Pancontinental Mining Limited v. Commissioner of Stamp Duties (Qld)Judges: Andrews CJ
de Jersey J
Supreme Court of Queensland (Full Court)
de Jersey J.
By an agreement in writing dated 22 August 1985 Mt Isa Mines Limited (``Isa'') agreed to sell to the appellant what is referred to in the agreement as ``the Isa Interest''. That was defined in the agreement (cl. 1.2) to mean Isa's interest in certain mining lease applications, certain shares in a company named Lady Loretta Mining Company Pty. Ltd., and Isa's interests in certain agreements (the ``Lady Loretta Management Agreement'' and the ``Joint Venturers' Related Agreements''), together with incidental rights etc. These matters related to a joint venture in which Isa held a one-half interest.
Clause 2.2 of the agreement is in these terms:
``Subject to the terms of this Agreement, Pancon shall pay Isa the following amounts in respect of the following assets comprising the Isa Interest:
- (a) Mining Tenements including buildings and other fixed improvements maintained for the Joint Venture for the sum of $5,962,624;
- (b) Plant including fixed and movable plant maintained for the Joint Venture and classified as allowable capital expenditure under Section 122A of the Income Tax Assessment Act 1936 or depreciable expenditure under Section 54 of the Income Tax Assessment Act 1936 for the sum of $75,400;
- (c) Mining Information arising from as a result of feasibility studies and exploration work conducted with respect to the Joint Venture Area and being confidential information provided to Pancon for the sum of $4,457,224;
- (d) Consumable stores and inventory spares held for the sum of $4,750;
- (e) All of the Class A Shares of LLM for the sum of $1;
- (f) Any other matter or thing, right, power or privilege comprising the Isa Interest for the sum of $1.
The above amounts are collectively hereafter referred to as the Purchase Price.''
The respondent assessed stamp duty on the agreement in the sum of $390,975. He relied on para. 4 of the ``conveyance or transfer'' head of duty in the First Schedule to the Stamp Act 1894-1987. Paragraph 4 relates to the conveyance or transfer of any property, upon a sale, for a consideration not less than the full unencumbered value of the property. Under that paragraph, ad valorem duty is calculated by reference to that consideration. I take it that the respondent calculated duty in this case upon the total of the components of consideration set out in cl. 2.2.
The appellant contends that no duty was chargeable on the component of consideration of $4,457,224, relating to the confidential mining information mentioned in cl. 2.2(c), because that mining information provided by Isa to the appellant is not property within the meaning of para. 4 of the head of duty.
In my opinion that contention is correct. There is no definition of ``property'' in the Act, but the ordinary meaning of the word does not encompass information. There is plenty of support for that view in the authorities.
For example, in
Brent v. F.C. of T. 71 ATC 4195 at p. 4198; (1971) 125 C.L.R. 418 at p. 425 Gibbs J., as he then was, said this:
``It is not possible speaking strictly to say that in communicating the information to the agents of the company the appellant was parting with property. Neither knowledge nor information is property in a strictly legal sense, although they can be said to be property in a loose metaphorical sense and have been referred to as property in a number of cases.''
Latham C.J. in
F.C. of T. v. United Aircraft Corporation (1943) 68 C.L.R. 525 at p. 534 said:
``Knowledge is valuable, but knowledge is neither real nor personal property. A man with a richly stored mind is not for that reason a man of property. Authorities which relate to property in compositions, etc., belong to the law of copyright and have no bearing upon the question whether knowledge or information, as such, is property. It is only in a loose metaphorical sense that any knowledge as such can be said to be property. Either all knowledge is property, so that the teaching of, for example, mathematics, involves a transfer of property, or only some knowledge is property. If only some knowledge is property then it must be possible to state a criterion which will distinguish between that knowledge which is not property and that knowledge which is not property. The only criterion which has been suggested is the secrecy of the knowledge - it is said that the fact that knowledge is secret in some way creates a proprietary right in that knowledge. I confess myself completely unable to appreciate this proposition as a legal statement.''
Along similar lines are the observations of Lord Upjohn in
Phipps v. Boardman (1967) 2 A.C. 46 at p. 127:
``In general, information is not property at all. It is normally open to all who have eyes to read and ears to hear. The true test is to determine in what circumstances the information has been acquired. If it has been acquired in such circumstances that it would be a breach of confidence to disclose it to another then courts of equity will restrain the recipient from communicating it to another. In such cases such confidential information is often and for many years has been described as the property of the donor, the books of authority are full of such references; knowledge of secret processes, `know how', confidential information as to the prospects of a company or of someone's intention or the expected results of some horse race based on stable or other confidential information. But in the end the real truth is that it is not property in any normal sense but equity will restrain its transmission to another if in breach of some confidential relationship.''
J.V. (Crows Nest) Pty. Ltd. v. Commr of Stamp Duties (N.S.W.) 85 ATC 4198. The communication of the information could not therefore amount to the transfer of property.
In my view this agreement was both a contract for the sale of property (for example, that referred to in cl. 2.2(a), (b), (d) and (e)) within the meaning of para. 4 of the heading ``Conveyance or Transfer'', and an agreement for the performance of a service by Isa for the benefit of the appellant, being the disclosure of the confidential information referred to in cl. 2.2(c). The agreement was chargeable with ad valorem duty in respect of the former matter, but nominal duty only in respect of the latter. That differential treatment of those separate aspects of the agreement is required by sec. 15(b) of the Act.
Counsel for the respondent submitted that the agreement involved a sale of Isa's interest under the joint venture agreement - the benefit of a contract, part of that benefit being the information in question. Now one readily accepts that the assignment of rights under a contract may amount to a transfer of property. See
Danubian Sugar Factories Ltd. v. I.R. Commrs (1901) 1 Q.B. 245 at p. 257 and
Allgas Energy Ltd. v. Commr of Stamp Duties (Qld) 80 ATC 4020 at p. 4024. The information referred to in cl. 2.2(c) of this agreement may not however be characterised as rights under a contract, in this case the joint venture agreement. The information is likewise not to be regarded as part of the benefit of a contract being assigned. The fact that Isa may have acquired the information through exercising rights under the joint venture agreement obviously does not give the information itself the quality of a chose in action, or place it into the category of
ATC 4193contractual rights being assigned: it remains mere information.
Counsel submitted in the alternative that this information is analogous to the ``know how'' referred to in cases like
Rolls Royce Ltd. v. I.R. Commrs (1962) 1 W.L.R. 425 and
Moriarty v. Evans Medical Supplies Ltd. (1958) 1 W.L.R. 66, capable of being dealt with and transferred and in that sense possessing a proprietary quality. It suffices to say that those cases were not concerned with the transfer of property, but with the different question whether, for taxation purposes, receipts from sales of know how etc. bore the character of capital or income.
Counsel's final submission was that the information in question is not intangible because it relates to documents identified as ``feasibility studies and analyses, budgets and forecasts'' etc. in cl. 7.3 of the agreement, which Isa is bound to preserve confidentially. I am not persuaded that the information referred to in cl. 2.2(c) is necessarily to be found in those documents. But if some of the information does appear in them, the communication of that information is clearly not for that reason converted into a transfer of property. It would be quite wrong to confuse the information with the physical record: cf. Rolls Royce, supra, at p. 431. The information itself remains intangible.
I would allow the appeal and answer the questions set out in the case stated as follows:
- (a) Is the said instrument dated 22 August 1985 liable to be charged with such ad valorem duty as is specified under the head of charge ``Conveyance or Transfer'' on the sale of any property other than stock or marketable security in the First Schedule to the said Act, as assessed by the Commissioner of Stamp Duties?
- Answer: No.
- (b) If ``No'' to (a) is the said instrument liable to be charged with duty in part under the said heading and/or under any other and if so which heading in the said Schedule?
- Answer: The instrument is to be charged with ad valorem duty under that head only upon that part of the consideration set out in cl. 2.2 which relates to property, and excluding the consideration set out in para. (c) of that clause. In respect of the consideration set out in para. (c), relating to the information there specified, the instrument is to be charged with duty of 50 cents only under the heading, ``Agreement under hand''.
- (c) Is the duty payable on the said instrument $390,975?
- Answer: No.
- (d) If ``No'' to (c) is any other and if so what amount payable as duty on the said instrument?
- Answer: Duty calculated in accordance with the answer to question (b) is payable.
- (e) How should the costs of and incidental to the stating of this case and the appeal thereon be borne?
- Answer: The respondent should pay the appellant's costs of and incidental to the stating of this case and the appeal thereon, to be taxed.
[Andrews C.J. and Thomas J. both concurred with the reasons of de Jersey J.]