EIE OCEAN BV v COMMR OF STAMP DUTIES (QLD)
Judges:Macrossan CJ
Pincus JA
Williams J
Court:
Queensland Court of Appeal
Macrossan CJ
Pincus JA has set out the background facts and referred to the issues that arise on this appeal.
If the sale in question was of shares in a ``land rich'' company, as that term has come to be used, then additional duty at the rate referable to a conveyance is to be paid. In a number of respects, there is no contest between the parties. The land, and with it the Sanctuary Cove Resort, in the control of the company, Riana Investments Pty Ltd, whose shares were sold by the agreement of 24 September 1988, was situated in Queensland; the consideration for the sale of the shares was $341m and there were a number of items other than land, entitlement to which passed under the sale. Items that were of the nature and value specified in paragraph 7 of the stated case had a value of $46,348,136. None of these matters mentioned so far were in dispute but an issue is raised whether there were further items, the entitlement to which passed on the share sale for which an allowance would have to be made in addition to the paragraph 7 matters, if the
ATC 4015
value of the included land is to be isolated. Within the total adjusted consideration of $341m, the value of any further items might depress the relative percentage which the value of the land passing as a result of the sale bore to the total value of the property comprehended so that the duty chargeable at conveyance rates under the prescribed provisions would be reduced below that which the Commissioner, with his view of land value, has imposed or would be eliminated altogether if the land value percentage should be less than 80 percent: see 56FL(2).The Commissioner's approach to valuation of the land involved a subtraction of the paragraph 7 total of $46,348,136 from the $341m total, leading him to adopt $294,651,864 for land. This sum comfortably exceeds the $272,800,000 which is 80 percent of the $341m total made relevant by the ``prescribed provisions'': in fact, it shows a land value percentage to the total value of relevant assets as 86.41 percent.
The appellant, in saying that an additional number of items of value passing as a result of the sale not allowed for by the Commissioner, contends that under the approach he has adopted, his land value is inflated. These additional items are claimed by the appellant to total $79,280,000 and to be distributable under these headings: concept and design $34m, trade names and trademarks $25m and other intangibles (value of tax losses and synergistic effect) $20,280,000. An alternative description of some aspects of these components could be adopted. A principal debate on the appeal concerned ``goodwill'' which could reflect some part of the additional headings and amounts for which the appellant contended. The appellant pressed for and the Commissioner resisted the conclusion that goodwill independent of land value passed under the sale. If the appellant can demonstrate that the land value contended for by the Commissioner was unduly inflated by at least $46,348,136 the position is arrived at where the relative percentage for the land value component falls below the 80 percent level and none of the additional duty is payable. With a lesser degree of success attending its contentions, the appellant may still have to pay some duty but in a reduced amount.
In the circumstances of this case and on the approaches so far pursued, no obviously correct land value appears. Starting with the objectively acceptable figure of $341m derived from the consideration on the share sale, if it could be accepted that the Commissioner had deducted all non-land items and attributed proper values to them, then his approach and the result at which he has arrived would have persuasive force. Although the appellant was disposed to object to it, there is nothing inherently wrong with the Commissioner's ``subtractive'' approach if it is possible to be satisfied that the component values he has adopted are substantially correct. The method resembles the commonly adopted method of analysing unimproved value from the evidence provided by sale prices paid for improved land.
The approach of the appellant's valuers attempted to arrive at land values independently of the share contract price by capitalising assumed future profits from aspects of the Resort's operations and then reconciling the result with the share sale figure by attributing values to balancing items. The appellant's valuers, in their exercise, have relied on what can be described as claimed expert opinion. In certain instances they have assumed some relationship between true present value of items and actual historical expenditure paid to produce them. In these proceedings it is not necessary to say more than that the reliability of this method has no greater claim to acceptance than the Commissioner's method.
With each side rejecting relevant aspects of the components relied on by the other, I agree with the conclusion of Pincus JA that the most important of the questions transmitted to this Court for decision cannot be answered. The duty, if any, payable cannot be stated until relevant values have been determined and this cannot be done on the material contained in the case stated and transmitted with it.
The relevant statutory provisions relating to stamp duty appeals are important in this case but some preliminary observations may be made.
The classical view of appeals by case stated saw them as consisting of a statement of ``ultimate'' facts upon which the questions arose and to which principles of law could be applied to provide the answer: see e.g.
The Queen
v.
Rigby
(1956) 100 CLR 146
. The appeals brought in the Supreme Court by case stated under the Stamp Act customarily conformed to this style and there are a number
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of statements suggesting that the Court's power to answer questions posed in this form of appeal was quite restricted and allowed no alternative mode of determining the duty payable when disputes concerning it arose. It is open to speculate whether in this strict regime a number of appellants may have been under pressure to yield ground in the interests of having the Commissioner state facts which would enable some, at least, of the area of dispute between the parties to find an answer. It was accepted that the case stated procedure provided the only avenue of appeal. It is clear that the present case has been stated as though the classical standard no longer applied. Any requirement for stating only ultimate facts has been very largely departed from. The factual matters upon which the land valuation and hence liability to duty depend have been dealt with by annexing a very large volume of documents which contain, spread throughout their bulk, reference to various aspects of the parties' competing contentions and the valuations upon which the parties rely. The immediate questions are whether in this form the appellant has a viable appeal and if so, how is it to be resolved.Pincus JA has indicated how the form of the legislation dealing with stamp duty appeals stood at relevant times. The share sale agreement was dated 24 September 1988 and, for present purposes, it has been accepted in the argument presented that the most significant sections of the Stamp Act were s. 22, s. 22A and s. 24, as they then stood. Read together there were, prior to 1988, some indications of an underlying assumption that appeals in cases of dispute about duty properly chargeable would occur only when there had been prior inquiry made by a party under s. 22(1) seeking the Commissioner's opinion on the question. This appears principally from in s. 24, the only section explicitly dealing with appeals, where there was the reference to a stated case ``setting forth the question or questions upon which (the Commissioner's) opinion was required''. However, in April 1988 s. 22 was amended in a number of respects including by omitting subs. (1) and with it the reference to the Commissioner being required to express an opinion. Notwithstanding this, the reference in s. 24(1) mentioned above was retained. It may be observed that subsequently s. 24 has been substantially recast, but it still refers to the case stated setting out the questions upon which the Commissioner's opinion was required. However, at present, under new procedures, there will always have been a notice of appeal served and a prior lodgment of objection to the Commissioner's assessment. I express the view in passing that while the current form of the Act retains the use of the case stated where there is an appeal against assessment, the reference to the questions upon which the Commissioner's opinion was required may now be taken to refer to the issues raised and considered under the objection procedure. Under the current provisions there may also have occurred some transformation of the more rigid case stated procedures. In making this observation I am influenced by the approach adopted and the general statements of principle made by the High Court in
Commissioner of Stamps (SA)
v
Telegraph Investment Co Pty Ltd
&
Anor
96 ATC 4075
;
(1995) 184 CLR 453
dealing with South Australian legislation. Statements made in that case have been referred to by Pincus JA. For the disposal of this appeal there is no need to express any final view upon the effect of the current Queensland legislation because it is accepted that we are concerned only with its effect at an earlier time.
Nevertheless, acting upon the general indications provided by the High Court in the Telegraph Investments case, the conclusion should be adopted that as at September 1988, s. 24 gave a substantive right of appeal in all cases of dissatisfaction with assessment and not just in cases where the expression of the Commissioner's opinion had previously been required. It is not necessary to decide whether, under the legislation in that earlier form, the appeal necessarily involved the utilisation of the case stated procedures but historically the consistent use of that mode of appeal had prevailed for such an extended period that there is no reason to reject that view.
The case stated procedure has been used in the present instance but the form of the case is, as already remarked, very different from the old strict model. It contains no comprehensive statement of ultimate facts and seeks the view of the Court on factual matters which are sketched by reference only to the case and its annexures. Both sides continue to press for the questions to be answered. Neither side suggests that there is not an appeal validly before the Court. That being so, and the Court being confronted with the need to resolve factual
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questions to fulfil its duty of determining the duty payable it can and should make use of the power conferred by s. 68(3) of the Supreme Court of Queensland Act 1991 which, in terms, is broad enough to cover the situation.Pincus JA has reviewed a number of authorities dealing with the nature of goodwill and its value and the occasions when, in connection with a business being conducted on land there can be associated goodwill with a value beyond that which it gives to the land on which the business is conducted. The distinction is between local goodwill attached to a place and personal goodwill. Whether in a case like the present there was, at September 1988, goodwill accompanying the share sale, that was not reflected in the value of the land on which the resort stood, I regard as only one of the factual questions arising. It will have to be determined on evidence assisted by the contributions of expert witness. It would have been open to the parties to the sale to agree on a schedule in the nature of an apportionment to accompany the sale of shares, stating how the share price in the contract had been arrived at and specifying a separate price for goodwill, but if that had been done I would not regard it as conclusive. That is because the assignment of value to the goodwill might merely have artificially reduced the figure otherwise properly attributable to the value of the land enhanced by the goodwill attached to it. In short, I regard the question as one which cannot be decided in the abstract. It is a factual matter for determination after consideration of such analyses as may be tendered and relied on by the parties.
I agree that question (a)(i) should be answered ``Yes'' and that the appeal should otherwise be remitted to the Trial Division for determination by trial. I agree with the further terms of the order proposed by Pincus J.A.
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