Gazzo v. Comptroller of Stamps, ex parte Attorney-General (Vic).
Members: Gibbs CJStephen J
Mason J
Murphy J
Aickin J
Tribunal:
High Court of Australia
Aickin J.
This matter was removed into this Court upon application on behalf of the Attorney-General for the State of Victoria under sec. 40(1) of the Judiciary Act 1903 (Cth.) and it was ordered that there be referred to the Full Court the following question:
``Is sec. 90 of the Family Law Act 1975 a valid law of the Commonwealth?''
The question arises from the dissolution of the marriage of Filippina Gazzo (``the wife'') and Antonio Pietro Gazzo (``the husband'') by an order of the Supreme Court of Victoria made under the Family Law Act 1975 (Cth.) on 26 May 1977. By a further order of the Supreme Court of Victoria made on that day it was ordered that the husband transfer his interest in certain land in Victoria to the wife as trustee for Santo Francesco Gazzo, Maria Carmela Gazzo and Giovanni Sebastian Gazzo, the children of the marriage. The order further provided that the petitioner (the husband) should pay all legal costs and registration fees in respect of the transfer. The husband and wife executed an instrument of transfer of the land pursuant to that order and that instrument was submitted to the Comptroller of Stamps for his opinion under sec. 32(1) of the Stamps Act 1958 (Vic.). The Comptroller of Stamps assessed the transfer for stamp duty under that Act. The wife objected to the assessment of duty on the ground that the transfer was exempt from duty by virtue of sec. 90 of the Family Law Act but the Comptroller disallowed that objection. On 31 August 1979 the wife, pursuant to sec. 33B of the Stamps Act, requested the Comproller to treat the objection as an appeal and to cause it to be set down for hearing in the Supreme Court.
Section 90 of the Family Law Act is as follows:
``A maintenance agreement, or a deed or other instrument executed by a person for the purposes of such an agreement or for the purposes of, or in accordance with an order under, this Part, is not subject to any duty or charge under any law of a State or Territory or any law of the Commonwealth that applies only to or in relation to a Territory.''
The term ``maintenance agreement'' used in sec. 90 is defined in sec. 4(1) of that Act and the term ``financial matters'' used in the definition of ``maintenance agreement'' is likewise defined in sec. 4(1). Those definitions are as follows:
```maintenance agreement' means an agreement in writing made, whether before or after the commencement of this Act, between the parties to a marriage, being an agreement that makes provision with respect to financial matters, whether or not there are other parties to the agreement and whether or not it also makes provision with respect to other matters, and includes such an agreement that varies an earlier maintenance agreement;''
```financial matters', in relation to the parties to a marriage, means matters with respect to -
- (a) the maintenance of one of the parties;
- (b) the property of those parties or of either of them; or
- (c) the maintenance of children of the marriage;''
It will be noted that the term ``maintenance agreement'' is not limited to agreements made between the parties to a marriage but includes agreements to which there are other parties and agreements which also make provision for matters other than financial matters. Section 90 itself operates
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in respect not only of maintenance agreements as defined but also in respect of deeds or other instruments executed by a person for the purposes of such an agreement or of Pt. VIII of the Family Law Act or in accordance with an order made under that Part.An examination of the interaction of those two definitions demonstrates that the prima facie operation of the expression ``maintenance agreement'' is extremely wide and goes far beyond what would be the ordinary meaning of the term ``maintenance agreement'' as between the parties to a marriage, whether in respect to a period when the marriage was still on foot or in respect to a period after the marriage had been dissolved. Although the question referred to the Full Court is expressed in very general terms and relates to the whole of the operation of sec. 90, it does not appear to me to be desirable that the Court should examine all the possible situations in which the section might operate within the whole reach of the definitions of ``maintenance agreement'' and of ``financial matters'' unless it is necessary to do so in order to decide whether it validly applies to the instrument of transfer in the present case. The case before us is concerned with an instrument of transfer of land executed in accordance with or pursuant to an order of a court exercising jurisdiction under the Family Law Act.
It was however submitted by the Solicitor-General for the State of Victoria that the section was wholly invalid and that there was no occasion for considering whether any part of it might none the less be valid. As I have said it seems that it is undesirable that the Court should attempt to deal with the validity of all possible applications of sec. 90. An examination of that section and the definitions demonstrates clearly that the application of sec. 15A of the Acts Interpretation Act 1901 (Cth.) would enable the question of the validity of the section to be determined in respect of its operation on an instrument of transfer of land under the Transfer of Land Act 1958 (Vic.) ``executed by a person... for the purposes of, or in accordance with an order under, this Part'' without necessarily having to consider the validity of the section in relation to maintenance agreements as defined. The former provision might be valid and the latter invalid, or vice versa, and in each case the invalid provision would be severable.
The question so narrowed is whether such a legislative provision is to be regarded as a law with respect to marriage within sec. 51(xxi) of the Constitution, or a law with respect to divorce and matrimonial causes and in relation thereto parental rights and the custody and guardianship of infants within sec. 51(xxii) or as coming within sec. 51(xxxix).
It was submitted by the Solicitor-General for the State of Victoria that the power to make laws with respect to marriage must be concerned with laws which govern the relationship of married people as between themselves and with their children and that it did not authorize the making of a law which concerned the relationship between the parties to a marriage or one of them and third persons. This proposition is in my opinion too general.
Differing views have been expressed as to the extent of the power with respect to marriage but in my opinion the formulation to be preferred is that contained in the judgment of
Gibbs
J. in
R.
v.
Lambert
;
Ex parte Plummer
(1980) FLC
¶
90-904
;
(1980) 55 A.L.J.R. 71
where he said at FLC p. 75,691; A.L.J.R. p. 74:
``The crucial question, however, is whether the legislation creates, defines or declares rights or duties that arise out of, or have a close connexion with, the marriage relationship. If not, the law cannot be said to be one with respect to marriage. This was, I think, recognized by the majority of the Court in
Russell v. Russell: see at at pp. 524, 538, 552-553 [FLC at pp. 75,168; 75,176] . Similarly in Dowal v. Murray , the judgments emphasized that the right defined by sec. 61(4) arose out of, or was intimately concerned with, the marriage relation: see per Stephen J. at p. 138, per Jacobs J. at p. 139 and in my own judgment at p. 136 [FLC at pp. 77,721-77,722; 77,724; 77,728].''
He then said:
``I adhere to the view that I expressed in
R. v. Demack ; Ex parte Plummer, at p. 46 [FLC at p. 76,312] that an enactment is not a law with respect to marriage simply because it has some operation with respect to the custody of a child of the marriage, or, I would add, with respect to married persons.''
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He concluded by saying:
``The question whether a law is one with respect to marriage is one of degree. The answer to it depends on the closeness of the connexion between the law and the marriage relationship.''
Barwick C.J. (at FLC p. 75,688; A.L.J.R. p. 72) agreed generally with Gibbs J.'s reasons but added that he was of the view that the decision in Russell v. Russell (1976) FLC ¶ 90-039; (1976) 134 C.L.R. 495 should be strictly confined and not used as a base for any extension of what is comprised within the concept of a law with respect to marriage. Wilson J. was of a similar view. He said (at FLC p. 75,710; A.L.J.R. p. 86) that the decision in Russell v. Russell demonstrated ``the necessity of a close relationship between the law and the marriage relationship'' for such a law to be within sec. 51(xxi). In my opinion the observations of Gibbs J. which I have quoted above appear to be equally applicable to the divorce power.
Taking the formulation proposed by
Gibbs
J. the ``crucial question'' in this case is whether sec. 90 creates, defines or declares rights or duties that arise out of, or have a close connexion with, marriage or divorce or matrimonial causes. The rights and duties in question are primarily but not exclusively those as between the parties to a marriage, including rights and duties in respect of the children of a marriage. The extend to which the two legislative powers extend to the relationship of the parties or their children with third parties has been the subject of some discussion in cases to which
Gibbs
J. referred in his judgment in
Ascot Investments Pty. Ltd.
v.
Harper
(1981) FLC
¶
91-000
;
(1981) 55 A.L.J.R. 233
. He there referred to two cases which arose under the
Matrimonial Causes Act
1959 (Cth.), viz.
Sanders
v.
Sanders
(1967) 116 C.L.R. 366
and
Antonarkis
v.
Delly
(1976) FLC
¶
90-063
;
(1976) 51 A.L.J.R. 21
. I do not need to quote in full his discussion of those cases but he concluded that discussion by saying (at FLC p. 76,059; A.L.J.R. p. 238):
``It is apparent that neither of these decisions provides authority for the view that any right or interest of a third party may be adversely affected by an order made in the exercise of matrimonial jurisdiction, although Antonarkis v. Delly suggests that a court in the exercise of that jurisdiction may treat as null a pretended claim of right made by a third party in collusion with one spouse for the purpose of defeating matrimonial proceedings brought by the other spouse.''
Gibbs
J. then referred to
R.
v.
Ross-Jones
;
Ex parte Beaumont
(1979) FLC
¶
90-606
;
(1979) 141 C.L.R. 504
as to which he said ``it appears from the judgments that the majority of the Court considered that the Family Court, in making orders with respect to the interests of the parties to a marriage in partnership property could not affect the interests of third parties''.
He concluded his review of those cases by saying (at FLC p. 76,061; A.L.J.R. p. 239):
``The authorities to which I have referred establish that in some circumstances the Family Court has power to make an order or injunction which is directed to a third party or which will indirectly affect the position of a third party. They do not establish that any such order may be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which the party would not otherwise be liable to perform. The general words of sec. 80 and 114 must be understood in the context of the Act, which confers jurisdiction on the Family Court in matrimonial causes and associated matters, and in that context it would be unreasonable to impute to the Parliament an intention to give power to the Family Court to extinguish the rights, and enlarge the obligations, of third parties, in the absence of clear and unambiguous words. It can safely be assumed that the Parliament intended that the powers of the Family Court should be wide enough to prevent either of the parties to a marriage from evading his or her obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform. It is one thing to order a party to a marriage to do whatever is within his power to comply with an order
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of the court, even if what he does may have some effect on the position of third parties, but it is quite another to order third parties to do what they are not legally bound to do. If the sections had been intended to prejudice the interests of third parties in this way, it would have been necessary to consider their constitutional validity.''
What Gibbs J. there said is expressed in terms of the proper construction of the Family Law Act but the constitutional problems of any wider construction are obvious.
R. v. Lambert; Ex parte Plummer is a case in which the majority of the Court held that it was beyond constitutional power to empower the Family Court to make orders for custody which would override the provisions of the Children's Services Act of 1965 (Q.) giving the Director certain powers and duties with respect to the care and protection of children.
Section 90 of the Family Law Act, so far as presently material, purports to ensure that certain instruments executed by married or divorced persons pursuant to an order of the Family Court shall be exempt from duties imposed upon them by State or Territorial laws. Section 122 of the Constitution leaves no doubt as to the validity of that provision so far as laws of the Territories are concerned but in relation to the laws of the States its validity must be based on the marriage or divorce powers, or the two in combination. It does not however create, define or declare rights or duties in the relevant sense at all. It purports to destroy an obligation placed by State law on persons seeking to register transfers of land executed by them pursuant to an order of the Family Court and in that sense to destroy rights in a ``third party'', i.e. the State of Victoria, having no connexion with the marriage or the divorce. That is not to create, define or declare rights or duties arising out of the marriage or the divorce. In the present case there is obviously some connexion between sec. 90 and marriage and divorce in that the existence of a marriage or of the dissolution of a marriage is an essential prerequisite to its operation, but that is neither a close nor a sufficient connexion with either of those powers. If it were, it would make them equivalent to powers to make laws with respect to married persons or divorced persons, a view of sec. 51(xxi) and (xxii) which is not tenable.
It was argued for the wife that sec. 90 is authorized by sec. 51(xxi) and/or sec. 51(xxii) and by what has come to be called, somewhat inaptly, the ``implied incidental power''. I say inaptly because that expression suggests that there is some additional power over and above that given by the paragraphs of sec. 51. It is of the nature of all the heads of power in sec. 51 that there is granted by the words describing the power itself everything which is incidental to its main purpose
-
see per
Knox
C.J.,
Rich
and
Dixon
JJ. in
Le Mesurier
v.
Connor
(1929) 42 C.L.R. 481
at pp. 497-498
and per
Dixon
C.J. in
Burton
v.
Honan
(1952) 86 C.L.R. 169
at pp. 177-178
. It is necessary to draw attention to this because of the tendency to regard, or at least to speak of, that which is incidental to a head of power as though it were something separate from and additional to the power itself. Such a tendency is calculated to mislead in that it is sometimes the basis for a search for something beyond the head of power itself. This is not to say that the heads of power in sec. 51 are to be read narrowly; the whole course of authority, at least since 1920, is to the contrary. Moreover the concept of that which is incidental being already embraced within a head of power points to a wide rather than a narrow construction.
It was also argued that sec. 90 was authorized by sec. 51(xxxix). This power is concerned with matters incidental to the execution of a power, not with matters incidental to its subject matter. It cannot be used to expand the subject matter of any of the enumerated legislative powers. Illustrations of the operation of para.(xxxix) are not numerous but it is necessary to consider whether the section now in question can be supported on this basis.
The argument for the wife was that the legislative powers given by para. (xxi) and (xxii) were wide and plenary. No doubt this is so but the question remains whether they are wide enough to support the specific provision in sec. 90 now in question. The passages which I have quoted above from the judgment of Gibbs J. in R. v. Lambert; Ex parte Plummer demonstrate both the positive and the negative aspects of the extent of the power with respect to marriage, the former requiring the close connexion with the marriage relationship and the latter demonstrating that it is not enough that the law has some operation on children of a marriage or on married persons. The present
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section seems to me to have no close or relevant connexion with marriage. I have already given my reasons for rejecting the contention that there is a sufficient connexion by reason of its being a prerequisite to the operation of sec. 90. The present case is one of divorce. The power to make orders altering the property interests of the parties is given by subsec. (1) of sec. 79. That power arises only in ``proceedings with respect to the property of the parties to a marriage or either of them''. Proceedings in this context refers to proceedings in which the Family Court is exercising jurisdiction under sec. 39 which itself requires that there be a ``matrimonial cause'' as defined (see the definitions of ``proceedings'' and ``court'' in sec. 4(1)). The relevant parts of that definition are para. (c) and (ca). After Russell v. Russell it is clear that para. (c) is restricted in its operation to proceedings of the type there mentioned which are ancillary to proceedings for principal relief, that is, relief within para. (a) and (b) of the definition of ``matrimonial cause''. Paragraph (ca) by its express words is similarly restricted. Compare the position under sec. 86 of the Matrimonial Cause Act as explained by Kitto J. inLansell v. Lansell (1964) 110 C.L.R. 353 at pp. 359-360 where he treats that section as an exercise of the divorce power; see also per Taylor J. at p. 365 who suggests that it may also be supported under the marriage power; and also per Mason J. in Russell v. Russell at FLC pp. 75,166-75,170; A.L.J.R. pp. 538-542. In both the Matrimonial Causes Act and the Family Law Act the power to alter property interests was limited to proceedings in which there was a claim for ``principal relief''. Thus the divorce power requires examination. There is no doubt power in the Family Court upon the dissolution of a marriage to order alterations to the property interests of the parties. However the question is whether the divorce power goes beyond giving the Family Court jurisdiction to order one party to transfer property, or an interest in property, to the other ( Lansell v. Lansell and Russell v. Russell ).
It was said, partly in reliance on a combination of para. (xxii) and (xxxix) of sec. 51, that the material part of sec. 90 was valid because it gives effect to a law providing for dissolution settlement of property rights. The connexion was said to be in facilitating transfers by making them cheaper and easier. In my opinion it cannot be said to make transfers easier except in the sense that they would be cheaper if no stamp duty were payable. It does not appear to me that relieving the parties from part of the cost of transferring property pursuant to a Family Court order has a close relationship to divorce, any more than prohibiting the charging of fees by practitioners for appearing in the Family Court would be within the divorce power. The latter may have a connexion with divorce but not one which is close enough. Proceedings for dissolution are of course a condition precedent but as I have already said that is not a sufficient basis to provide power to enact this section. It is not in my opinion possible to regard sec. 90 as incidental to the execution of the legislative power under para. (xxii). No doubt orders for the transfer of property may be enforced by appropriate orders against a party or by instituting contempt proceedings; legislation on such matters may be incidental to the execution of the legislative power, though they would seem more appropriately to fall within the ordinary meaning of the power itself as being ``incident'' thereto. However as Dixon C.J. said in Burton v. Honan (at p. 178).
``But the distinction is for present purposes immaterial because it produces the same result, namely, that the Parliament may in the exercise of any of the substantive powers given by sec. 51 make all laws which are directed to the end of those powers and which are reasonably incidental to their complete fulfilment.''
Moreover no satisfactory basis was suggested for regarding sec. 90 as incidental to the execution of the legislative power with respect to divorce, however widely one views that power.
Counsel for the wife also sought to support the validity of sec. 90 on the basis of sec. 51(xxxix) as being ``incidental to the execution of any power vested by this Constitution... in the Federal Judicature''. It was argued that the expression ``the Federal Judicature'' included the Family Court as being one of ``such other federal courts as the Parliament creates'' within the meaning of sec. 71 of the Constitution. In the alternative it was argued that judicial power is vested in the Family Court by sec. 31 and 39 of the Family Law Act and sec. 90 is incidental to the execution of the power so vested. Against these submissions, the
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Solicitor-General for the State of Victoria submitted that sec. 71 says nothing about the content of the jurisdiction which it empowers the Parliament to vest in federal courts; that content must be filled out by another law which itself must fall within the legislative competence of the Parliament. On that view sec. 51(xxxix), if it has any relevance at all, it can only be in relation to the powers in sec. 51(xxi) or (xxii).It is clear that the Constitution vests neither power nor jurisdiction in the Family Court so that the power to make orders within Pt. VIII is not a power vested in the Family Court by the Constitution. However that of itself does not determine the question for it remains open whether the words ``vested by this Constitution'' in sec. 51(xxxix) apply to matters incidental to the execution of judicial power conferred by legislation. It is unnecessary for me to attempt a resolution of that problem for I consider that the observations of
Dixon
and
Evatt
JJ. in
R.
v.
Federal Court of Bankruptcy
;
Ex parte Lowenstein
(1938) 59 C.L.R. 556
apply to this case. They said (at p. 587):
``But, assuming that it [sec. 51(xxxix)] does apply to the Federal and State courts exercising jurisdiction in bankruptcy in respect of offences against the bankruptcy laws, it would not authorize the Parliament to make a provision which departed from or was at variance with the purpose of the main power, the power vested in the Federal judicature. In other words, a law with respect to a matter incidental to the execution of judicial power, must, in order to answer that description, deal with something arising in the course of exercising judicial power, something attendant upon or incidental to the fulfilment of powers truly belonging to the judicature.''
It cannot be said, in my opinion, that sec. 90 of the Family Law Act is in any way incidental to the fulfilment or exercise of the powers vested in the Family Court. It says nothing as to the fulfilment of the powers of the Family Court to make orders as to transfers of property between parties. Those orders stand complete and operative in themselves to bind the parties to do that which has been ordered and which, when done, will operate under State law. Section 90 however is directed to the obligations of the parties under State law governing (in this case) transfers of land from one to another. In my opinion it cannot be regarded as incidental to the execution of judicial power. Perhaps procedures for enforcement of the orders of the Family Court could properly be regarded as ``incidental to the fulfilment of powers truly belonging to the judicature''. The judicial power is however spent upon the making of an order (including an order as to costs) and its enforcement. I do not exclude from the judicial power the reopening of some matters, e.g. maintenance.
Some reliance was placed on the decision of this Court in
Australian Coastal Shipping Commission
v.
O'Reilly
(1962) 107 C.L.R. 46
. In that case the
Australian Coastal Shipping Commission Act
1956 provided in sec. 36(1) that the Commission (which was a body corporate established under that Act) was to be subject to taxation under the laws of the Commonwealth but was ``not subject to taxation under laws of a State... to which the Commonwealth is not subject''. By virtue of sec. 114 of the Constitution a State may not, without the consent of the Parliament of the Commonwealth, impose any tax on property of any kind belonging to the Commonwealth. It was held that the section was within the powers of the Parliament and that the Commission was therefore not liable under the
Stamps Act
1946 (Vic.) to stamp receipts given by it in the course of its trading activities. The basis of the decision appears from the judgment of
Dixon
C.J. (with whom
Kitto, Taylor
and
Owen
JJ. agreed) when he said (at p. 56):
``The fact that a government agency is set up at all brings under consideration the question whether its operations should or should not be exposed to State taxes. How that question should be decided is a matter of policy. But the legislative power under which, ex hypothesi, the agency is validly set up must surely be enough to enable the legislature to decide it. The various taxes of the six States the liability for which might otherwise be incurred in the course of the activities of what is called the National Shipping Line may have been considered something to which it is desirable that the Commonwealth Line should not be exposed. Once that view is taken it appears to be sufficiently clear that the legislative power must extend to excluding the imposition upon the activities of the Commonwealth Line of such taxation.''
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It is however one thing to legislate so as to exempt an instrumentality of the Commonwealth from the incidence of a State tax conditioned upon the doing by that instrumentality of something which it is set up to do or which is an ordinary or necessary incident of that which it is set up to do. It is quite another thing for the Commonwealth to legislate to exempt transactions between citizens from the incidence of State taxation upon transfers of land. The fact that the transfer is one directed by a federal court in the exercise of jurisdiction to provide for the maintenance of spouses or children is not a sufficient basis for such an enactment. Such a transfer is no doubt consequential on the order but it is an instrument to which only State law can give effect. The connexion with marriage or divorce is too remote to support the legislation. In my opinion no assistance can be obtained by the wife or the Commonwealth from that decision.
The operation of the laws of the States with respect to the nature, incidents and mode of transfer of property appear to me to stand outside the range of the legislation which may be enacted pursuant to sec. 51(xxi), (xxii) or (xxxix) notwithstanding that such laws apply to married persons and divorced persons and transfers of property between them, whether beneficially in favour of a transferee or to a transferee upon trust for children of a marriage, and whether by voluntary transfer or by transfer pursuant to orders of the Family Court. The same is true of State laws with respect to taxation save that, as suggested in argument, a State tax on marriage certificates might perhaps be excluded by a section such as sec. 90. It is plain that a law is not one with respect to marriage or divorce merely because it applies to married or divorced persons and in my opinion the relevant part of sec. 90 on its proper construction purports to extend to the fees payable under the Transfer of Land Act for the registration of dealings, the connexion with marriage or divorce would be equally remote. This view of the operation of sec. 90 was however urged by counsel for the wife, though not supported by the Solicitor-General for the Commonwealth. In my opinion such an operation could not validly be given to sec. 90 and if that is its proper construction it is pro tanto invalid.
The same conclusion follows from a somewhat different approach which requires first some short examination of both the Stamps Act and the Transfer of Land Act.
Section 37 of the Stamps Act provides that unstamped instruments shall not be received by any person under a duty to enrol, enter or receive any original instrument. Subsections (1) and (2) are as follows:
``(1) Where a person is under a duty to receive enrol enter or record any original instrument or a copy of any original instrument he shall not if the original instrument is chargeable with duty under this Act or would be chargeable with duty under this Act if it were in Victoria receive register enrol enter or record any such original instrument or copy unless he is satisfied that the original instrument has been duly stamped or is deemed to have been duly stamped.
(2) Any such person may refer any question as to the dutiability of an original instrument or copy to the Comptroller of Stamps.''
Similar provisions are to be found in equivalent legislation in each of the States.
By sec. 17 of the Stamps Act it is provided that ``there shall be charged for the use of Her Majesty upon the several instruments specified in the said [Third] Schedule the several duties and additional duties therein specified.''
The Stamps Act imposes an ad valorem stamp duty on every conveyance or transfer of land (sec. 70(3)) and provides that the consideration for such transfer shall be stated ``fully and truly'' therein (sec. 70(5)). Section 70(6) provides that in the case of a sale of real property the burden of the duty is to be borne by the purchaser and that any contract or agreement by which he seeks to relieve himself from that liability or to impose that liability upon any other person or any obligation to indemnify him in respect thereof shall be ineffective.
The Third Schedule provides that ``there shall be charged and paid for the use of Her Majesty upon and for the several instruments hereinafter specified the several stamp duties hereinafter specified...''. Heading VI(B) provides for the rate of duty payable on ``LAND TRANSFER - Under the Transfer of Land Act 1958'' upon (inter alia) ``every transfer of land on a sale thereof'' a specified rate of ad valorem stamp duty. Heading VI(A) deals in a similar way with conveyances under the general law.
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The transfer of land with which these proceedings are concerned is not a transfer on a sale, and therefore the provisions to which I have referred have no application. The Comptroller of Stamps took the view that the transfer constituted a ``deed of settlement'' within Heading IX of the Third Schedule which deals with deeds of settlement or gift and assessed it to stamp duty accordingly. It imposes an ad valorem duty on:
``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 and whether revocable or not whereby any property is settled or agreed to be settled in any manner whatsoever or is given or agreed to be given or directed to be given in any manner whatsoever.''
The Stamps Act provides that stamp duty on a deed of gift is to be payable by the donee and on a deed of settlement by the settlor. Whether the Comptroller was right or wrong in that view is not material to the question before this Court. We are concerned only with the validity of sec. 90 of the Family Law Act.
The Transfer of Land Act is the legislation which embodies the Torrens system of registration of title (or of title by registration) in Victoria. It does not differ materially from the Real Property Act, 1900, (N.S.W.) or from corresponding legislation in other States of the Commonwealth. The relevant sections of the Victorian Act are:
``40. (1) Subject to this Act no instrument until registered as in this Act provided shall be effectual to create vary extinguish or pass any estate or interest or encumbrance in on or over any land under the operation of this Act, but upon registration the estate or interest or encumbrance shall be created varied extinguished or pass in the manner and subject to the covenants and conditions specified in the instrument or by this Act prescribed or declared to be implied in instruments of a like nature.
(2) Every instrument when registered shall be of the same efficacy as if under seal and shall be as valid and effectual to all intents and purposes as a deed duly executed and acknowledged or other the appropriate form of document.
41. No Crown grant of certificate of title under this Act shall be impeached or defeasible by reason or on account of any informality or irregularity in any application or instrument or in any proceedings previous to the registration of the certificate; and every Crown grant or certificate of title registered under this Act shall be received in all courts as evidence of the particulars therein and of the entry thereof in the Register Book, and shall be conclusive evidence that the person named in such grant or certificate as the proprietor of or having any estate or interest in or power to appoint or dispose of the land therein described is seised or possessed of such estate or interest or has such power.
...
45. (1) A registered proprietor may transfer his estate or interest in land by an instrument in or to the effect of the appropriate form in the Sixth Schedule.
(2) Upon the registration of the transfer the estate or interest of the proprietor as set out in such instrument or which he is entitled or able to transfer or dispose of under any power, with all rights powers and privileges thereto belonging or appertaining, shall pass to the transferee; and such transferee shall thereupon become the registered proprietor thereof.''
The corresponding sections of the New South Wales Act are sec. 41(1). 36(11), 40, 46 and 51.
Thus real property in Victoria which is governed by the Torrens system (as is the land now in question) is capable of transfer only by an instrument in the form required by the Act but the instrument alone does not effect the transfer of title. This is effected only by and upon registration of the instrument and the making of appropriate entries in the Register. This is of the essence of the Torrens system and it governs not merely the mode of transfer but also the nature of an interest in registered land. Accordingly it is a characteristic of land, the title to which is registered under the Transfer of Land Act, that the legal estate therein is transferable only by an instrument of transfer in accordance with that Act. Such a transfer must under sec. 37 of the Stamps Act bear the appropriate duty stamp or be denoted non-dutiable before it can be registered, and that too is a characteristic of
ATC 4726
the property itself. It is of course otherwise with equitable interests, but we are not here concerned with such interests.The approach to which I referred above is to be found in two earlier decisions of this Court, one a very recent decision and the other by no means recent. The first is Ascot Investments Pty. Ltd. v. Harper to which I have already referred. That was a case in which the Family Court purported to order a proprietary company to register a transfer of shares notwithstanding the absence of approval by the directors as required by its articles of association. That restriction complied with sec. 15 of the Companies Act 1961 (Vic.) which requires that the memorandum or the articles of association of a proprietary company must place a restriction on the transfer of shares in such a company. In that case Barwick C.J. said (at FLC p. 76,055; A.L.J.R. p. 235):
``In my opinion, the appellant and its directors could not be ordered to do something in relation to the shareholding which the husband by dint of his shareholding could not compel the appellant or its directors to do. Nor could the court alter the nature, incidents or extent of the property which the court could command the husband to transfer. It could only require him to deal with, that is, to transfer, what in point of property he had. To conclude otherwise would be unauthorizedly to enlarge the rights inherent in the shareholding.
It is said by counsel for the wife that until registration, the transfer signed and delivered by the husband was ineffective. But this clearly is not so. The transfer was effective to create equitable rights. No doubt registration would convert the equitable title into a legal title: and the absence of a right to compel registration of a transfer reduced the ambit of the equitable interest in the shares. In truth, the transfer already signed on behalf of the husband and delivered to his wife is as effective a transfer of the property in the shares as the husband as a matter of right could make.''
Gibbs J. said (at FLC pp. 76,057-76,058; A.L.J.R. p. 237):
``But the question for our decision is whether the Family Court had power to order Ascot Investments to register the transfer from the husband to the wife of the 7,000 `A' class shares. The restrictions contained in cl. 4(a) of the Memorandum and Art. 143 of the Articles, which satisfy the requirements of sec. 15(1)(a) of the Companies Act 1961 (Vic.), as amended, confer on the directors of the company a wide discretion to refuse to register a transfer. The directors are bound to exercise their discretion bona fide in what they consider to be in the interests of the company, and not for any collateral purpose, but subject to that qualification their discretion is absolute and uncontrolled: In
re Smith & Faweett Ltd. (1942) Ch. 304 at pp. 306-308 ;
Charles Forte Investments Ltd. v. Amanda (1964) Ch. 240 at pp. 252-254, 260-264 ;
Australian Metropolitian Life Assurance Co. Ltd. v. Ure (1923) 33 C.L.R. 199 at pp. 205-206, 217-220, 223 . This rule is an application of the general principles governing the exercise by directors of their powers: those principles are discussed in
Ngurli Ltd. v. MeCam (1954) 90 C.L.R. 425 at pp. 438-440 . The cases cited establish that the onus of proving that the directors in refusing registration did not act in good faith in what they considered to be the interests of the company lies on those who challenge their decision.In the present case it was not proved that the directors of Ascot Investments acted in bad faith or for an ulterior purpose; indeed the transfers of the shares have not been submitted for registration and the directors have not been called upon to exercise their discretion to register or decline to register them.
...
It may be accepted that the orders fall within the literal words of sec. 80 and sec. 114(3), and that they were made in aid of the jurisdiction of the Family Court. The question that then arises is whether the powers conferred by those sections, wide as they admittedly are, extend to enable the Family Court to make an order which will impose new duties on persons who are not parties to the marriage (third parties).''
He then referred to
Sanders v. Sanders
(1967) 116 C.L.R. 366;
ATC 4727
Antonarkis
v.
Delly
(1976) FLC
¶
90-063
;
R.
v.
Dovey
;
Ex parte Ross
(1979) FLC
¶
90-616
;
(1979) 141 C.L.R. 526
and
R.
v.
Ross-Jones
;
Ex parte
``Except in the case of shams, and companies that are mere puppets of a party to a marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it. To take two obvious examples, the Family Court could not compel a husband to assign to his wife a lease without obtaining the necessary consent of the lessor, and could not order the transfer to a wife of land owned by a husband free of mortgage, when in fact the land was mortgaged to a third party. Thus, in the present case, the Court must deal with the husband's shares in Ascot Investments as they in fact are, that is, as shares in a company whose Memorandum and Articles contain a restriction on transfer.''
Stephen J., Wilson J. and I agreed with Gibbs J. Mason J. said that, assuming without deciding, that the Family Court was empowered to make orders of the kind sought the facts did not disclose appropriate circumstances for the making of such orders. Murphy J. took a contrary view.
In Ascot Investments the question of the constitutional validity of a provision of the Family Law Act did not directly arise but none the less the scope of the marriage power and of the divorce power was involved. The order made by the Family Court in that case was invalid and inoperative because no power existed to authorize such an order on the proper reading of the provisions of the Family Law Act. Any specific legislative provision for such a purpose would in my opinion have been invalid. The nature and incidents of the property of a party to a marriage, including the means of transfer of such property, are governed by State law and there is no power in the Family Court or in the Parliament of the Commonwealth under sec. 51(xxi), (xxii) or (xxxix) to alter such nature and incidents.
The earlier decision of this Court to which I referred was
The Commonwealth
v.
New South Wales
(1923) 33 C.L.R. 1
(``the
Royal Metals case
''). That case dealt with a number of matters, only one of which is presently material. The relevant matter was the validity of sec. 20 of the
Lands Acquisition Act
1906. That Act provided for compulsory acquisition of land by the Commonwealth and the term ``land'' was defined to include ``Crown land'', which in its turn was defined as meaning ``any land the property of a State, whether reserved or dedicated for any public purpose or not''. The process of acquisition provided for in sec. 15 was that the Governor-General might direct that land be acquired by the Commonwealth from the owner by compulsory process. It provided that the Governor-General might ``by notification published in the
Gazette
declare that the land has been acquired under this Act for the public purpose therein expressed'' Section 16 provided that:
``(1). Upon the publication of the notification in the Gazette, the land described therein shall, by force of this Act -
- (a) be vested in the Commonwealth; and
- (b) be freed and discharged from all trusts, obligations, estates, interests, contracts, licences, charges, rates, and casements.
to the intent that the legal estate therein, together with all rights and powers incident thereto or conferred by this Act, shall be vested in the Commonwealth.
(2). Where the land described in the notification is Crown land of a State, or is by virtue of any law of a State vested in any person on behalf of the Crown or for any public purpose, the notification shall also have the effect of cancelling any dedication or reservation to which the land was subject at the date of the publication of the notification.''
Section 20 provided:
``If a copy of the notification in the Gazette, certified under the hand of the Attorney-General, is lodged with the Registrar-General or Registrar of Titles or other proper officer of the State or part of the Commonwealth in which the land is situated, he shall register it in the register and in the manner as nearly as may be in which dealings with land are registered, and shall deal with and give effect to the notification as if it were a grant or conveyance or memorandum or instrument of transfer of the land to the Commonwealth duly executed under the laws in force in that State or part of the Commonwealth.''
ATC 4728
In their joint judgment Knox C.J. and Starke J. said (at pp. 27-28):
``The power conferred by sec. 51(xxxi) and (xxxix) of the Constitution is to make laws with respect to the acquisition by the Commonwealth of property, including land, and with respect to matters incidental thereto; and the question is whether a provision entitling the Commonwealth to insist on the registration under the Real Property Act of its title to land acquired under the Lands Acquisition Act, without complying with the conditions imposed by State law on such registration, is incidental to the complete exercise of the power of acquisition. Effective acquisition of (inter alia) land by the Commonwealth is the object to be attained, and the power is completely exercised by enabling the Commonwealth to vest absolutely in itself the land which it desires to acquire. The object is attained by the method provided by sec. 16 of the Act, namely, that upon the publication of a notification of acquisition the land described therein shall `by force of this Act be vested in the Commonwealth. This section, the validity of which is not, and cannot be, disputed, confers on the Commonwealth a statutory title to the land required which must, by force of sec. 109 of the Constitution and of sec. V of the covering Act, be paramount to any title dependent on a law of the State. The Commonwealth acquires the land and a statutory title to it under a law of the Commonwealth independently of any State law. But it does not follow that the Commonwealth Parliament is entitled to insist upon the State registration of its title to the land acquired unless upon compliance by the Commonwealth with the conditions imposed by State law. The provisions of the Real Property Act 1900 which stand in the way of the Commonwealth in this case in no way prevent or interfere with the acquisition by the Commonwealth of any land in New South Wales: they do no more than prescribe the conditions on which the State will permit the registration of title to land; and in our opinion the Commonwealth, if it desires to obtain registration of its title under the Real Property Act, must comply with the conditions imposed by that Act. As our brothers Isaacs and Rich said, in Commonwealth v. New South Wales (1918) 25 C.L.R. 325 at p. 340, `if it' (i.e. the Commonwealth) `seeks to obtain the registration provided by the statute, it must take it on the terms of the Act which it invokes'.''
Gavan Duffy J. agreed with that view. Isaacs J. said (at pp. 53-54):
``On this occasion a much more radical question was propounded, namely, whether the Registrar-General, as a State officer acting under and by virtue of the State enactment - the Real Property Act, - could be called upon to register any devolutions of title other than those effected as that Act requires, that is, by State Crown grant in the first instance, and then by the various instruments prescribed by the statute as the Registrar's authority to register the new proprietorships. This question, in my opinion, so presented, admits of no doubt. The Commonwealth Parliament has, by sec. 20 of the Lands Acquisition Act 1906, purported to require the State Registrar to register a copy of the Governor-General's notification as if it were a grant or conveyance or memorandum or instrument of transfer duly executed under the laws in force in the State. Section 64 also declared that the acquisition under sec. 85 of the Constitution shall for the purposes of the Act be deemed an acquisition and vesting under the Act. But as to this there is not even a declaration that any document is to be regarded as a grant, etc., as in sec. 20, and I take this provision to be one for compensation in accordance with the Constitution, sec. 85. In any case sec. 20 of the Act, purporting to require the State officer to treat the copy notification as a State instrument, is invalid. It is, of course, not pretended that, unless expressly authorized, the Commonwealth Parliament can directly repeal or amend State legislation. Where competent, either by concurrent or exclusive powers, Commonwealth Acts repugnant to any State law prevail (see Attorney-General for
Ontario v. Attorney-General for the Dominion (1896) A.C. 348 ). Section 20, however, is really an amendment of the Real Property Acts of the States, and is a command to a State official as such in the performance of his State functions to disregard the conditions of his statutory authority and to act in accordance with Commonwealth directions.''
ATC 4729
Higgins J. dissented on this point.
That case did not directly involve any question as to the incidence of stamp duty on the documents which had been brought into existence or on those which, according to the decision, would be necessary to enable the Commonwealth's title to be registered under the Real Property Act.
In my opinion if the Commonwealth empowers the Family Court to order compulsory transfers of land registered under State systems of registered title, or for that matter, of land not brought under the Torrens system, then it must take each of those systems as they stand. The price of the advantage of having the rights and the protection accorded by registered title under State law is compliance with the requirements of that law, by the owners and transferees, whether married or single or divorced or the children of the married or divorced parents. In my opinion the present case is not distinguishable from that part of the Royal Metals case which deals with the registration of the title of the Commonwealth in respect of lands compulsorily acquired from the States.
I would therefore answer the question in the Case Stated as follows: No, so far as it relates to stamp duties on transfers of land under the Transfer of Land Act 1958 (Vic.) executed pursuant to an order of the Family Court exercising jurisdiction under Pt. VIII of the Family Law Act 1975, and fees payable on the registration thereof in accordance with the Twentieth Schedule of the Transfer of Land Act.
ORDER:
The question submitted to the Court is answered as follows:
Section 90 of the Family Law Act 1975 (Cth.), in its attempted application to stamp duties imposed under the Stamps Act 1958 (Vic.) on transfers of land executed by a person in accordance with an order under Pt. VIII of the Family Law Act 1975 is not a valid law of the Commonwealth.
Remit the matter to the Supreme Court of Victoria.
No order as to costs.
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