• Legal database
Legal database

Sportsman's Hall Hotel Pty. Ltd. & Anor v. Commissioner of Stamp Duties (Tas.)

Judges:
Underwood J

Court:
Supreme Court of Tasmania

Judgment date: Judgment handed down 21 February 1990.

Underwood J.

This is an appeal, brought pursuant to the Stamp Duties Act 1931, sec. 21, against the respondent's assessment of duty on a conveyance of real property. Duty was assessed in the sum of $5,710 on a value of $200,970 under item 7(a) of the Second Schedule of the Act. No complaint is made with respect to the assessment in so far as it is based upon the real property conveyed by the deed having a value of $165,000. However, relying on the provisions of the Act, sec. 70(4B), to that figure the respondent added the sum of $35,970 for the value of certain chattels. The appellants contend that in the circumstances, the provisions of sec. 70(4B) have no application to the assessment of duty on the conveyance and that the assessment should be varied accordingly.

Nature of an appeal under the Stamp Duties Act 1931

Counsel agreed that, as the Commissioner heard no evidence and made no judicial determination of fact, the provisions of the Rules of Court, O. 76 r. 74, had no application to the hearing of this appeal and that the jurisdiction conferred by the Stamp Duties Act, sec. 21, should be exercised ``in such form, mode, and manner as the Court or a judge may direct''. See Supreme Court Civil Procedure Act 1932, sec. 6(3). There is authority for that proposition. See
Smith & Anor v. Commr of Stamp Duties (Tas.) 81 ATC 4244 at pp. 4247-4248; (1981) Tas. R. 14 at p. 21.

Section 22(2) gives the Judge hearing an appeal power to make an order ``confirming or varying the assessment, as he may think just''. The Act is silent with respect to the nature of the appeal and the onus of proof. (Cf. Stamps Act 1958 (Vic.) sec. 33C.) The Act places no probative value on the Commissioner's assessment. By sec. 21 and 22, the Parliament provided for a judicial review of an administrative decision. On such a review the duty of the court is to determine the matter, i.e. assess the duty, anew on such evidence as is placed before it. In
Ex parte Australian Sporting Car Club Ltd.; Re Dash & Anor (1947) 47 N.S.W.S.R. 283 Jordan C.J. (with whose reasons for judgment the other members of the Court agreed) said at p. 283:

``The word `appeal' may be used in two connections. It may refer to an appeal from one judicial tribunal to another; such an appeal may be an appeal stricto sensu or an appeal by way of rehearing, in which latter case the jurisdiction exercised by the appellant tribunal is in part original; or the word may refer to an appeal from an executive authority to some other executive authority or to a court. If such an appeal is to a court, the jurisdiction which it exercises is not appellate but original;.
Federal Commissioner of Taxation v. Munro (1926) 38 C.L.R. 153 at p. 181;
McCaughey v. Commissioner of Stamp Duties (1945) 46 S.R.N.S.W. 192 at p. 207.''

See also
Builders Licensing Board v. Sperway Constructions (Sydney) Pty. Ltd. & Anor (1976) 135 C.L.R. 616;
Turnbull v. New South Wales Medical Board (1976) 2 N.S.W.L.R. 281;
State Superannuation Board of Victoria v. O'Connor (1985) V.R. 380 at p. 382;
Bell v. Feehan (1985) V.R. 841.

By the provisions of the Act, sec. 21, the proper assessment of duty falls to be determined judicially for the first time. See Burbury C.J. in
R. v. Oldham; Ex parte Registrar of Motor Vehicles (1966) Tas. S.R. 80 at p. 83;
R. v. Commissioner for Town and Country Planning; Ex parte Scott (1970) Tas. S.R. 154 at pp. 169-170. In
Minister of State for the Navy v. Rae (1945) 70 C.L.R. 339, referring to an ``appeal'' from an executive decision to a Court Dixon J. (as he then was) described the appellate proceedings as being an exercise of the original jurisdiction and said at p. 341:

ATC 4314

``As it is an originating proceeding, the question should be tried on fresh evidence and independently altogether of the proceedings conducted before the Compensation Board, and of the process by which the Board reached its conclusion.''

It follows that upon the exercise of such original jurisdiction the onus falls on the Commissioner to justify the assessment and the payment of duty he seeks to extract. In
Phillips v. The Commonwealth of Australia (1964) 110 C.L.R. 347 it was held that an appeal to the County Court from a decision of a Commissioner appointed pursuant to the Commonwealth Employees' Compensation Act 1930-1956 was an original proceeding in that Court. With respect to the onus of proof on such ``appeals'' the following passage appears in the judgment of the Court at p. 350:

``What the section does is to provide for the judicial review of administrative decisions of a particular character and upon any such review it is, we think, for the Court to pronounce anew upon the rights of the parties as disclosed by the evidence before it. That being so the application of the ordinary principles relating to the determination of disputed questions of fact by judicial tribunals requires the conclusion that if a claim for compensation be rejected by the Commissioner or his delegate the onus of proving the necessary facts to entitle the appellant to what is virtually an award of compensation will be upon the claimant in later proceedings before the County Court. Likewise, the application of the same principles may well mean that in some cases the onus of proving critical facts may rest upon the Commonwealth.''

See also McCaughey v. The Stamp Duties Commissioner (1945) 46 N.S.W.S.R. 192 at p. 207.

Accordingly, I will determine this appeal on the basis, agreed to by counsel, that it is an original proceeding and that the onus falls upon the respondent Commissioner to prove all the facts necessary to establish that the duty claimed by him was properly assessed and is payable.

The facts

The facts were wholly comprised in an agreed statement of facts and six documents. On 1 December 1988 David Clarence Siggins and Patricia Elaine Siggins (the vendors) entered into a written agreement with respect to the sale of the Rosegarland Hotel. The purchaser was described as ``Peter Clem Dixon of Yarraman Park, Casino Rise Launceston in Tasmania or his nominee or nominees to the intent that he may nominate one or more purchasers to complete this contract in so far as the freehold property hereinafter described is concerned and another purchaser or purchasers to complete this contract in so far as the balance of the property hereby agreed to be sold is concerned''.

The property comprised in the agreement for sale was:

  • 1. The freehold property described in the first schedule as ``all the piece of land situate at Gretna in Tasmania comprising the Rosegarland Hotel and the adjacent cottage and the car park adjoining the same'' as shown on an annexed plan.
  • 2. The vendors' hotel furniture, furnishing plant and equipment in the Rosegarland Hotel as described in the annexure.
  • 3. The licences attaching to the Rosegarland Hotel and the goodwill of the vendors in that business.

The purchase price was expressed to be $185,000. A deposit of 10% was to be paid on signing the contract and the balance on completion. The agreement apportioned the purchase price as follows:

``(a) For the freehold property $130,000.

(b) For the furniture, furnishings, plant and equipment the sum of $35,970.

(c) For the licences and the goodwill the sum of $19,030.''

By cl. 14, the purchaser agreed to purchase ``all good and saleable food stocks liquor stocks and other stock in trade and merchantable stores of all kinds'' at valuation. By an annexure, the agreement listed certain furniture, furnishings, plant and equipment and ascribed a monetary value to each which totalled $35,970.

The agreement for sale contained the standard clauses usually found in a contract for the sale of a hotel as a going concern. It concluded with a restrictive covenant against

ATC 4315

the vendors, effective for a period of three years and within a radius of four kilometres of the Rosegarland Hotel. The agreement provided that the contract shall be completed on 18 November and the purchaser to be entitled to vacant possession ``at midnight on the day of 1988''. There was no evidence to explain why the completion date was expressed to be prior to the date the agreement was entered into and no evidence with respect to the date the purchaser or his nominees took vacant possession.

Six days later, Peter Clem Dixon and one Wayne Thomas Hay and Gillian Mavis Read entered into an agreement. The agreement describes Mr Dixon as a chartered accountant and Mr Hay as a hotelier. No occupation is shown for Gillian Read. There was no evidence of the relationship between any of these three persons nor of any discussions which led to the execution of this or any of the other documents tendered in evidence other than that which may be inferred from the documents themselves. The document entered into on 6 December 1988 can be described as an agreement for lease. It contained the following recitals:

``WHEREAS Dixon is about to enter into an agreement for sale (her[e]inafter called `the agreement for sale') a copy whereof is annexed hereto and marked with the letter `A'.

AND WHEREAS in so far as the freehold referred to in the agreement for sale is concerned Dixon has agreed to enter into the agreement for sale on behalf of Sportsman's Hall Pty. Limited [sic] and Carlton Dixon.

AND WHEREAS in so far as the other property referred to in the agreement for sale is concerned Dixon has agreed to enter into the agreement for sale on behalf of Hay.''

(Wayne Thomas Hay and Gillian Mavis Read were referred to in the agreement for lease, and will be referred to in these reasons, together as ``Hay''.)

The first recital is in conflict with the agreed fact that the agreement for the sale of the Rosegarland Hotel was entered into on 1 December 1988. There was no evidence to explain this apparent conflict. The agreement for lease provided that:

  • 1. Mr Dixon will enter into the agreement for sale.
  • 2. Mr Dixon will nominate, and Hay will accept nomination as purchasers under that contract of all matters except the real estate.
  • 3. Hay will provide Mr Dixon with $5,500 to be applied towards the deposit payable under the agreement for sale.
  • 4. Hay and Dixon indemnify each other in the terms set out in the document.
  • 5. ``Upon completion of the agreement for sale Dixon will ensure that the purchaser of the freehold under the agreement for sale grants, and Hay will take a lease of said freehold in the terms set forth in the schedule hereto.''

The schedule sets out the terms of the proposed lease. Curiously, notwithstanding the fifth recital, the proposed lessee is shown as Wayne Thomas Hay alone, but the agreed fact was that Hay (i.e. both Hay and Read) entered into the lease. It is for a period of six years. Over the term to be demised the rental commences at $30,000 and rises to $36,000 per annum. The terms are those common to a lease of a hotel and there is nothing in them to suggest that the lease is anything other than an arm's length transaction between three business people for the lease of a hotel as a going concern.

Three days after executing the agreement for lease, by a document addressed to the vendors, Mr Dixon exercised his right of nomination under the agreement for sale by nominating Sportsman's Hall Hotel Pty. Ltd. and Carlton Patrick Dixon as tenants in common as purchasers of the freehold property, and Hay as purchasers of the furniture, furnishings, plant and equipment, licences, goodwill and stock. On the same day, 9 December 1988, the vendors executed a deed of conveyance of the freehold to Mr Dixon's nominees. The consideration in the conveyance was expressed to be $130,000. I interpolate here that the respondent Commissioner was of the opinion that the value of the freehold was in excess of $130,000 and obtained a certificate of valuation from the Valuer-General. His opinion was that the true value of the real property was $165,000 and, in the exercise of the powers given him by the Act, sec. 25, the respondent assessed the duty on that value. The applicants

ATC 4316

make no complaint about this aspect of the assessment.

There was no evidence of the identity of the shareholders, officers or directors of the corporate purchaser. Apart from a description in the conveyance of Carlton Patrick Dixon being a bank officer, there was no evidence of any relationship or antecedent dealings between the purchasers of the freehold and Mr Dixon or Hay. Hay and Sportsman's Hall Hotel Pty. Ltd. and Carlton Patrick Dixon duly entered into a lease in the terms of the schedule to the agreement for lease. From the photocopy of this document tendered in evidence it appears that it was dated 2 December 1988 but there was no evidence to explain this.

From the foregoing recital of facts it appears that Mr Dixon or his nominee or nominees agreed to buy the Rosegarland Hotel, the chattels in it and the licences and goodwill and that in result, the real estate was conveyed to Sportsman's Hall Hotel Pty. Ltd. and Carlton Patrick Dixon (the applicants) and the chattels to Hay. Pursuant to the agreement for lease entered into, the applicants granted and Hay accepted a lease of the freehold property for a term of six years.

It was not disputed that, pursuant to item 7(a) of the Second Schedule, ad valorem duty is payable on the conveyance of the real estate, calculated on the basis that the value of that property was $165,000. However, the Commissioner assessed duty on the basis that the value of the property included a further sum of $35,970, being the amount shown in the agreement for sale as the value of the chattels. The Commissioner claimed entitlement to do this, notwithstanding that the chattels were not transferred by the deed of conveyance and transferred to persons not a party to that conveyance, by virtue of the provisions of the Act, sec. 70(4B). Before turning to consider the correctness of this entitlement it is necessary to refer to some of the provisions of the Stamp Duties Act 1931.

The Act

Part III Div. 1 of the Act makes general provision for the calculation, assessment and payment of duty in respect of the instruments specified in Sch. 2. Part IV contains 10 Divisions, nine of which each deal with a separate matter and one which deals with a number of miscellaneous matters. Division 5 deals with contracts for sale, conveyances and transfers. This Division, together with Pt III, Div. 1 and Sch. 2, 3 and 4, provide for the calculation, assessment and payment of duty on contracts of sale, conveyances and transfers.

Apart from the provisions of sec. 70(4B), the obligation to pay duty on a contract of sale, conveyance or transfer arises by virtue of sec. 9 and items 6 and 7 of Sch. 2. Section 70(1) defines a contract of sale for the purposes of that section and item 6 as ``an agreement for the sale, conveyance, or transfer of real property in this State and includes an assignment of the purchaser's rights under such a contract''. Until the enactment of amending Act No. 68/1984 the value of moveable chattels which were transferred to the purchaser of the real estate, other than by the deed of conveyance, as part of one transaction was not taken into account for the purpose of assessing duty. Act No. 68/1984 changed this situation by inserting subsec. 70(4A) and (4B), by amending subsec. (6)(a) and by inserting subsec. (6A). The amendments are as follows. (The amendments to subsec. (6)(a) are in italics.)

``(4A) For the purposes of this section, a contract of sale, conveyance, or transfer of real property is deemed to include any moveable chattels, other than stock in trade and livestock, that are included in the transaction to which the contract, conveyance, or transfer relates, notwithstanding that the moveable chattels -

  • (a) are not referred to in the instrument of conveyance or transfer;
  • (b) pass upon delivery or pursuant to another instrument or in any other manner; or
  • (c) are not, at the date of execution of the instrument of conveyance or transfer, on the property to which that instrument relates.

(4B) Where the Commissioner is satisfied that the delivery, transfer, or sale of moveable chattels -

  • (a) is made to a person other than the purchaser specified in a contract of sale, conveyance, or transfer; and
  • (b) forms part of the transaction to which that contract, conveyance, or transfer relates,

    ATC 4317

the moveable chattels are deemed to be included in that transaction and he may assess duty payable in respect of that contract, conveyance, or transfer according to an amount which includes an amount equivalent to the value of the moveable chattels.

...

(6)...

  • (a) a person submitting a conveyance of real property to an assessor for the assessment of the duty payable in respect thereof shall produce therewith to the assessor -
    • (i) the contract of sale, if any, to which the conveyance gives effect specifying the value of any moveable chattels included in the transaction to which that conveyance relates; or
    • (ii) a statutory declaration stating how the grantee or transferee became entitled to the conveyance or why the property is conveyed to him and specifying the value of any moveable chattels included in the transaction to which that conveyance relates;
  • (b)...
  • (c)...

(6A) The duty payable on a contract of sale under item 6 in Schedule 2 or on an instrument of conveyance under item 7 in Schedule 2 shall be calculated by taking into account the value of any moveable chattels as specified pursuant to subsection (6)(a).''

Subsection (4A) extended the definition of a contract of sale contained in sec. 70(1) by providing that a conveyance or transfer of real property is deemed to include any moveable chattels (subject to certain exceptions) ``that are included in the transaction to which contract, conveyance or transfer relates''. This is expressed to be so notwithstanding any of the matters referred to in para. (a), (b) and (c) of that subsection. Subsection (6A) made provision for the method of calculating the value of moveable chattels by reference to the provisions of subsec. (6)(a). Subsections (4A), (6)(a) and (6A) are confined to contracts of sale, conveyances and transfers by virtue of which both the real property and the moveable chattels included in ``the transaction'' to which the contract, conveyance or transfer relates, are conveyed or transferred to the same transferee. Although this is not expressly stated it is to be inferred from:

  • 1. The terms of subsec. (4B).
  • 2. The absence from subsec. (4A), para. (a), (b) and (c) of a circumstance in which the chattels included in the transaction to which the contract, conveyance or transfer relates, pass to a person other than the purchaser specified in the contract, conveyance or transfer.
  • 3. The terms of subsec. (6)(a)(ii) which refer to ``grantee'' or ``transferee''.
  • 4. The fact that subsec. (6A) imposes no duty but provides only for the calculation of duty imposed by sec. 9 and the Second Schedule, items 6 and 7.
  • 5. The application of the principle that duty is paid on the instrument and, in the absence of statutory extension, is assessed by reference to the value of the property passed by the instrument. See
    I.R. Commrs v. Angus & Ors (1889) 23 Q.B.D. 579;
    Littlewoods Mail Order Stores Ltd. v. I.R. Commrs (1963) A.C. 135;
    Matysek & Ors v. Commr of Stamp Duties, Nettlefold J. B38/1988 at p. 5.

Subsection (4B) stands alone in the sense that it provides for a method of assessment of duty payable when there is a delivery, transfer or sale of moveable chattels to a person ``other than the purchaser specified in the contract of sale, conveyance or transfer''. The value of such moveable chattels may be included in the assessment of duty on the contract, conveyance or transfer but only if the delivery, sale or transfer of those chattels ``forms part of the transaction to which the contract, conveyance or transfer [under assessment] relates''.

The assessment

In the present case, there was a delivery, transfer or sale of moveable chattels. It was from the vendors to Hay. The conveyance under assessment was a conveyance of the real property from the vendors to the applicants. The question on this appeal is, am I satisfied that the transfer of the moveable chattels from the vendors to Hay formed part of the transaction to which the conveyance from the vendors to the applicants relates?

ATC 4318

``Transaction'' is a word of variable meaning. The words of McCarthy J. in
Robertson v. Commr of I.R. (1959) N.Z.L.R. 492 at p. 498 are apposite:

``The word `transaction' is not a word of precise meaning. The parties are agreed that it is `wide, vague, and of uncertain import' in its dictionary meaning, it is `an act, doing, negotiation or dealing' that definition is possibly too general, but clearly it seems to me that, without attempting a comprehensive definition, one can affirm that the word as used in the paragraph can cover a series of steps linked together to attain a definite objective.''

As Everett J. observed in Smith v. Commr of Stamp Duties (supra) at pp. 22-24, when the Parliament imposes a new incidence of taxation (in this case upon certain contracts of sale, conveyances and transfers) the instrument does not attract the obligation to pay tax unless the words of the statute are clear and unambiguous. See
Anderson v. Commr of Taxes (Vic.) (1937) 57 C.L.R. 233;
Cape Brandy Syndicate v. I.R. Commrs (1921) 1 K.B. 64;
Russell v. Scott (1948) A.C. 422.

In
Barron (Inspector of Taxes) v. Littman (1953) A.C. 96 Lord Normand said at p. 113 that ``transaction is a comprehensive word which includes any dealings with property''. A transaction may constitute more than one step in dealing with property. See
Palmer v. Commr of Taxes (1976) 11 A.L.R. 637 at p. 641;
Grimwade & Ors v. F.C. of T. (1949) 78 C.L.R. 199;
Gorton & Ors v. F.C. of T. (1965) 113 C.LR. 604.

The other provisions of the Act afford no assistance in determining the meaning of ``transaction'' in sec. 70(4B). Although the word appears frequently throughout the Act, for example in sec. 35(2), 37(3), the heading to Pt IV, Div. 3, and sec. 60A, its meaning clearly depends on the context in which it appears.

Schedule 4, r. 1 (inter alia) deems ``every... instrument upon the sale of any lands... whereby any such property shall be... conveyed to, or vested in the purchaser'' to be a conveyance. Section 70(4A) speaks of moveable chattels ``that are included in the transaction to which the... conveyance... relates'', and subsec. (4B) of moveable chattels which ``form[s] part of the transaction to which that... conveyance [i.e. the instrument under assessment]... relates''. The deed of conveyance operated to transfer the title of the real property to the applicants. Thus, the transaction referred to in subsec. (4B) is not the transfer of the realty but some antecedent dealing to which the conveyance relates. The question is whether the delivery, transfer or sale of the moveable chattels from the vendor to Hay formed part of that antecedent dealing. No duty is payable upon the transfer of chattels unless the transfer is effected by a conveyance, as defined by Sch. 4, or in the circumstances postulated by either subsec. (4A) or (4B). The obligation to pay duty on a conveyance falls upon the purchaser of the property as expressed in the conveyance under assessment. Thus it appears that a delivery, sale or transfer of moveable chattels to a person other than the purchaser will only form part of the transaction to which the conveyance relates, if it is an integral part of, or is sufficiently linked to, the dealing to which the conveyance relates, so that as a matter of substance, the purchaser's dealing or arrangement comprised in part the transfer of moveable chattels and in part the transfer of the real estate. For example, if a house owner sold the real property to X and at the same time sold the contents to a person or persons unconnected with X, the latter sale would form no part of the dealing or transaction between the vendor and X. Subsection (4B) contemplates there being a physical or legal connection between the moveable chattels and the real property, a sufficient commercial nexus between the purchaser of the real estate and the purchaser of the moveable chattels and an interdependence between the steps taken to achieve the transfer of the realty and the transfer of the personalty so that, it can be said that in substance, both are the result of a single arrangement or dealing by the purchaser with the vendor.

In the present case there is evidence that the moveable chattels transferred from the vendors to Hay were those used to carry on the business of a licensed hotel built on the land conveyed by the instrument under assessment. From the material put before the Court it can be inferred that the applicant's transaction included the purchase of the real property and immediately thereafter its lease for a period of six years to Hay. But there is nothing in that material to

ATC 4319

suggest that the applicants and Hay were anything other than commercial strangers to each other. There is nothing to indicate that the applicants will ever have any interest in or control over the moveable chattels transferred to Hay or that, after the expiration of six years, Hay will have any interest in the real property. There is nothing in the agreed facts or documents tendered in evidence to show that any of the applicant's dealings which led to the conveyance were dependent upon or included an agreement by Hay to purchase the moveable chattels. Whether or not Hay purchased those chattels may have been a matter of indifference to the applicants whose only concern may have been the acquisition of the freehold for the purpose of leasing it to achieve the best possible return. No doubt the purchase of the real property and the moveable chattels were simultaneously arranged by Mr Dixon or his agent, but the transaction referred to in subsec. (4B) is the applicant's transaction, for the obligation to pay duty falls upon them.

Hay's acquisition of the moveable chattels conferred no immediate or prospective benefit on the applicants either directly or indirectly. The applicant's transaction was confined to an agreement to acquire the freehold title to the Rosegarland Hotel and subsequently lease the land for a limited period to persons with whom they had no commercial or other connection other than that which would arise out of the indenture of lease.

I find that I am not satisfied that the transfer of moveable chattels from the vendors to Hay formed part of the transaction to which the conveyance from the vendors to the applicants related and accordingly, for the purpose of calculating duty on that instrument, the sum of $35,970 should not have been included.

It is perhaps useful to cite the following passage from
Kimbers & Co. & Anor v. I.R. Commrs (1936) 1 K.B. 132 at p. 140:

``I have been told that this is in the nature of a test case. The difficulty is that these cases must to a certain extent depend on their facts, and that the facts in any other case are not likely to be exactly the same as those in this case. The substance of the matter has to be looked at, and in order to determine whether the reality of it is a contract for the sale of a house, it has to be ascertained whether the transaction is really all one.''

I will hear the parties with respect to the sum to which the assessment should be varied.


Back to top

This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.