Boulevarde Developments Pty. Ltd. v. Toorumba Pty. Ltd. and Pittsbay Pty. Ltd.

Judges: Campbell CJ
Connolly J

McPherson J

Court:
Supreme Court of Queensland (Full Court)

Judgment date: Judgment handed down 9 August 1984.

---

McPherson J. (Campbell C.J. and Connolly J. concurring)

These are appeals by the defendant, Pittsbay Pty. Ltd. (``Pittsbay''), from summary judgments in favour of the plaintiff Boulevarde Developments Pty. Ltd. (``Boulevarde'') in actions 452/1984 and 453/1984. In the first of the two actions the judgment was for a sum of $3,259,900 with interest due by the defendant under what has been called ``the building contract''. In the second action (No. 453/1984) the judgment was for specific performance of a contract for the sale of land (``the land contract''). As regards that action, we were informed that the plaintiff, Boulevarde, has, since judgment was given, obtained an order rescinding the order for specific performance because of the financial inability of Pittsbay to complete the contract. No doubt the plaintiff wishes to resell the land and convert its claim against Pittsbay to one for damages. However, that consideration does not in any relevant way affect the appeal against judgment in that action.

The grounds of the appeal by Pittsbay are that the learned Chamber Judge ought to have been satisfied that there were questions to be tried and so ought not to have given judgment summarily. The questions said to be in dispute are (1) that there had been a material alteration to the building contract, which had the effect of avoiding that contract; and (2) that the contracts were illegal and unenforceable. In order to understand these grounds of appeal it is necessary to say something about the transactions and events out of which they grew.

In March 1982 Boulevarde was the owner of the land, which is situated on the Gold Coast and on which it was planned to build a block of home units comprising 28 lots. The procedure proposed, which is set out in a letter dated 3rd March 1982 (record at p. 88), was that Pittsbay should buy the land. Another company, Toorumba Pty. Ltd. (``Toorumba''), which was to be the developer, was to enter into the building contract with Boulevarde for construction by the latter of the block of units for a lump sum price of $3,442,000. A purpose of arranging the transaction in this way was to reduce the incidence of stamp duty, which is why the contracts are said to be illegal. Underlying the arrangement was a notion that one may knowingly build or pay for building to be done on the land of another without that building becoming the property of the land owner.

Both the land contract and the building contract are dated 29 March 1982. Clause 28 of the land contract provides that if the purchaser (Pittsbay) requires the vendor (Boulevarde) to effect improvements to the property before completion, then at the time of completion the purchaser ``will accept the property in that state and in titles that then exist for the property in lieu of vacant land and the present Certificates of Title''. Both this and other provisions of the two contracts demonstrate what is evidently not in dispute, namely that those contracts were intended to form a single transaction for the sale of land with building units to be constructed thereon before settlement. However, at some stage in the course of 1982 it was decided that Pittsbay should become a party to the building contract (which bears the number 108215: see p. 103) already executed between Boulevarde and Toorumba. Pittsbay accordingly executed that contract, and the appeal record contains copies of the duplicate or counterpart contracts so executed bearing the numbers 108273 (Boulevarde's copy) and 114119 (Pittsbay's copy).

The addition of Pittsbay as a party naturally involved some amendment of the terms of the building contract. In a physical sense this was effected by two means. An additional typed page or pages were inserted in the documents incorporating new cl. 58 to 60; and, as well, the wording of cl. 56 was altered. The new cl. 58 recorded that Pittsbay agreed to be bound by the building contract ``as if it were a party'' thereto. Clause 56(c) was altered so as to read that the property in the works (which was the building to be constructed) ``shall pass to Pittsbay Pty. Ltd. upon payment by the Company'' [which was Toorumba] ``to the Builder [which was Boulevarde] of the contract sum''. Before that alteration the intention had been that the property in the works should on payment pass to Toorumba.

There is no doubt that Pittsbay executed the contract. The impression of its common seal appears on both its own and Boulevarde's duplicate or copy of the contract. That it did execute the contract appears from para. 41 to 44 of the affidavit of Mr. McColl. He voices some complaint about the advice of Pittsbay's solicitors contained in a letter dated 8th December 1982 (p. 145) that led to execution of

---

ATC 4717

the contract by Pittsbay; but that is plainly not relevant to any question in the actions brought by Boulevarde. The only point in issue is the alteration to cl. 56(c) and the initialling of that alteration and of the inserted pages. The alteration is what gives rise to the first ground of defence which it is said should have been sent for trial.

[His Honour then considered the question of the alteration and decided it involved no ground of defence that would have justified a trial of the action. His Honour then continued - ]

The second point raised is that of illegality. This was founded on the letter dated 3 March 1982 (p. 88), which, as I have said, set out the arrangement for dividing the transaction into two contracts, and the explanation of why it was done. Two different aspects of illegality were argued. The first was that the contracts, or at any rate the land contract, offended sec. 16(1)(a) of the Stamp Act 1894-1981 (``the Act''). That section provides that -

``16(1) All the facts and circumstances affecting the liability of any instrument to duty, or the amount of the duty with which any instrument is chargeable, are to be fully and truly set forth in the instrument; and every person who -

• (a) Executes any instrument in which all the said facts and circumstances are not fully and truly set forth; or
• (b) Being employed or concerned in or about the preparation of any instrument, neglects or omits fully and truly to set forth therein all the said facts and circumstances within his knowledge; or
• (c) Being required to make and produce to the Commissioner a declaration under the Oaths Act of 1867 setting forth all the said facts and circumstances, makes a declaration and neglects or omits fully and truly to set forth therein all the said facts and circumstances within his knowledge; or
• (d) Makes any such declaration which is false in any material particular;

shall incur a penalty not exceeding one hundred dollars.

(2) Payment of any such penalty shall not relieve any person from the payment of any duty or any other penalties incurred under this Act.

(3) The provisions of this section shall not affect any of the provisions of The Criminal Code: Provided that any person shall not be liable to be proceeded against and punished both under this section and under The Criminal Code.''

On the faith of sec. 16(1)(a) it was argued that at the instant of its execution the land contract, and perhaps also the building contract, was or were rendered illegal and unenforceable.

There are, in my view, two considerations that lead to the opposite conclusion. One is that, even assuming that the two contracts, or one of them, offended against sec. 16(1)(a), the section does not in terms provide that the instruments or the agreements that they embody or record are to be illegal or unenforceable. That is in marked contrast to at least one other well known provision of the Act. Section 53(5), in addition to imposing a penalty of $40, provides that no instrument of transfer shall be valid ``either at law or in equity'' unless the transferee's name is written in at the time of its execution, and that ``any such instrument so made shall be absolutely void and inoperative''. There is an express proviso in sec. 53(5) that saves a transfer of a marketable security or right in respect of shares. That may be said to support an argument that when an instrument is intended to be void the Act says so in clear terms.

The second consideration in favour of that view lies in the provisions of sec. 81 and in the decision in
Yango Pastoral Company Pty. Ltd. v. First Chicago Australia Ltd. (1978) 139 C.L.R. 410. In that case a statute which imposed a daily penalty on the conduct of unauthorised banking business was held not to render illegal or unenforceable a mortgage given to a lender in the course of conducting such a business. All the Judges of the High Court emphasised that the statute did not expressly invalidate the contract, and that such a result would follow only if it could be said that the legislation, properly construed, impliedly prohibited the contract. In reaching the conclusion that the contract was not impliedly prohibited, the Court regarded it as proper to examine the nature and express provisions of the legislation and the penalty imposed, as well as the consequences that would result if the contract, and others like it, were held to be

---

ATC 4718

invalidated. Imposition of the specified penalty was held to be the only consequence intended by the legislature to result from a contravention of the relevant prohibition.

In the case of the Stamp Act, sec. 81 provides -

``81. Every contract, agreement, or arrangement made or entered into, in writing or orally, whether before or after the commencement of The Stamp Acts Amendment Act of 1959, shall, so far as it has or purports to have the purpose or effect of in any way directly or indirectly -

• (a) Altering the incidence of any duty under this Act; or
• (b) Relieving any person from liability to pay any duty, or make any return, under this Act; or
• (c) Defeating, evading, or avoiding any duty under this Act or liability imposed on any person by this Act; or
• (d) Preventing the operation of this Act in any respect,

be absolutely void, but without prejudice to its validity in any other respect or for any other purpose.''

The heading to the section is ``Certain contracts, etc. void against the Commissioner''. That is not, according to ordinary principles of interpretation, capable of affecting the construction of the provision; but even without reference to it, the circumstance that the section appears in a revenue statute, and that it follows very closely the model provided by sec. 260 of the Income Tax Assessment Act, is a compelling reason for giving to the words ``absolutely void'' something less than the full effect inter partes which might otherwise be warranted. It is well settled that the ``annihilating'' effect of sec. 260 avails only the Commissioner acting in the course of his tax-gathering functions, and does not affect the mutual relations of the parties to or under the impugned transaction. As was said by Fullagar J. in Newton's case, ``Section 260 alters nothing that was done by the parties.'':
Newton v. F.C. of T. (1957) 96 C.L.R. 577 at p. 656.

In my view sec. 81 of the Stamp Act is to be approached on a like footing as entitling the Commissioner of Stamp Duties only, and not the parties, to assert that the contract, agreement or arrangement under scrutiny is, in the circumstances expressed in the section, absolutely void. That is itself a strong reason for concluding that, together with any duties, penalties, and interest that may be payable and except where otherwise expressly provided, sec. 81 represents an exhaustive statement of consequences resulting from infringements of the provisions of the Act. Approached on this footing sec. 16(1)(a) is not to be regarded as impliedly rendering illegal or unenforceable an instrument that offends against its provisions. Indeed, for it to do so might very well tend to defeat the purpose of the enactment by making void the very instrument that it is sought to charge to duty.

Section 16(2) preserves the liability for duty and other penalties exigible under the Act. Section 16(3) provides that the section is not to affect any of the provisions of the Criminal Code.

[His Honour then considered the argument that the transaction was void as an agreement to defraud the revenue and held that the Chamber Judge was justified in concluding that there was no issue or question in dispute that ought to be tried nor any reason why there ought to be a trial of the action, so that the appeals should be dismissed with costs.]