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

Judges:
Mason CJ
Brennan J
Deane J
Dawson J
Toohey J

Court:
High Court

Judgment date: Judgment handed down 16 March 1989.

Mason C.J.

This appeal raises questions as to the operation of sec. 17 of the Stamp Duties Act, 1920 (N.S.W.) (``the Act'') and certain provisions set out under the heading ``Declaration of Trust'' in the Second Schedule of that Act.

On 1 December 1976 the second respondent, BT Australia Limited (``BTA''), executed a trust deed (``the trust deed'') which established a unit trust known as the BTA Property Trust. BTA declared in cl. 4 of the trust deed that it would ``hold the Fund upon trust for the Unit Holders subject to and upon the terms of'' the deed. Clause 3(2)(i) defined the ``Fund'' to include the trust fund constituted by the trust deed and the investments from time to time of that fund.

Clause 10(4)(ii) provided that certain investments of the fund should vest in BTA upon delivery of stamped transfers in favour of BTA or its nominee, subject to a solicitor acting for BTA certifying that the transfers were registrable. The reference to a nominee is explained by cl. 29(j), which empowered BTA to cause any of the trust assets to be vested in its nominee and held by its nominee upon the trusts of the deed. BTA 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'': cl. 30(d). The trust deed made no express reference to the first respondent, Pendal Nominees Pty. Limited (``PN''). PN was at all material times a wholly owned subsidiary of BTA.

On 28 June 1983, various companies including BTA and PN executed a deed of sale (``the sale deed'') pursuant to which BTA agreed to purchase certain shares from another party, RDC Holdings Limited (``RDC''). The exchange of counterparts took place on the same day, as did the sale pursuant to the sale deed.

The sale deed obliged BTA upon completion to pay to RDC the purchase price for the shares: cl. 1.3. Further, cl. 1.4 stated:

``RDC shall on completion deliver to BTA transfers of the... [s]hares in favour of PN and PN shall hold such shares as nominee for BTA.''

By cl. 3.3.1, RDC was bound to deliver to BTA duly executed transfers in favour of PN along with relevant share certificates and corporate records. Clause 7 contained warranties given by BTA, RDC and certain other parties to the sale deed (not including PN), and cl. 9 permitted the covenants and warranties contained in the sale deed to be enforced by ``BTA (in its capacity as trustee of the BTA Property Trust), PN (both for itself and as nominee for BTA in its capacity as trustee of the BTA Property Trust), RDC'' and other parties.

The sale deed was charged with ad valorem stamp duty as an agreement for the sale of shares. The respondents did not dispute that this document was properly so charged upon that basis. However, the Commissioner also assessed the document to further ad valorem duty upon the basis that it constituted a declaration of trust in respect of the shares within the terms of para. (2)(a) under the heading ``Declaration of Trust'' in the Second Schedule of the Act. The Commissioner relied upon the terms of cl. 1.4, set out above. Paragraph (2)(a) is in the following terms:

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``Any instrument declaring that any property vested or to be vested in the person executing the instrument is or shall be held in trust for the person or persons or purpose or purposes mentioned therein notwithstanding that the beneficial owner or person entitled to appoint that property may not have joined therein or assented thereto.''

The respondents appealed against the Commissioner's assessment by way of case stated pursuant to sec. 124 of the Act. They alleged before David Hunt J. in the New South Wales Supreme Court [reported at 86 ATC 4774] that the sale deed was not a document falling within para. (2)(a), or alternatively that it was a document falling within para. (1), which imposes nominal duty only. Paragraph (1) reads as follows:

``Any instrument declaring that a person in whom property is vested as the apparent purchaser thereof holds the same in trust for the person or persons who have actually paid the purchase-money therefor.''

David Hunt J. held that cl. 1.4 did no more than record an obligation which was in any event imposed upon BTA by operation of the general law, and thus held that no duty was payable upon the sale deed beyond the undisputed ad valorem duty upon the agreement for sale of the shares. His Honour expressed the further view that in any case he would have held the sale deed to fall within para. (1) rather than para. (2)(a).

The Commissioner appealed against this decision to the Court of Appeal. Mahoney J.A. (with whom Kirby P. and HcHugh J.A. agreed) [reported at 88 ATC 4026] held that the sale deed was a document within the terms of para. (2)(a) rather than para. (1), but went on to hold that the terms of para. (3)(b) were ultimately applicable. This paragraph, like para. (1), imposes only nominal duty, and refers to:

``Any such instrument as aforesaid by which... the trusts declared are the same trusts as those upon or subject to which the same property was conveyed to the person declaring the trust by an instrument duly stamped with ad valorem duty under this Act...''

The Commissioner now appeals against the decision of the Court of Appeal to the extent that it held that para. (3)(b) was applicable. The respondents in turn contend that the decision should be affirmed but on different grounds.

It was accepted by all parties, although the matter is perhaps not free from doubt, that if either of the provisions imposing nominal duty were to apply, then they would exclude the operation of the paragraph imposing ad valorem duty. So much can therefore be assumed in the construction of the legislation.

Before examining these charging provisions it is necessary to consider the effect of sec. 17(1) of the Act, which states:

``Except where express provision to the contrary is made by this or any other Act, an instrument containing or relating to several distinct matters is to be separately and distinctly charged with duty in respect of each of such matters, as if each matter were expressed in a separate instrument.''

There being no ``express provision to the contrary'' in the present case, the question arises whether the sale deed deals with ``several distinct matters'' when it deals with the sale of shares and the provision in cl. 1.4 that PN is to hold the shares as nominee for BTA. The effect of that provision is of central importance in answering this question.

If the second part of cl. 1.4 were regarded as simply declaratory of the general law, it would be at least strongly arguable that it is not a matter distinct from the sale of shares and hence not independently dutiable. However, if it is determined that cl. 1.4 operates to impose positive obligations upon PN additional to those it may have had imposed upon it under the general law, or seeks to impose certain obligations regardless of the form of other obligations which might be imposed by the general law, then it may be more readily concluded that there are two distinct matters involved.

On its face, the clause purports to impose an obligation upon PN to hold the shares on trust for BTA and would therefore amount to a covenant by PN. However, the respondents contended that the relevant part of the clause has no operative effect and merely states what would in any event be an obligation of PN imposed by the general law as a consequence of BTA having contributed the purchase money for the shares. It was argued before David Hunt J. and the Court of Appeal that in this

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circumstance duty would not be payable, and reliance for this conclusion was placed upon
Mullett v. Huchison (1828) 7 B. & C. 639 ( 108 E.R. 861 ) ;
Lawrance v. Boston (1851) 7 Ex. 28 ( 155 E.R. 842 ) and
Annandale v. Pattison (1829) 9 B. & C. 919 ( 109 E.R. 342 ) . However, as will appear below, in this Court this argument was advanced in the terms I have set out in the preceding paragraph.

Clause 1 contains several provisions whose purpose is to create covenants of the various parties to the sale deed enforceable by those parties. The word ``shall'' is repeatedly used in the clause to give effect to this intention. It seems to me that cl. 1.4 likewise contains in its second part a covenant by PN which it is intended will be enforceable by the other parties to the sale deed. Indeed, this covenant appears to be one of the reasons for PN having been made a party to the document at all. Further, by creating an obligation for the benefit of and enforceable by the other parties (pursuant to cl. 9), cl. 1.4 is doing more than simply recording an obligation imposed by law, since the general law would not permit all the parties to enforce any trust it might impose. And cl. 1.4 would be operative even if the circumstances giving rise to a resulting trust never occurred, for example if the purchase money were in fact paid by an entity other than BTA. Once it is recognised that cl. 1.4 extends beyond the ambit of the general law, it becomes impermissible to regard the part of that provision which constitutes a declaration of trust as no more than a recitation of the general law not intended to create obligations between BTA and PN.

Had it been the intention of the parties to do no more than record an unwritten obligation, then it would not have been expressed in the same terms as provisions imposing covenants and the use of the mandatory form of expression would have been an inappropriate means of expressing what was intended. For these reasons, the second part of cl. 1.4 amounts to a positive covenant of PN rather than a mere acknowledgment of an obligation arising under the general law.

Since two obligations are created by cl. 1.4, it is necessary to decide whether these amount to ``distinct matters'' for the purposes of sec. 17(1).

The statutory concept of ``distinct matters'' has traditionally been associated with the rule enunciated by Martin B. in
Limmer Asphalte Paving Co. v. I.R. Commrs (1872) L.R. 7 Ex. 211 in these terms (at p. 217):

``There is no better established rule as regards stamp duty than 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.''

This rule has been described as a common law rule. It may be traced back as far as
Pratt v. Thomas (1831) 4 C. & P. 554 ( 172 E.R. 822 ) ;
sub nom. Price v. Thomas (1831) 2 B. & Ad. 218 ( 109 E.R. 1125 ) which was decided long before a provision in the form of sec. 17(1) first found its way into the United Kingdom Stamp Act of 1870 (33 and 34 Vict. c. 97): see sec. 8 of that Act. But it should be noted that the Act of 1815 (55 Geo. III c. 184) contained a similar provision under the heading ``Conveyance''. It is likely that the common law rule was fashioned with this provision in mind. Be this as it may, the statutory provision seems to have been regarded as being consistent with the common law rule, no doubt on the footing that, in general, a provision that is merely accessory or merely ancillary to the principal transaction or obligation embodied in an instrument is not a ``distinct'' matter which attracts additional duty: see
Freeman v. I. R. Commrs (1871) L.R. 6 Ex. 101 ;
Hadgett v. I. R. Commrs (1877) 3 Ex. D. 46 ;
Worthington v. Warrington (1848) 5 C.B. 635 ( 136 E.R. 1027 ) . However, what must be recognised is that sec. 17(1) now provides the governing rule. The old common law rule, being entirely subservient to the statutory provision, cannot generate a life of its own. The utility of the old rule is limited; it conveys the idea, which conforms to the statutory concept of distinctness, that a provision which is merely accessory or merely ancillary to a particular transaction or obligation embodied in an instrument is not a matter ``distinct'' from that transaction or obligation. But, in judging what is merely accessory or merely ancillary, the court must always have regard to the statutory concept itself. The court cannot expand or confine that concept by attributing a narrow or broad operation to what is accessory or ancillary.

Once this is acknowledged, as it must be, it is impermissible to characterise an instrument by reference to a single broad purpose or object so that all obligations created by the instrument

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may be treated as subsidiary or accessory to that object or purpose. Neither the terms of the subsection nor the authorities lend support to such a broad-brush approach. This does not, however, require that two matters which truly form part of the same transaction embodied in a document must necessarily be treated as ``distinct'' for the purposes of determining the liability to stamp duty of that document in relation to that transaction.

The correct approach was stated by Sugerman J. in
Bambro (No. 2) Pty. Ltd. v. Commr of Stamp Duties (1963) 80 W.N. (N.S.W.) 1142 where he said (at p. 1146):

``I see no reason for concluding that `matters' may not be `distinct' in the sense now under consideration even though in a contractual sense, and in terms of the instrument which embodies them, they are integrated and interlocked as parts of a single larger transaction or bargain or agreement. Matters contained in the same instrument are distinct for the purposes of sec. 17(1) when it is necessary to regard them separately in order to assess the same amount of duty as would have been assessable if each had been expressed in a separate instrument, more particularly when each falls within a different classification created by the Act for the purpose of specifying the nature (fixed or ad valorem) and amount or rate of the duty payable.''

This statement was approved by Andrews S.P.J. and Macrossan J. in
Pagan v. Commr of Stamp Duties (Qld) 83 ATC 4320 ; (1983) 2 Qd.R. 466 ; their Honours also observed (at ATC p. 4323; Qd.R. p. 469) that ``the proper approach to interpretation of the document and [to the] applicability of [the Queensland provision equivalent to sec. 17(1)] lies outside any search for a principal or leading object''.

The point, as Adam J. noted in
Comptroller of Stamps v. Martin (1967) V.R. 369 (at p. 375) , is that to be ``distinct'' the matters ``must be different from the point of view of the Stamp Act and taxation'' and be, if they had been the subject of a separate instrument, separately and distinctly dutiable.

Each case will depend on its particular facts, and will necessarily involve questions of impression and degree, but in the present case, I consider that the two matters dealt with in cl. 1.4 are distinct, and that it cannot be said that one is accessory to the other. Two separate and different matters are dealt with which would have been individually assessable for stamp duty had they been expressed in separate documents. Neither is merely ancillary to the other, especially in view of the fact that on its proper construction the second matter does not consist simply of a statement explaining the consequences under the general law of the effecting of the transfer described in the first matter. Their combination in cl. 1.4 is thus an instance of the type of composite instrument to which sec. 17(1) is addressed. I would regard that provision as applicable accordingly. I note that the same view was taken by Sheppard J. of a contract of sale in which the purchaser was described as being ``trustee for'' a certain person, in
Farrar v. Commr of Stamp Duties (1975) 5 A.T.R. 364 .

I referred earlier to the argument raised in the courts below invoking the alleged common law rule that, to the extent that provisions in a document do no more than record an obligation which is imposed regardless of those provisions by the general law, those provisions do not attract stamp duty. The respondents therefore contended that the sale deed could not be dutiable as a declaration of trust, for even if cl. 1.4 contained enforceable covenants, that part which would have attracted duty as a declaration of trust did no more than record a general law obligation. On this argument, the fact that this obligation operates as a covenant in favour of third parties would not affect the document's liability to duty as a declaration of trust. In the present case, however, the common law proposition contended for could have relevance only indirectly, in so far as it relates to the question whether the second part of cl. 1.4 is for stamp duty purposes ``distinct'' from the sale provision. It could not operate directly because para. (3)(b) (among other provisions) now extends over the field or part of the field covered by the suggested common law rule. Attention was not directed to this provision at first instance and the argument did not require consideration in the Court of Appeal. It must be concluded, as counsel for the respondents conceded before us, that the suggested rule could not operate in these circumstances without depriving para. (3)(b) of all meaning. It is therefore not necessary to decide whether the common law rule in fact exists or what may be its scope.

ATC 4213

Turning to the liability of the sale deed to stamp duty as a declaration of trust, the central charging provision in this case is that contained in para. (2)(a), which is set out above. The provision imposes liability upon the person declaring the relevant trust or the person directing its declaration. The Commissioner asserts that PN made the declaration by cl. 1.4 at the direction of BTA. It is not necessary to consider whether the sale deed amounts to a declaration of trust in the ordinary sense of that expression, so long as it falls within the terms of the description of ``Declaration of Trust'' in the Second Schedule of the Act:
D.K.L.R. Holding Co. (No. 2) Pty. Ltd. v. Commr of Stamp Duties (N.S.W.) 82 ATC 4125 at pp. 4128-4129, 4139-4140 and 4149-4150; (1981-1982) 149 C.L.R. 431 at pp. 437, 454-455 and 471-472 .

It is first necessary to determine whether the declaration in cl. 1.4 relates to property ``vested or to be vested'' in PN. Depending on the meaning which is to be given to this phrase, it may then be necessary to consider the appropriate time for assessing the liability of the sale deed under this head of duty. For present purposes I shall assume that property concerned is not ``vested'' at the relevant time, and so it only needs to be considered whether it can then be said of the property that it is ``to be vested''.

The interpretation of the phrase ``to be vested'' in this context was considered in
Tooheys Ltd. v. Commr of Stamp Duties (N.S.W.) (1960-1961) 105 C.L.R. 602 . Dixon C.J. said (at p. 612):

``The words `any property vested or to be vested' seem to me to be directed simply to the two cases, namely the case of the declaration of a trust of property then vested in the person who declares the trust and the second case of a declaration of trust in advance of the vesting in the person who declares it of property which it is intended to make the subject of the trust.''

His Honour also stated that para. (2)(a) (which at that time was simply para. (2)) did not require either a presently constituted trust or a trust in which the declarant had enforceable rights in the property still ``to be vested''. The other members of the Court did not directly address this question.

The phrase was again considered in D.K.L.R. Holding Co . The members of the Court on this occasion did not adopt a uniform approach to the meaning of the phrase or its interpretation by Dixon C.J. in Tooheys .

Gibbs C.J. regarded the words ``to be vested'' as importing mere futurity. His Honour, after referring to para. (2), said (at ATC p. 4130; C.L.R. p. 439):

``The words `shall be vested' in this context indicate mere futurity, although the very fact that a declaration of trust is made in respect of property not yet vested suggests that there exists an expectation, if not an intention, that it will become vested.''

His Honour pointed out that although an expectation may be defeated in a particular case, this may equally happen despite the existence of a legal obligation to vest the property.

I was of the opinion that the words ``to be vested'' should be read as ``intended to be vested'' and stated (at ATC p. 4140; C.L.R. p. 456) that it is the intention of the declarant, ``and perhaps that of the person directing the declaration, that is the relevant intention''. I considered that when a declarant's intention is frustrated or changed the duty may subsequently be recoverable under the Act or regulations. Stephen J. (at ATC p. 4134; C.L.R. p. 446) expressed agreement with my judgment.

Aickin J. took a stricter view of the question. Referring to the second case mentioned by Dixon C.J. above, his Honour said (at ATC p. 4147; C.L.R. p. 468):

``The phrase speaks of property which is or `shall' be held in trust, not which may be held in trust. Such an event can only be one which either must happen as a matter of law in the circumstances existing, or one which some person is under some obligation to bring about or which by statute must occur.''

Later his Honour stated (at ATC p. 4148; C.L.R. p. 469):

``The words of the provision require certainty of vesting, not possibility, probability or intention.''

Like Gibbs C.J., Brennan J. considered that the words ``to be vested'' import mere futurity.

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His Honour said (at ATC p. 4150; C.L.R. p. 471):

``In my opinion, no notion of intention to vest is imported into para. (2), and no enquiry into the actual intention of any person is called for.''

His Honour noted the potential injustice of this construction but, without deciding the matter, adverted to the possibility of a refund of duty in the case where an instrument fails in its intended purposes and remains void of legal effect.

Although there is a distinct difference between the views expressed by Gibbs C.J. and Brennan J. on the one hand and Stephen J. and myself on the other hand, I doubt that the difference could be of substantial practical significance. As Gibbs C.J. pointed out, the fact of the making of the declaration of trust will itself often suffice to demonstrate the presence of an expectation or intention. However, further reflection on the question has led me to the conclusion that the interpretation of para. (2)(a) favoured by Gibbs C.J. and Brennan J. should now be adopted. The liability of an instrument to duty should not call for an inquiry into the intention of the maker of the instrument. The fact that the maker takes the trouble to execute the instrument is enough to bring para. (2)(a) into operation. Actual intention or expectation is not a criterion of operation of the subparagraph.

On this view the property was property ``to be vested'' within the meaning of para. (2)(a). In any event in the present case the parties to the sale deed clearly expected and intended that PN would hold the shares on trust for BTA, and indeed received the benefit of a covenant by PN to that effect. If it be accepted that the time for assessment of duty is the time at which the exchange of counterparts took place, the view of all the members of the Court in D.K.L.R. Holding Co. would be satisfied, with the possible exception of Aickin J. The shares would then have been property ``to be vested'' in the declarant within the meaning of para. (2)(a).

However, sec. 38(1) of the Act provides that liability to stamp duty arises ``upon the first execution'' of an instrument, which in the present case meant, in the view of the Commissioner, that the sale deed should be assessed at the point at which PN executed its counterpart. Even at this earlier point PN had manifested an intention or expectation sufficient to satisfy the majority in D.K.L.R. Holding Co. and it is accordingly not necessary to determine the precise point at which liability to duty should have been assessed for the purpose of considering whether the property was ``to be vested'' in PN.

The next question which arises in the construction of para. (2)(a) is whether the declaration in the sale deed is in favour of ``the person or persons or purpose or purposes mentioned therein''. It is accepted that the references to purpose are not relevant to the present case. Counsel for the respondents contended that the shares were in effect to be held on trust by PN, not for BTA, but for the unit holders under the trust deed, who are not ``persons mentioned'' in the sale deed. If this contention were accepted it would then be necessary to consider the meaning of the word ``mentioned'' in para. (2)(a) and to decide whether the terms of the trust deed could for this purpose be incorporated into the sale deed. But in my view the contention cannot be accepted. It is not relevant that BTA as beneficiary of the trust declared by PN itself held the equitable interest in the trust property on trust for other persons. The fact remains that the shares were to be ``held in trust'' for BTA which is a person mentioned in the sale deed and accurately described as the beneficiary of the trust in question. There is no basis for ``looking through'' this trust as the respondents urged. Indeed, the sale deed itself does not contemplate that the unit holders, rather than BTA, should be able to call for the trust property and otherwise enforce the trust directly.

It follows that in my opinion cl. 1.4 of the sale deed falls within the terms of para. (2)(a). However, as I have indicated, the case has proceeded upon the basis that para. (1) and (3)(b) have, in effect, paramount force, and so these provisions must also be considered.

The terms of para. (1) are set out above. The language of this provision is unmistakably different to that used in para. (2)(a). In particular, the words ``or to be vested'' which appear in the latter paragraph are absent from the former. The history of these provisions reveals that these words were specifically added to para. (2)(a) but that the legislature did not see fit to insert them in para. (1). A clear

ATC 4215

distinction was thus made and persuasive reasons would be needed to imply the presence in para. (1) of words which appear to have been consciously excluded. As I have not been able to identify persuasive reasons for making such an implication, I would be disposed to conclude that the shares were not ``vested'' in PN either at the point of first execution or at the point of exchange of the executed counterparts.

However, it is unnecessary to rest my decision on this ground because there is in my view a compelling ground for excluding the operation of para. (1) in this case, namely that PN cannot be said to be the ``apparent purchaser'' of the shares. Not only does the sale deed recite that BTA is the purchaser of the shares, but it is clear from its terms that BTA is to provide the purchase money and that PN is merely to be the transferee. PN is not the ``purchaser'' in the ordinary sense of the word and I see no reason to give the word any meaning in this context other than its ordinary sense.

Moreover, para. (1) is concerned with the situation in which a document reveals a certain person as the purchaser of property and does not reveal that another person has ``actually paid the purchase-money'', but contains a declaration of trust by the ``apparent purchaser'' in favour of that other person. This is not the situation in the present case. Furthermore, the situation envisaged by the paragraph is one in which the law would ordinarily impose a resulting trust in favour of the provider of the purchase money, and para. (1) is therefore concerned with a declaration which does no more than record the existence of such a trust: see
Truskett v. Commr of Stamp Duties (N.S.W.) (1976) 6 A.T.R. 1 . But this does not mean that every such declaration comes within the protection of the paragraph. Even if the second part of cl. 1.4 were viewed as creating several different obligations, only one of which amounted to a declaration of trust for stamp duty purposes, the fact that such declaration may do no more than record the position under the general law would not suffice to bring the sale deed within the terms of the statutory exception. Paragraph (1) is not applicable on its terms.

The final question, and indeed the issue raised directly by this appeal, is whether para. (3)(b) is applicable to the sale deed. An initial difficulty faced by the respondents is that the person liable under this paragraph is the person declaring the trust (PN), but not the person directing the declaration of the trust (BTA). However, PN or BTA is liable under para. (2)(a), and there must be some doubt as to whether BTA could escape liability under para. (2)(a) by virtue of para. (3)(b). None the less, it seems to have been accepted throughout this litigation that BTA could potentially avoid ad valorem duty under para. (2)(a) in this manner, and so it is appropriate to make that assumption for present purposes.

The Court of Appeal held that para. (3)(b) was applicable to the sale deed. The Commissioner has appealed on two grounds. The first is that it could not be said of the relevant property that it ``was conveyed'' to PN, because the conveyance was effected, not by the sale deed, but by the transfer of shares which was executed as part of completion as contemplated by the sale deed. Accordingly, so it was said, no conveyance had taken place at the time when duty fell to be assessed, whether upon first execution of a counterpart or upon exchange of counterparts.

On a literal reading of para. (3)(b), this argument has strong persuasive force. It gains added force from the judgment of Gibbs C.J. in D.K.L.R. Holding Co., where his Honour said (at ATC p. 4132; C.L.R. pp. 442-443):

``... the words `was conveyed' in para. (3)(b) are in my opinion deliberately used in the past tense, to refer to a conveyance made before the declaration of trust was executed.''

However, in the same case Brennan J. pointed out (at ATC p. 4152; C.L.R. p. 475) that such a construction would deny para. (3)(b) any operation in relation to a declaration that property to be vested in the trustee shall be held by him in trust, despite the fact that para. (3) is expressed to apply to all declarations falling within para. (2). His Honour therefore took the view that:

``... if the declaration falls within para. (2), it will nevertheless escape the ad valorem duty charged upon it under that paragraph if, at the time when it is stamped, the conveyance has already been stamped with ad valorem duty''

(at ATC p. 4152; C.L.R. p. 475).

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The other members of the Court did not address this question, although Aickin J. observed (at ATC p. 4148; C.L.R. p. 469):

``There is no question of [the instrument] falling within para. (1) or (3)...''

This statement, along with the tenor of his Honour's judgment, might be taken to imply agreement with the more literal view of the Chief Justice.

In the result, however, it is unnecessary for me to decide upon the meaning and operation of the phrase. This is so, because in my view the property was not conveyed ``by an instrument duly stamped with ad valorem duty''. The instrument which was stamped with ad valorem duty was the sale deed, which conveyed only an equitable interest in the shares to PN, by virtue of the agreement for sale contained in cl. 1.4. But the property in relation to which the declaration of trust was made, and thus the property referred to in para. (3)(b), was the legal interest in the shares. It cannot matter that at the time when the declaration of trust was made, PN did not possess this legal interest and could only pass an equitable interest in property to be acquired by it, because this is the very situation which the words ``to be vested'' in para. (2)(a) are intended to cover and which para. (3) deals with by the use of its opening words ``[a]ny such instrument as aforesaid''.

Therefore the trust property, to be vested in PN, was not conveyed to PN by the sale deed, but by the share transfer, which pursuant to sec. 41(4)(a) of the Act was stamped with nominal duty only, since the sale deed had been stamped as an agreement for sale. The legislature could, if it wished, have made reference in para. (3)(b) to agreements to convey, but it did not do so. A conveyance is stipulated. There is no conveyance of the trust property stamped with ad valorem duty. This fact is not altered by the circumstance relied upon by Mahoney J.A., that ``ad valorem duty as on a transfer of the shares was paid, presumably upon the sale deed and/or upon the share transfers''. The presumption mentioned is not sufficiently precise, since the proper test is not whether duty was paid ``as on'' a transfer Paragraph (3)(b) is therefore not applicable to the sale deed.

The result is that the respondents are liable for ad valorem duty upon the sale deed as a declaration of trust, pursuant to para. (2)(a). While this may appear to some an arbitrary conclusion, given that a minor reorganisation of the transaction or documentation may have produced a different result, the legislature has clearly created a wide ad valorem charging provision and some relatively narrow exceptions. In these circumstances, to extend the application of those exceptions on the basis of a supposed legislative policy against the imposition of double duty would not only undermine sec. 17(1), but would do considerable violence to the language employed under the heading ``Declaration of Trust'' and may have undesirable consequences for the interpretation of other parts of the legislation.

The Commissioner's figure of $47,620.80 was not challenged by the respondents. I would allow the appeal with costs and answer the questions asked in the stated case as follows:

  • (a) Whether the share sales deed is chargeable with stamp duty in accordance with the head of charge ``Declaration of Trust'' in the second schedule to the Stamp Duties Act, 1920 . Answer: Yes.
  • (b) If the share sales deed is chargeable with duty in accordance with the head of charge ``Declaration of Trust'', whether it is so chargeable under -
    • (i) para. (1); or
    • (ii) para. (2)(a)

    of that head of charge.

    • Answer: Paragraph (2)(a).
  • (c) If the share sales deed is chargeable with duty under the head of charge ``Declaration of Trust'' whether the correct amount of duty thereunder is -
    • (i) $47,620.80
    • (ii) $6
    • (iii) some other and if so what sum.

    Answer: $47,620.80.

  • (d) By whom should the costs of those proceedings be paid?
  • Answer: The plaintiffs to pay the defendant's costs of the proceedings.


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