Marsal Pty. Ltd.; Arila Pty. Ltd., and Geoffrey Arthur Cohen v. Comptroller of Stamps (Vic.).Judges:
Supreme Court of Victoria
This appeal concerns the interpretation of the word ``addition'' in sec. 88 of the Stamps Act 1958 (``the Act''). It does not raise a matter of continuing importance, because the relevant sections have been repealed (see Act No. 9662 sec. 10).
By a deed of settlement dated 15 February 1977 a family trust called ``The Pamela Kibby Family Trust No. 2'' was established. The settlement sum was $10 and Mrs. Kibby was one of the primary beneficiaries. Marsal Pty. Ltd. (the appellant) was created the trustee, and Pamela Margaret Kibby was named as ``the principal''. By cl. 6 of the deed the trustee was empowered to transfer without consideration the whole or any part of the trust fund to such persons as the principal appointed.
On 18 June 1980 a further deed was executed establishing a trust called ``the Arila Trust''. Marburg Pty. Ltd. was appointed trustee. The primary beneficiaries were the same as the remaining primary beneficiaries
ATC 4537of the earlier trust, and the principal was Pamela Margaret Kibby. The settlement sum was $50, and duty of $11.50 was paid in respect of that deed.
On 19 June 1980 Pamela Margaret Kibby appointed Marburg Pty. Ltd. as an additional beneficiary.
At a meeting of the directors of Marsal Pty. Ltd. on 19 June 1980 it was resolved that the assets constituting the trust fund of the Pamela Kibby Family Trust No. 2 be transferred to Marburg Pty. Ltd. in its capacity as trustee of the Arila trust. Those assets had a value of approximately $1,500,000.
On 25 July 1980 the name of Marburg Pty. Ltd. was changed to Arila Pty. Ltd., one of the above-named appellants.
In September 1980 the appellants' solicitors submitted the documents effecting the transfer of the said assets for assessment of stamp duty. By a letter dated 24 February 1981 the respondent requested a statutory declaration pursuant to sec. 88 of the Stamps Act. In due course, the appellants' solicitors denied that the appellants were obliged to provide such a declaration. On 13 May 1981 the respondent served notice of a default assessment pursuant to sec. 33 of the Act, assessing duty at $52,888.50. By notice dated 12 June 1981 the appellants objected to that assessment. The only ground here relevant was stated as follows:
``That the said transfers are not additions to the property comprised in the Arila trust deed dated 18 June 1980 within the meaning of sec. 88 of the Stamps Act 1958.''
By notice dated 8 September 1981 the respondent disallowed the objection. It was agreed before me that the ground for disallowance here relevant should be taken to read:
``The transfers are additions within the meaning of and for the purposes of sec. 88 of the Act to the property comprised in the Arila trust deed dated 18 June 1980.''
Both the notice of objection and notice of disallowance set out other matters which counsel before me agreed were irrelevant to the point now falling for decision.
By notice dated 29 September 1981 the appellants pursuant to sec. 33B(1)(b) of the Act requested the respondent to treat the notice of objection as an appeal to this Court.
Section 88(1) of the Act reads:
``Where any addition is made to the property comprised in the original instrument or any further instrument and stamp duty has not previously been paid on the amount or value of that addition, a statutory declaration of the amount or value of the addition shall be made by the trustee or some person acquiring an estate or interest therein or (in case of a corporation) by some person on behalf of the corporation, and that declaration shall for the purpose of stamp duty be deemed to be a further instrument executed on the day on which the addition is added to or becomes subject to the original instrument or further instrument.''
Section 84(1) of the Act reads:
``In this subdivision unless inconsistent with the context or subject-matter -
`Addition' includes -
- (a) any property that -
- (i) by gift conveyance transfer or declaration of trust by the settlor or donor; or
- (ii) by declaration of trust by the trustee for the time being of the original instrument or any further instrument; or
- (iii) by entry in any book or account or paper of the settlor or donor or trustee -
executed or made after the original instrument or further instrument is first executed is added to or becomes subject to the original instrument or further instrument; and
- (b) any accretion -
- (i) to the property comprised in the original instrument or any further instrument or added to or becoming subject to the original instrument or any further instrument by entry as aforesaid; or
- (ii) to the value of such property; or
- (iii) to the interest therein of the beneficiaries under the original instrument -
that arises from any payment of purchase money or from any payment made in partial or complete discharge of any mortgage debt or certain charge to which the property was subject when the original instrument was executed or from any other act by the settlor or donor or trustee executed or done after the original instrument or further instrument is first executed -
but does not include any accretion to the property comprised in the original instrument or any further instrument or added to or becoming subject to the original instrument or any further instrument by entry as aforesaid or any accretion to its value or to the interest therein of the beneficiaries under the original instrument that arises -
- from the receipt or accumulation of income of any property comprised in the original instrument or further instrument or of any property added to or becoming subject to the original instrument or any further instrument by entry as aforesaid, whether such income is treated as capital or not; or
- upon realization of any such property; or
- upon an issue of shares stock or securities by a company out of its profits reserves or capital.
`Further instrument' means a deed of settlement or deed of gift executed by the person or persons or one or more of the persons (whether any other persons execute the deed as settlors or donors or not) who executed the original instrument in favour of the same donees or persons who benefited under the original instrument or in favour of any one or more of them (whether or not any persons benefit under the further instrument who did not benefit under the original instrument).
`Original instrument' means any deed of settlement or deed of gift.
`Settlor' `donor' and `trustee' include any agent of or trustee or person acting for a settlor donor or trustee (as the case may be) or for any one or more of two or more settlors donors or trustees (as the case may be).''
In his initial submissions Mr. Fajgenbaum, who appeared for the appellants, stated that he and Mr. Jolson, who appeared for the respondent, were agreed ``that para. (b) relating to accretions is of no assistance to the matter'' falling for decision. However, as will be seen, in his reply Mr. Fajgenbaum resiled from that concession. Mr. Fajgenbaum's primary submission was that sec. 88, having regard to the definition of ``addition'' in sec. 84, was concerned with a transfer by the settlor (who, in this case, was the appellant Geoffrey Arthur Cohen); that since Marsal Pty. Ltd. was here the transferor, the transfer could not be said to be a transfer made by the ``settlor'' or ``donor'' of the original instrument, which was the Arila trust deed. Further, it was said, the extended meaning given to ``settlor'' or ``donor'' in sec. 84(1) can here have no application. As a corollary to that, it was said that sec. 88 does not operate where ``additions'' are made to property comprising the original settlement by persons other than a trustee, donor or settlor; that where property is transferred by a stranger in what may or may not be a normal commercial transaction, sec. 88 could not be relied upon as a means whereby duty could be assessed, either on the transaction itself, or any instrument whereby such transaction was effected. It was submitted that were it otherwise, a normal commercial transaction (for example, where the trustee purchased goods intending that they thereby became part of the assets of the trust fund) would constitute an addition, and thus impose an obligation on the trustee to make a statutory declaration under sec. 88, a declaration which itself would become dutiable under sec. 88. It was submitted that the legislature has not been shown to have intended to cast a net of such width.
For the respondent, Mr. Jolson submitted that the meaning of sec. 88 was clear and unambiguous, that it was designed to operate in respect of additions to trust property by means of instruments where no duty has been paid, and there was nothing in the words of
ATC 4539sec. 88 which justified limiting its operation to a transaction where any particular person was the transferor of the relevant property. He submitted that it was significant that the definition of ``addition'' in sec. 84(1) was inclusive rather than exhaustive, comparing that with the use of the word ``means'' in the definition of ``further instrument'' in sec. 84(1). (I should here observe that in the principal definition section of the Act (sec. 3), the draftsman appears to have taken care to distinguish between ``includes'' and ``means''.)
Mr. Jolson went on to submit that since this transaction came within the ordinary meaning of the word ``addition'' in sec. 88, it was not necessary to resort to the definition in sec. 84. Nevertheless, he submitted, although it could not be said that this transaction was struck at by sec. 84(a)(i) or (ii), the company resolution relating to the transfer of assets was an ``entry in any book or account or paper... of the trustee'' within the meaning of sec. 84(1)(a)(iii). For the latter submission to succeed, it would be necessary to hold that the trustee referred to in subsec. (a)(iii) related to a different trustee to that referred to in subsec. (a)(ii). I am unable to accept that submission. In my opinion, the reference to trustee in cl. (a)(iii) refers, as it does in cl. (a)(ii), to a trustee ``of the original instrument'', and since it is conceded that the trustee here relevant was not a trustee of the original instrument, the respondent cannot rely upon cl. (a)(iii).
After I had heard Mr. Fajgenbaum in reply, I invited a further limited submission from Mr. Jolson concerning the application of sec. 88 to what had been described by Mr. Fajgenbaum as a ``normal commercial transaction'', such as the sale of goods. Mr. Fajgenbaum then for the first time submitted that having regard to the form of sec. 84(1)(b) and to the place on the page occupied by the exception following subcl. (b), he wished to submit that that exception applied to cl. (a) and (b) and that, in turn, led to a submission that the word ``includes'' following the word ``addition'' in sec. 84(1) should read ``means''; in other words, it was submitted that the definition was exhaustive rather than inclusive. He submitted that the legislature has used the word ``includes'', because it would have been grammatically incorrect to use the word ``means'', and then use an expression such as ``but does not include...'' which is used in the latter part of sec. 84(1)(b). That submission depended in turn upon the submission that the exclusion clause applied to both cl. 1(a) and 1(b). Although the positioning by the printer of the exclusion clause might be thought, as Mr. Fajgenbaum claimed, to lend some strength to that argument, in my view, upon an ordinary reading of the whole of the subsection, the exclusion clause applies only to cl. 1(b) and not to cl. 1(a).
The question whether the word ``includes'' should be construed as ``means'' has been the subject of considerable debate over the years. See Pearce's Statutory Interpretation in Australia, 2nd ed. para. 151-154 and the cases there referred to; Craies on Statute Law, 7th ed. p. 213.
Mr. Jolson replied by submitting that without the extended definition of ``addition'' in sec. 84(1), there may have been room for argument that some transactions, or at least the instruments by which some transactions were effected, intended by Parliament to be dutiable, might have escaped the net. There was no warrant, it was said, for holding that the word ``includes'' should read ``means''.
The basic principles of interpretation to be applied are that the words in a statute should be given their ordinary meaning and that, generally speaking, the word ``means'' is used if the definition is intended to be exhaustive while ``includes'' is used if it is intended to enlarge the ordinary meaning of the word. I do not find myself propelled towards a conclusion that the word ``includes'' should here be read as ``means''. I find significance in the fact that distinctions are made between those two words both in sec. 3 and in the definition of ``further instrument'' in sec. 84 to which I have earlier referred.
I turn then to the sole question remaining - on the ordinary reading of the language of sec. 88, did the transfer here relevant bring about an ``addition'' to ``the property comprised in the original instrument...''? In my opinion, that question should be answered in the affirmative. I have not been referred to, nor have I found, any authority of assistance, but a plain reading of the section does not suggest to me that I should
ATC 4540uphold the appellants' principal submission that the only additions covered by sec. 88 are those effected by transfer from the settlor or donor of the original instrument. On 18 June 1980 the ``property comprised in the original instrument'' amounted to the sum of $50. By the relevant transfer on 19 June 1980 property to the value of some $1,500,000 was added to ``the property comprised in the original instrument''.
In my view that transaction effected an ``addition'' within the meaning of sec. 88 of the Act.
Accordingly, the appeal must be dismissed with costs to be taxed.