Commissioner of Stamp Duties (N.S.W.) v. Pendal Nominees Pty. Limited and Anor

Members: Mason CJ
Brennan J

Deane J
Dawson J
Toohey J

Tribunal:
High Court

Decision date: Judgment handed down 16 March 1989.

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Deane and Dawson JJ.

The relevant facts and statutory provisions are set out in the judgments of the Chief Justice and of Toohey J. We shall avoid unnecessary repetition of them.

The deed of sale of 28 June 1983 (``the sale deed'') incorporated agreements for the sale and purchase of two separate parcels of shares (``the Seven Hills shares'' and ``the St Ives shares''). The sale of the Seven Hills shares was by RDC Holdings Limited (the registered holder) to BT Australia Limited (``BTA''). The sale deed provided that, on completion, the transfer of those shares would be to Pendal Nominees Pty. Limited (``PN'') which was a wholly owned subsidiary of BTA. The sale of the St Ives shares was by RDC Holdings Limited and RDC Properties Pty. Limited (the registered holders) to Suburban Centres (Seven Hills) Pty. Limited. The two sales were related; completion of the one was made conditional upon, and was to be contemporaneous with, completion of the other. It is common ground that the sale deed attracted ad valorem duty under the Stamp Duties Act, 1920 (N.S.W.) (``the Act'') by reason of its predominant operation and character as an agreement for sale of the two parcels of shares and that it has been duly stamped with such duty.

The Commissioner's claim to a second lot of ad valorem duty calculated by reference to the value of the Seven Hills shares is founded upon the statement in cl. 1.4 of the sale deed that, after the delivery to BTA of transfers of the Seven Hills shares in favour of PN, ``PN shall hold such shares as nominee for BTA''. The Commissioner submits that that statement, in a deed executed by PN, gave the sale deed a distinct character as an instrument of the kind described in para. (2)(a) under the heading ``Declaration of Trust'' in the Second Schedule to the Act, namely, as an ``instrument declaring that... property'' (viz.: the Seven Hills shares)

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``to be vested in the person executing the instrument'' (viz.: PN) ``shall be held in trust for the person... mentioned therein'' (viz.: BTA). The Commissioner contends that, in the circumstances, sec. 17(1) of the Act is applicable with the result that there is payable the further ad valorem duty which would have been payable if PN had executed a separate instrument of the kind described in para. (2)(a). For their part, the respondents contend that the provision that PN shall hold the Seven Hills shares as nominee for BTA did not constitute additional dutiable matter as a declaration of trust. That provision was not, when read in context, a ``distinct'' matter for the purposes of sec. 17(1). It was, so it was said, merely explanatory and at most recorded an obligation which was imposed aliunde (i.e. by the provisions of a separate trust deed or by operation of law). For that reason, so the argument continued, there was no declaration of trust but, even if there were, it was merely ancillary to the character and object of the sale deed as an agreement for the sale of two parcels of shares. The respondents also submitted that, if cl. 1.4 did attract additional duty as a declaration of trust, the additional duty was nominal only for the reason that the applicable provision was para. (1) or (3)(b) (under the heading ``Declaration of Trust'') and not para. (2)(a). It is convenient to consider first the respondents' submission that, regardless of whether it amounts to a declaration of trust, the provision of the sale deed that ``PN shall hold such shares as nominee for BTA'' did not constitute a distinct matter so as to attract duty pursuant to sec. 17(1).

The respondents placed particular reliance upon the traditional rule ``that all that is required is, that the instrument should be stamped for its leading and principal object, and that this stamp covers everything accessory to this object'' (see
Limmer Asphalte Paving Co. v. I.R. Commrs (1872) L.R. 7 Ex. 211 at p. 217 , and
Price v. Thomas (1831) 2 B. & Ad. 218 ; ( 109 E.R. 1125 ) ). That rule cannot, however, operate as more than an aid to the construction of sec. 17(1) of the Act. The question posed by sec. 17(1) does not require the identification of the ``leading and principal object'' of an instrument. The fact that a provision serves a subordinate or non-leading ``object'' will not, of itself, necessarily preclude it from constituting a ``distinct'' matter for the purposes of sec. 17(1). That is not to say that the rule articulated in the Limmer Asphalte Paving Co. case is irrelevant to the construction of provisions of the kind contained in sec. 17(1). The rule remains relevant in its disregard of the merely ``accessory''. A provision in an instrument will not properly be seen as a ``distinct'' matter for the purposes of sec. 17(1) if it is merely accessory or ancillary to an operation or character of the instrument which brings it within a particular category of dutiable instruments under the Act. Thus, in the present case, the operation and character of the sale deed as an agreement for sale of shares bring it within a particular category of dutiable instrument under the Act. If the provision of cl. 1.4 is properly to be seen as merely accessory or ancillary to that operation and character, it cannot, in our view, properly be seen as constituting a ``distinct'' matter for the purposes of sec. 17(1).

The Act itself contains several indications that a declaration of trust by a person in whom property is, upon purchase, vested as trustee should be seen, for stamp duty purposes, as an incident of, or ancillary to, the agreement for sale or the conveyance of the relevant property. Thus, para. (1) under the heading ``Declaration of Trust'' in the Second Schedule imposes only nominal duty upon an instrument declaring that an apparent purchaser of property holds it in trust for the person or persons who actually paid the purchase price. Again, para. (3)(b) imposes only nominal duty upon an instrument declaring the same trusts as those upon or subject to which the same property was conveyed to the person declaring the trust by an instrument stamped with ad valorem duty. In the first case (i.e. para. (1)), the agreement for sale under which the trustee was the apparent purchaser and the separate instrument containing a declaration of trust would, when read together, incorporate both the purchase in the name of the trustee and the declaration by the trustee of the trusts upon which the legal estate was acquired. Yet only one lot of ad valorem duty would be payable (i.e. on the agreement for sale), presumably on the basis that the declaration of trust was ancillary to the agreement for sale which would attract ad valorem duty. In the second case (i.e. para. (3)(b)), the conveyance and declaration of trust would, if read together, effect the purchase in the name of a trustee and incorporate a

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declaration by the trustee of the trust upon which the legal estate was held. Again, only one lot of ad valorem duty would be payable (i.e. on the conveyance), presumably on the basis that the declaration of trust was ancillary to the conveyance. In each case, the declaration of trust can be seen as identifying the legal and equitable interests acquired. In that statutory context, it may be arguable that a provision in an actual agreement for sale to the effect that the legal owner on completion will hold the property purchased as trustee for a nominated beneficiary should not in any circumstances be treated as a matter distinct from the transaction of sale for the purpose of sec. 17(1) of the Act. Such a provision may be seen as an incident of the actual sale in that it identifies the prospective proportions and interests (legal and equitable) acquired by the individuals involved in the purchase. It is, however, unnecessary to go so far in the circumstances of this case because here, even if it were otherwise possible that the relevant provision might constitute a distinct matter, the context of that provision clearly points to the conclusion that it is merely accessory or ancillary to the operation and character of the sale deed as an agreement for the sale of shares.

The sale deed expressly stated that BTA had agreed to purchase the Seven Hills shares ``in its capacity as trustee of the BTA Property Trust''. The trust deed governing that trust appointed BTA as trustee and provided (cl. 4) that the assets of the trust (``the fund'') were to be held by the trustee ``upon trust for the Unit Holders subject to and upon the terms of this deed''. Clause 29(j) of that trust deed authorised the trustee to ``cause all or any of the assets constituting the Fund to be vested in a nominee of the Trustee to be held by such nominee upon the trusts of this deed '' (emphasis added). By cl. 30(d), the trustee covenanted that ``any nominee of the Trustee will duly observe and perform the covenants and obligations of this deed in the same manner as is required of the Trustee '' (emphasis added). Those provisions of the trust deed lend support for the view that, in a case where assets of the fund are vested in a nominee of the trustee pursuant to the terms of the trust deed, the effect of the trust deed is that the nominee holds the assets so vested directly in trust for the unit holders (i.e. ``upon the trusts of this deed'') and not in trust for BTA in its capacity as trustee. Be that as it may, what is important for present purposes is that it is clear that a person in whom assets of the Fund are vested as a nominee of the trustee pursuant to the provisions of the trust deed will, in the absence of some countervailing equity, hold them ``upon the trusts of'' that deed as properly construed whether directly or through BTA.

The statement in cl. 1.4 of the sale deed that PN would hold the shares ``as nominee for BTA'' could not properly be seen as intended to override the applicable provisions of the trust deed. As has been said, the sale deed expressly recorded that BTA was acting in its capacity as trustee of the BTA Property Trust. That being so, the statement that PN would hold the shares as nominee for BTA represented no more than an acknowledgment of the plain fact that PN held the shares as BTA's nominee under the provisions of the trust deed. The terms upon which PN was bound to hold the shares were those of the trusts declared by the trust deed itself. If, upon the proper construction of the trust deed, a nominee of a trustee holds fund property directly for the unit holders, the statement in cl. 1.4 of the sale deed that PN held the shares as nominee for BTA could not properly be construed as a declaration of a trust for BTA as distinct from the unit holders. If, upon the proper construction of the trust deed, such a nominee holds fund property in trust for the trustee, PN would none the less hold the Seven Hills shares, as the trust deed expressly requires, upon the terms of the trusts of that deed.

In these circumstances, the provision in cl. 1.4 of the sale deed that PN would hold the shares as nominee for BTA was not an independent or overriding declaration of trust. In a context where the sale deed expressly acknowledged that BTA was acting in its capacity as trustee of the BTA Property Trust, it correctly identified the respective roles of PN and BTA in the actual purchase and represented no more than an acknowledgment of the fact that, after transfer, PN would hold the shares as BTA's nominee under the trust deed. It was merely accessory or ancillary to the operation and character of the sale deed as an agreement for the sale and purchase of the two parcels of shares and did not attract additional duty as a ``distinct'' matter under sec. 17(1) of the Act. That being so, it is unnecessary to consider the alternative submission, advanced on behalf of

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the respondents and upheld in the Court of Appeal, to the effect that, if such additional duty was payable, it was nominal only.

We would alter the answers given by the Court of Appeal to the first three questions asked in the stated case so that they accord with the answers given to them by David Hunt J. at first instance. So altered, the answers to those three questions would read: Question 1: No; Questions 2 and 3: Unnecessary to answer. Otherwise, we would dismiss the appeal with costs.