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Emanuel (Rundle Mall) Pty. Ltd. v. Commissioner of Stamps (S.A.).

Members: Jacobs J
Mohr J

Bollen J

Tribunal:
Supreme Court of South Australia (Full Court)

Decision date: Judgment handed down 13 June 1986.

Bollen J.

This is an appeal from the answers returned by White J. to a case stated by the Commissioner of Stamps pursuant to sec. 24 of the Stamp Duties Act [reported at 86 ATC 4004].

The Commissioner sought the opinion of the Court about the ``stamp duty chargeable'' on four memoranda of transfer of estates in fee simple in real estate on which a building is erected in the city of Adelaide. The fact that the Commissioner sought that opinion is set out in paragraph 1 of the case stated where the four memoranda of transfer are mentioned. Each transferred an estate in fee simple to Emanuel (Rundle Mall) Pty. Ltd. (``Emanuel''). The transferors were Myer S.A. Stores Ltd., Myer (S.A.) Limited, Stevenson Bros. Pty. Ltd. and J. Leaver Pty. Limited. The transferors have,

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during the hearing, all been called collectively ``Myer''.

I think it well to set out the remainder of the case stated. It is:

``2. The Memoranda of Transfer were executed and delivered pursuant to a Contract for Sale and Purchase made the 11th day of August, 1983 between Myer (S.A.) Stores Limited, J. Leaver Pty. Limited, Myer (S.A.) Limited and Stevenson Bros. Pty. Limited as vendors and Emanuel (Rundle Mall) Pty. Ltd. (hereinafter called `the appellant') as purchaser whereby the vendors agreed to sell their respective estates in fee simple in the land described in Item S3 in the Schedule thereto and the appellant agreed to purchase that land for the total purchase price of $18,166,000. Pursuant to clause 2 and Item S.4 of the Contract the land was sold together with all buildings, but clause 4 provided that the sale was subject to the exceptions referred to in Item S6. That Item in turn referred to Annexure `B' to the Contract in which the items excluded from the sale and to remain the property of the occupier, Myer S.A. Stores Limited were set forth.

The Contract and the annexures forming part thereof are annexed hereto and marked `B'.

3. I was of the opinion that of the items listed in Annexure `B' to the Contract, the following (at least), were fixtures which formed part of the land:

  • (1) Airconditioning including mechanical ventilation, air conditioning units, ducting and the associated equipment, chimneys and flues, hoist in plant room;
  • (2) Cool room and associated plant and pipework;
  • (3) Generating Plant;
  • (4) Lift and Escalators (including dumbwaiters);
  • (5) Sprinklers with associated pipework and pumps;
  • (6) All external entrance and exit doors (including Roller Shutters);
  • (7) Suspended ceilings;
  • (8) Vinyl and ceramic floor tiles and parquetry;
  • (9) Strong room doors;
  • (10) Staff Toilets and Wash Rooms - including walls and floor tiling - terrazzo, marble, concrete stone and similar paving and surface finishes, plumbing fixtures and fittings and sanitary were internal partitions;
  • (11) Plumbing - Internal sewerage, hot and cold water pipes toilets hand basins, vanity units hot water services sullage pits and pumps, grease trap.

The items listed in subpara. (1) to (11) (inclusive) hereof are hereinafter referred to as `the items'.

4. By an Application for Opinion of Commissioner of Stamps dated the 11th day of August, 1983, a copy of which is annexed hereto and marked `C' Thomson Simmons & Co. required me to express my opinion upon the amount of duty with which the Memoranda of Transfer were chargeable. I was of the opinion that Memoranda of Transfer were separate conveyances of land or interests in land that arose from a single contract of sale, and were chargeable with ad valorem duty calculated upon the sum of the amounts by reference to which ad valorem duty on each of the conveyances would, but for sec. 66ab(1) of the Stamp Duties Act, have been calculated.

5. Since the items had not been severed from the land the subject of the Memoranda of Transfer on or before settlement of the Contract, I was further of the opinion that the items were legally transferred to, or vested in the appellant as transferee. It appeared to me that, in all the circumstances of the transaction, including the `exclusion' of the items from the sale, the consideration for the sale may have been less than the value of the property conveyed or transferred as at the date of the sale. As the evidence furnished to me of the value of the property conveyed or transferred was, in my opinion, unsatisfactory, I caused a valuation of the property to be made by the Valuer-General.

6. The Valuer-General valued the property the subject of the Memoranda of Transfer

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(including the items) at $20,000,000 at the date of the sale (11th August, 1983). I assessed the duty payable in respect of the Memoranda of Transfer by reference to that valuation at the total amount of $798,930 in accordance with para. (b) under the head `Conveyance or Transfer on sale of any property (not otherwise charged) including contract or agreement for sale - '. I apportioned the duty to the Memoranda of Transfer in the same proportions as the consideration expressed in each bore to the total consideration.

7. The appellant contends that the total amount of duty to be assessed in respect of the Memoranda of Transfer and to be apportioned to those instruments was $725,570 being the ad valorem duty calculated by reference to a total consideration of $18,166,000.

8. If the items should not have been taken into account in the valuation of the land for the purpose of the assessment of duty the value of the property the subject of the Memoranda of Transfer as at the date of Sale (11th August 1983) was $18,166,000.

9. The appellant, being dissatisfied with the assessment made and having paid the duty in accordance therewith, has appealed against the assessment to the Supreme Court and for that purpose has required me to state and sign a case setting forth the question upon which my opinion was required and the assessment made by me and I state and sign this case accordingly.

10. The documents annexed hereto are intended to form part of this case.

11. The questions for the opinion of the Court are: -

  • (1) Whether the Memoranda of Transfer annexed hereto and marked `Al', `A2', `A3' and `A4' are liable to duty as assessed by me?
  • (2) If not, to what duty are they liable?''

The Commissioner decided, and counsel for him submitted, that duty should be assessed on the value of the real estate passing under the said memoranda calculated by including the value of some fixtures on it. The appellant said that the value of the property for assessment of duty was the value of the real estate (i.e. land and building) minus these fixtures. White J. upheld the Commissioner's assessment. He answered the first question ``Yes''. It was not necessary for him to answer the second question.

The appellant appeals. I will now set out the grounds of appeal. The appellant submits that the Commissioner should have assessed by taking the value of the property conveyed as the value of the real estate (i.e. land and building) minus the value of the fixtures.

The contract for sale and purchase provided that the sale was subject ``to any exceptions referred to Item S6''. That appears in cl. 4 of the contract. S6 said in print:

  • (1) Exceptions (including chattels on hire, lease, mortgage or bill of sale)
  • The words ``See Annexure B'' were typed in.

Annexure B began thus: ``The following items are excluded from the sale and shall remain the property of the occupier Myer S.A. Stores Limited.'' Many ``items'' were then mentioned. The Commissioner thought that some were fixtures which passed with the land on conveyance. They are in cl. 3 of the case stated. A reading of cl. 3 quickly makes one understand the attitude of the Commissioner.

It was not disputed that these ``items'' were fixtures. Of course, many could have been detached from the building and removed. It would have been a big job for some. I am not sure whether the ``plumbing things'' could have been removed. But there are fixtures and fixtures. Some can be removed from the soil yet remain fixtures whilst attached to the soil or to a building on it. Myer (using the word comprehensively) took a long lease back from the appellants. Myer will continue to have the use of the fixtures on the appellant's land. There was much discussion to suggest that it might be said that Myer transferred an interest in the fixtures to the appellant and then took that interest back. That did not happen. As between Myer and the appellant, Myer retained (speaking neutrally) a right to the fixtures. Equity would recognise that right as between Myer and the appellant.

At the time of contract, settlement and registration of the memorandum of transfer the fixtures were in the building on or in the land. After registration they were on or in the appellant's land. They were affixed to the

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building built on its land. Myer undoubtedly has rights in equity over these fixtures. Nobody denied that equity would protect those rights.

As between vendor and purchaser here the stated exclusion of the fixtures from the passing of property may well be relevant and effective for some purposes. It may have been relevant to the agreed purchase price. It would certainly be relevant if the appellant sought to remove the fixtures on the ground that they were its property by virtue of their annexure to its building. But we are not concerned with those matters. We are concerned with the assessment of stamp duty, nothing else.

Stamp duty in this case, as always, is to be assessed on the instruments and on the value of the property conveyed by the instruments (sec. 60 and 60a and the Schedule to the Stamp Duties Act ). It is axiomatic that duty is assessed on instruments not on transactions. The question is - what property was conveyed by the relevant instruments, namely, the memoranda of transfer? They are the relevant instruments. It is what they say which is really the most important matter. What was conveyed? Was real estate alone (i.e. land and building on it) or real estate plus fixtures?

Mr Doyle submitted that although stamp duty is assessed on an instrument the Commissioner is entitled, and sometimes compelled, to look ``beyond the transfer to see what is the property conveyed by it''. I think that this is perfectly correct. Mr Doyle relied on the case of
Commr of Stamps (W.A.) v. Whiteman Ltd. (1940) 64 C.L.R. 407 for his submission. That case does support the submission. So do the cases mentioned in it by Rich A.C.J. But the fact that the Commissioner can look beyond the instrument does not carry us very far. What did the Commissioner's all-embracing eye see here when he looked beyond the instrument? It saw that some things were excluded as between vendor and purchaser, from the property which passed pursuant to the sales. But parties to an instrument cannot diminish duty merely by words used in the relevant documents. If property passes by operation of law it will not necessarily avail parties to write down that it does not pass. Here, the Commissioner saw not only that things were said to be excluded from sale but he saw what those things were. They were fixtures. They had not at the ``stamping time'' been severed from the building. Therefore, said the Commissioner, they pass on conveyance at least for the purposes of assessing the stamp duty chargeable. They pass by virtue of their nature no matter what the parties have said. That was the Commissioner's view. I think that view (taking the matter thus far) derives support from Whiteman's case particularly from Rich A.C.J.'s reference to
Reynolds v. Ashley & Son (1904) A.C. . Rich A.C.J. quoted from the reasons for judgment of Lord Lindley at p. 472. His Lordship said: ``... the purpose for which the machines were obtained and fixed seems to me unmistakable: it was to complete and use the building as a factory. It is true that the machines could be removed if necessary, but the concrete beds and bolts prepared for them negative any idea of treating the machines when fixed as movable chattels.'' I do not think that the fixtures in the case at bar could be treated as ``movable chattels''. They were annexed to the building for the better use of the building. Therefore, the fixtures passed on conveyance. At least they passed on conveyance for the purposes of stamp duty. That might be enough to dispose of the appeal. But Mr Doyle Q.C. submitted that there was more to it. He submitted that at the time of registration the equitable interest in the fixtures became detached from the legal interest in estate. There was, he said, ``never any intention to vest in (the appellant's) the beneficial interest''. Therefore, he said, the beneficial interest remained in Myer and the value of the fixtures should not have been included in the amounts or value on which duty was assessed. He developed the submission thus:

``It is important to make submissions to show where chattels are affixed to land and become fixtures that the person who was the owner of the chattel now has an equitable interest in the land of the person who has affixed the chattels to the land. I want to make an endeavour to make that proposition good. Where chattels belonging to A are by B affixed to land that belongs to B, so that they become fixtures, the position then is that A has an equitable interest in the land of B. Here it is not a case of Myer taking Emanuel's chattels and turning them into fixtures, they remain fixtures all the time. The point I am making good is that you can have a person who has an equitable interest in the land of another and that equitable

ATC 4399

interest is measured by the presence of chattels on the land of the other which have become the fixtures...''

Mr Doyle had addressed this argument to White J. White J. said:

``At the time of assessment, Myers still had the legal estate in fee simple in the land and therefore owned the unsevered fixtures in the same estate. Myers owned the fixtures by virtue of its ownership of the legal estate in the land. It had no separate legal title to or property in the fixtures apart from its legal title to the land. And so long as Myers remained the legal owner of the land it could not be a trustee for itself of the fixtures; nor could any equitable interest arise in Myers in favour of itself during this interim period before settlement. The equitable interest in Myers (in protection of its fixtures and its later right of removal of fixtures) would only arise and could only arise after the legal title passed to another, to Emanuel. Only then would it be possible for equity to attach to Emanuel's conscience and to impress Emanuel's title with a constructive trust in favour of Myers. Until then, equity would be powerless and Myers' rights would be powerless and Myers' rights would be protected by its legal title with all of the rights of dominion, self-help and protection which go with legal title.

The land being registered under the Real Property Act 1886, the legal estate in fee simple could only pass when the duly stamped transfers had been lodged and registered at the Lands Title Office. The exact moment of passage of legal title is not relevant. The transfers had not yet been lodged because they had not yet been stamped. It follows that Myers, at the time, remained the owner of the legal estate in fee simple in the land until registration...''

and

``Fixtures in situ and intended to remain in situ are intrinsically part of the land and have no separate legal existence or entity apart from the land. It is true that fixtures can by agreement be excluded from sale and removed; but if they are not severed by the time when the conveyance operates, they are still part of the soil and pass with the conveyance of the land. In my opinion, they cannot be validly excepted in any relevant sense for stamp duty purposes. The effect of reserving a right to property in the fixtures and at the expiration of a lease to remove them, amounts, in my opinion, to a reservation rather than an exception notwithstanding the analogy with minerals. On the other hand, fixtures to be removed prior to settlement seem to bear a closer analogy to mines and minerals which under old law could be excepted...''

and

``At the moment before the contract was signed, Myers had `both the legal estate and the entire beneficial interest in the land'. Myers therefore had at that time `an unqualified legal interest and not two separate interests, one legal and the other equitable' in the land and fixtures.''

Mr Doyle began with
Kay's Leasing Corporation Pty. Ltd. v. C.S.R. Provident Fund Nominees Pty. Ltd. (1962) V.R. 429 . Under sec. 77 of the Transfer of Land Act 1958 (Vic.) a mortgagor selling in default may not sell ``separately from the land itself fixtures annexed to such land''. The facts and the decision are set out in the headnote:

``A company hired certain items of machinery to B company which installed them in its factory in circumstances in which they became fixtures. B company mortgaged the freehold of the factory to C company. Thereafter B company defaulted under the mortgage, and C company, in purported exercise of its rights under the mortgage and by virtue of sec. 77 of the Transfer of Land Act 1958, threatened to sell the items of machinery alone. A company sought an injunction against C company to restrain it from selling the items of machinery.

Held: notwithstanding that the items of machinery had become fixtures and that, as against C company, A company had no rights in respect of them, yet, by reason of the rights which A company still retained against B company under the hiring agreement, A company was entitled to require that C company, in the exercise of its rights as mortgagee, act strictly in accordance with the powers given it by the mortgage and sec. 77 and, accordingly, C company should be restrained from selling only the fixtures.''

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This case was quite different to the case at bar. Chattels were hired on terms permitting repossession. Moreover, it turned on the powers of a mortgagee. At p. 438 Adams J. said:

``Where, as in the case of a mortgage of land, the mortgagee does not acquire absolute title, but certain limited powers and rights over the mortgaged property by way of security, I see no reason for treating equitable interests of others in the land as extinguished unless and until by exercise of the mortgagee's powers in a manner inconsistent with the continued existence of the equitable interests, they must be regarded as extinguished.''

I cannot accept Mr Doyle's submission that Myer is in the same position as was Kay's. The case is not in point. The next case mentioned was
Standard Portland Cement Co. Pty. Ltd. v. Good (1982) 47 A.L.R. 107 . I set out the whole headnote:

``The appellant (vendor) had sold to the respondent (purchaser) land on which was erected a cement mill weighing 100 tons which would pass with the land as a fixture unless clearly excluded from the sale. Although the contract did not expressly exclude the mill from the sale it contained a clause allowing the vendor to remove it, providing that it was removed within 12 months from the date of the contract. Correspondence during negotiations established common intent that the mill be excluded from the sale. The vendor had not effected removal within the contractual time limit because it had agreed to give the purchaser the opportunity to remove and transport the mill for reward so long as the latter could demonstrate its competence to do so by carrying out other removal work which he had not been able to do before the mill was due to be removed and which the vendor had allowed him further time to complete.

When the purchaser's further delay in performing the other removal work became excessive the vendor decided it need no longer allow the purchaser the opportunity to remove the mill and, shortly afterwards, entered negotiations with another to sell the mill and assign the right to enter the purchaser's land and remove it. Subsequently the purchaser, with some knowledge of these negotiations, made an offer to buy the mill, but the vendor accepted a higher offer.

The Supreme Court of New South Wales found that the mill was a fixture and upheld the purchaser's claim that ownership of the mill had passed to him on the vendor's failure to remove it within the contractual time limit.

On appeal to the Privy Council (with leave of the trial judge): -

Held, by the Board allowing the appeal, that the vendor was entitled to remove the mill since: -

  • (i) On its proper construction the contract excluded the mill from the sale because the clause allowing removal was consistent only with this interpretation, and the vendor was entitled ex abundanti cautela to have the contract rectified to make clear what was expressed in the correspondence and implicit in the contract.
  • (ii) A failure by the vendor to comply with the contractual obligation to remove the mill within 12 months would not mean that ownership passed to the purchaser, but would sound only in damages or expose the vendor to proceedings for an injunction ordering him to remove it. Accordingly the vendor had been owner of the mill at all times and as an incident of ownership had the right to enter the purchaser's land and remove the mill.
  • (iii) The purchaser had waived the contractual date for removal of the mill and could thereafter require its removal only if he gave reasonable notice to do so, which he had not done.
  • (iv) The purchaser's conduct in offering to buy the mill and allowing the vendor to negotiate for its sale to another, resulting in such a sale, gave rise to estoppel by acquiescence in the vendor's claim to a continuing right of removal.''

This is an unsatisfactory case. There was no argument for the respondent. The Privy Council was dealing with an argument between vendor and purchaser. Could the mill be removed? That was the issue. A nice analysis of the

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purchaser's rights was not necessary. Above all the case was not concerned with the assessment of stamp duty. Of Mr Doyle's argument, based on this case, White J. said: ``Construed in the way Mr Doyle suggested the decision runs counter to centuries of authority on fixtures including Whiteman's case ''. I agree. I do not think that the Standard Portland case helps.

Both counsel before us sought to rely on the case of
D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commr of Stamp Duties (N.S.W.) (1981-1982)149 C.L.R. 431 ; 82 ATC 4125 . This was a case about stamp duty. But the facts were very different to the case at bar. Its facts, set out in the headnote, were:

``A company owning certain land requested an associated company to act as trustee for it on the terms of a declaration of trust. The directors of the first company resolved that the proposed trustee would hold only the legal estate in the land and that the first company would not part with the beneficial ownership. The proposed trustee executed the declaration of trust by which it declared that it would hold the land upon trust absolutely for the first company and would do all such things as were necessary to vest the land back in its name and would deal with the land solely as it should direct. The first company then executed a memorandum of transfer of the land to the trustee `in consideration of nominal [sic] (the receipt whereof is hereby acknowledged), paid' to the company by the trustee.''

The relevant provisions of the N.S.W. Act brought to duty ``any instrument declaring that any property vested or to be vested in the person executing the same is or shall be held on trust for the person or persons mentioned therein''. The amount of duty payable was the ad valorem duty which would have been payable had the instrument been a conveyance of property.

Two issues which called for decision were whether any document was an instrument and the meaning of the phrase ``to be vested''. The majority of the justices held that the declaration of trust was liable to ad valorem duty as on a conveyance. They decided also that the whole legal and beneficial ownership passed from ``29 Macquarie'' to D.K.L.R. Both Gibbs C.J. and Aickin J. held that the property comprised in the declaration was the entire property and not the bare legal estate. There was no division of equitable and legal estate. Gibbs C.J. said at C.L.R. pp. 443-444; ATC pp. 4132-4133:

``The question which must then be considered is whether the memorandum of transfer was liable to ad valorem duty. The first submission on behalf of the appellant was that the property conveyed by the transfer was valueless. The submission was that before the memorandum of transfer was executed, 29 Macquarie had the full rights of a beneficial owner of the land, and after the execution of the transfer, when the declaration of trust took effect, it had the same beneficial rights. This is a variant of an argument which I have already rejected. I have pointed out that 29 Macquarie had the whole right of property in the land and transferred it to D.K.L.R. The fact that on the very instant when the transfer took effect the declaration of trust became effective does not mean that the real effect of the transfer was any different from its apparent effect. The transfer did what its purported to do, i.e., to transfer the whole property in the land to D.K.L.R. Before the transfer there had been no severance of the legal and equitable interests in the land. It was only when the declaration of trust took effect, which of course was immediately after the transfer, that there was a severance of the legal and equitable interests.

The present case bears a close analogy to
Commissioner of Stamp Duties (N.S.W.) v. Perpetual Trustee Co. Ltd. (Quigley's case) (1926) 38 C.L.R. 272 . In that case Q., who was beneficially entitled to certain property subject only to a life interest of one K. in part of it, conveyed the property to a trustee in trust for himself for life, with certain remainders over in favour of others. It was held that the instrument was liable to ad valorem duty in respect of the whole of the property thereby settled, including the life interest limited to Q. Counsel in that case submitted an argument similar to that which was advanced in the present case, saying, `The beneficial interest during the lifetime of the settlor was not conveyed. It remained after the conveyance where it was before' (p. 276). This argument was rejected. Knox C.J., Gavan Duffy and Starke JJ. said (at pp. 277-278):

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  • `He' [the settlor] `granted and assigned unto the trustee the whole of his property, and then proceeded to create new interests including a beneficial interest for himself. He held that interest under the settlement and under no other title.'

In the present case 29 Macquarie transferred the whole of the land to D.K.L.R. which then created a new equitable interest in favour of 29 Macquarie.''

At C.L.R. p. 463; ATC pp. 4144-4145 Aickin J. said:

``A preliminary argument advanced on behalf of D.K.L.R. was that the transfer of the land to it by 29 Macquarie was effective to transfer only the `bare legal estate' and to leave remaining in 29 Macquarie the entire beneficial interest. It was said that immediately prior to the transfer 29 Macquarie held both the unencumbered legal estate and the entire equitable interest in that property and that all that it had done was to transfer the legal estate. In my opinion this argument is based upon a fundamental misconception as to the nature of legal and equitable interests in land or other property. If one person has both the legal estate and the entire beneficial interest in the land he holds an entire and unqualified legal interest and not two separate interests, one legal and the other equitable. If he first holds the legal estate upon trust for some other person and thereafter that other person transfers to him the entire equitable interest, then again the first-named person does not hold two separate interests, one the legal and the other the equitable estate; he holds a single entire interest - he is the absolute owner of an estate in fee simple in the land. The equitable interest merges into the legal estate to comprise a single absolute interest in the land. It is a fundamental principle of both the common law and of equity that the holder of an estate in fee simple cannot be a trustee of that fee simple for himself for what he holds is a single estate, being the largest estate in land known to the law.''

Aickin J. was ``in the minority'' in the decision on some issues but this passage is in accord with the views of Gibbs C.J. and not at variance with the views of the other justices about the nature of legal and equitable interests in property.

White J. recited the above passages from the reasons of Gibbs C.J. and Aickin J. and said: ``At the moment before the contract was signed Myer had `both the legal estate and the entire beneficial interest in the land'. Myer, therefore, had at that time `an unqualified legal interest and not two separate interests, one legal and the other equitable' in the land and fixtures.''

Brennan J. said at C.L.R. pp. 473-474; ATC p. 4151:

``However, it was submitted that the property transferred was the bare legal estate, and that 29 Macquarie remained throughout the beneficial owner of the land. this conclusion was said to follow from the fact that it was the common intention of transferor and transferee that, upon the transfer, D.K.L.R. should hold the land in trust for 29 Macquarie. Yet the interest which 29 Macquarie had after the transfer was not the same as it had before. Before the transfer it did not hold legal and equitable estates in the property: it held the legal estate alone. There was no equitable estate, for a person cannot be trustee for himself alone.''

That is most important. In my opinion acceptance of Mr Doyle's argument would amount to saying that Myer was trustee for itself. As Mohr J. said during the hearing there cannot be an equitable estate without a trustee or at least someone holding the legal estate with a recognition of an equitable interest in someone else. White J. said: ``Myer's interest rested upon its legal ownership in possession impressed with the obligation to carry out the contract; and when the legal title did pass to Emanuel, a constructive trust in favour of Myer was impressed upon Emanuel to recognize Myer's equitable interest in the fixtures.''

I refer now to the reasons of Mason J. in D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commr of Stamp Duties (supra). Mr Doyle sought assistance from a passage in his Honour's reasons. His Honour said at C.L.R. pp. 449-450; ATC pp. 4136-4137:

``It is a fundamental principle of the law relating to stamp duties that duty is levied on instruments, not on the underlying transactions to which they give effect

ATC 4403

(
Commissioner of Stamp Duties (Q.) v. Hopkins (1945) 71 C.L.R. 351 , at p. 360 ). As we shall see when we come to consider the liability to duty on each of the instruments, in the case of a conveyance the statutory command is that it attracts duty on the property conveyed; in the case of the declaration it attracts duty on `the property comprised therein'. Consequently the issues are: (1) What was the property conveyed by the transfer?; and (2) What was the property comprised in the declaration? The decision on these issues hinges on the interpretation of the two instruments, that is, on the description given by them of the relevant estate or interest as applied to the facts of the case. It is a matter of ascertaining what is the property with which each instrument deals, according to its terms.

We cannot substitute for the issues presented by the statute a different issue having no foundation in the statutory provisions. Nor can we substitute for the property which the parties have chosen by their instruments to convey and make the subject of a declaration of trust the interest in property which in a practical sense represents the alteration in 29 Macquarie's position brought about by the combined operation of the two instruments.

The unacceptable consequences of the appellant's argument are illustrated by two examples, the first of which I take from the judgment of Hope J.A. A. conveys an absolute estate in fee simple to B. and takes from B. a lease back for fifty years. If the appellant is correct, A. has conveyed, not an absolute estate in fee simple, but the reversion expectant on the determination of a lease for fifty years and the conveyance is to be assessed for duty on this footing. How the lease is to be assessed on this approach does not emerge. Fortunately we do not have to solve this problem for the true position is that each instrument is to be separately assessed, the conveyance being assessed to duty on the property conveyed, viz. an absolute estate in fee.

The second example is closer to the present case. A. conveys an absolute estate in fee simple to B. who executes a declaration of trust acknowledging that he holds as trustee for A. absolutely. The appellant says, contrary to the fact, that the property conveyed is a bare legal estate. At common law A. might have conveyed a bare legal estate, but in the example given he has not done so and therefore duty is to be assessed on the footing that an absolute estate in fee was conveyed.

The decision in Commr of Stamp Duties (N.S.W.) v. Perpetual Trustee Co. Ltd. (Quigley's Case) (supra) strongly supports the proposition that we should look to the legal operation of the particular instrument, not to the net result of the transactions. There a person who was beneficially interested in real and personal property, subject only to a life interest of another person in part of it, executed a deed of settlement whereby he conveyed the property to a trustee on trust for himself for life with certain remainders over in favour of others. The question was whether the deed of settlement was liable to duty under s. 66(1) of the Stamp Duties Act 1920-1924 (N.S.W.). It was argued that the deed did not convey the beneficial interest during the lifetime of the settlor because it remained after the conveyance where it was with him before and that, accordingly, the value of that beneficial interest should be deducted from the value of the property conveyed. The argument was rejected by the Court.''

Mr Doyle allied these words to his submissions about looking beyond the conveyance. But although he denied it I think that his submission amounted to looking at ``the underlying transaction''. As Mason J. said you cannot do that. Applying some of the words of Mason J. I say that here it is not possible to substitute for the property which the parties have chosen to convey the alteration in position created by the operation of the documents. An ``absolute estate in fee'' in land and fixtures was conveyed because the fixtures were not (in Lord Lindley's words) ``movable chattels''.

In my respectful opinion White J. accurately summed up the result of the D.K.L.R. case so far as it touches this case. White J. said [at ATC p. 4012]:

``The other Judges of the High Court made it clear that there could be no transfer of a bare legal estate in fee simple and that the owner of the legal estate was, by virtue of

ATC 4404

that estate, entitled to every right which equity could in other circumstances protect, with the result that when the owner transferred away his legal estate he transferred with it all conceivable interests. Naturally, it would be open to the owner to reserve some equitable rights and interests in the land to himself or to himself and others but such equitable rights and interests would only be reserved as they would arise by way of regrant and be impressed upon the new estate in fee simple of the transferee. Being in the nature of a regrant, any such new interests would be characterized as reservations not as exceptions.''

Again I emphasise that the relevant time is the time when instruments are presented for stamping. At that time the Commissioner is bound to look at the instrument. He is to assess the duty and stamp the instrument. He is not to take into account the underlying transaction. He may look beyond the instrument to see what is being conveyed and to help him ascertain its value. But he cannot assess duty on the resultant change in the parties' position caused by the operation of instruments. The Commissioner must ascertain what property is being conveyed (or otherwise dealt with), ascertain the value of the property, assess duty and stamp the instrument. He may look beyond the instrument but parties may not create an unreal picture to meet his gaze. If an instrument conveys property the parties cannot exclude the property from the operation of the instrument for the purposes of stamp duty merely by saying that they exclude that property. They may, of course, create a situation different than (say) a mere conveyance by appropriate documents. Nor did Myer transfer or convey anything less than the full estate in land and fixtures.

The legislation about stamp duties is much the same in New Zealand as it is here. I think that the decision of the Court of Appeal in New Zealand in
Farm Products Co-operative (Tararua) Ltd. v. I.R. Commr (C.A.) (1969) N.Z.L.R. 874 is very helpful. The facts were set out thus in the headnote:

``The appellant entered into an agreement granting it, for a consideration of £ 10, an option to purchase all shares in Manawatu Mills Ltd. at £ 2 10s. 6d. per share, on terms that: all shares be transferred forthwith to the appellant to be held in trust for the vendors pending exercise of the option: no beneficial interest to pass meantime and if the option lapsed all shares to be retransferred to the vendors. Transfers were effected accordingly and the option was subsequently duly exercised orally. The transfers were thereupon presented for stamping and were assessed by the respondent with ad valorem stamp duty totalling £ 729 6s. 9d., each share being taken as worth £ 2 10s. 6d. This appeal is against the judgment of Haslam J. upholding, on a case stated, the assessment made by the respondent.''

The Court held that it is the value of the property transferred which determines the amount of duty assessed and that this is not affected by the retention or existence of any equitable interest. But the real question was ``on what basis should ad valorem duty be assessed?'' Turner J. said (at pp. 882-883):

``If the conveyance is a `conveyance on sale', the duty is computed on the value of the consideration, subject to what is provided by s. 65; for if the consideration expressed in the conveyance is inadequate having regard to the value of the property conveyed, that consideration is revisable under s. 65 to accord with a valuation. If the conveyance is one not `on sale' at all, but a `voluntary conveyance' (for by virtue of s. 63 it appears that all conveyances are one or the other) then their assessment is as on the value of the property conveyed. It will be seen, therefore, that in this case if the transfers were made for a consideration adequate having regard to the value of the property conveyed, then the assessment is on that consideration; if they were given otherwise than for consideration, or for a consideration inadequate having regard to the value of the property conveyed, then the assessment will be on the value of the property. The whole question, then, is as to the value of the property conveyed by the transfers. If what was conveyed was worth, as the Crown contends, something of the order of $200,000, then the assessment of the Commissioner must stand, either under ss. 65 and 66(c) or under s. 66(c) simpliciter, as a voluntary conveyance. If on the other hand the value of what was conveyed was substantially nil, then the

ATC 4405

provisions as to voluntary conveyances and conveyances for inadequate consideration cannot apply, and Mr Barton's submission must succeed.

I have no doubt at all that what was conveyed was the shares. This is what the transfer says was transferred, and it is therefore the value of the shares with which s. 65 is concerned. It seems to me meaningless to speak of the transfers as transferring the `bare legal estate' in the shares, or of valuing this `bare legal estate'. The shares were property. They were transferred. He who takes a transfer or conveyance of the legal estate in property takes a transfer or conveyance of that property. The property of which he takes a transfer or conveyance may be the subject of equitable interests vested in equity in another. But this does not affect the position at law: and at law he becomes the proprietor of the property of which he has taken a transfer or conveyance. It is the value of the property transferred on conveyance which determines assessment, and this is unaffected by the existence of any outstanding equitable interest.''

McCarthy J. said (at p. 887):

``The property here transferred was shares. These documents entitled the transferees to be registered as proprietors of those shares without qualification as far as the company was concerned. It is the value of the property transferred, and not the value of a particular proprietary right or equity in that property, which determines the amount of duty.''

The property transferred in the case at bar was the real estate including the fixtures. The instrument to be assessed for duty conveyed the whole of Myer's title to or interest in these fixtures.

The value of the fixtures here must be included in the value of the property passing under the memoranda of transfer. These fixtures could have been ``excluded out'' by severing them from the building before the time for assessing stamp duty arrived. Perhaps they could have been excluded by the use of instruments other than those used here. But the memoranda of transfer each transferred in estate a fee simple in the land and the relevant certificates of title. Fixtures are part of the land because they are annexed to the soil or to buildings on the soil. They may cease to be fixtures if they become or are treated as movable chattels. They did not here. It is the instrument which is to be stamped. It is the property passing pursuant to or on the face of the instrument which is brought to duty. It is the whole estate and interest in land, building and fixtures which passed under these memoranda of transfer. There was no attempt at retaining any equitable interest by Myer. Nor could any retaining have had any effect had it happened [ D.K.L.R. Holding Co. (No.2) Pty. Ltd. v. Commr of Stamp Duties N.S.W. (supra) and Farm Products Co-operative (Tararua) Ltd. v. I.R. Commr (C.A.) (supra) ]. Here there was no separation of legal and equitable estate or interests. There was no retaining of anything by Myer. The memoranda of transfer spoke of the ``fee simple''. That was the estate and interest which the transferors had. The memoranda of transfer said that they passed those estates, not some parts of it, not one of two separate estates (which do not exist) but the whole of those estates and interests. On looking beyond the memoranda of transfer the Commissioner saw that some things were said to be excluded from the sale. He did not deny that that might have been effective between vendor and purchaser. But he correctly contended that the things were fixtures because, as I say again, they were not treated as movable chattels. They were within the whole estate and interest which the transferors had. Therefore they passed. Therefore the value of the property passing included the value of the fixtures. The Commissioner was right. So was White J.

I would dismiss the appeal.


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