CAMPBELLS HARDWARE & TIMBER PTY LIMITED v COMMR OF STAMP DUTIES (QLD)
Judges: Fitzgerald PDavies JA
Fryberg J
Court:
Queensland Court of Appeal
Davies JA
On 21 September 1992 the appellant acquired a number of retail hardware shop businesses in Queensland conducted by subsidiaries of James McEwan Limited (receiver and manager appointed). It accordingly delivered to the Commissioner a statement under s. 54A(2) of the Stamp Act 1894 and was originally assessed on that statement. It showed the assets acquired to consist of goodwill (at a nominal consideration), plant and chattels and other assets but no stock-in-trade. The Commissioner subsequently amended that statement to include stock-in-trade of over $20M and reassessed. The appellant sought a statutory order of review of that assessment before a Judge of the Trial Division which was dismissed [ reported at 96 ATC 4348]. This is an appeal from that dismissal.
The assets the subject of the original statement under s. 54A(2) were the subject of an agreement called Sale of Business Agreement of the above date. The stock-in- trade was the subject of an agreement called an Agency Agreement of the same date. The question for the Commissioner, the court below and this Court was and is whether that stock-in- trade was acquired or agreed to be acquired from the vendors, whether included in the transaction by which the businesses were acquired or agreed to be acquired or the subject of another or other transactions. That question in turn depends, in the first place, on whether, under the Agency Agreement, the appellant acquired the stock-in-trade.
There is no doubt that, in form, the Agency Agreement was not one by which the appellant acquired the stock-in-trade. In form it was an agreement by which the appellant agreed to sell the stock-in-trade as agent for the various vendor companies. But there is also no doubt that the
Stamp Act
is concerned, not with the form of an instrument, but with its substance.
[21]
The label which the parties put upon the transaction with respect to the trading stock, both in the Sale of Business Agreement and in the Agency Agreement was of agency for sale; of engagement of the appellant by the vendors of the businesses for sale, on their behalf, of the trading stock. The Sale of Business Agreement provided that the trading stock was to remain the property of the vendors. More importantly the Agency Agreement, after reciting that each vendor owned trading stock which it wished to dispose of as part of its business and that the applicant had agreed to act as agent for each vendor, then irrevocably appointed the appellant such agent who acknowledged that it held the trading stock as bailee for the vendors on a consignment basis. Thereafter, as the learned primary Judge said [ 4351], the Agency Agreement ``abounds with words indicative of agency for sale rather than an acquisition by the [ appellant] of the goods. In particular, cll. 2 and 3 are replete with language familiar in the law of principal and agent''. It is unnecessary to refer to that language in detail because, as appears from what I have said above, it is the legal effect of the contractual terms, rather than merely the language in which they are
ATC 4282
expressed, which determines the true character of the transaction with respect to the trading stock. The learned primary Judge found in the Agency Agreement a number of provisions which, together, caused him to conclude that it was in substance an agreement under which property in the trading stock was intended to pass to the appellant. I agree with that conclusion. In my view the true nature of the transaction with respect to the trading stock was one of sale by the vendors to the appellant.Bearing in mind that the Agency Agreement was dependent on completion of the Sale of Business Agreement there are two aspects of the Agency Agreement which, taken together, require that conclusion. The first involves the price. On the date of completion, which was the date of completion of the Sale of Business Agreement, the appellant was obliged to pay the sum of $17,500,000 to the vendors, that being the estimated value of the trading stock. Although that was described as an advance, the vendors had no obligation to repay it or any part of it unless either, in effect, the sale of one or more of the businesses could not be completed because of absence of the lessor's consent, in which case that part of the total transaction was reversed, or upon a stocktake and stock valuation an adjustment was required to be made to that sum against the appellant. Payment by the appellant to the vendors under the Agency Agreement was not dependent on the sale by it of any trading stock nor was the amount payable dependent on the amount received from that sale.
The second is that the property and the trading stock effectively passed to the appellant upon completion. The risk of loss passed to the appellant on that date and, in effect, the appellant was entitled to receive the proceeds of insurance in respect of that loss. It could deal with the trading stock as it could in respect of its own trading stock. It could sell the trading stock on its own account and, absurdly, it could ``sell any part of the trading stock to itself''. There was no circumstance, other than that in which the sale of one or more of the businesses could not be completed because of absence of the lessor's consent, in which, after completion, the vendors had any real rights in respect of the trading stock. Moreover the vendors were obliged, upon completion, to assign to the appellant the benefit of any manufacturers' or suppliers' warranties, an obligation which would be unnecessary if the property in the trading stock remained in the vendors and the appellant were selling merely as their agent.
It is true that the power to deal with the trading stock is described as being ``for the benefit of the Vendors''
[24]
The learned primary Judge summed up the effect of the Agency Agreement correctly, in my view, when he said [ 4351-4352]:
``... The vendors get a sum of money unrelated to the destiny of the goods. More importantly, at completion the applicant took possession with the right to it indefinitely, entirely free of the vendors' control. The vendors retained neither a dispositive right in respect of the stock nor any power to direct dealings by the applicant in the goods. Although the applicant could have insisted on returning stock on the occurrence of an event contemplated by cl. 8.7 of the Sale of Business Agreement, on no contingency could a vendor have demanded the goods back or controlled their fate.
... Here, however, the applicant was entitled to exclusive possession of the stock permanently, and in circumstances where the vendors were `contractually disabled... from enforcing any right of property against the person receiving delivery'.''
[25]
The passage which his Honour cited was from the judgment of Sir Owen Dixon in . His Honour also referred, by way of comparison, to Chapman Bros v.Verco Bros. & Co. Ltd. (1933) 49 C.L.R. 306 at 318. Farnsworth v.F.C. of T. (1949) 9 ATD 33 at 40;(1949) 78 C.L.R. 504 at 518and S. Gageler. ``Retention of Title Clauses'' (1989) 2 Journal of Contract Law 34 at 36-8. The South Australian Insurance Co v.Randell (1869) L.R. 3 P.C. 101 at 109
I agree with the reasons of the President for concluding that the presence of the securities on the trading stock could not prevent the property in it from passing to the appellant and also with his Honour's reasons for rejecting the contention that the Commissioner was not otherwise precluded from making the assessment. Accordingly I agree that, were there no question of the validity of s. 54A, the appeal would have to be dismissed with costs. In the circumstances I agree with the declaration proposed by the President.
Footnotes
[21][22]
[23]
[24]
[25]
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