon the Trust's equitable interest in those properties as purchaser. What is taxed is the instrument or instruments which evidence a transaction in those properties, not the properties themselves. In
D'Emden v. Pedder (1904) 1 C.L.R. 91 it was decided that a receipt evidencing a payment to the Commonwealth, which was required to be stamped under State law, ``although undoubtedly the property of the Commonwealth for some purposes, is not `property' of the kind intended in sec. 114, which appears rather to refer to taxation imposed upon property qua property''. Despite the subsequent fate of that case on other issues, the decision on that point does not seem to have been doubted, and it would seem to dispose of the alternative submission, that the instruments themselves are relevant property of the Commonwealth. But even if they are so regarded, they are not taxable when they come into the hands of the Trust. The statutory obligation to pay the duty is upon the vendor, and as the purchaser cannot register his transfer unless it is stamped, he is entitled to call for a stamped transfer. No doubt, as a matter of general conveyancing practice, the vendor will generally stipulate for payment of stamp duty, or indemnity in respect thereof, in his contract. If he does not do so, one might expect that the incidence of stamp duty would be reflected in the price, but I am unable to regard those alternatives as a tax, direct or otherwise, upon the instruments as property in the hands of the purchaser. Could it be said that the Commonwealth as the lessee-occupier of rateable property, is required to pay rates because the lessor covers his own liability for payment of rates in fixing the rent?

For these reasons, I would answer ``Yes'' to Question (a) in the case stated, notwithstanding the status I attribute to the Trust. For reasons already given, I do not think that Question (b) is authorised by the statutory provisions which govern this appeal, and it should not be answered in these proceedings. The answer to Question (a) disposes of the appeal, which shall accordingly be dismissed.


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