Rose & Anor. v. Commissioner of Stamps (S.A.)
Members:Zelling J
Tribunal:
Supreme Court of South Australia
Zelling J.: These four appeals from assessments made by the Commissioner of Stamps all raise the same point: whether as the Commissioner thought they were properly stamped as deeds containing ``covenants'' or whether they should bear duty as an agreement under hand only. In order to understand the matters in dispute between the parties, I think it is necessary to set out one of the four agreements which are all in very much the same form: -
AN AGREEMENT made this 9th day of February 1977 BETWEEN THE LENDER described in Item 1 of the Schedule hereto (hereinafter called `the Lender') of the one part and THE BORROWER named and described in Item 2 of the Schedule hereto (hereinafter called `the Borrower') of the other part WHEREBY IT IS AGREED as follows:
- 1. The Lender at the request of the Borrower agrees to lend to the Borrower the sum set out in Item 3 of the said Schedule (hereinafter called `the principal sum') on the date hereof.
- 2. The Borrower agrees to repay the principal sum to the Lender upon the expiration of three (3) days after the service by the Lender on the Borrower of a demand in writing requiring repayment.
- 3. If the Borrower shall fail to make due payment of the principal sum or any part thereof after the same shall fall due the Borrower shall pay interest thereon or on so much thereof as shall from time to time be outstanding at the rate set out in Item 4 of the Schedule.
- 4. Any demand to be given hereunder shall be sufficiently made if:
- 4.1 In writing.
- 4.2 Signed by the Lender his attorney agent or solicitor.
- 4.3 Sufficiently served if delivered to the Borrower or posted by ordinary prepaid post addressed to the Borrower at his address hereinbefore mentioned or principal place of business or residence for the time being.
- 4.4 Irrevocable unless expressed to be otherwise and any such demand may be in respect of the whole or parts of the principal sum with the right to make successive demands from time to time until repayment in full.
- 5. That any other amounts which may from time to time hereafter be loaned by the Lender to the Borrower shall be repayable in the like manner as the principal sum hereunder.
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- 6. That the Borrower shall pay the costs of and incidental to this Agreement.
- 7. The expressions `the Lender' and `the Borrower' wherever used herein shall mean and include the person or persons herein described as Lender and Borrower respectively and or the Company or Companies so described and if more than one both jointly and severally and where the context so admits shall include the executors or administrators and the permitted assigns of such person or of each of such persons if more than one and the successors and the permitted assigns of such Company or of each of such Companies if more than one.
IN WITNESS whereof the parties hereto have hereunto set their hands and or seals on the day and year first hereinbefore written.
ITEM
1 LENDER JOHN HAROLD ROSE of Naracoorte,
SOUTH AUSTRALIA, 5271.
Pastoral Manager.
2 BORROWER JOHN HAROLD ROSE of Naracoorte in the State
of South Australia 5271 Pastoral Manager and
MARION ROSE his wife as Trustees of the J.H.
Rose Family Trust.
3 PRINCIPAL SUM TWELVE THOUSAND DOLLARS ($12,000.00)
4 RATE OF INTEREST NINE PER CENTUM PER ANNUM (9% p.a.)
SIGNED SEALED AND DELIVERED }
by the said JOHN HAROLD ROSE } (Sgd.) J.H. Rose
in the presence of: }
(Sgd.) illegible }
SIGNED SEALED AND DELIVERED }
by the said JOHN HAROLD ROSE } (Sgd.) J.H. Rose
and MARION ROSE in the presence of: } (Sgd.) M. Rose
(Sgd.) illegible }
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Mr. Evans, who appeared for the appellants in all four cases submitted that the words ``sealed and delivered'' in the attestation clauses at the end were mere surplusage and that it was clear from the agreements themselves that they were only agreements under hand and the parties did not intend to execute agreements under seal. He referred first to the judgment of Martin B. in the Court of Exchequer in
Freeman v. I.R. Commrs. (1871) L.R. 6 Exch. 101 at p. 104: -
``For the purpose of ascertaining with what stamp a document ought to be impressed the document ought to be looked on as what, upon the face of it, it is - that is, according to its true and proper effect, not according to the technical words which may be used in it.''
For this purpose it is to be observed that the document describes itself as an agreement. It carries that wording right through the words ``whereby it is agreed'' and the words in para. 1, 2 and 6 of the agreement. Further it is to be noticed that unlike the cases relied on for the Crown, this is a document which does not need to be executed under seal. Many of those cases refer either to documents relating to land, which still require to be under seal apparently in England, documents where consideration is in issue, and documents such as insurance policies which were at one time deeds and were required so to be by law. This document is simply a common agreement for the lending of money which would be just as efficacious if it were under hand. The only difference, as counsel for the Commissioner had to concede, was that being under seal it would attract a longer period of limitation under the Limitation of Actions Act 1936. Even this is a very minor consideration when this is an agreement repayable on demand, so that time would run from the date of the demand and not from the date of the original agreement.
In addition I notice that para. 7 of the agreement is obviously miscopied from another form. There is no company referred to in the two Rose agreements; there is in the Topex agreements because Topex Proprietary Limited is a company. Then the words ``their hands and/or seals'' is completely inappropriate in the Rose agreements and the ``and/or'' would in all four agreements suggest that those who are signing in person did not have to attach their seals as would be expected if the document were a deed. I have no doubt that on the proper construction of this document that the words ``sealed and delivered'' are surplusage. That of itself would be sufficient to dispose of these appeals.
However, statutory declarations were filed before the Commissioner setting out the fact that the parties did not intend to execute the documents as deeds. Counsel for the Commissioner asserted that these declarations were irrelevant and that no evidence of intention could be adduced. I do not agree. It is quite true that evidence of intention cannot be called to contradict a written document but evidence can be, and frequently is, called to show whether a document is in fact sealed or delivered as a deed and there are numerous authorities on the point. One starts from the position that if all one knows about a document is that it purports on the face of it to have been signed, sealed and delivered, then the fair inference in the absence of other evidence is that it is in fact a deed: see the speech of Lord Cranworth in
Xenos v. Wickham (1866) L.R. 2H.L. 296 at p. 322 and Blackburn J. one of the Judges called in to advise the House said much the same at p. 312. Those words in the absence of other evidence, show that evidence is admissible on the point. Street C.J. said in
Electricity Meter Manufacturing Coy. Ltd. v. Manufacturers' Products Proprietary Limited (1930) 30 S.R. 422 at p. 425 after referring to the judgment of Blackburn J. to which I have just referred, said: -
``Here there is no evidence of any acts or words of any kind to show that the document was intended to be executed as a deed. I think therefore that it must be held to be an agreement.''
That of course differs from the present case in that here there are words but no acts. Buckley L.J. said in
First National Securities Ltd. v. Jones and Another (1978) 1 Ch. 109 at p. 115: -
``... [A]uthority appears to establish that for due execution of a deed it is not necessary to have any physical seal nor even any impression on the paper so long as the evidence establishes that the document has been delivered by the
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relevant party as his act and deed''- the emphasis is mine.
Similar statements are made as to the decision of these questions by considering the evidence by Goff L.J. at p. 119 and by Sir David Cairns at p. 121. I have no doubt that the evidence was rightly before the Commissioner. If the Commissioner thought the evidence was untrustworthy or wrong, he could have exercised his powers under the Stamp Duties Act sec. 27a(2) to require the declarants to appear before him, but he did not do so, so that I must accept that what is stated in the declaration is in fact true. That evidence is all one way, namely that the parties did not believe that they were executing deeds at all. Accordingly both from the intrinsic nature of the document and from the evidence tendered I have no difficulty in finding that these four documents were not deeds.
The Commissioner however fell back on the provisions of sec. 41 of the Law of Property Act which reads as follows: -
``41. (1) Where a person proposes to execute a deed, he must sign or place his mark upon the deed.
(2) The signature or mark of a party to a deed, or of a person executing the deed on behalf of a party to the deed, must be attested by at least one witness who is not a party to the deed.
(3) Indenting shall not be necessary in any case.
(4) Every instrument expressed to be an indenture or a deed, or to be sealed, which is executed and attested in accordance with this section, shall be deemed to be sealed.
(5) This section does not affect -
- (a) the law relating to the execution of a deed by a corporation;
- (b) the validity, operation or effect of a deed executed before the commencement of the Law of Property Act Amendment Act, 1972;
- (c) the manner in which a deed is proved;
- or
- (d) the law relating to undelivered deeds or deeds in escrow.
(6) Where it appears in any proceedings -
- (a) that a deed has not been duly executed by, or on behalf of, a party to the deed;
- or
- (b) that the signature or mark of a party to a deed, or a person acting on his behalf, has not been duly attested,
but that the party to the deed, or person acting on his behalf, purported or intended to execute the deed, and that party has taken a benefit under the deed, then, for the purposes of this section, the deed shall be deemed to have been duly executed by or on behalf of that party to the deed, and the execution shall be deemed to have been duly attested.''
Mr. Evans for the appellants argued that the whole section was inappropriate because these persons did not ``propose to execute'' a deed. He is right in thinking that subsec. (1) does not apply to people who do not intend to execute a document as a deed because Danckwerts J. so interpreted the narrower sec. 73 of the English Law of Property Act (1925) 15 & 16 Geo. V c. 20: see his judgment in
Stromdale & Ball Ltd. v. Burden (1952) Ch. 223 at p. 230, where the learned Judge expresses the test as being ``with the intention of executing the documents as a deed'' when speaking of the operation of the English section. That however does not conclude the matter because our subsec. (4) provides that an instrument expressed to be sealed which is executed and attested in accordance with sec. 41 is deemed to be sealed. Those words do in fact catch each of the four documents before me. However as I pointed out to Mr. Hocking for the Commissioner the deeming clause only goes as far as the sealing. It does not extend to the delivery of the deed because subsec. (5)(d) expressly so states. It is for this reason the two New Zealand decisions on which he relied are inapplicable. They are
Domb v. Owler a decision of Salmond J. reported in (1924) N.Z.L.R. 523 and
Re Wilsons' Settlements, Gibbs and Another v. Anderson and Others (1972) N.Z.L.R. 13, because the New Zealand section covers delivery as well as sealing as is pointed out by Salmond J. at p. 537 in Domb v. Owler and that is what our section does not do. There is no evidence that these documents were ever
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delivered as the party's act and deed and all the evidence is to the contrary that they never intended to do anything of the sort. For that reason sec. 41 does not advance the Commissioner's case any further. Even if the document is deemed to be sealed it still has never been delivered as a deed. It is true that there are cases which say that when a document has been sealed and has been in fact delivered that that is sufficient. However these documents were not sealed, they are merely deemed so to be by the force of the statute. As I pointed out to Mr. Hocking, it is the wrong way to construe a statute to apply a deeming provision which is put in for one purpose to cover a factual situation which is not covered by the deeming clause and to reason from one deeming to another deeming. That is the flaw in the Commissioner's argument on this point. In my opinion sec. 41 does not cause these documents to be treated as deeds, even if, contrary to the submission put to me by counsel for the appellants, subsec. (4) is wider in its operation than subsec. (1) and does apply to documents which are never intended to be deeds in fact.There is only one other matter which I should mention in case the appeal should go further and that is as to the quantum of stamp duty if an appellate court, contrary to my view, should hold that the documents are deeds. The documents are stamped on the basis that they are deeds and that they contain covenants which produce ad valorem stamp duty. There is no doubt that there are decisions of the House of Lords to this effect. Regrettably however the whole line of decisions is based on an error in the original decision. The original case, which is referred to in later cases, is
Limmer Asphalte Paving Company Limited v. I.R. Commrs. (1872) L.R. 7Exch. 211. After finding that there was no property which could be the subject of a conveyance on sale, the Court of Exchequer somewhat surprisingly held that a subsidiary covenant for the repayment of $6,000 was caught by sec. 72 of the Stamp Duties Act 1870 and in particular by subsec. (4) of that section. It is obvious from the heading under which sec. 72 of the Stamp Duties Act 1870 33 & 34 Vict. c. 97 occurs and from the wording of the section as well, that that subsection only applies if in fact there is a conveyance on sale and the second half of the decision of the Court of Exchequer is clearly wrong on the words of the statute. However the decision was somewhat blindly followed by a Divisional Court in
Jones v. I.R. Commrs. (1895) 1 Q.B. 484 and that decision in its turn was approved by what one might almost describe as a side wind, certainly almost by inadvertence, in the House of Lords in
The National Telephone Company Limited v. I.R. Commrs. (1900) A.C. 1 at p. 2. The matter was therefore treated as being beyond revision in England in
Independent Television Authority and Associated-Rediffusion v. I.R. Commrs. (1961) A.C. 427 at 427 and
I.R. Commrs. v. Henry Ansbacher & Co. (1963) A.C. 191 although in the former case Lord Radcliffe did point out in his speech at pp. 441-2 some of the absurdities which this view entails. The collocation of words used in the schedule to our Stamp Duties Act and referred to in previous English Stamp Duties Acts are words with a well known signification in law. The normal and ordinary way of construing such words unless some special reason applies to the contrary, is to take them in their ordinary legal sense: see the speech of Lord Macnaghten in
Commissioners for Special Purposes of the Income Tax v. Pemsel (1891) A.C. 531 at p. 580. No such countervailing considerations appear in the schedule to our Stamp Duties Act.
I am of course bound by the authority of the House of Lords. The Full Court may not be; the High Court certainly is not, and I refer to the point in case an appellate tribunal of sufficient standing has to consider the question of whether even if the documents are deeds they should not have been stamped only at the nominal fee applicable to a deed of any other kind and not stamped ad valorem as in fact they were.
However in my opinion the documents are not deeds and the proper stamp duty exigible on each of the four documents was twenty cents as an agreement under hand. Each of the appeals should be allowed and the excess amount of stamp duty refunded in each case. The appellants must have their costs of the four appeals but limited to one set of costs except insofar as it was necessary for each of the four appeals to be separately brought before this Court.
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