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

Members: Barwick CJ
Stephen J

Mason J
Murphy J
Aickin J

Tribunal:
Full High Court

Decision date: Judgment handed down 8 August 1979.

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Mason J.: The appellant Trust, which claims to be the Crown in right of the Commonwealth, is the transferee in three memoranda of transfer relating to land on which shopping centres are erected. The common seal of the Trust was affixed to the memoranda of transfer pursuant to sec. 96a of the Real Property Act, 1886 (S.A.) (as amended) which requires that ``Every transfer shall contain a statement signed by the transferee indicating that he accepts the transfer or grant of the land''. Argument has proceeded on the footing that the appellant concedes that it was a party to the three instruments.

The total consideration payable under the three instruments of transfer was $34,430,000. The respondent Commissioner assessed the three instruments to stamp duty under the Stamp Duties Act, 1923 (S.A.) (as amended) in an amount of $1,373,990, despite a request by the appellant and the transferors that the instruments be marked ``Not subject to duty''.

Stamp duty is imposed by sec. 5(1) of the Stamp Duties Act . It is in these terms:

``Subject to the exemptions contained in the second schedule and other provisions of this Act, there shall be charged, for the use of His Majesty, the several stamp duties specified in the said schedule and elsewhere in this Act upon and for the several instruments therein set forth, and also such other duties as are specified in the said schedule or in any other provision of this Act.''

Section 5(2) provides:

``The duty chargeable upon any such 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 party or parties in any court of competent jurisdiction.''

In conformity with the provisions of sec: 24 of the Stamp Duties Act the appellant appealed against the assessment, the Commissioner stating a case pursuant to sec. 24(5) for the opinion of the Supreme Court of South Australia. The questions asked in the stated case are:

``(a) Whether the instruments and each of them are chargeable with the ad valorem duty assessed by the respondent.

(b) Whether the appellant is liable to pay stamp duty.''

The Full Court of the Supreme Court held that the second question should not be answered on the ground that the appellant was not entitled under the Stamp Duties Act to raise that question in its appeal. By majority, the Full Court held that the appellant was not the Crown in right of the Commonwealth and that there was no inconsistency between the Superannuation Act 1976, the statute which establishes the Trust, and the Stamp Duties Act . The Court answered question (a) in the affirmative and dismissed the appeal.

In its appeal to this Court the appellant does not challenge the Supreme Court's

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refusal to answer question (b). We are concerned, therefore, only with question (a) and the correctness of the conclusion reached by the Supreme Court on that question.

Whether the appellant is, or represents, the Crown in right of the Commonwealth depends upon the Superannuation Act . That Act makes provision for a superannuation scheme for Commonwealth public servants and employees of approved Commonwealth statutory authorities and other bodies corporate. Part II of the Act creates the office of Commissioner for Superannuation (sec. 17(1)) and charges him with the general administration of the Act, other than Pt. III (sec. 17(2)). The Commissioner is appointed by the Governor-General (sec. 18(1)) and his appointment may be terminated by the Governor-General for misbehaviour or incapacity (sec. 23(1)). It is the Commissioner's responsibility to cause proper records to be kept in respect of contributions paid into the Superannuation Fund in respect of benefits paid under the Act and in respect of amounts that are paid out of the Consolidated Revenue Fund into the Superannuation Fund or vice versa (sec. 27).

Part III of the Act deals with the Superannuation Fund Investment Trust (``the Trust'') and the Superannuation Fund. It sets up the Trust (sec. 28), as a body corporate with perpetual succession and a common seal (sec. 29). The Trust consists of three members, all appointed by the Governor-General (sec. 30(1) and (2)). A member holds office on such terms and conditions in respect of matters not provided for by the Act as are determined by the Governor-General (sec. 30(9)). The chairman, who is a full-time member, shall not engage in paid employment outside the duties of his office without the approval of the Treasurer (sec. 31). The Treasurer may grant leave of absence to a member on such terms and conditions as he determines (sec. 33). A member may resign by writing signed by him and delivered to the Governor-General, but his resignation does not have effect until it is accepted by the Governor-General (sec. 34). The Governor-General may terminate the appointment of a member in certain circumstances (sec. 35). The Treasurer may fill vacancies in the office of chairman or member (sec. 36).

The Fund is established by sec. 40(1). Section 40(2) provides:

``The Superannuation Fund shall form part of the Trust Fund referred to in section 60 of the Audit Act 1901-1975, and the provisions of that Act relating to the Trust Fund (other than section 62B of that Act) shall, subject to this Act, extend to that portion of the Trust Fund which comprises the Superannuation Fund.''

The Fund is managed by the Trust (sec. 41(1)). The income of the Fund is not subject to Commonwealth, Territory or State taxation (sec. 42(5)).

Part IV deals with contributions. The Act provides for a variety of benefits. They include an age retirement benefit (sec. 55), an early retirement benefit (sec. 58 and 59), an invalidity benefit (Pt. IV, Div. 4), benefits for spouses (Pt. VI, Div. 1 to 3 inclusive) and an orphan benefit (Pt. VI, Div. 4).

In most cases the benefit comprises the payment of a periodic pension. In many cases a lump sum benefit is payable as well. In certain cases the employee is given a right of election for lump sum benefits in lieu of periodic payments: see, for example, sec. 62 and 64. Each employee must pay fortnightly basic contributions (sec. 45) and may elect to pay supplementary contributions (sec. 48). The contributions are paid to the Commissioner by or on behalf of the persons liable to pay them (sec. 53(1)) and the Commissioner is bound to pay all contributions received by him into the Fund (sec. 53(3)).

All the amounts payable for age retirement benefits, both periodic and lump sum payments, are payable out of the Consolidated Revenue Fund (sec. 55 to 57 inclusive). This result is achieved by sec. 112(2) which provides that, except where other provision is made, any payment of benefit is to be made out of the Consolidated Revenue Fund, which is appropriated accordingly. Every benefit to the extent that it consists of periodic or pension payment is payable out of the Consolidated Revenue Fund and out of it only. Lump sum benefits payable under sec. 62(2) in case of involuntary retirement are also payable out of the Consolidated Revenue Fund.

But a number of lump sum payments are made directly out of the Superannuation

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Fund. They include accumulated contributions payable out of that Fund under sec. 68(5), 71(5) and 80(1) and certain lump sum benefits equal in amount to the employee's accumulated supplementary contributions. In each case where a pension is payable additionally, it is payable out of the Consolidated Revenue Fund. In each case there is paid from the Superannuation Fund to the Consolidated Revenue Fund an amount equal to the employee's accumulated basic contributions and the total benefit, with the exception of the lump sum equal to accumulated supplementary contributions, is payable out of the Consolidated Revenue Fund (sec. 112(2)).

The costs of, and incidental to, the management of the Fund by the Trust shall be paid out of moneys appropriated from time to time by Parliament (sec. 160(1)). The Fund is subject to audit by the Auditor-General (sec. 44(3), sec. 161(2)). The Trust must report annually to the Treasurer and furnish him with such information as he requires (sec. 161(1) and 163).

This resume of the statute reflects various features which tend to demonstrate that the Trust is the Crown. First, the scheme set up by the statute is a superannuation scheme for Crown employees and other employees of Commonwealth authorities or of companies or bodies in which the Commonwealth has a controlling interest or for which it is financially responsible. Superannuation benefits are part of the total remuneration which the Crown provides for its employees. The Superannuation Fund which the Trust manages is a fund established by the Crown for the purpose of providing superannuation benefits for its employees.

The argument for the respondent rested chiefly on the submission that the moneys standing to the credit of the Fund belong in equity to the contributors. I do not agree with this submission. The Act prescribes the amounts of the benefits to which contributors become entitled but it does not, as I read its provisions, give them any property or equitable interest in the Fund. To a very substantial extent benefits payable under the Act are payable out of the Consolidated Revenue Fund, that Fund being reimbursed in appropriate cases by the Superannuation Fund. The moneys standing to the credit of the Superannuation Fund are Commonwealth public moneys in an account within the Treasury (sec. 60 of the Audit Act 1901 (as amended)). To the extent to which the Trust is a trustee of the moneys it is a trustee for the Commonwealth, not for the contributors.

Although the Trust is a separate corporate entity the control which the Crown has over its membership and its activities shows that it is an alter ego of the Crown. Thus its members are appointed and liable to removal by the Executive Government, it is bound to furnish information to the Treasurer at his request and it must submit its annual report and financial statements to the Treasurer after they have been audited by the Auditor-General. The Trust, in determining the investment policy which it will pursue within the prescribed investments which it is authorized to make (see sec. 42(2) and (4)), is free of directions by the Treasurer and the Government, but this in itself does not show that it has been established as a body independent of the Crown.

It must be acknowledged that the provisions of the Act may become applicable to employees of bodies corporate in which the Commonwealth has a controlling interest, and employees of an authority or body which is financed in whole or in substantial part, either directly or indirectly, by moneys provided by the Commonwealth - see the definition of ``approved authority'' in sec. 3(1). This circumstance, it is argued, shows that the superannuation scheme extends beyond the realm of Crown employees. So much may be conceded. However, it is to be noticed first, that an authority in order to qualify as an approved authority must be specified in the regulations as an approved authority - see the definition. Secondly, the companies, authorities and bodies described in para. (iii) and (iv) of the statutory definition are so closely connected with the Commonwealth that the inclusion of their employees in the superannuation scheme does not give the scheme a significantly different character. In essence it remains a scheme whereby the Commonwealth discharges its obligation to Crown employees to provide superannuation benefits.

Although there are some differences

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between the scheme in this case and the scheme embodied in the Defence Forces Retirement Benefits Act 1948 (as amended), the decision in
Goodfellow v. F.C. of T. 77 ATC 4086 ; (1977) 51 A.L.J.R. 437 suggests that the Trust is the Crown. The two cases have much in common and I quote what Aickin J. said (at p. 4093; 442):

``The Board performs what is plainly a governmental function in the administration of the Act, payments under which form part of the terms of service of members of the Defence Forces. The considerations which led this Court in
Repatriation Commission v. Kirkland (1923) 32 C.L.R. 1 to hold that the Repatriation Commission under the Australian Soldiers' Repatriation Act 1920 was the Crown, notwithstanding that it was given separate corporate personality, appear to me to lead to the conclusion that this Board is also the Crown. It is true that the Repatriation Act gave to the Commission the general administration of the Act `subject to the control of the Minister' and that this feature was relied upon by the Court, along with the general structure of the Act. In my opinion the absence of an express provision to that effect in the present Act does not require a different conclusion in view of the wholly governmental membership of the Board, and the nature of its functions. The alternative modes for dealing with the payment of eighty per cent of each pension payment emphasizes, rather than negatives, the identity of the Board with the Crown. The considerations adverted to in
Inglis v. Commonwealth Trading Bank (1969) 119 C.L.R. 334 , point in the same direction.''

I therefore conclude that the Trust is the Crown in right of the Commonwealth. It was submitted that once this conclusion is reached the Stamp Duties Act exempts the Trust from liability to duty on the footing that it is the Crown. The provision relied upon to sustain this argument is Item 13b under the heading ``General Exemptions from all Stamp Duties'' in the Second Schedule to the Act. The Item is expressed in this way:

``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 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).''

The term ``the Crown'' should, I think, be understood as a reference to the Crown in right of the State of South Australia. The provision is one which exempts the Crown from liability; it is not a provision which imposes an obligation or a liability: cf.
Bradken Consolidated Ltd. v. Broken Hill Proprietary Co. Ltd. (1979) 24 A.L.R. 9 , at pp. 30-32 . The interpretation which I favour accords with indications as to the meaning of the term that are to be found in the Stamp Duties Act itself. When sec. 5(2) makes a stamp duty a duty due to ``His Majesty'' it refers to His Majesty in right of the State of South Australia, that is, to the Crown in that capacity. Accordingly, the references to the Crown in the exemptions contained in the Second Schedule should be read as references to the Crown in right of the State. I am unable to find in them, or in the subject matter to which they relate, anything that indicates that the Crown means the Crown in right of the Commonwealth as well as the Crown in right of the State. Some references, chiefly Item 13a which precedes Item 13b, seem to be capable of applying only to the Crown in right of a State. Item 13a exempts ``Grant of land from the Crown''. Although there are other references in the exemptions to the State and to the Commonwealth, I am unable to draw from them any implication that the statute when it speaks of the Crown is speaking of the Crown in right of the Commonwealth.

Certain provisions in the Superannuation Act indicate that whether or not the Trust is the Crown in right of the Commonwealth it is liable to pay stamp duty chargeable under State laws on instruments to which it is a party. The only provision in the Act which exempts the Trust or the Fund from liability for State taxes and duties is that contained in sec. 42(5). It provides that the income of the Fund shall not be liable to taxation under Commonwealth, State or Territory laws. As there is no corresponding provision relating

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to stamp duty, the implication is that the Trust is liable to stamp duty. This implication is assisted by sec. 173(3) which provides that an instrument that an authorized person certifies to have been made, executed or given by reason of, or for a purpose connected with, the operation of Div. 2 of Pt. XII (Transitional Provisions - Existing Superannuation Fund) is not liable to stamp duty.

Read in the light of this, sec. 160(1) is to be understood as a direction that the costs of and incidental to the management of the Fund, including stamp duties payable under State laws, are to be paid out of moneys appropriated by Parliament.

I acknowledge that, so understood, the provisions of sec. 160(1) give some support to the argument that the Trust is not the Crown. However, as the liability is one that arises because Commonwealth law exposes the Trust to it, the existence of the liability is consistent with an identity between the Trust and the Crown.

Section 114 of the Constitution is no barrier to the conclusion that the Trust is liable. If the instrument of transfer is property of the Commonwealth and the stamp duty payable in respect of the transfer is a tax on property of the Commonwealth, the stamp duty is imposed with the consent of the Parliament, as evidenced by sec. 42(5), 160(1) and 173(3) of the Superannuation Act .

In the result I would dismiss the appeal.